COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. West’s Business Law 10 th Edition Kenneth W. Clarkson, University of Miami Roger LeRoy Miller, Institute for University Studies, Arlington, Texas Gaylord A. Jentz, University of Texas, Austin, Emeritus Frank B. Cross, University of Texas, Austin CHAPTER 19 E- Contracts 1

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 2 Introduction Most courts find E-Contracts involve basic principles of contract law, applied in the online context. Most courts find E-Contracts involve basic principles of contract law, applied in the online context.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 3 §1: Online Contract Formation Online Offers should include: 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). Online Offers should include: 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).

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 4 Online Contract Formation Dispute Settlement Provisions. Dispute Settlement Provisions.  Choice of Law.  Choice of Forum.  E-Bay uses online dispute resolution. Displaying the Offer (via hyperlink). Displaying the Offer (via hyperlink). How Offer Will Be Accepted. How Offer Will Be Accepted.  Amazon.com--Checkout.  “I Accept” Button to Click. Dispute Settlement Provisions. Dispute Settlement Provisions.  Choice of Law.  Choice of Forum.  E-Bay uses online dispute resolution. Displaying the Offer (via hyperlink). Displaying the Offer (via hyperlink). How Offer Will Be Accepted. How Offer Will Be Accepted.  Amazon.com--Checkout.  “I Accept” Button to Click.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 5 Online Acceptances Click-on Agreements. Click-on Agreements. Shrink-Wrap 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). Enforceable Contract Terms. (UCC 2-204). Additional Terms. Additional Terms. Click-on Agreements. Click-on Agreements. Shrink-Wrap 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). Enforceable Contract Terms. (UCC 2-204). Additional Terms. Additional Terms.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 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. Click-On Agreements occur when Buyer “checks out” or clicks on “I Accept” button on Seller’s website or when software is installed.  Case 19.1: Mortgage Plus, Inc. v. DocMagic, Inc. (2004). Browse-Wrap Terms. Browse-Wrap Terms.  Case 19.2: Specht v. Netscape Communi- cations (2002). Click-On Agreements occur when Buyer “checks out” or clicks on “I Accept” button on Seller’s website or when software is installed. Click-On Agreements occur when Buyer “checks out” or clicks on “I Accept” button on Seller’s website or when software is installed.  Case 19.1: Mortgage Plus, Inc. v. DocMagic, Inc. (2004). Browse-Wrap Terms. Browse-Wrap Terms.  Case 19.2: Specht v. Netscape Communi- cations (2002).

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 7 § 2: E-Signatures E-Signature Technologies. E-Signature Technologies.  Asymmetric Cryptosystem.  Cyber Notary. State Law Governing E-Signatures. State Law Governing E-Signatures.  Uniform Electronic Transactions Act (1999). Federal Law. Federal Law.  E-SIGN (2000) gives e-signatures and e-documents legal force.  Case 19.3: In re Cafeteria Operators, L.P. (2003). E-Signature Technologies. E-Signature Technologies.  Asymmetric Cryptosystem.  Cyber Notary. State Law Governing E-Signatures. State Law Governing E-Signatures.  Uniform Electronic Transactions Act (1999). Federal Law. Federal Law.  E-SIGN (2000) gives e-signatures and e-documents legal force.  Case 19.3: In re Cafeteria Operators, L.P. (2003).

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 8 Partnering Agreements Sellers and Buyers agree as to protocols to create online agreements. Sellers and Buyers agree as to protocols to create online agreements. Useful for electronic inventory (Just In Time) ordering of parts and supplies. Useful for electronic inventory (Just In Time) ordering of parts and supplies. Sellers and Buyers agree as to protocols to create online agreements. Sellers and Buyers agree as to protocols to create online agreements. Useful for electronic inventory (Just In Time) ordering of parts and supplies. Useful for electronic inventory (Just In Time) ordering of parts and supplies.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 9 § 3: The Uniform Electronic Transactions Act Purpose is to remove barriers to forming electronic commerce. 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.” 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. UETA applies only to e-records and e-signatures relating to a transaction. Purpose is to remove barriers to forming electronic commerce. 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.” 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. UETA applies only to e-records and e-signatures relating to a transaction.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 10 UETA and E-SIGN E-SIGN explicitly refers to UETA. E-SIGN explicitly refers to UETA. Provides that E-SIGN is pre-empted by state passing of UETA. Provides that E-SIGN is pre-empted by state passing of UETA. But state law must conform to minimum E-SIGN procedures. But state law must conform to minimum E-SIGN procedures. E-SIGN explicitly refers to UETA. E-SIGN explicitly refers to UETA. Provides that E-SIGN is pre-empted by state passing of UETA. Provides that E-SIGN is pre-empted by state passing of UETA. But state law must conform to minimum E-SIGN procedures. But state law must conform to minimum E-SIGN procedures.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 11 Highlights of UETA Parties must agree to Conduct Transactions Electronically. 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. Attribution—process to ensure person sending an electronic record is in fact the real person. Electronic Errors. Electronic Errors. “ box” Rules. “ box” Rules.  Dispatched when leaves control of sender.  Received when enters recipient’s processing system. Parties must agree to Conduct Transactions Electronically. 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. Attribution—process to ensure person sending an electronic record is in fact the real person. Electronic Errors. Electronic Errors. “ box” Rules. “ box” Rules.  Dispatched when leaves control of sender.  Received when enters recipient’s processing system.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 12 § 5: UCITA Applies to computer information. Applies to computer information. Software is not a “good” but intellectual property. Software is not a “good” but intellectual property. Software is licensed, not sold; Software is licensed, not sold; License contract gives Buyer (Licensee) only specific rights. License contract gives Buyer (Licensee) only specific rights. Attribution and Authentication. Attribution and Authentication. Mass Market Licenses. Mass Market Licenses. Applies to computer information. Applies to computer information. Software is not a “good” but intellectual property. Software is not a “good” but intellectual property. Software is licensed, not sold; Software is licensed, not sold; License contract gives Buyer (Licensee) only specific rights. License contract gives Buyer (Licensee) only specific rights. Attribution and Authentication. Attribution and Authentication. Mass Market Licenses. Mass Market Licenses.