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Computers and
the Internet play a predominant role in today's marketplace. Business
transactions are increasingly conducted at least in part by electronic
format, including e-mail. The Electronic Signatures in Global and National
Commerce Act, 15 U.S.C. § 7001, facilitates such transactions by providing
that for all transactions affecting interstate or foreign commerce, a
contract or other record relating to the transaction shall not be denied
legal effect merely because it is in electronic
form. As the Act
makes clear, a sender's name on an e-mail equates to a handwritten
signature, thereby negating any argument that the contract is
unenforceable under the Statute of Frauds. See Cloud Corp. v. Hasbro,
Inc., 314 F.3d 289, 295 (7th Cir. 2002) (ruling that e-mail
messages regarding purchase orders that contained typed name of sender
were sufficient to satisfy Statute of Frauds requirement that alleged
modification of purchase order be in writing); Roger Edwards, LLC v.
Fiddes & Son, Ltd., 245 F. Supp. 2d 251, 261 (D. Me. 2003)
(holding that e-mails sent by agent of manufacturer to distributor,
referencing an agreement to give distributor exclusive right to market and
distribute manufacturer's products in certain territory, satisfied Statute
of Frauds requirement that agreement be in a writing signed by the party
to be charged or his agent, even though e-mails contained no signature),
aff'd in part, dismissed in part, 387 F.3d 90 (1st Cir.
2004). In accord with
the spirit of the Electronic Signatures Act, case law has also established
that standard-form electronic contracts, commonly known as
"clickwrap," are valid and legally enforceable. See, e.g., Recursion
Software, Inc. v. Interactive Intelligence, Inc., 425 F. Supp. 2d 756,
785 (N.D. Tex. 2006); Specht v. Netscape Commc'ns Corp., 150 F.
Supp. 2d 585, 594 (S.D.N.Y. 2001), aff'd, 306 F.3d 17 (2d Cir.
2002). "A click-wrap license presents the user with a message on his or
her computer screen, requiring that the user manifest his or her assent to
the terms of the license agreement by clicking on an icon." Specht,
150 F. Supp. 2d at 593-94. No actual signature by either party is
required. Although
computer users have alleged that they did not understand the legal effect
of their action in "clicking" on an icon marked "I accept," courts have
overwhelmingly rejected arguments that the resulting clickwrap contracts
should be declared void. In the absence of fraud, "the user's failure to
read, carefully consider, or otherwise recognize the binding effect of
clicking 'I agree' will not preclude the court from finding assent to the
terms." Note, Presumed Assent: The Judicial Acceptance of
Clickwrap, 22 Berkeley Tech. L.J. 577, 579 (2007). A contracting party
has a duty to read the agreement regardless of whether it is in standard
or electronic format. Seibert v. Amateur Athletic Union of U.S.,
Inc., 422 F. Supp. 2d 1033, 1039 (D. Minn. 2006); DeJohn v. TV
Corp. Int'l, 245 F. Supp. 2d 913, 919 (N.D. Ill.
2003). In upholding
clickwrap contracts, courts have found that the computer user was provided
adequate notice of both the fact that he was entering into a binding
contract and the resulting contract terms. See, e.g., Seibert, 422
F. Supp. 2d at 1039-40; DeJohn, 245 F. Supp. 2d at 919; Forrest
v. Verizon Commc'ns, Inc. , 805 A.2d 1007, 1010-11 (D.C. 2002). This
is true even if the contract displayed on the screen failed to highlight
certain key provisions, such as a limitation-of-liability clause, or used
a "scroll box" that displayed only part of the agreement at a time.
Forrest, 805 A.2d at 1011. Even so,
standard contract defenses, such as fraud or unconscionability, may serve
to vitiate a particular clickwrap contract. See, e.g., Comb v. PayPal,
Inc., 218 F. Supp. 2d 1165, 1172-77 (N.D. Cal. 2002) (concluding that
arbitration clause in clickwrap agreement was both procedurally and
substantively unconscionable); Aral v. EarthLink, Inc., 134 Cal.
App. 4th 544, 557, 36 Cal. Rptr. 3d 229, 238 (2005) (ruling
that class action waiver and Georgia forum-selection clause contained in
Internet service agreement were unconscionable). Similarly, under the
particular circumstances of a case, a clickwrap contract provision, such
as a forum selection clause, may be struck down as violative of public
policy. See Am. Online, Inc. v. Superior Court, 90 Cal. App.
4th 1, 15, 108 Cal. Rptr. 2d 699, 710 (2001) (holding that
enforcement of forum-selection clause in standard-form electronic contract
would deprive consumers of statutory remedies under California Consumers
Legal Remedies Act and would thus constitute a violation of California
public policy). In summary,
although technology has changed much of the way in which business is
transacted, the legal analysis concerning the validity of the resulting
contracts has remained remarkably consistent. To facilitate the
transaction of business and commerce, courts have been quick to enforce
contracts generated or acknowledged by electronic communications,
including e-mail. For the most part, courts will also honor standard-form
electronic contracts. Computer users' rights may be protected through the
use of standard contract defenses such as fraud and
unconscionability. | |||||||||||
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