Most online transactions are contractual. The problem, of course, is who has the time or ability to write out individual contracts and have them printed in such circumstances? The answer is no one, which is why we now have the concept of electronic contracting.
Parties have traditionally written contracts out on paper. If you’ve purchased a home or new car, for example, you undoubtedly ended up spending half the day signing different documents.
As technology has changed over time, so has the concept of a contract. When you pay for a purchase with a credit card, for instance, you have already signed an open-ended contract with the credit card company guaranteeing you will pay any borrowed amounts. The credit card company has, in turn, forced retailers to sign an agreement with it regarding fees and such. When the transaction occurs, you then also agree to pay the retailer if the credit card company fails to make payment. Ultimately, these are all contracts and parties can produce the documents in court if disputes arise.
Things change when we move to the internet. How do we create a contractual relationship when some joins a site such as a social media platform like Facebook? The answer is not all that easy to come by from a traditional legal perspective. Customary contract law called for a written agreement signed by both parties. On the web, we have no written agreement and certainly no physical signatures. Hmmm…sounds like we need a new method for creating agreements online – electronic contracting.
Lawyers thrashed around with this issue to no end for some time. The first rudimentary answer was to create a contract that people had to print out and fax in. As you can imagine, business owners were not excited by this option. Lawyers then pitched the idea of posting the contract on the site and forcing people to read it first before getting to the good stuff. Again, not such a good idea. Eventually, the idea of posting the contract on a passive page and having people agree to it came to the forefront. This contract concept eventually evolved into the terms and conditions for a website that we have today.
The basic idea with these agreements is the site can set forth the terms that it demands the user comply with before the user is allowed to participate on the site. For instance, a website might include terms that state that a user will not upload items for which it does not own the copyright. If the user goes ahead and does this, the site can then terminate them or release their information to the copyright holder that files a complaint pursuant to the agreed terms.
To Click or Not To Click
The interesting thing is more and more courts are starting to agree with this assessment. We are seeing decisions come down holding the lack of an actual affirmative act acknowledging agreement with the terms of a site means the terms are not binding on the user because there is a failure in the electronic contracting process. Appellate courts have not issued written opinions as of yet, but it is only a matter of time. [An appellate opinion must be “published” before it is binding. A judgment or ruling in a trial is not a published opinion. Perhaps less than 5 percent of all cases appealed end up in published opinions, so a decision on this issue could take some time.]
What Is A Site Owner To Do?
The answer is pretty straightforward. Most sites will want to make sure that users click a statement that they agree to the terms before they get into the website. Your script should record this action internally. If the terms become an issue, the evidence of the user’s agreement will go a long way to establishing a binding contract.
Ah, but what if you don’t require a user to join the site to get access to information? For instance, a blog. Well, the answer is still pretty much to post the terms and hope for the best. A few courts are still willing to enforce this browsewrap approach. [See Hines v Overstock.com, Inc. (ED NY 2009) 668 F Supp 2d 362, 367]. But let’s not kid ourselves. The vast majority of judges are very uncomfortable with this approach. Given this, rely on browsewrap agreements at your peril.
As you can probably surmise, the law has a rough time handling many internet issues. The subject of electronic contracting is very much one of those problematic areas. If you are a site owner, make sure you keep up to date on changes in this area. You can follow me on Facebook, Google+, Twitter by clicking the relevant buttons at the top of the right column or sign up to receive my electronic newsletter for updates on a host of internet issues.
Richard A. Chapo, Esq.