1. ©2002 by West Legal Studies in Business A Division of Thomson Learning Chapter 18 E-Contracts

2. ©2002 by West Legal Studies in Business A Division of Thomson Learning 2 Shrink-Wrap Agreements  Shrink Wrap Agreement –“Shrink wrap” refers to the cellophane wrap around software packages. –Manufacturer’s terms are expressed inside a box in which the goods are packaged. –When the buyer opens the box, he agrees to the terms. –Terms generally concern warranties and remedies.

3. ©2002 by West Legal Studies in Business A Division of Thomson Learning 3  Enforceable Contract Terms –Generally, courts have enforced the terms of shrink-wrap agreements (ProCD v. Zeidenberg). –Practical to include terms inside the box, rather than read them over the phone.  Case 18.1 Mortenson v. Timberline Software (2000). Shrink-Wrap Agreements

4. ©2002 by West Legal Studies in Business A Division of Thomson Learning 4  Proposals for Additional Terms –Not all terms in a shrink-wrap agreement are enforceable. –Court may find buyer learned of terms after the parties entered into the contract.  Case 18.2 Klocek v. Gateway (2000). Shrink-Wrap Agreements

5. ©2002 by West Legal Studies in Business A Division of Thomson Learning 5  Click-on (or click-wrap) agreement are standard for e-commerce sales.  Occurs when buyer uses computer to complete an electronic transaction by clicking on a button that says, for example, “I Agree.”  The terms of the contract are contained elsewhere on the website. Click-On Agreements

6. ©2002 by West Legal Studies in Business A Division of Thomson Learning 6  UCC 2-204 allows for contracts to be formed in any manner sufficient to show agreement (e.g., a “click”) by the parties.  Case 18.3 Hotmail Corp v. Van$ Money Pie, Inc. (1998). Shrink-Wrap Agreements

7. ©2002 by West Legal Studies in Business A Division of Thomson Learning 7 E-Signature  E-signatures are electronic signatures affixed to electronic records.  E-Signature Technologies. –Asymmetric Cryptosystem –Signature Dynamics

8. ©2002 by West Legal Studies in Business A Division of Thomson Learning 8 Laws on E-Signatures  State Laws  Federal “E-SIGN” Act requires that no document may be “denied legal effect” because of electronic form and signature.

9. ©2002 by West Legal Studies in Business A Division of Thomson Learning 9 E-Agents  Agency involves agent who agrees to act on behalf of principal.  E-Agent is an semi-automatic computer program that carries out specific tasks.

10. ©2002 by West Legal Studies in Business A Division of Thomson Learning 10  UCITA History –Software is not a “good” under UCC. –“Sale” of software actually involves a license.  UCITA Coverage and Content –Only applies to “computer information” (e.g., license to purchase or license software, computer games, access to online databases, online books, internet software distribution. Uniform Computer Information Transactions Act

11. ©2002 by West Legal Studies in Business A Division of Thomson Learning 11  Application: –UCITA does not apply to sale of goods, even if there is “embedded” computer software (e.g., televisions, automobiles, computers). –UCITA does apply if the primary purpose of the transaction deals with computer and information rights. Uniform Computer Information Transactions Act

12. ©2002 by West Legal Studies in Business A Division of Thomson Learning 12  Parties can “opt out.” –UCITA provides “default” terms but gives the parties freedom to contract with differing terms than UCITA. –Rights and Restrictions. License transfers use (not title) from seller (licensor) to buyer (licensee). –UCITA covers contract formation to remedies. Uniform Computer Information Transactions Act

13. ©2002 by West Legal Studies in Business A Division of Thomson Learning 13  Highlights –UCITA resembles UCC Article 2, Sales: Statute of Frauds (writing for $5,000 transaction) Offer and Acceptance Unconscionability Parol Evidence Choice of Law and Forum Uniform Computer Information Transactions Act

14. ©2002 by West Legal Studies in Business A Division of Thomson Learning 14  Warranties –Essentially the same as UCC 2 Sales. –Implied warranty of merchantability and fitness tailored to the information and computer system.  Authentication—a record (electronic “writing”) that is retrievable.  Attribution—ensures identification of parties. Uniform Computer Information Transactions Act

15. ©2002 by West Legal Studies in Business A Division of Thomson Learning 15  Case 18.4 Caspi v. Microsoft Network (MSN), LLC (1999). MSN’s online service agreement requires users to agree to Washington as the forum for dispute resolution. Court held the clause enforceable because Caspi clicked “I agree” when joining MSN. Uniform Computer Information Transactions Act

16. ©2002 by West Legal Studies in Business A Division of Thomson Learning 16  Access Contracts—allows use of the internet via Internet Service Providers.  Support and Service Contracts—covers licensee support and requires licensor to comply with express terms of contract.  Electronic Self-Help—licensor may cancel, re-possess or “turn off” software if licensee breaches the contract. Uniform Computer Information Transactions Act

17. ©2002 by West Legal Studies in Business A Division of Thomson Learning 17  Both provide for: –Record is a writing under statute of frauds. –Validity of e-signatures. –Formation of contracts by electronic agents. –Attribution of an electronic act.  Differences: –UETA creates no rules for electronic transactions. –UETA does not apply unless parties agree. Uniform Electronic Transactions Act

18. ©2002 by West Legal Studies in Business A Division of Thomson Learning 18  UCITA, UETA and all uniform codes are located at http://www.nccusl.orghttp://www.nccusl.org  Site Map at NCCUSL website includes “Drafts”, “Legislative Status” and “Summary” of new developments.  Status: only Maryland and Virginia have passed UCITA, but considered in six other states; twenty-nine states have passed UETA. NCCUSL Website