Not very long ago, it was an open question whether
an agreement entered over the Internet was an enforceable contract.
There were plenty of good reasons why such agreements shouldn't be viewed
any differently than agreements on paper, but there were few laws or cases
that addressed the issue.
As consumers and businesses engage in billions of
dollars worth of business online, electronic commerce is hardly even news
anymore. Recent legislation, including the federal E-SIGN Act and the
state Uniform Electronic Transactions Act, remove any doubt that electronic
agreements and signatures are as enforceable as transactions on paper.
Still, the fact that electronic agreements may be
enforceable in principle does not mean that a particular agreement is
enforceable in practice. Here are five things you can do to increase the
odds that a court will enforce an electronic agreement.
Make sure that the transaction is one that can be
conducted electronically. Although E-SIGN and UETA authorize a vast range of
commercial transactions, there are some exceptions. The cancellation or
termination of utility services or insurance benefits, for instance, are not
authorized by E-SIGN. Similarly, E-SIGN does not allow notices of
default, acceleration, repossession, or eviction under a rental agreement or a
credit agreement secured by a home mortgage to be sent electronically.
UETA states that it does not apply to UCC transactions except those under
Article 2 and 2A. Virtually all states have laws that govern the
requirements for wills, codicils and testamentary trusts that are not affected
by E-SIGN or UETA.
Display all of the terms of the contract. A
party seeking to enforce a contract must show that there was mutual assent to
the terms of the contract. If the other party does not have the
opportunity to review the terms before executing it, enforcing the contract
will be more difficult. Thus, it is important to display all of the
terms of the contract to the other party before asking for acceptance so that
the other party cannot claim that it did not know to what it was agreeing.
Many agreements cannot be displayed in a single
screen. It is typically sufficient to present the contract in a manner
that allows the user to scroll through the agreement. Just as many
people do not read written contracts before signing them, however, many users
do not take the time to scroll through an entire agreement before clicking
ìOK.î If the transaction is important enough -...