IT400 Midterm Terms (CH 5)

Online Contracts

Contracts entered through technology rather than on paper, and are still governed by traditional contract laws, but with electronic-specific rules

E-Commerce

The buying and selling of goods and services, or transmitting of funds and data over the internet

Common Law

Law derived from judicial decisions and court rulings, as opposed to statutes or constitutions

Uniform Commercial Code (UCC)

A comprehensive set of laws governing commercial transactions in the United States

Uniform Computer Information Transactions Act (UCITA)

A model law governing contracts involving software, digital products, and online transactions (not widely adopted)

Electronic Signatures in Global and National Commerce Act (E-SIGN Act)

A federal law that gives electronic signatures and records the same legal validity as traditional signatures and documents

Uniform Electronic Transactions Act (UETA)

A uniform law adopted by many states that gives electronic signatures and records the same legal validity as traditional signatures and documents

Statute of Frauds

A legal doctrine requiring certain types of contracts to be in writing to be enforceable (e.g., contracts for the sale of land)

Can email and text exchanges satisfy the Statute of Frauds

Potentially if it includes the ssential terms of the agreement, a signature, and a clear intent to be legally bound by the agreement

Types of Contracts Covered by the Statute of Frauds

• Sale of lands

• Agreements that extend beyond 1 year

• Sale of goods valued $500 or more

• Anwers for the debt of another (where one party promises to pay another’s debt)

• Consideration of Marriage (prenuptial & postnuptial agreements)

• Executors or Adminitrators (promises to

  personally pay a deceased person’s debts)

FUNDAMENTAL PRINCIPLES OF CONTRACT LAW

Mutual Assent, Consideration, Capacity, Legal Purpose

Mutual Assent

Agreement by all parties to the terms of a contract, usually involving an offer and acceptance

Mutual Assent: Meeting of the Minds

Parties must have a mutual understanding of all material terms

Mutual Assent: Changes to Offer Terms

Considered a rejection and counteroffer, not acceptance

Mutual Assent: Acceptance in Online Contracts occurs when…

a user clicks “I agree” to terms and conditions

Consideration

Something of legal value exchanged between parties in a contract; it can be money, goods, or services

Consideration: Requirements for Enforceability

Must have new consideration, cannot be based on past actions or pre-existing duties

Capacity

The legal ability to enter into a contract; parties must be of sound mind and legal age

When are contracts not upheld by court

Contracts with parties lacking capacity are not upheld by courts

Examples of Lack of Capacity

• Minors (under the age of eighteen)

• Mentally incapacitated individuals

• The issue of intoxication: voluntary intoxication alone not considered a defense, extreme intoxication with exploitation could make a contract voidable

Legal Purpose

A contract must have a lawful objective; illegal contracts are void

Examples of Illegal Contracts

Online sales of illegal narcotics or pirated software

E-Contract

A legally binding agreement created and executed electronically

E-Contract type of agreements

clickwrap and browsewrap agreements

Clickwrap Agreement

An online agreement where users actively consent to terms by clicking a button or checkbox (e.g., "I agree")

Browsewrap Agreement

An online agreement where a user's use of a website implies consent to the terms, without explicit agreement

COMMON CLAUSES IN ONLINE AND SOFTWARE CONTRACTS

• Warranty / Warranty Disclaimer

• Dispute resolution / Arbitration

• Indemnity

Warranty

A guarantee or assurance by the seller about the quality or performance of a product

Warranty Disclaimer

A statement that limits or excludes certain warranties

Arbitration

A method of dispute resolution involving a neutral third party who renders a binding decision

Indemnity

Where one party agrees to reimburse another for liability arising from its work, often included in a hold-harmless agreement

Choice-of-Law Clause

A contractual provision specifying which jurisdiction's laws will govern the agreement

Forum Selection Clause

A contractual provision specifying the location where disputes will be resolved

Limitation of Liability Clause

A contractual provision that caps the amount of damages one party can recover from the other