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

2. 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

3. 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

4. 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.)

5. 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. 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.

7. 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.

8. 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

9. 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

10. 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)

11. 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.

12. 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.

13. 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 (Int. Star Registry of Ill.)
Use clear incorporation language:
“The terms and conditions posted at are incorporated by reference and made a part of the agreement between the parties.”
Insufficient to say “subject to.” (Affinity Internet)

14. 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

15. 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.

16. 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 (Conference America)
Enforceable based on terms of sale existing on website on the date of services.

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

18. 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.

19. 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)

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

21. 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.

22. 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

23. Questions? David Boyajian dboyajian@Schwabe.com