© 2007 West Legal Studies in Business, A Division of Thomson Learning Chapter 13 E-Contracts

© 2007 West Legal Studies in Business, A Division of Thomson Learning 2 What are some important clauses to include when making offers to form e-contracts? How do shrink-wrap and click-on agreements differ from other contracts? How have traditional laws been applied to these agreements? What is an electronic signature? Are electronic signatures valid? What is a partnering agreement? What purpose does it serve? What is the UETA? What are some of the major provisions of this act? Learning Objectives

© 2007 West Legal Studies in Business, A Division of Thomson Learning 3 Forming Contracts Online Online Offers should include: –Remedies for Buyer. –Statute of Limitations. –What constitutes Buyer’s acceptance. –Method of Payment. –Seller’s Refund and Return Policies. –Disclaimers of Liability. –How Seller will Use Buyer’s Information (Privacy).

© 2007 West Legal Studies in Business, A Division of Thomson Learning 4 Dispute Settlement Provisions. –Choice of Law. –Choice of Forum. –E-Bay uses online dispute resolution. Displaying the Offer (via hyperlink). How Offer Will Be Accepted. –Amazon.com--Checkout. –“I Accept” Button to Click. Forming Contracts Online

© 2007 West Legal Studies in Business, A Division of Thomson Learning 5 Online Acceptances Click-on Agreements. Shrink-Wrap Agreements. –Contract terms are inside the box. –Party opening box agrees to terms by keeping merchandise. Enforceable Contract Terms. (UCC 2-204). Additional Terms.

© 2007 West Legal Studies in Business, A Division of Thomson Learning 6 Online Acceptances Click-On Agreements occur when Buyer “checks out” or clicks on “I Accept” button on Seller’s website or when software is installed. –CASE 13.1 i.LAN Systems, Inc. v. NetScout Service Level Corp. (2002). Browse-Wrap Terms. –CASE 13.2 Specht v. Netscape Communications Company (2002).

© 2007 West Legal Studies in Business, A Division of Thomson Learning 7 E-Signatures E-Signature Technologies. –Asymmetric Cryptosystem. –Cyber Notary. State Law Governing E-Signatures. –Uniform Electronic Transactions Act (1999). Federal Law. –E-SIGN (2000) gives e-signatures and e-documents legal force. –CASE 13.3 In re Cafeteria Operators, L.P. (2003).

© 2007 West Legal Studies in Business, A Division of Thomson Learning 8 Partnering Agreements Sellers and Buyers agree as to protocols to create online agreements. Useful for electronic inventory (Just In Time) ordering of parts and supplies.

© 2007 West Legal Studies in Business, A Division of Thomson Learning 9 UETA Purpose is to remove barriers to forming electronic commerce. E-Signature is “electronic sound, symbol or process…associated with a record and… adopted by a person with intent to sign the record.” UETA applies only to e-records and e- signatures relating to a transaction.

© 2007 West Legal Studies in Business, A Division of Thomson Learning 10 UETA and Federal E-SIGN E-SIGN explicitly refers to UETA. Provides that E-SIGN is pre-empted by state passing of UETA. But state law must conform to minimum E-SIGN procedures.

© 2007 West Legal Studies in Business, A Division of Thomson Learning 11 Highlights of UETA Parties must agree to Conduct Transactions Electronically. –A party can “opt out” of UETA terms. Attribution—process to ensure person sending an electronic record is in fact the real person. Electronic Errors. “ box” Rules. –Dispatched when leaves control of sender. –Received when enters recipient’s processing system.

© 2007 West Legal Studies in Business, A Division of Thomson Learning 12 UCITA Applies to computer information. Software is not a “good” but intellectual property. Software is licensed, not sold; License contract gives Buyer (Licensee) only specific rights. Attribution and Authentication. Mass Market Licenses.