Sales Law October 20, 2009 Winn

Sales Law October 20 Reading estimate for Thursday 10/22 – Finish Statute of Frauds; Unconscionability 2-13, 2-14 (skip 2-15) Review common contract terms; finish conclusory terms exercise Battle of the forms strategy – Diagram transaction: where is Offer? Acceptance? – Open statute book, start with 2-207(1), do not rely on comments or your outline alone

Contract Formation & New Media I Unambiguous new contract formation systems – Business-to-business electronic data interchange Corinthian Pharmaceuticals v. Lederle case – Clickwrap (with appropriate graphical user interface) – exchange (provided not mere preliminary negotiations in light of content) Bad design/drafting can make this ambiguous – “Please review and agree to the terms of the Netscape license” (including arbitration term) not binding Specht v. Netscape 150 F. Supp. 2d 585 (S.D.N.Y. 2005, aff’d 2 nd Cir. 2002)

Ambiguous Clickwrap Interface

Unambiguous Clickwrap Interface

Contract Formation & New Media II Ambiguous new contract formation systems – Pay now, terms later/telephone order If existence of terms in box not disclosed in telephone call, why are they binding just because consumer didn’t return the product? – Shrinkwrap If copyright license terms not provided prior to formation of contract, then end user gets implied license based on end user’s reasonable expectations – Browsewrap If no unambiguous manifestation of assent, then access to website is governed by implied copyright license, not by express terms of “site license” Litigated cases all involve B2B unfair trade practices, not consumers Unambiguous but unpopular solution under Restatement of Contracts – Condition subsequent: if you do not accept these additional terms, then you must return the computer promptly for a refund Information asymmetry & bounded rationality problem: If ethical merchants did this, then consumers would think they were unethical and choose unethical merchants instead….

What about “rolling contracts”? Most law professors reject, focus on oral contract/F2F payment for goods in store – Under Restatement, terms in box are mere proposals that customer is free not to accept – Under UCC, additional terms are mere proposals if buyer is consumer; deemed accepted unless material if buyer is merchant Most practitioners accept, focus on “expectations of parties” that restrictive terms will come in box – Under Restatement, implied condition that buyer will review additional terms and return computer if not acceptable – Under UCC, 2-204(3) not 2-207(2)