LS311Business Law

Sundays 9:00 p.m. – 10:00 p.m. EST

March 21, 2012 – May 29, 2012

Melissa Borrelli, Esq.

Agenda

• Course Housekeeping

• Assignments

• eSignatures

Case Analysis

• Mary DeFontes bought a computer and a service contract from Dell Computers Corp. DeFontes was charged $950.51, of which $13.51 was identified on the invoice as “tax.” This amount was paid to the state of Rhode Island. DeFontes and other Dell customers filed a suit in a Rhode Island state court against Dell, claiming that Dell was overcharging its customers by collecting a tax on service contracts and transportation costs. Dell asked the court to order DeFontes to submit the dispute to arbitration.

Case Analysis• Dell cited its Terms and Conditions Agreement, which

provides in part that by accepting delivery of Dell’s products or services, a customer agrees to submit any dispute to arbitration. Customers can view this agreement through an inconspicuous link at the bottom of Dell’s website, and Dell encloses a copy with an order when it is shipped. Dell argued that DeFontes accepted these terms by failing to return her purchase within 30 days, although the agreement did not state this.

• Is DeFontes bound to the “Terms and Conditions Agreement?”

• Should the court grant Dell’s request? Why or why not?

Case Analysis• Minimum of one full page (not including the cover and

references pages), double spaced, twelve-point, Times New Roman font.

• Use the Sample APA paper posted in Doc Sharing—cover page, references page

• Use the Writing Center • Read the rubrics• Label your projects: username-project-unit#.doc. For

example, a student named Tina Allen would name her file TAllen-CriminalLawEssay-Unit3.doc.

• Submit your assignment by selecting the appropriate Dropbox by the end of the unit.

• Use the Assignment Guide• Email, call, or IM me with questions

Writing Assignment

• This Unit's Assignment has you take a look at situations for which the court may grant specific performance as a remedy for a breach of contract.

• Take a look at the following four scenarios. In which of the these situations might a court grant specific performance as a remedy for the breach of the contract? Explain.

• IMPORTANT: Answer for each of the scenarios, don’t just pick one and say, “this is it.”

Writing Assignment

• Scenario 1 • Tarrington contracts to sell her house and lot to Rainier. Then,

on finding another buyer willing to pay a higher purchase price, she refuses to deed the property to Rainier.

• Scenario 2 • Marita contracts to sing and dance in Horace’s nightclub for

one month, beginning June 1. She then refuses to perform.

Writing Assignment• Scenario 3 • Juan contracts to purchase a rare coin from Edmund, who is

breaking up his coin collection. At the last minute, Edmund decides to keep his coin collection intact and refuses to deliver the coin to Juan.

• Scenario 4 • Astro Computer Corp. has three shareholders. Among them are

Coase, who owns 48%, and Cary, who owns 4%. Cary contracts to sell his 4% to DeValle but later refuses to transfer the shares to him.

• In response to these scenarios be sure to: • Discuss the elements of Specific Performance. • Analyze whether or not the scenarios in above cases are covered

under the doctrine of Specific Performance.

Writing Assignment• Minimum of one full page (not including the cover and

references pages), double spaced, twelve-point, Times New Roman font.

• Use the Sample APA paper posted in Doc Sharing—cover page, references page

• Use the Writing Center • Read the rubrics• Label your projects: username-project-unit#.doc. For

example, a student named Tina Allen would name her file TAllen-CriminalLawEssay-Unit3.doc.

• Submit your assignment by selecting the appropriate Dropbox by the end of the unit.

• Use the Assignment Guide• Email, call, or IM me with questions

Learning Objectives

• What are some important clauses to include when making offers to form e-contracts?

• How do shrink wrap and click-on agreements differ from other contracts? How have traditional laws been applied to these agreements?

• What is an electronic signature? Are electronic signatures valid?

• What is a partnering agreement? What purpose does it serve?

• What is the UETA? What are some of the major provisions of this Act?

Parties

• Offeror and the offeree = seller and a buyer• = Licensor and a licensee

Parties• E-commerce, like traditional commerce, relies upon contracts.

Unlike traditional commerce, e-commerce relies utterly upon agreements drafted and presented by one party on a take-it-or-leave-it basis.

• Such contracts' validity arises from the recipient's 'adherence' to the terms given. These so called 'adhesion' contracts are enforceable except to the extent a term is found unconscionable.

• With escalating frequency, courts are discovering unconscionable e-commerce contract clauses and refusing to enforce them.

Parties

• Courts have long tolerated e-commerce adhesion contracts because they are important to the Internet marketplace. Initially, e-sellers used adhesion contracts to affiliate Internet transaction and offer a standard operating procedure for novel transactions. More recently, their use is intended to take unfair advantage by e-commerce merchants.

Parties

• The Internet allows one party to mass market a product under terms it believes appropriate in light of the price it is charging and another party to acquire, or refuse to acquire, the product under those terms. That choice marks the assent. As e-commerce expands, the number of e-transactions with unconscionable terms will follow in its expansion.

Parties• Traditionally, 'adhesion contracts' share four

elements: (1) adhesion contracts are drafted to drastically favor one party; (2) general enough to apply to numerous transactions; (3) offered with the representation that, except for price, the drafting party will enter into the transaction only on the terms contained in the document; and (4) minimize the actionable obligations of the adhering party, predominantly to the payment of the money.

Parties

• As a rule, a court will not enforce an unconscionable contract clause. An unconscionable clause is one whose purpose is contrary to public policy, is overly harsh or has one-sided results that shock the conscience of the court. For instance, a clause which purports to release one party for its intentional torts would be unconscionable and unenforceable.

Forming Contracts Online

• Online Offers should include:– Remedies for Buyer.– Statute of Limitations.– What constitutes Buyer’s acceptance.– Method of Payment.– Seller’s Refund and Return Policies.– Disclaimers of Liability.– How Seller will Use Buyer’s Information

(Privacy).

• Dispute Settlement Provisions.– Choice of Law.– Choice of Forum.– E-Bay uses online dispute resolution.

• Displaying the Offer (via hyperlink).• How Offer Will Be Accepted.

– Amazon.com--Checkout.– “I Accept” Button to Click.

Forming Contracts Online

• A shrink-wrap agreement is an agreement whose terms are expressed inside a box in which the goods are packaged.

• A click-on agreement arises when a buyer, completing a transaction on a computer, is required to indicate his or her assent to the terms by clicking on a button that says, for example, “I agree.”

• Generally, courts have enforced the terms of these agreements the same as the terms of other contracts, applying the traditional common law of contracts.

Forming Contracts Online

Online Acceptances

• Click-on Agreements.• Shrink-Wrap Agreements.

– Contract terms are inside the box.– Party opening box agrees to terms by keeping

merchandise.

• Enforceable Contract Terms. (UCC 2-204).• Additional Terms.

Online Acceptances

• Click-On Agreements occur when Buyer “checks out” or clicks on “I Accept” button on Seller’s website or when software is installed.

• Browse-Wrap Terms.

E-Signatures

• E-Signature Technologies.– Asymmetric Cryptosystem.– Cyber Notary.

• State Law Governing E-Signatures.– Uniform Electronic Transactions Act (1999)

(UETA).

• Federal Law.– E-SIGN (2000) gives e-signatures and e-

documents legal force.

Partnering Agreements

• Sellers and Buyers agree as to protocols to create online agreements.

• Useful for electronic inventory (Just In Time) ordering of parts and supplies.

UETA

• Purpose is to remove barriers to forming electronic commerce.

• E-Signature is “electronic sound, symbol or process…associated with a record and… adopted by a person with intent to sign the record.”

• UETA applies only to e-records and e-signatures relating to a transaction.

UETA and Federal E-SIGN

• E-SIGN explicitly refers to UETA.

• Provides that E-SIGN is pre-empted by state passing of UETA.

• But state law must conform to minimum E-SIGN procedures.

Highlights of UETA• Parties must agree to Conduct Transactions

Electronically.– A party can “opt out” of UETA terms.

• Attribution—process to ensure person sending an electronic record is in fact the real person.

• Timing: “E-Mailbox” Rules. – Dispatched when leaves control of sender.– Received when enters recipient’s processing

system.

Contracts Paul is a financial analyst for King Investments, Inc., a brokerage firm. He uses the Internet to investigate the background and activities of companies that might be good investments for Kings customers. While visiting the Website of Business Research, Inc., Paul sees on his screen a message that reads, “Welcome to businessresearch.com. By visiting our site, you have been entered as a subscriber to our e-publication, Companies Unlimited. This publication will be sent to you daily at a cost of $7.50 per week. An invoice will be included with Companies Unlimited every four weeks. You may cancel your subscription at any time.”

Has Paul entered into an enforceable contract to pay for Companies Unlimited? Why or why not?

Contracts

A click-on offer that gives the offeree an opportunity to read the terms before agreeing to the contract is likely enforceable, but no such opportunity was provided in this problem. Here, the only way not to accept the offer is to affirma tively act to cancel the subscription.

In such a situation, the offeror has attempted to set up silence to operate as an acceptance. As explained in an earlier chapter, silence cannot constitute the acceptance of an offer. For this reason, the subscription agreement for the e-publication Companies Unlimited would not be enforceable against Paul.

NEXT WEEK’S SEMINAR

Be ready to discuss the following employment-at-will question:

Barbara Kraus was vice president of nursing at the New Rochelle Hospital Medical Center. She learned that a certain doctor had written on the charts of some patients that he had performed procedures for them that he had not performed. In fact, he had not obtained consent forms from the patients to perform those procedures. She reported this to the doctor's superiors, who took little action against the doctor. Some time later, Kraus was terminated. She filed a suit in a New York state court against the hospital to recover damages for wrongful termination.

What is required for the court to rule in Kraus’s favor?