Its hardly news that in today's market place the Internet plays a significant role in conducting business. The Internet is involved in everything from downloading purchased software to filing trademarks. Even checks are being phased out in favor of electronic transactions. Whether or not the parties realize it, prior to completing any type of online transaction, the consumer enters into an agreement with the provider. That process may be as simple as checking a box, scrolling through its terms or even just entering a password, but the purpose is the same--to enter into an agreement that controls the rights and obligations of the parties. An email exchange can also create an agreement, even without the parties intending to be bound to anything.
E-contracts were designed to make buying or subscribing to online products and services easier and quicker, without the need for the time consuming exercise of formally executing a paper contract. E-contracts were not intended to reinvent the wheel of an enforceable contract but to broaden the medium by which enforceable contracts can be prepared and executed. In a practical sense, an electronic agreement is no different than a traditional paper contract.
Just as minimum requirements are necessary for enforceable paper contracts, electronic agreements must also satisfy basic minimums.
Although using the Internet and e-contracts to purchase goods and conduct business has pitfalls, such as the possibility for abuse and the possible loss of confidentiality, when done correctly it offers many advantages. What happens when a problem arises? Are electronic agreements always enforceable? Do all e-contracts satisfy the requirements for a valid and binding relationship? Are hyperlinks embedded in an online contract binding as part of the contract? Are there any exceptions that require formal signatures? Although this is a relatively new form of contract formation, at least from an enforceability perspective, a framework to ensure the enforceability of these types of agreements has emerged, and is the focus of this article.
In the early days of e-contracts, a consumer simply had to check "I accept" on a website. Although the consumer typically knew the product purchased, usually software that was downloaded, the consumer did not always know the terms of the agreement that had been accepted. (Even today, some of the terms of e-contracts are suspect, particularly as they concern the release of personal information.) As e-contracts evolved and developed, to encourage the consumer's review of the parties' agreement, a site would force a buyer to at least go through the motion of reading the agreement, by scrolling through an agreement or allowing an agreement to be downloaded, before being allowed to confirm acceptance. Today, some agreements refer to additional terms, usually by providing a hyperlink, as incorporated in the agreement and controlling between the parties.
It took some time, but eventually e-contracts ended up in court, where the consumer sought to avoid the terms of the e-contract and the provider sought to enforce it. Interestingly, when this happened, the medium of the agreement was given little consideration by the court. The court's focus was usually on the scope of the agreement, and the information and notice provided to the consumer.