Five Easy Ways to Make Online Contracts More Enforceable

Author:Mr Edward Naughton
Profession:Holland & Knight LLP

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 clickingOK. If the transaction is...

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