On-Line Contracting for the Towing Industry Incorporation of online posted terms & conditions David Boyajian Schwabe, Willaimson & Wyatt Portland, Oregon

Benefits of Online Posted Terms & Conditions Offensive Defensive Battle of the Forms – Common Law vs. UCC Services only Goods & services Goods only UCC § 2-207

Goods vs. Services Battle of the Forms – UCC § 2-207 Can accept offer with confirmation that has additional or different terms. Additional terms are proposals and between merchants become part of contract unless: Offer expressly limits acceptance to terms of the offer; Additional terms materially alter offer; or Notification of objection to additional terms has been given or given within reasonable time after notice of them received

Requirements for Enforceability Sufficient Notice: Web terms must be specifically referenced and identified beyond a reasonable doubt in base contract. (Affiliated FM Ins. Co.) “Specific and Conspicious.” Knowledge and Assent: It must be clear that parties had knowledge of and assented to the incorporated terms. (Affiliated FM Ins. Co.)

6 Suggestions for Clear Notice Reference to website - consider larger font size, ALL CAPS, or bold text. Use specific “incorporation by reference” language. Include full web address to easily locate – direct link.

6 Suggestions for Clear Notice cont. Description in website should match description in contract. Specifically state that by purchasing goods/services or selling goods or services to company, the other party agrees to be bound by online terms and conditions. “Entire Agreement” or “Integration” clause should reference the web document.

Courts Favor Enforceability: Courts view as basic contract law - incorporation by reference. (Rest. (Second) of Contracts §132) If sufficient notice and opportunity to find web based terms, courts will probably enforce. One Beacon: Sufficiently specific & conspicuous even though: Web link referenced was not direct (4 steps to get to terms & conditions) Website font – 4 pt.

Added Terms Subsequent terms: If added after contracting complete terms do not apply to that transaction. Example: Terms in invoice after performance complete (too late) Late added terms: If added late in contracting terms may still apply. Example: Shrink-wrap agreement on product shipped (not too late if can return) Course of Dealing: Terms repeatedly included in written confirmations may apply for subsequent transactions between parties. Examples: One Beacon – oral contracts repeatedly followed by repair service orders incorporating web terms In re Moran Philadelphia - Prior invoicing Incorporated web terms, including limitation of liability for towing service Affiliated FM Ins. Co. – delivery receipts repeatedly incorporating web terms

Knowledge & Assent Must clearly show that both parties intend to be bound by web-based terms. Evidenced in writing or by performance Indication of intent can vary depending on type of contract. Unilateral contract (performance based) Written contract Web-based contract Oral contracts

Unilateral Contracts: Course of Dealing Contract formed by acceptance of offer through performance or use of services. Notices provided post performance (such as delivery receipts or termination letters) can be sufficient for subsequent unilateral contracts between parties. (Conference America)

Written Contracts: Incorporation Applies to various forms of written contracts: signed agreements order confirmations seller’s invoices buyer’s purchase orders Primary issue is whether party had adequate notice of terms.

Written Contracts: Incorporation Applies to various forms of written contracts: signed agreements order confirmations seller’s invoices buyer’s purchase orders Primary issue is whether party had adequate notice of terms.

Indicating Intent in Written Contract Clearest way to indicate intent is with signed contract. “. . . by my signature below, I certify that I have read and agree to the provisions set forth in this invoice and to the terms and conditions posted at http://www.___________” (Int. Star Registry of Ill.) Use clear incorporation language: “The terms and conditions posted at http://www.___ are incorporated by reference and made a part of the agreement between the parties.” Insufficient to say “subject to.” (Affinity Internet)

Online Contracts: Clickwrap vs. Browsewrap Clickwrap: “Agree” / “Disagree” buttons – treated as signature. Whether customer actually read terms is irrelevant. (Hugger-Mugger) Browsewrap: terms and conditions are posted on website through hyperlink May not be sufficient notice of terms or constructive agreement (Zappos) User must have notice that taking action manifests assent and user must take that action

Tips for Enforceable Online Contracts Require “I Accept” to proceed and position directly by terms and conditions. If use hyperlink to terms – must be prominent (not buried). Different color/background, larger font Multiple locations and important locations Position at top of webpage (no scroll down needed to find) One click only to find terms. Terms should be easily printable.

Example text from Conference America “Any services used or requested by Conexant [Customer] after termination will be made available only on and subject to Conference America’s [Provider’s] standard terms, conditions, and prices effective at the time the services are rendered . . . Terms & Conditions is available at www.yourcall.com” (Conference America) Enforceable based on terms of sale existing on website on the date of services.

Oral Contracts Incorporation by reference may be enforceable if evidence that sufficient notice of online terms was orally given.

Changing Web Posted Terms Mere posting of revised terms on website is insufficient notice. (Douglas) For unilateral contracts, terms of service on website at time services rendered are only relevant terms. Attempts to provide that can change terms at any time without notice may not be enforceable as “illusory.” (Zappos) Can change terms and enforce on future sales of services. (Conference America) Clearly state how future modifications apply. Example: State that terms may change and customer responsible to review terms before each order. Must archive written record of actual terms posted, showing dates changed and changes.

Electronic Contracting in General Maritime Law Contract for repair of vessel is a maritime contract, governed by general maritime law. (Todd Shipyards) Common in ship repair to enter into oral agreement, followed by purchase order with terms which effectively supplement if there is evidence of prior course of dealing between parties. (Campbell) Maritime law applies principles from traditional contract law. Can incorporate terms posted on website through purchase order or invoice acceptable (One Beacon)

Business Considerations in Setting Web Terms Staking position in Battle of Forms Privacy of terms Balancing aggressiveness of terms against marketing of services online

5 Important Practice Tips Archive terms: Maintain archive of terms & conditions posted online, with dates of changes. Log Inaccessibility: Keep log of times when web terms not accessible due to technical problems. Hard copies: Provide hard copies of terms and conditions upon request/ Print copies of other parties online terms.

5 Important Practice Tips cont. Reject other party’s online terms: Include language in standard forms that rejects incorporation by reference of other party’s online terms & conditions. Employee Awareness: All employees engaging in contracting should be educated on noticing references to online terms and conditions. If reference spotted in contract, purchase order, invoice, etc. – notify general counsel

Questions? David Boyajian dboyajian@Schwabe.com