The placement of an order (by phone or online) is not an offer. The shipment of the goods by the vendor constitutes the offer, and keeping the product is the acceptance.
Opening a package to read the terms does not constitute an acceptance, but after perusal of the terms, if the consumer keeps the product for the specified period of time (specified in the terms) then he/she has assented to the terms
Practical advantage: the consumer retains the ability to escape the contract
The contract is formed when the consumer orders the product
Shrink-wrap terms found in the box contain the vendor's proposals for additions to the contract governed by UCC, the terms are not included in the contract unless readily assented to by the consumer
Clickwrap
Here we are talking about circumstances where you have to scroll through the seller’s terms of sale, before completing the purchase, and click a button that says “I agree” that signals the purchaser’s agreement.
It makes it harder for the purchaser to say they did not see the terms.
Courts generally accept that you assent through the click because:
1) user gets notice of provisions before shelling out $
2) arguably the quality of notice is better (better than bundled in the back of a booklet)
3) clickwrap is easier to determine discrete user conduct (in shrinkwrap you have to unwrap paper and retain…clicking to indicate acceptance is easier to distinguish and isolate and unwind because you can refrain from clicking instead of having to send back)
Browsewrap
May not even be purchasing. Just the user of a site. There are no “I agree” buttons. The owners of the site just provide terms and conditions.
Typically involve information made available by Internet providers on their websites often, but not necessarily, free of charge, and often, although not necessarily, including information that the user accesses but doesn’t always download.
Fall into several categories:
Repeatedly getting information (register)
Terms and conditions on the site browsed are enforced against the website owner themselves, not the smaller fry customers that are repeat customers.
Going to turn on:
Identity of parties
Court’s interpretation of property
The actual terms imposed
Enforceable if 4 Requirements Met:
User is provided w/ adequate notice of the existence of the proposed terms
Plaintiff initiated a class action against overstock.com claiming that their restocking fee was a breach of contract, fraud and a violation of NY business law.
Plaintiff purchased a vacuum and when she returned it she was charged a 30 dollar restocking fee despite the fact that the website said returns could be done free of charge
Overstock moved to have the case moved to Utah for binding arbitration in accordance with their terms and conditions
Plaintiff claimed to have never seen the terms and conditions due to their location on the website, and that the arbitration clause is not part of the contract
She was never required to actively assent to the terms and conditions by clicking "I agree"
ISSUE
Are the terms and conditions of a seller binding on a consumer when the print is in a location that is not apparent to the consumer
HELD
I. Request to Stay or Dismiss for Arbitration
The Federal Arbitration Act allows for binding arbitration is specified in the contract and both parties agree.
To determine whether arbitration should be stayed/dismissed the court must ask 2 questions
(1) Did the parties agree to arbitrate?
Traditionally, agreements require "meeting of the minds" and a "manifestation of mutual assent"
Internet contracts challenge this traditional understanding.
The new standard is "whether a website user has actual or constructive knowledge of a site's terms and conditions prior to using the site"
Defendant has failed to prove that Plaintiffs had actual or constructive notice because the website did not prompt the visitors to review the terms and conditions.
No adequate notice of existence of the terms
A small hyperlink to the terms and conditions at the bottom of the page is not sufficient
(2) Does the scope of the agreement encompass the asserted claims?
II. Request to transfer to Utah Pursuant to the Forum Selection Clause
A forum selection clause also requires that both parties assent. There was no meeting of the minds on these terms therefore they are invalid.
Computer purchasers brought action against manufacturer, alleging that manufacturer's collection of taxes from them on the purchase of optional service contracts violated the Deceptive Trade Practices Act because services contracts were not taxable in Rhode Island. The Superior Court denied manufacturer's motion to stay the proceedings and compel arbitration, and manufacturer appealed.
HELD
“Shrinkwrap” terms and conditions agreements did not adequately inform buyers of their right and method of rejection of the goods, and thus buyers' retention of the goods did not indicate assent to the terms and conditions agreements, including arbitration provision.
Postponed Bargaining: “The Agreement to Agree”
Restatement § 27. Existence of Contract Where Written Memorial is Contemplated
Manifestations of assent that are sufficient to constitute an agreement will be treated as binding even if the parties have agreed to write a formal contract later with all of the specific terms. However some circumstances can show that a manifestation of assent is just preliminary negotiations.
UCC § 2-204(3)
Even though 1 or more of the terms are left open, the contract does not fail for indefiniteness if the parties intended to make a contract and "there is a reasonably certain bases for giving an appropriate remedy"
UCC § 305. Open Price Terms
If the parties leave the price blank, a court will fix a reasonable price.
