Class 2.1 Notes: Online Transactions

I approached our class on Online Transactions, admittedly, with some trepidation.  I worried about the extent to which the “blocking and tackling” of contracting on the Net would prove interesting in our largely discussion-based format.  I was extremely pleased with the outcome of the class: everyone was well-prepared and seemed engaged in the material, beyond expectations.  We got through the doctrinal parts and into the policy questions pretty effectively, I thought, though we didn’t get into the related digital signatures matters that I’d hoped to reach by the end of the class.  Here’s what I took away:

* Shrinkwrap, Clickwrap and Browsewrap: As a process point, we worked through the three cases in the Mann textbook.  Shrinkwrap licenses, with their delayed presentation of terms, tend to be deemed enforceable by the courts, so long as there’s a reasonable opportunity to return the goods by the buyer without penalty.  Clickwrap licenses, too, are largely enforceable, especially if the buyer is given ample opportunity — i.e., forced by the technology — to see (if not read or understand) the terms before assenting in some affirmative matter (e.g., an “I agree” button; or, better yet, radio buttons that are not pre-populated with “I have read this agreement and I agree with its terms” or “I don’t agree”) to the contract.  With Browsewrap licenses, as in the Netscape case presented in the Mann text, the seller is on the least firm ground in terms of working toward an enforceable contract, especially if the buyer is never forced to see the contract terms and then only requested (rather than somehow required by the tech) to go find them.  (Note how often this is the case with “terms of use” and “privacy policies” located in web site footers).  The related issue that courts often take up is the matter of unconscionability of arbitration clauses and the like, to which the buyer is often bound through the shrinkwrap/clickwrap/browsewrap contract.  We did not get as far as the issues of how UCITA got bogged down in the ratification process, which might have drawn out some additional policy problems. 

* Once you get into cross-border transactions, the issues from a policy perspective are somewhat trickier.  There are obvious conflicts of laws problems when a buyer in one country contracts over the Net with a seller in another.  Through the contract, the buyer often commits to a choice of law in another country and signs away certain consumer protections guaranteed in the home country (giving rise to conflicts with treaty provisions, the EU Distance Sale Directive in the case of B2B transactions, and similar quandries).  On the practical side, the issues often boil down to enforceability and to whether buyers just take on a certian amount of risk when they contract for a small item with a foreign seller on the Net (are you really going to return a $9.99 product to an overseas merchant if you’re dissatisfied with the contract terms or with the product itself?  Who should bear the risk of the cost of the return?).  Business to consumer transactions may differ from business to business transactions from a policy perspective.  We briefly talked about the promise, as yet unfilled, of online dispute resolution as one way to manage some of these issues.

* One policy issue: to the extent that we as participants in the global economy have rushed to make the world safe and easy for e-commerce to flourish — focusing on legislation and a legal regime overall that makes it convenient for businesses to contract over the Net — have we left consumers, particularly from less powerful parts of the world, behind?

Next week: on to our hypothetical clients, with Messrs Cunard and Keller from Debevoise & Plimpton.

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