Fundamentals of business law, 10e Roger leroy miller © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT IN TRADITIONAL AND E-CONTRACTS Chapter 9 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

LEARNING OBJECTIVES What elements are necessary for an effective offer? What are some examples of nonoffers? In what circumstances will an offer be irrevocable? What are the elements that are necessary for an effective acceptance? © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

LEARNING OBJECTIVES (CONT’D) How do shrink-wrap and click-on agreements differ from other contracts? How have traditional laws been applied to these agreements? What is the Uniform Electronic Transactions Act? What are some of the major provisions of this act? © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

introduction In this chapter, we look closely at agreement, one of the requirements for a contract to be valid and enforceable. Then we discuss online offers and acceptances and examine some laws that have been created to apply to electronic contracts, or e-contracts. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Agreement Agreement Agreement means that the parties must agree on the terms of the contract. Ordinarily, agreement is evidenced by two events: an offer and an acceptance. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT Requirements of the Offer The first requirement for an effective offer must be a serious, objective intention by the offeror to become bound by the offer. The concept of intention can be further clarified through an examination of the types of statements that are not offers. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT Nonoffer situations include: Expressions of opinion Statements of future intent Preliminary negotiations Generally, advertisements, catalogues, price lists, and circulars Traditionally, agreements to agree in the future © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Agreement The second requirement for an effective offer involves definiteness of terms. The terms of the offer must be sufficiently definite to be ascertainable by the parties or by a court. Generally, a contract must include the following terms, either expressed in the contract or capable of being reasonably inferred from it: © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT The identification of the parties The identification of the object or subject matter of the contract The consideration to be paid The time of payment, delivery, or performance © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT The third requirement for an effective offer is communication. The offer must be communicated to the offeree. The communication of an effective offer to an offeree gives the offeree the power to transform the offer into a binding, legal obligation (a contract) by an acceptance. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT Termination of the Offer An offer can be terminated by action of the parties or operation of law. Three ways to terminate an offer by action of the parties: Revocation—Offerer withdraws the offer. Rejection—Offeree rejects the offer by words or by conduct. Counteroffer—Offeree rejects the original offer and makes a new offer. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT Some offers can be irrevocable: Offeree changed position because of justifiable reliance on the offer “Firm offers” made by merchants An option contract when an offeror promises to hold an offer open for a specified period of time in return for a payment given by the offeree, as in sale or lease of real estate. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT An offer can be terminated by the operation of law through the following events: Lapse of time—The offer terminates at the end of the time period specified in the offer or at the end of a reasonable time period if no time is specified. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Agreement Destruction of the specific subject matter of the offer Death or incompetence of the offeror or offeree Illegality of the contract © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Agreement Acceptance An acceptance is a voluntary act by the offeree that shows assent, or agreement, to the terms of an offer. Acceptance can be made only by the offeree or the offeree’s agent. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Agreement Acceptance must be unequivocal. Under the common law, if new terms or conditions are added to the acceptance, it will be considered a counteroffer. Acceptance of a unilateral offer is effective on full performance of the requested act. Generally, no communication is necessary. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT In a bilateral contract, in contrast, communication of acceptance is necessary, because acceptance is in the form of a promise. The offeree can communicate acceptance by any authorized mode of communication. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT AND E-CONTRACTS Online Offers Sellers doing business via the Internet can protect themselves against contract disputes and legal liability by creating offers that clearly spell out the terms that will govern their transactions if the offers are accepted. All important terms should be easy to view. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Agreement and E-Contracts The offer should be displayed in an easily readable format and should include a mechanism, such as an “I agree” or “I accept” box, by which the customer can accept the offer. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT AND E-CONTRACTS Jurisdictional issues frequently arise with online transactions. The offer should include dispute-settlement provisions. It should also include a forum-selection clause, indicating the location for the resolution of any dispute arising under the contract. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT AND E-CONTRACTS Online Acceptances Click-on agreement is created when a buyer completes a transaction on a computer. She then indicates her assent to be bound by the terms of an offer by clicking on a box that says, for example, “I agree.” The terms of the agreement may appear on the Web site through which the buyer is obtaining goods or services, or they may appear on a computer screen when software is downloaded. Enforceability—Courts enforce click-on agreements, holding that by clicking on “I agree,” the offeree has accepted by conduct. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Agreement and E-Contracts Browse-wrap terms are terms that an Internet user does not have to read Enforceability—may not be enforced on the ground that the user is not made aware that he or she is entering into a contract. A shrink-wrap agreement has terms expressed inside the box. The party who opens the box is informed that, by keeping the goods, he or she agrees to the terms of the shrink-wrap agreement. Enforceability—Courts have often enforced shrink-wrap agreements, even if the purchaser-user of the goods did not read the terms of the agreement. A court may deem a shrink-wrap agreement unenforceable if the buyer learns of the shrink-wrap terms after the parties entering into the agreement. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT AND E-CONTRACTS E-Signatures An e-signature is “an electronic sound, symbol, or process associated with a record and executed by a person with the intent to sign the record.” With the Electronic Signatures in Global and National Commerce Act (E-SIGN Act) of 2000 , no contract, record, or signature may be “denied legal effect” solely because it is in an electronic form. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

AGREEMENT AND E-CONTRACTS Partnering Agreements Seller and buyer agree in advance on the terms and conditions that will apply to all subsequent transactions. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Uniform Electronic Transactions Act UETA was adopted by most states to create rules to support enforcement of e-contracts. The Scope and Applicability of the UETA Contracts entered into online, as well as other documents, are presumed to be valid. Does not apply to certain transactions governed by the UCC or to wills or testamentary trusts. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Uniform Electronic Transactions Act The Federal E-SIGN Act and the UETA Although most states have laws governing e-signatures, these laws are not uniform. The UETA provides for the validity of e-signatures and may ultimately create more uniformity among the states in this respect. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Uniform Electronic Transactions Act Highlights of the UETA Attribution Authorized signatures The effect of errors Timing © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Exhibit 9.1 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.