Before the Internet, forming a contract was a beautiful thing: the process was almost ritualistic, a formal and semi-sacred event. The tome was typed on bond paper and frequently backed with colored stock. Contracts had an actual set of signatures on them. Even after the arrival of the facsimile machine, the contract was tangible and revered. Fire-proof cabinets held these important parchments.
Today, we send emails back and forth more in an elongated form of electronic conversation. (Why we send emails instead of using the telephone is another article for another time). Buried somewhere in the dozen or so replies is a meeting of the minds. When we are not conducting business with email, we are buying or selling some product, service, or information on the Internet (“Internet Business”). Freed from the traditional contract formalities, Internet Business confronts us with text directing us to a contract located on yet another web-page, or a graphic box with a requirement that we “click it” to continue. Debtors may authenticate a security agreement by electronic signature or a mouse click. We bind ourselves more quickly than we need to, as if reading contract terms would delay the quick delivery of our goods and services! Yet, just because a transaction is electronic does not mean it lacks legal effect.
In Oregon, oral contracts can be valid. If oral contracts are enforceable, then it should come as no surprise that contracts created, generated, sent, communicated, or received by electronic means can be valid under Oregon’s Uniform Electronic Transactions Act (“UETA”).
Email. Thanks to the UETA, you and a business partner can form a perfectly legal agreement using email. Both of you must agree, however, to conduct transactions electronically. The best way to meet this requirement is for both of you to agree that your emails (and perhaps even instant messages) are the means that you are using to form a contract. If this express agreement is absent, then the courts will review the facts and circumstances to see if you both agreed. If you conducted business by electronic means, you are not stuck with this medium for future deals; either party may refuse to conduct future transactions by electronic means. In short, if you don’t want emails to create a contract, say so!
Internet. If email contracting is unavailable or impractical, then you have a choice between two forms of Internet Business contracts: “click-wrap” or “browse-wrap.”
Click-wrap agreements are typically presented in a window or a frame of a web-page, located in the vicinity of the agreement that contains an “I Agree” or “I Accept” button. If the button is not clicked, the transaction is not concluded. By clicking “I Agree,” the user declares that they have read, agreed to, and thus consent to the contract.
Browse-wrap agreements typically consist of a link or button within a web-page directing the user to the contract on another web-page or at the bottom of the initial web-page. In most cases, the user need not declare that they have actually read the agreement and agree to it in advance.
In the “good old days,” a person rarely was able to successfully contend that they had no notice of a contract or that they did not consent to it. The document had their signature on it after all. In electronic contracting, those issues are now critical.
Click-wrap agreements are popular because it is difficult for a purchaser to declare that they had no notice of the agreement; the purchaser had to actively click a button to proceed with the transaction. Don’t think that a click on an “I accept” button guarantees a valid contract. To guarantee a valid contract user must be (i) able to see and read the agreement before selecting the “I Accept” button and (ii) informed that selecting the “I Accept” button will indicate binding consent.
Browse-wrap usually does not provide a means for a person to affirmatively consent to the agreement. The user is presumed by implication to agree to the agreement by merely browsing the web-site. Thus, a browse-wrap agreement may be unenforceable if a court determines that the user’s “implied” consent is not enough.
As a seller, use click-wrap if possible and:
- Clearly display the agreement in a highly visible location before goods and services are provided;
- Provide a very visible means like a button to accept the agreement; and
- Specifically state that selecting “I Accept” forms a binding contract.
If you must use browse-wrap:
- Make the link to the browse-wrap terms and agreement conspicuous and clearly state its purpose (for example, state “THESE TERMS AND CONDITIONS GOVERN YOUR USE OF THIS WEB-SITE.”);
- Make the link appear on each web-page that does not disappear as the user navigates the web-site; and
- Clearly state that the user agrees to be bound to the agreement merely by navigating the web-site, purchasing goods, etc.
In either case, the agreement must be written in easy-to-understand language.
If you are a buyer confronted with a click-wrap or browse-wrap agreement, the following strategies should prevent misunderstandings and disputes:
- If the agreement is click-wrap, recognize you are providing consent and agreeing to a contract as binding as any created on paper when you click an “I Agree” button;
- If the agreement is browse-wrap, look for the browse-wrap link, usually entitled “Terms and Conditions” or “Terms of Service;”
- Print out the actual agreement before indicating consent; and
- If time permits, obtain legal advice about any terms you do not understand.
With the increasing use of email and Internet agreements, issues about enforceability are likely to arise in legal disputes over electronic contracts. The best advice is to treat these electronic agreements with the dignity and respect that contracting parties once offered to paper contracts.