This paper discusses contract law and forming contracts on the Internet. It summarizes the basic tenets of forming a binding contract, as well as the appropriate method for achieving this on the web. The case Hines v. Overstock.com is also referenced, with an analysis of what Overstock.com could have done to avoid litigation.
Online Contracts and Hines v. Overstock.com
It is common knowledge that binding contracts were usually signed by hand before the Internet. The rise of the Internet led to legislature such as the Uniform Electronic Transactions Act to be adopted by a majority of states, and the Electronic Signatures in Global and National Commerce Act federally, both essentially making electronic contracts just as enforceable as written ones (Craig, 2013, p. 71-72). As expected, making contract law apply to an entirely new medium (where both parties usually are not physically present) raised some new questions and issues. Even though the requirements of creating a binding contract stay the same, how would one do this effectively over the Internet? In the context of Hines v. Overstock.com, Overstock.com lost the case due to failing to sufficiently exercise the answer to the question. What Overstock.com could have done, in addition to a brief overview of contract law and what’s required on the Internet will be covered in the following sections of this paper.
The Internet and Contract Law
The issue of browsewrap agreements was brought up in the case Hines v. Overstock. Craig elaborates that the Plaintiff in the case purchased an item from Overstock.com and subsequently returned it, and was charged a restocking fee (p. 78). Craig continues to explain that the Plaintiff sued, claiming a breach of contract in imposing the fee, and Overstock.com lost the case because the Plaintiff did not have actual notice of the terms and conditions of the sale. In my opinion, Overstock could have easily avoided this by prominently displaying the terms of the sale and return policy when the Plaintiff placed the order. That way, they would have had actual notice of the restocking fee if returned.
As usual, the Internet brings new rules and complications to a facet of law – this time, contract law. By using clickwrap and browsewrap agreement, websites can satisfy the mutual agreement requirement of forming a binding contract online. Attention needs to be paid to using browsewrap agreements correctly, however, as the user needs to have actual notice of the terms for it to be enforceable.