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Chapter 10
Agreement in Traditional
and E-Contracts
See Separate Lecture Outline System
INTRODUCTION
The four essential requirements, for a contract to be valid and enforceable are agreement, consideration, contractual
capacity, and legality. This chapter examines agreement.
An agreement forms the basis of a contract. Through a discussion of offer and acceptance, the chapter helps your
students to begin to understand how promises become legally binding. The text also contrasts non-offer situations. Responses
to the offer and which acts terminate it are defined and discussed.
This chapter also reviews some of the problems that concern e-contracts. E-contracts include any contract entered into
in e-commerce, whether business to business (B2B) or business to consumer (B2C), including licenses, as well as sales and leases
of goods and services. The chapter covers shrink-wrap agreements, click-on agreements, and developments that relate to e-
signatures. This chapter also reviews provisions of the Uniform Electronic Transactions Act.
ADDITIONAL RESOURCES—
VIDEO SUPPLEMENTS
The following video supplements relate to topics discussed in this chapter—
PowerPoint Slides
To highlight some of this chapter’s key points, you might use the Lecture Review PowerPoint slides compiled for
Chapter 10.
241
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole
or in part.
242 UNIT TWO: CONTRACTS
Business Law Digital Video Library

The Business Law Digital Video Library at www.cengage.com/blaw/dvl offers a variety of videos for group or
individual review. Clips on topics covered in this chapter include the following.
• Ask the Instructor

E-Contracts: Agreeing Online—When I'm online and I click on a button that says "I ACCEPT," are all of those terms
actually enforceable against me, even if I didn't read them?—In this regard, contracts online and on paper are the
same. Under ordinary circumstances, one who signs a contract, or otherwise accepts an offer, is generally bound by all
of its terms. However, there are some situations in which the court might be persuaded to invalidate a provision that
the reasonable consumer would not have expected to be there.
CHAPTER OUTLINE
I. Agreement
Essential to any contract is an agreement: an offer must be made and it must be accepted. The parties must manifest
their assent to the same bargain. In interpreting the parties’ words and conduct, the law adheres to the objective
theory of contracts (Chapter 9).
A. REQUIREMENTS OF THE OFFER

The parties to a contract are the offeror and the offeree. An offer is a promise to do or refrain from doing some
specified thing in the future. The elements necessary for an effective offer are: (1) a serious intent by the offeror;
(2) reasonably certain, or definite, terms (so that they can be ascertained by the parties and a court); and (3)
communication of the offer to the offeree.
1. Intention
Serious intent is determined by what a reasonable person in the offeree’s position would conclude the
offeror’s words and actions meant. Offers made in obvious anger, jest, or undue excitement do not meet
the test.
CASE SYNOPSIS—
Case 10.1: Lucy v. Zehmer

For eight years, W. O. Lucy had been anxious to buy the Ferguson Farm from J. C. Zehmer, whom he’d known for at
least fifteen years. One night, while visiting, Lucy said, “I bet you wouldn’t take $50,000 for that place.” Zehmer
replied, “Yes, I would too; you wouldn’t give fifty.” Throughout the evening, the parties drank whiskey and talked,
repeatedly returning to the subject of the farm. Eventually, Zehmer wrote out an agreement to the effect that he and
Mrs. Zehmer agreed to sell the farm to Lucy for $50,000. Lucy sued Zehmer to go through with the sale. Zehmer
argued that he had been drunk and that the offer had been made in jest and was unenforceable. The court agreed.
Lucy appealed.
or in part.
CHAPTER 10: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 243
The Supreme Court of Virginia reversed. The Zehmers were ordered to carry through with the sale. Noting that
Lucy attempted to testify in detail as to what was said and done the night of the transaction, the state supreme court
concluded that “Zehmer was not intoxicated to the extent of being unable to comprehend the nature and
consequences of the instrument he executed, and hence that instrument is not to be invalidated on that ground.” That
execution of the agreement was a serious business transaction was evidenced by a number of circumstances, including
discussion of the contract for forty minutes or more before it was signed, its rewriting to reflect Mrs. Zehmer’s interest,
discussion of what was to be included in the sale, provision for examination of title, completeness of the instrument,
and Lucy’s taking possession without Zehmer’s request that he give it back.
..................................................................................................................................................
Notes and Questions
You might want to review this case when discussing intoxication and contractual capacity. The heart of the
decision in this case appears to be whether Zehmer understood the nature of what was happening. The court believed
that the record showed he did. What made the court believe that Zehmer was not drunk? He testified as to many
details; at the time, they rewrote the agreement, talked about title, discussed what the sale included, and so on. Does
it matter that Lucy supplied the liquor? Should Zehmer have attempted to place emphasis on that point at trial?
Should voluntary intoxication be an excuse for voiding a contract?
Imagine that after winning the case, Lucy celebrates in Zehmer’s restaurant. Suppose that Zehmer remains sober
while Lucy becomes extremely intoxicated and obviously unaware of what he is doing. Late in the evening, Lucy sells
the farm back to Zehmer for $10,000. The next day, Lucy cannot remember the transaction. Can Lucy recover the
farm? Yes. Under these circumstances, the contract would be voidable on the ground of intoxication. If Lucy acts
promptly to disaffirm the contract and offers to return the $10,000, he would be allowed to recover the farm.
In part because intoxication is usually self-induced, there is sometimes a different emphasis in the cases that
concern lack of capacity on the ground of intoxication than in the cases that concern lack of capacity on other grounds.
Particularly in older cases, there is often a discussion of the parties’ morals. It has been suggested that the motivation
for enforcing a contract made by an intoxicated person is not that the person was sober enough to understand what he
or she was doing. Instead, the issue is whether the law will allow the person to get intoxicated and avoid the
consequences of his or her behavior. Sometimes, it may appear that what is being judged is not the extent of a
person’s intoxication but his or her attitude. At least one court at the turn of the century held that intoxication is never
a defense.
ANSWER TO “WHAT IF THE FACTS WERE DIFFERENT?” IN CASE 10.1

Suppose that, the day after Lucy purchased the farm, he decided that he did not want it after all, and Zehmer sued
Lucy to perform the contract? Would this change in the facts alter the court’s decision that Lucy and Zehmer had
created an enforceable contract? No. In fact, this would likely support the court’s determination that there was an
enforceable contract between the parties. In this circumstance, unless Lucy attempted to void the contract on the
ground of intoxication, the court might not have addressed the issue at all.
or in part.
ADDITIONAL CASES ADDRESSING THIS ISSUE —
Recent cases in which the intent of the parties to contract was at issue include the following.
• Dickemann v. Millwood Golf & Racquet Club, Inc., 67 S.W.3d 724 (Mo.App. S.D. 2002) (in a golf club member’s
action to rescind a contract with a golf club, one of the questions was whether the member intended to enter into the
contract with the club).
• Tabler v. Industrial Commission of Arizona, 202 Ariz. 518, 47 P.3d 1156 (Div. 1 2002) (the existence or nonexistence
of an oral agreement to settle a workers’ compensation claim requires first a determination of the parties’ intent).
a. Expressions of Opinion
An expression of opinion is not an offer. For example, a doctor’s opinion that a hand will heal within a
few days of an operation is not an offer.
b. Statements Future of Intent

No offer is made when a party says that he or she plans to do something. A request or invitation to
negotiate is not an offer. (This includes statements such as “Will you sell your estate?” and “I wouldn’t
sell my car for less than $1,000.”)
ENHANCING YOUR LECTURE—
IS IT A CONTRACT?
Over the past decade, the letter of the law has become clearer on the issue of whether a preliminary agreement,
such as an agreement to agree, constitutes a contract. Increasingly, the courts are holding that a preliminary
agreement constitutes a binding contract if all essential terms have been agreed on and no disputed issues remain to
be resolved. In contrast, if the parties agree on certain major terms but leave other terms open for further negotiation,
a preliminary agreement is binding only in the sense that the parties have committed themselves to negotiate the
undecided terms in good faith in an effort to reach a final agreement.
Fluorogas, Ltd., learned about this distinction, to its dismay, when a federal district court in Texas held that a
preliminary agreement that it had formed with Fluorine On Call, Ltd., was a binding contract. After executives of the
two companies had enjoyed a weekend of yachting in the Florida keys, the executives drew up a brief handwritten
document stating that Fluorogas would sell to Fluorine the exclusive rights to a technology to build and sell
sophisticated semiconductor equipment. When Fluorogas refused to transfer the patents and intellectual property at
issue to Fluorine, Fluorine sued for breach of contract. Was there a contract? Yes, according to the court. Because the
handwritten document included the essential terms of the agreement, the document constituted a contract, not an
agreement to agree to form a contract at some point in the future. a
or in part.
THE BOTTOM LINE
Businesspersons should exercise care when forming preliminary agreements, for they may be bound in contract
without realizing it. Fluorogas learned this lesson the hard way: the jury awarded Fluorine $12 million in punitive
damages, in addition to compensatory damages.
a. Fluorine On Call, Ltd. v. Fluorogas Limited, No. 01-CV-186 (W.D.Tex. 2002). This decision is not published in the Federal Supplement.
or in part.
c. Preliminary Negotiations
An invitation to submit bids is not an offer. Thus, when contractors are invited to bid on a job, the
party to whom the bid is submitted is not bound. (The bid is an offer, however, and the contractor is
bound by its acceptance.)
d. Advertisements, Catalogues, and Circulars

In general, ads, catalogues, price lists, and circular letters are treated as invitations to negotiate. If an
ad to sell a single item was interpreted as an offer, and fifty people accepted, the offeror would breach
forty-nine contracts. A price list is not an offer to sell at that price; it invites the buyer to offer to buy
at that price.
If an ad makes a promise so definite in character that it is apparent that the offeror is binding himself
or herself to the conditions stated, the ad is treated as an offer. Thus, an ad may be an offer if it
solicits performance—for example, by offering a reward.
e. Auctions
An auction is not an offer—the owner is only expressing a willingness to sell. In an auction with
reserve, the owner may withdraw the goods any time before the auctioneer closes the sale. An
auction is assumed to be with reserve, unless it is stated to be without reserve, in which case the
goods cannot be withdrawn and must be sold to the highest bidder. In an auction with reserve, the
bidder is the offeror. A bidder may revoke his or her bid, or the auctioneer may reject it, before the
auctioneer strikes the hammer, which constitutes acceptance of the bid. When a bid is accepted, all
previous bids are rejected.
ANSWER TO LEARNING OBJECTIVE/FOR REVIEW QUESTION NO. 1

What elements are necessary for an effective offer? What are some examples of nonoffers? Three elements are
necessary for an offer to be effective: (1) a serious, objective intent by the offeror; (2) reasonably certain, or definite
terms; and (3) communication of the offer to the offeree. Nonoffers include expressions of opinion, statements of
intent, preliminary negotiations, advertisements, catalogs, and circulars. In an auction, the bidder, not the seller, is the
offeror.
CAN AN ONLINE BID CONSTITUTE ACCEPTANCE?
Under the Uniform Commercial Code, or UCC (see Chapter 20), a bid at an auction constitutes an offer. The offer
or in part.
(the highest bid) is accepted when the auctioneer’s hammer falls. The UCC also states that auctions are “with reserve”
unless the seller specifies otherwise. As noted elsewhere, in an auction with reserve, the seller reserves the right not
to sell the goods to the highest bidder. Hence, even after the hammer falls, the contract for sale remains conditioned
on the seller’s approval. The question of how these rules should be applied to an online auction of a domain name, in
which no hammer falls, came before a California court.
THE BID (OR OFFER?)
The case involved an online auction conducted by The .TV Corporation International (DotTV) on its Web site.
DotTV posted an announcement on its Web site asking for bids for rights to the “Golf.tv” domain name and stating that
the name would go to the highest bidder. Je Ho Lim submitted a bid for $1,010 and authorized DotTV to charge that
amount to his credit card if his bid was the highest. Later, DotTV sent Lim an e-mail message stating that he had “won
the auction” and charged the bid price of $1,010 to Lim’s credit card. When DotTV subsequently refused to transfer
the name, Lim sued DotTV for, among other things, breach of contract. Lim argued that his bid constituted an ac-
ceptance of DotTV’s offer to sell the name. DotTV contended that Lim’s bid was an offer, which it had not accepted.
Furthermore, even if it had accepted Lim’s offer, because the auction was “with reserve,” DotTV could withdraw the
domain name from the auction even after acceptance. The trial court held for DotTV, and Lim appealed.
THE COURT’S ANALYSIS
The appellate court first looked at the UCC’s provisions concerning auctions, but noted that the UCC did not apply
in this case because the UCC applies only to “goods,” and domain names are not goods. The court then looked at
common law principles as codified in the Restatement (Second) of Contracts. The rules under the Restatement are
similar to those of the UCC: a bid in an auction is an offer that is accepted when the “hammer falls,” and an auction is
with reserve unless otherwise specified by the seller.
The court also pointed out, however, that DotTV’s charging of the bid price to Lim’s credit card was inconsistent
with DotTV’s claim that it could withdraw the domain name from the bidding because the auction was with reserve.
Furthermore, stated the court, even if it concluded that Lim’s bid was an offer and not an acceptance, DotTV had
accepted the offer by its e-mail to Lim stating that he had won the auction. In all, held the court, there was no
evidence that a contract between DotTV and Lim had not been formed, and Lim had stated a valid claim against DotTV
for breach of contract. The court thus reversed the lower court’s decision and remanded the case for further delib-
eration consistent with the appellate court’s opinion.a
FOR CRITICAL ANALYSIS
Should the UCC rules governing auctions apply to items sold on online auction sites, such as e-Bay? Why or why
not? How can you know whether e-Bay’s auctions are “with reserve” or “without reserve”?
a. Lim v. The.TV Corp. International, 99 Cal.App.4th 684, 121 Cal.Rptr.2d 333 (2d Dist. 2002).
f. Agreements to Agree
or in part.
Agreements to agree serve valid commercial purposes and can be enforced if the parties clearly
intended to be bound by the agreements. In other words, the emphasis is on the parties’ intent rather
than on form. IF all of the essential terms have been agreed to and no disputed issues remain, it is
more likely that a court will hold that a preliminary agreement constitutes a contract.
CASE SYNOPSIS—
Case 10.2: Basis Technology Corp. v. Amazon.com, Inc.
Basis Technology Corp. created software and provided technical services for Amazon.com, Inc.’s Japanese-
language Web site. Their agreement allowed for separately negotiated contracts for additional services. Later, Basis
filed a suit in a Massachusetts state court against Amazon in part for nonpayment of services that the initial agreement
did not cover. During the trial, the two parties exchanged e-mail messages that outlined settlement terms. Amazon
reneged on the terms. Basis filed a motion to enforce the settlement. The court granted the motion. Amazon
appealed.
The Appeals Court of Massachusetts affirmed. The parties’ e-mail notes constituted a complete and unambiguous
statement of their desire to be bound by the settlement terms. “Provisions are not ambiguous simply because the
parties have developed different interpretations of them.”
..................................................................................................................................................
Notes and Questions
The word “correct” has at least two meanings. In one sense, “correct” can express approval and indicate assent. In
another context, the word can be a synonym for “fix,” or “make right,” or “align with a certain standard.” Could
Amazon have successfully argued that its use of the word “correct” in its e-mail followed the sense of this second
meaning? Probably not, because with Basis, Amazon reported to the trial judge that the parties had reached an
agreement for the settlement of their dispute. It would have strained Amazon’s credibility to later claim that that was
not what it meant.
Under what circumstances could Amazon justify its “about face” after having agreed in an e-mail to the settlement
terms? There might have been some part of the case that Amazon felt would result in a judgment against it, and its
acquiescence to settlement terms may have been a delaying ploy. Or from Amazon’s perspective there may have been
some aspect of the settlement that was disadvantageous on a closer look.
ANSWER TO “WHAT IF THE FACTS WERE DIFFERENT?” IN CASE 10.2

Assume that the attorneys for both sides had simply had a phone conversation that included all of the terms they
actually agreed on in their e-mail exchanges. Would the court have ruled differently? Why or why not? Probably not.
As the court pointed out, “the issues [were] whether the . . . terms were sufficiently complete and definite to form an
or in part.
agreement and whether Amazon had intended to be bound by them.” Terms expressed orally can be as binding as
those expressed in writing. The court also determined that “the essential circumstance of this disputed agreement is
that it concluded a trial.” If the trial court had given the same effect to a phone conversation as the court gave to the e-
mail exchange, it is unlikely that the appellate court would have interpreted it differently.
2. Definiteness
A contract must have reasonably definite terms so that a court can determine if a breach has occurred and
can give an appropriate remedy. An offer may invite an acceptance to be worded in specific terms so that
the contract is made definite. Courts may supply a missing term when the parties have clearly manifested
an intent to form a contract, but they will not do so if the parties’ expression of intent is too vague or
uncertain.
ADDITIONAL BACKGROUND—
Restatement (Second) of Contracts, Section 33

The Restatement (Second) of Contracts is an authoritative source for many of the principles discussed in this
chapter. Specific sections of the Restatement are noted throughout the text. After selected parts of the text in which a
section is noted, or is otherwise relevant, the full text of that section is set out. The following is the section that relates
to this part of the text—Restatement (Second) of Contracts, Section 33.
§ 33. Certainty
(1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to
form a contract unless the terms of the contract are reasonably certain.
(2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and
for giving an appropriate remedy.
(3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of
intention is not intended to be understood as an offer or as an acceptance.
Rewards
Rewards are discussed briefly in the text. Rewards are also discussed in The Guide to American Law: Everyone’s
Legal Encyclopedia, a multivolume reference work published by West Publishing Company. In the words of its editors,
The Guide “presents in one reference set a panorama of the American legal system, which while comprehensive in
scope is specific in its explanations of a cornucopia of legal topics.” The following is the text of the discussion in The
Guide of rewards.
or in part.
REWARD A sum of money or other compensation offered to the public in general, or to a class of persons, for the
performance of a special service.
When an offer of a reward is accepted by performance, a binding contract, based on and governed by the law of
contracts, exists.
Offer There must be an actual, valid offer to create a contract of reward. An offer or promise to pay a reward,
however, is merely a proposal or a conditional promise by the offeror; it is not a consummated contract.
The person offering the reward can do so on any terms he or she wishes, and the terms must be met before the
reward can be recovered. The subject matter of the offer can entail the discovery of information and evidence
leading to the arrest and conviction of a certain person or persons. Similarly the offer can require the recovery of
stolen property and the apprehension of the thief, the return of lost property, or the recovery or rescue of a
person.
A prize or premium can be a valid offer of a reward for exhibits, architects’ plans, paintings, the best
performance in a tournament, the suggestion of a name, or the achievement of the best time in a race.
The offer must be made with the intent to form a contract. It is not necessary for the offeror to have any
personal interest in the subject, and the motive in making the offer is immaterial.
Any person capable of making a contract can bind himself or herself by an offer of a reward. A private
corporation can offer a reward for the arrest and conviction of persons who have acted unlawfully against it.
Legislatures have the power to offer rewards for acts that will be of public benefit. It can also empower
designated officers, such as the Governor, the U.S. attorney general, or a Federal marshal, to offer rewards for
certain purposes, such as the apprehension of criminals. Ordinarily municipal corporations cannot offer rewards
for criminal offenders against state law.
Unless a statute requires the offer to be in writing, the offer of a reward can be made orally. An offer can be
made by a private contract with a particular person or by an advertisement or public statement in a newspaper,
handbill, circular, postcard, or telegram.
Consideration A contract of reward must be supported by consideration, something of value. The consideration
that supports the promise of a reward is the trouble or inconvenience resulting to the person who has acted on
the faith of the promise.
Revocation Since an unaccepted offer of a reward grants no contractual rights, the offer can be revoked or
canceled at any time prior to its acceptance by performance. Personal notice of revocation is not necessary. An
offer, however, is only revocable either in the manner in which it was made, or in a manner that gives the
revocation the same publicity as the offer. A later offer, in different terms from the first, and made in another
place. does not revoke the first offer.
A few courts treat the discontinuance of an advertisement offering a reward as a revocation of the offer, but this
is not the usual case.
An offer of a reward cannot be revoked so as to deprive a person of any compensation he or she has earned by
the performance, or partial performance, of its conditions.
or in part.
Lapse Generally an offer of a reward that is not limited in duration by its own terms is considered to have been
withdrawn after a reasonable time. What constitutes a reasonable period of time depends largely on the
circumstances under which the offer was made. In some jurisdictions, a reward for the discovery of past offenders
is not barred by a lapse of time but continues until the statute of limitations has expired against the crime.
Performance A reward can be claimed only by a person who has complied with the conditions of the offer before
it expires or is revoked. Performance can be completed by a third person, such as an agent or a servant, who is
acting on behalf of the claimant’s interest.
When the reward is offered for information leading to an arrest and conviction, the return of property, the
location of a missing person, or for other purposes, the person who furnishes the information is entitled to the
reward. This rule applies even if the person does nothing more than disclose the information, and the physical,
capture, in the case of arrest, is made by others. The informant need not become involved in the prosecution or
appear as a witness at the offender’s trial in order to collect the reward.
The information must be adequate and timely. It is untimely when it is given or acted upon after the criminal
has surrendered, or if the information was already known when the informant provided it. It is inadequate if it
does not lead to the desired end, such as an arrest and conviction or the recovery of property.
When the reward is for the detection or discovery of an offender, a conviction is not necessary, as long as a
discovery or an arrest occurs.
When a reward is offered for the apprehension or arrest of a criminal, a personal arrest by the claimant is
usually not necessary. A few jurisdictions, however, hold that merely giving information that leads to an arrest
made by others is not a performance of an offer of a reward, and that the reward belongs to those who assume
the personal danger and responsibility of making the arrest.
The person who is arrested must be the one described in the offer. The arrest must be lawful. Those making an
unlawful arrest cannot recover the reward, because an agreement for an unlawful arrest is against public policy
and unenforceable.
If the offender voluntarily surrenders or is enroute to surrender, the captors have not earned the reward.
Persons who have taken the accused into custody are, however, entitled to the reward if they were instrumental in
the offender’s decision to surrender.
Generally when a reward is offered for the arrest and conviction of an offender, the claimant must have caused
both the arrest and subsequent conviction, since both are conditions precedent to the recovery. The reward in
such a case cannot be apportioned between what is due for the arrest and what is due for the conviction.
Return of lost property Some statutes provide for a reward for the finder of lost property or for compensation for
the expense of recovering and preserving it. Apart from statute, a finder has no right to a reward for the return of
property to its owner if none has been offered. If only a proportionate part of the lost property is returned, the
finder is entitled to a proportionate part of the reward.
If the offered reward is definite and certain, the finder has a lien, a charge against property to secure the
payment of a debt or the performance of an obligation, on the property in the amount of the reward until it is
or in part.
paid. If the offer is indefinite, such as one that states “liberal reward,” there is no lien on the property.
Performance without knowledge Except in the case of statutory rewards, the general rule is that the claimant
must have performed the services knowing of the offer and for the purpose of collecting the reward. This rule is
based on the theory that without such knowledge, there can be no meeting of the minds and, consequently, no
contract. Knowledge of a statutory reward is not necessary to entitle the claimant to recover it.
Persons entitled When a reward is offered to the public, anyone who performs the required services can claim and
accept the reward, except for persons who are under a duty to perform such services, such as law enforcement
officers.
A promise by a private individual to reward a public officer for doing something that is his or her duty is void—of
no legal force or binding effect. If the service is within the line and scope of the officer’s duty, it is immaterial that
it is rendered at a time when the officer is not on duty or is outside his or her territorial jurisdiction. When,
however, an officer acts beyond the scope and line of duty in performing the service, he or she is not prohibited
from claiming the reward.
The maxim that “no man shall profit by his own wrong” applies to those claiming rewards. A person who aids
and abets the commission of a crime has no right to a reward for the arrest of the perpetrator. Similarly a person
who purchases stolen property with reasonable grounds for believing it has been stolen cannot receive the reward
offered for its return.
3. Communication
An offer must be communicated to the offeree, so that the offeree knows it. Ordinarily, one cannot agree
to a bargain without knowing that it exists.
B. TERMINATION OF THE OFFER

An offeree can transform an offer into a contract by acceptance. This power of acceptance can be terminated,
however, by action of the parties or operation of law.
1. Termination by Action of the Parties
a. Revocation of the Offer

Generally, an offer may be revoked any time before acceptance, even if the offeror agreed to hold it
open, but revocation is effective only on receipt. Revocation can be express or implied by conduct
inconsistent with the offer. Revocation of an offer made to the general public must be communicated
in the same manner in which the offer was communicated.
b. Irrevocable Offers
One form of irrevocable offer is an option contract, which is created when an offeror promises to hold
an offer open for a specified period of time in exchange for a payment by the offeree.
CASE SYNOPSIS—
Case 10.3: T.W. Nickerson, Inc. v. Fleet National Bank
or in part.
Steven Clark bought T.W. Nickerson, Inc., from Theodore Nickerson and leased the land on which it was operated.
The lease gave Clark a right of first refusal to buy the land at a price equal to “any bona fide offer” and required notice
of any offer in writing. The lessor was Fleet National Bank, which held the land in trust for Theodore and later his
spouse Lillian and their children. The parties were negotiating a possible sale of the land to Clark for as much as
$300,000, when Lillian died. Fleet ended the trust and distributed its assets to the Nickerson siblings, who, without
notifying Clark, made a deal to sell the land to Anthony Bridgewater for $400,000. Bridgewater told Clark. Clark’s
company filed a suit in a Massachusetts state court against Fleet and the others for violating the lease’s “implied
covenant of good faith and fair dealing.” The court dismissed the claims. The plaintiff appealed.
A state intermediate appellate court reversed and remanded. An option contract that requires notice of “any bona
fide offer” is breached if the party with the option is not notified of all the terms. Bridgewater’s comment about his
purchase of the land did not satisfy the lease’s requirement of notice. The failure to notify Clark in writing of the terms
of Bridgewater’s deal was a violation of the lease. “Because the holder of the right must meet the terms and conditions
of the third-party offer, it cannot be called upon to exercise or lose that right unless the entire offer is communicated
to him in such a form as to enable him to evaluate it and make a decision.”
..................................................................................................................................................
Notes and Questions
Suppose that Clark had never expressed an interest in buying the leased premises. Would the result have been
different? Explain. No, the result would not have been different. Under the terms of the lease, the lessor was required
to give written notice to the lessee of all of the terms of any bona fide offer to buy the leased premises. This
requirement was not conditioned on the lessee’s previously expressed interest in buying the property.
Why would a business lease property under a contract with an option to buy? Why not simply buy the property in
the first place? From the lessee’s point of view, the property may cost more than the lessee has available, or the price
in the real estate market may be too high, at the time of the lease. The success of the lessee’s business may be too
doubtful to support an investment in real property. From the lessor’s perspective, it may not be advantageous to sell at
the time of the lease because the market is priced too low or the lessor simply does not want to sell. In any case, there
may be other parties who must agree to a purchase or sale.
ANSWER TO CRITICAL ANALYSIS QUESTION IN CASE 10.3

Other than price, why might the Nickerson siblings have wanted to quickly sell the land on which Clark operated
his firm? Discuss. Businesses and individuals are often held liable for the cost of cleaning up pollution on land that they
own or did own. In some cases, an owner may engage in a sometimes-futile attempt to avoid this potential liability by
selling a polluting enterprise or the land on which it operates. There are intimations of this reason for the quick sale of
the land in the Nickerson case, including comments in correspondence between a Nickerson sibling and a bank officer
and between two bank officers.
or in part.

(Note that your students can find the answers to the even-numbered For Review questions on this
text’s Web site at www.cengage.com/blaw/blt.
We repeat these answers here as a convenience to you.)
In what circumstances will an offer be irrevocable? An offeror may not effectively revoke an offer if the offeree has
changed position in justifiable reliance on the offer. Also, an option contract takes away the offeror’s power to revoke
an offer for the period of time specified in the option (or, if unspecified, for a reasonable time).
c. Rejection of the Offer by the Offeree

An offer may be rejected by the offeree. A subsequent attempt to accept will be construed as a new
offer. Rejection can be express or implied by conduct evidencing an intent not to accept. It is effective
only on receipt. Asking about an offer is not rejection, but an ambiguous response may be construed
as a rejection.
d. Counteroffer by the Offeree

A counteroffer is a rejection and a simultaneous making of a new offer. The mirror image rule requires
that the offeree’s acceptance match the offeror’s offer—any material change in the terms automati-
cally terminates the offer and substitutes a counteroffer.
2. Termination by Operation of Law

An offeree’s power to accept can be terminated by the destruction of the subject matter of the offer, by the
death or incompetence of either party (whether or not the other party has notice), by a statute or court
decision that makes the offer illegal, or by a lapse of time.
a. Lapse of Time
An offer terminates automatically when the time specified in the offer has passed (“This offer is good
until 5:00 P.M. on Monday, July 15” or “This offer expires in two months”). The specified time begins
to run when the offeree receives the offer, not when it is sent. If the offer is delayed, the period
begins to run from the date the offeree would have received it, but only if the offeree knows or should
know of the delay. If no time is specified, the offer terminates at the end of a reasonable period, as
determined by the subject matter of the contract, business and market conditions, and other relevant
circumstances.
Restatement (Second) of Contracts, Section 49

§ 49. Effect of Delay in Communication of Offer
If communication of an offer to the offeree is delayed, the period within which a contract can be created by acceptance
is not thereby extended if the offeree knows or has reason to know of the delay, though it is due to the fault of the
or in part.
offeror; but if the delay is due to the fault of the offeror or to the means of transmission adopted by him, and the
offeree neither knows nor has reason to know that there has been delay, a contract can be created by acceptance
within the period which would have been permissible if the offer had been dispatched at the time that its arrival seems
to indicate.
b. Destruction of the Subject Matter

An offer terminates if the subject matter is destroyed before the offer is accepted.
c. Death or Incompetence of the Offeror or Offeree

An offer terminates if the offeror or offeree dies or becomes incompetent. This rule applies whether
or not the other party had notice of the death or incompetence.
or in part.
d. Supervening Illegality of the Proposed Contract

A statute or court decision that makes an offer illegal automatically terminates the offer.
C. ACCEPTANCE
Acceptance is a voluntary act (either words or conduct) by the offeree that shows assent to the terms of an offer.
1. Who Can Accept?

Except in special circumstances, only the person to whom the offer is made can accept.
2. Unequivocal Acceptance
Unequivocal acceptance is required by the mirror image rule. An acceptance subject to new conditions or
with terms that materially change the offer (“I accept the offer, but only if I can pay on ninety days’ credit”)
may be considered a counteroffer. An acceptance may be unequivocal even though the offeree expresses
dissatisfaction (“I accept the offer, but I wish I could have gotten a better price” is effective). Conditions
that add no new terms do not turn an acceptance into a rejection (“I accept; please send written contract”)
unless the acceptance is made conditional (“I accept if you send a written contract”).
3. Silence as Acceptance
Ordinarily, silence cannot be acceptance. Silence can operate as acceptance if an offeree takes the benefit
of offered goods or services even though he or she had an opportunity to reject and knew that they were
offered with the expectation of compensation. Silence can operate as acceptance when the parties have
had prior dealings in which the offeree has led the offeror reasonably to understand that the offeree will
accept all offers unless the offeree sends notice to the contrary.
4. Communication of Acceptance
In a unilateral contract, no communication of acceptance is generally necessary, because acceptance is
normally evident. Notice is necessary if the offeror requests it or has no adequate means of determining
whether there has been performance, or if the law requires it. In a bilateral contract, communication of
acceptance is necessary because acceptance is in the form of a promise, and the contract is formed when
the promise is made. Communication of acceptance is not necessary if the offer dispenses with it. If an
offer can be accepted by silence, no communication is necessary.

What are the elements that are necessary for an effective acceptance? An acceptance is a voluntary act on the
part of the offeree that shows assent, or agreement, to the terms of an offer. The acceptance must be unequivocal and
must be timely communicated to the offeror.
5. Mode and Timeliness of Acceptance

An acceptance is timely if it is made before the offer is terminated.
or in part.
a. The Mailbox Rule

Acceptance is effective when it is sent by whatever means is authorized by the offeror. This is the
mailbox rule.
b. Authorized Means of Communication

Specific means can be stated in the offer or authorized by facts or by law. If an offeror specifies an
exclusive means, the contract is not formed unless the offeree uses it.
• If the offeror does not specify a certain means, the offeree can accept by any medium reasonable
under the circumstances. A medium is reasonable if it is the same means as the offeror used to
communicate the offer or a faster means.
• An acceptance sent by unauthorized means is effective on receipt.
CONTROLLING THE TERMS OF THE OFFER

The courts normally attempt to “save” contracts whenever possible, but sometimes it is impossible to do so. Two
common reasons that contracts fail are that (1) the terms of the offer were too unclear or indefinite to constitute a
binding contract on the offer’s acceptance and (2) the acceptance was not timely. If you are an offeror, you can control
both of these factors: you can determine what the terms of the future contract will be, as well as the time and mode
of acceptance.
INCLUDE CLEAR AND DEFINITE TERMS
If a contract’s terms are too unclear or indefinite, the contract will fail. Unless a court can ascertain exactly what
the rights and duties of the parties are under a particular contract, the court cannot enforce those rights and duties.
Therefore, as an offeror, make sure that the terms of your offer are sufficiently definite to constitute a binding contract
if the offer is accepted. A statement such as “Quantity to be determined later” may allow the offeree, after acceptance,
to claim that a contract was never formed because the quantity term was not specified.
Another reason an offeror should make sure that the offer’s terms are clear and definite is that if a contract
results, any ambiguous provision may be interpreted against the party that drafted the contract.
SPECIFY THE TIME AND MODE OF ACCEPTANCE
Problems concerning contract formation also arise when it is unclear whether an acceptance is effective. To avoid
such problems, you should take some precautions when phrasing the offer. Whether your offer is made via the
Internet, fax, express delivery, or mail, you can specify that the offer must be accepted (or even that you must receive
the acceptance) by a certain time, and if it is not, the offer will terminate. Similarly, you can specify the mode of
acceptance. In online offers, you can indicate that to accept the offer, the user must click on a certain box on the
screen If you make an offer and want the acceptance to be faxed to you, make sure that you clearly indicate that the
acceptance must be faxed to you at a given fax number by a specific time, or it will not be effective.
CHECKLIST FOR THE OFFEROR

1. Make sure that the terms of the offer are sufficiently clear and definite to allow both the parties and a court to
or in part.
determine the specific rights and obligations of the parties. Otherwise, the contract may fail for indefiniteness.
2. Specify in the offer the date on which the offer will terminate and the authorized mode of acceptance. For
example, you can indicate that an acceptance, to be effective, must be faxed to you at a specific fax number by a
specific time or date.
II. Agreement in E-Contracts

Disputes arising from contracts entered into online concern the terms and assent to those terms.
A. ONLINE OFFERS
1. Displaying the Offer

Terms should be conspicuous and clearly spelled out. On a Web site, this can be done with a link to a
separate page that contains the details.
B. ONLINE ACCEPTANCES
1. Click-On Agreements
A click-on agreement occurs when a buyer, completing a transaction on a computer, is required to indicate
his or her assent to be bound by the terms of an offer by clicking on a button that says, for example, “I
agree.” The terms may appear on a Web site through which a buyer is obtaining goods or services, or they
may appear on a computer screen when software is loaded.
2. Provisions to Include
The text lists subjects that might be covered, including remedies, forum selection, payment, taxes, refund
and return policies, disclaimers, and privacy policies. An online offer should also include a mechanism by
which an offeree can affirmatively indicate assent (such as an “I agree” box to click on).
ANSWER TO VIDEO QUESTION NO. 1

According to the instructor in the video, what is the key factor in determining whether a particular term in an
online agreement is enforceable? According to the instructor in the video, the key is whether a reasonable contracting
party would have expected the term (or one like it) to be in the contract in the first place. If it is a reasonably expected
term, you are bound by it whether you read it or not.

Suppose that you click on “I accept” in order to download software from the Internet. You do not read the terms
of the agreement before accepting it, even though you know that such agreements often contain forum-selection and
or in part.
arbitration clauses. The software later causes irreparable harm to your computer system, and you want to sue. When
you go to the Web site and view the agreement, however, you discover that a choice-of-law clause in the contract
specified that the law of Nigeria controls. Is this term enforceable? Is it a term that should be reasonably expected in
an online contract? The law governing contracts does not require that all of the terms in a contract must actually have
been read by all of the parties in order for the contract to be binding. Generally, forum-selection clauses and
arbitration clauses in online agreements are held to be enforceable because they are reasonably expected terms. In
this instance, the provision at issue is a choice-of-law clause, which states that Nigerian law governs the contract. The
issue is whether a choice-of-law clause is a term that is reasonably expected in an online contract. The issue is not
whether the choice of Nigerian law is a term that one would reasonably expect. If choice-of-law clauses are reasonably
expected to be in online contracts, then a court would likely enforce the clause. The seller could argue that a choice-of-
law clause is similar to a forum-selection clause because they both are dispute-settlement provisions, which typically
are found in online contracts. A court in this instance would probably also consider whether the term was conspicuous
and easily viewed by online buyers. If the term was conspicuous and reasonably expected, the term will probably be
enforced and Nigerian law will control.

Does it matter what the term actually says if it is a type of term that one could reasonably expect to be in the
contract? What arguments can be made for and against enforcing a choice-of-law clause in an online contract? As
noted, most courts hold that if the term is one that is reasonably expected in a contract—such as a forum-selection
clause or an arbitration clause—it is enforceable. If the parties agree to the term voluntarily, a court will generally not
intervene. Some courts have made exceptions to the general rule on public policy grounds if the clause effectively
denies consumers an adequate remedy. The buyer (you) could argue that the choice-of-law clause here is against
public policy and unreasonable. As with forum-selection clauses, choice-of-law clauses might deny buyers a remedy
that would otherwise be available (if, for example, the law of Nigeria contains no consumer protections or severely
limits a buyer’s rights against the seller). Also, if the seller is not actually located in Nigeria, you could argue that it is
unreasonable for the contract to stipulate that Nigerian law controls. A court might be persuaded to invalidate the
clause for either of these reasons. The seller, on the other hand, could argue that you voluntarily entered the
agreement and that the seller has a valid interest in choosing which law will govern the contract. The seller could point
out that the choice-of-law clause only says which law should apply, not the forum in which the matter is to be resolved,
and is thus less restrictive on your rights. Because you could sue the seller in your state (assuming there is no forum
selected in the contract), the seller could argue the clause is reasonable and should be enforced.
3. Shrink-wrap Agreements
A shrink-wrap agreement is an agreement whose terms are expressed inside a box in which computer
hardware or software is packaged. In most cases, the agreement is not between a seller and a buyer, but
between a manufacturer and the user of the product. The terms generally concern warranties, remedies,
and other issues associated with the use of the product.
• Courts often enforce shrink-wrap agreements, reasoning that the seller proposed an offer that the
buyer accepted after an opportunity to read the terms. Also, it is more practical to enclose the full
terms of a sale in a box.
or in part.
• If a court finds that the buyer learned of the shrink-wrap terms after the parties entered into a contract,
the court might conclude that those terms were proposals for additional terms, which were not part of
the contract unless the buyer expressly agreed to them.

(Note that your students can find the answers to the even-numbered For Review questions on this
text’s Web site at www.cengage.com/blaw/blt.
We repeat these answers here as a convenience to you.)
How do shrink-wrap and click-on agreements differ from other contracts? How have traditional laws been applied
to these agreements? A shrink-wrap agreement is an agreement whose terms are expressed inside a box in which the
goods are packaged. A click-on agreement arises when a buyer, completing a transaction on a computer, is required to
indicate his or her assent to the terms by clicking on a button that says, for example, “I agree.” Generally, courts have
enforced the terms of these agreements the same as the terms of other contracts, applying the traditional common
law of contracts. Article 2 of the UCC provides that acceptance can be made by conduct. The Restatement (Second) of
Contracts has a similar provision. Under these provisions, a binding contract can be created by conduct, including con-
duct accepting the terms in a shrink-wrap or click-on agreement. Questions arising in this context include which law to
apply (for example, does UCC Article 2 apply to software licenses?) and to what extent (for example, if UCC Article 2
applies, can a seller opt out of its provisions entirely?).
AVOIDING DECEPTION IN SOFTWARE SALES
Sometimes, businesspersons who include shrink-wrap licenses with their products may have some terms
elsewhere, such as on a disk or on a download page of the Internet. Not including all of the terms in the shrink-wrap
agreement, however, can lead to problems—as one software producer learned when the state of New York brought an
action against its company for fraud.
THE LAWSUIT AGAINST NETWORK ASSOCIATES, INC.
Network Associates, Inc. (NA), develops and sells software, including Gauntlet, a software firewall product, via the
Internet. NA included on its disks and on its Internet download page—but not in its license agreement that
accompanied its products—a restrictive clause.
The restrictive clause provided that anyone installing the Gauntlet software accepted the terms and conditions of
or in part.
the license agreement in the box and urged users to read the license before installing the software. The clause also
stated, among other things, that the customer “will not publish reviews of this product without prior consent from
Network Associates.” The problem was that the license agreement in the box stated that the agreement contained all
of the rights and duties of the parties. How, then, did the restrictive clause apply to the sale?
When Network World Fusion, an online magazine, published a comparative review of firewall software products,
including NA’s Gauntlet, without NA’s permission, NA protested. Ultimately, the state attorney general of New York
brought an action against NA for fraud.
THE FRAUD ISSUE
According to the New York court hearing the case, NA’s restrictive clause misled customers and was thus
deceptive. First, the license agreement stated that it contained all of the terms of the agreement. Therefore, the rules
and regulations listed in the restrictive clause appeared to be independent of the license contract. This could mislead
purchasers of the software because they might believe that the restriction was created by some other entity, such as
the federal government.
For these reasons, the court concluded that the restrictive clause was deceptive and constituted fraud. The court
ordered NA to stop including the clause in its software. The court also ordered NA to reveal “the number of instances
in which software was sold on disks or through the Internet containing the above-mentioned language in order for the
court to determine what, if any, penalties and costs should be ordered.” a
FOR CRITICAL ANALYSIS
What is the difference, if any, between reading a disputed clause as part of a shrink-wrap agreement and accessing
it through a link as part of a click-on agreement?
a. People v. Network Associates, Inc., 195 Misc.2d 384, 758 N.Y.S.2d 466 (2003).
3. Browse-Wrap Terms
Browse-wrap terms, which can also occur in an online transaction, do not require a user to assent to the
terms before going ahead with the deal. Offerors of these terms generally assert that they are binding
without the user’s active consent. Critics argue that a user should at least be required to navigate past the
terms before they should be considered binding.
C. E-SIGNATURE TECHNOLOGIES
The text discusses three common methods for creating e-signatures.
D. STATE LAWS GOVERNING E-SIGNATURES

Most states have laws governing e-signatures, although the laws are not uniform. The Uniform Electronic
Transactions Act (UETA), issued in 1999, was an attempt by the National Conference of Commissioners on Uniform
State Laws (NCCUSL) and the American Law Institute to create more uniformity. Most states have adopted the
UETA, under which a signature may not be denied legal effect or enforceability solely because it is in electronic
form.
or in part.
E. FEDERAL LAW ON E-SIGNATURES AND E-DOCUMENTS

In 2000, Congress enacted the Electronic Signatures in Global and National Commerce Act (E-SIGN Act) to provide
that no contract, record, or signature may be “denied legal effect” solely because it is in an electronic form. Some
documents are excluded: most notably documents governed by Articles 3, 4, and 9 of the UCC.
or in part.
SPECIAL EXHIBIT—
Online Acceptances
The following illustration summarizes some of the principles of online acceptances involving shrink-wrap agreements,
click-on agreements, and browse-wrap terms discussed in the text.
SHRINK-WRAP CLICK-ON AGREEMENT BROWSE-WRAP TERMS

AGREEMENT Contract terms that appear on Contract terms on a Web site
Contract terms expressed in a a computer screen, that need not be actively
document inside a product accompanied by an on-screen agreed to before using a
package button on which the buyer is product available from the site
asked to click
ARE THESE TERMS PART OF A CONTRACT BETWEEN THE

PARTIES?
Yes, if before entering into the contract, the buyer—
• Is made aware of the terms
• And expressly agrees to the terms by opening the package, clicking on the button,
or using the product
or in part.
ANSWER TO CRITICAL ANALYSIS QUESTION IN THE FEATURE—

BEYOND OUR BORDERS
There are about two hundred sovereign nations in the world today, but only seventeen have signed the Electronic
Communications convention, and thirty have signed the Cyber-Crime Convention. Why do you think so many nations’
governments are reluctant to be bound by international conventions? Individual nations might believe that the
regulation will hinder their economic development. Their governments might view the regulation as an attempt to
interfere with their sovereign rights. There may be some political inertia, especially with respect to an outside
regulation that may have little effect on activities within a less developed country. Corruption is also a possibility—
those who commit the proscribed acts may be able, in some countries, to influence the enactment of laws in their
favor.
F. PARTNERING AGREEMENTS
Through a partnering agreement, a seller and a buyer agree in advance on the terms to apply in all transactions
subsequently conducted electronically. These terms may include access and identification codes. A partnering
agreement, like any contract, can prevent later disputes.
III. The Uniform Electronic Transactions Act

The UETA, which is a draft of legislation suggested to the states by the National Conference of Commissioners of
Uniform State Laws (NCCUSL) and the American Law Institute (ALI), removes barriers to e-commerce by giving the
same legal effect to electronic records and signatures as to paper documents and signatures.
“Electronic Signature”
The Uniform Electronic Transactions Act (UETA) provides a definition of “electronic signature” (or e-signature) that
can be used by the states that enact the UETA. The following comments accompanying the draft of UETA 102(8)
presented for the states’ adoption explain the definition.
7. “Electronic signature.”
The idea of a signature is broad and not specifically defined. Whether any particular record is “signed” is a question of
fact. Proof of that fact must be made under other applicable law. This act simply assures that the signature may be
accomplished through an electronic means. No specific technology need be used in order to create a valid signature.
One’s voice on an answering machine may suffice if the requisite intention is present. Similarly, including one’s name as
part of an electronic mail communication also may suffice, as may the firm name on a facsimile. It also may be shown
that the requisite intent was not present and accordingly the symbol, sound or process did not amount to a signature.
One may use a digital signature with the requisite intention, or one may use the private key solely as an access device
with no intention to sign, or otherwise accomplish a legally binding act. In any case the critical element is the intention
to execute or adopt the sound or symbol or process for the purpose of signing the related record.
or in part.
The definition requires that the signer execute or adopt the sound, symbol, or process with the intent to sign the
record. The act of applying a sound, symbol or process to an electronic record could have differing meanings and
effects. The consequence of the act and the effect of the act as a signature are determined under other applicable law.
However, the essential attribute of a signature involves applying a sound, symbol or process with an intent to do a
legally significant act. It is that intention that is understood in the law as a part of the word “sign”, without the need for
a definition.
This Act establishes, to the greatest extent possible, the equivalency of electronic signatures and manual signatures.
The purpose is to overcome unwarranted biases against electronic methods of signing and authenticating records.
Therefore the term “signature” has been used to connote and convey that equivalency. The term “authentication,”
used in other laws, often has a narrower meaning and purpose than an electronic signature as used in this Act.
However, an authentication under any of those other laws constitutes an electronic signature under this Act.
The precise effect of an electronic signature will be determined based on the surrounding circumstances under [UETA
109(b)].
This definition includes as an electronic signature the standard webpage click through process. For example, when a
person orders goods or services through a vendor’s website, the person will be required to provide information as part
of a process which will result in receipt of the goods or services. When the customer ultimately gets to the last step and
clicks “I agree,” the person has adopted the process and has done so with the intent to associate the person with the
record of that process. The actual effect of the electronic signature will be determined from all the surrounding
circumstances, however, the person adopted a process which the circumstances indicate s/he intended to have the
effect of getting the goods/services and being bound to pay for them. The adoption of the process carried the intent to
do a legally significant act, the hallmark of a signature.
Another important aspect of this definition lies in the necessity that the electronic signature be linked or logically
associated with the record. In the paper world, it is assumed that the symbol adopted by a party is attached to or
located somewhere in the same paper that is intended to be authenticated, e.g., an allonge firmly attached to a
promissory note, or the classic signature at the end of a long contract. These tangible manifestations do not exist in the
electronic environment, and accordingly, this definition expressly provides that the symbol must in some way be linked
to, or connected with, the electronic record being signed. This linkage is consistent with the regulations promulgated
by the Food and Drug Administration. 21 CFR Part 11 (March 20, 1997).
A digital signature using public key encryption technology would qualify as an electronic signature, as would the mere
inclusion of one’s name as a part of an e-mail message - so long as in each case the signer executed or adopted the
symbol with the intent to sign.
A. THE SCOPE AND APPLICABILITY OF THE UETA

The UETA applies only to e-records and e-signatures relating to a transaction (an interaction between two or more
people relating to business, commercial or governmental activities). The UETA does not apply to laws governing
wills or testamentary trusts, the UCC (except Articles 2 and 2A), the UCITA, and other laws excluded by the states.
B. THE FEDERAL E-SIGN ACT AND THE UETA

If a state enacts the UETA without modification, the E-SIGN Act does not preempt it. The E-SIGN Act does preempt
modified versions of the UETA to the extent that they are inconsistent with the E-SIGN Act. Under the E-SIGN Act,
states may enact alternative procedures or requirements for the use or acceptance of e-records or e-signatures if
or in part.
(1) those procedures or requirements are consistent with the E-SIGN Act, (2) the state’s procedures do not give
greater legal effect to any specific type of technology, and (3) if the state adopts the alternative after the
enactment of the E-SIGN Act, the state law must refer to the E-SIGN Act.
C. HIGHLIGHTS OF THE UETA

State versions may vary.
1. The Parties Must Agree to Conduct Transaction Electronically

This agreement may be implied by the circumstances and the parties’ conduct (for example, giving out a
business card with an e-mail address on it). Consent may also be withdrawn.
2. Parties Can “Opt Out”

Parties can waive or vary any or all of the UETA, but the UETA applies in the absence of an agreement to the
contrary.
3. Attribution
The effect of an e-record is determined from its context and circumstances. A person’s name is not necessary
to give effect to an e-record, but if, for example, a person types her or his name at the bottom of an e-mail
purchase order, that typing qualifies as a “signature” and is attributed to the person. Any relevant evidence
can prove that an e-record or e-signature is, or is not, the act of the person. If issues arise relating to agency,
authority, forgery, or contract formation, state laws other than the UETA apply.
4. Notarization
A document can be notarized by a notary’s e-signature.
5. The Effect of Errors

If the parties agree to a security procedure and one party does not detect an error because it did not follow
the procedure, the conforming party can avoid the effect of the error [UETA 10]. If the parties do not agree on
a security procedure, other state laws determine the effect of the mistake. To avoid the effect of an error, a
party must (1) promptly notify the other of the error and of his or her intent not to be bound by it and (2) take
reasonable steps to return any benefit or consideration received. If restitution cannot be made, the
transaction may be unavoidable.
6. Timing
An e-record is sent when it is properly directed from the sender’s place of business to the intended recipient
in a form readable by the recipient’s computer at the recipient’s place of business that has the closest relation
to the transaction (or either party’s residence, if there is no place of business). Once an e-record leaves the
sender’s control or comes under the recipient’s control, it is sent. An e-record is received when it enters the
recipient’s processing system in a readable form—even if no person is aware of its receipt [UETA 15].

What is the Uniform Electronic Transactions Act (UETA)? What are some of its major provisions? The goal of the
UETA, a uniform law proposed by the National Conference of Commissioners on Uniform State Laws, is to support the
or in part.
enforcement of e-contracts. The UETA provides for (1) the equivalency of records and writings; (2) the validity of e-
signatures; (3) the formation of contracts by e-agents; (4) the formation of contracts between an e-agent and a natural
person; (5) the attribution of an electronic act to a person if it can be proved that the act was done by the person or
her or his agent; and (6) a provision that parties do not need to participate in e-commerce to make binding contracts.
The UETA supports all e-transactions, but it does not create rules for them. The UETA does not apply unless parties
agree to use e-commerce in their transactions.
HOW CAN YOU FIND AND

USE ONLINE CONTRACT FORMS?
Before the printing press, every contract form had to be handwritten. Since the advent of printing, however, most
standard contract forms have been readily available at low cost. Now the Internet has made available an even larger
variety of contract forms, as well as other legal and business forms.
WHERE TO OBTAIN ONLINE CONTRACT FORMS

The ‘Lectric Law Library has a collection of forms at www.lectlaw.com/form.html. The site includes forms for the
assignment of a contract, a contract for the sale of a motor vehicle, and many others. In addition to actual forms, there
are comments on how the forms should be used and filled out. Another excellent online resource for various types of
forms is FindForms, at www.findforms.com.
Other online forms collections can be found at LegalWiz.com (go to www.legalwiz.com/forms.htm), a Web site
that provides free legal forms, including a form that can be used to sell personal property. At www.legaldocs.com, you
will find an electronic forms book that offers hundreds of standardized legal forms, some of which are free. Washburn
University School of Law has a Web page containing links to an extensive number of forms archives at
www.washlaw.edu/legalforms/legalforms.html.
A special Web site for small-business owners is www.lawvantage.com/index.shtml. Some documents are free;
others require a fee or an annual subscription. Many law firms post legal forms, including contract forms, on their
Web sites. For example, see the Web site of Bornstein & Naylor (at lbnlaw.com/Freedownload2.htm).
Finally, a number of forms are available from FindLaw, which is now a part of West Group. Go to
forms.lp.findlaw.com and scroll down the screen to “Other Form Resources.”
CHECKLIST FOR THE ONLINE SELLER

1. When looking for a contract form appropriate to your business, “shop around” for a form that most closely meets
your needs.
2. Consider customizing any standardized contract form that you use to ensure that it will cover all of the
or in part.
contingencies that you deem important.

3. When using a standardized contract form, make sure that you provide for a means of acceptance—for example, by
including a box stating “I accept” or “I agree.”
4. Consider posting your own customized contract forms on your Web site for prospective customers or others to
use.
TEACHING SUGGESTIONS
1. Concepts in the area of the law covered in this chapter that students have difficulty with include:
a. Advertisements are usually not valid offers. Emphasize that it is the indefiniteness of their terms (and the
unfairness that might result from enforcing every advertisement as an offer) that prevents most
advertisements from being effective offers.
b. Revocation and rejection are not interchangeable terms. Underscore that only offerors can revoke and
only offerees can reject.
c. In the absence of an option contract or promissory estoppel, an offeror can legally revoke an offer even if
he or she has said that the offer will be kept open.
2. Discussing firm offers provides an opportunity to have students study a statute—UCC 2–205—carefully. Point out
that if any element of UCC 2–205 is lacking in a situation, there is no firm offer and that it will lapse within a reasonable
time by itself unless consideration is given to keep it open.
3. Students may find it helpful, when confronted with difficult points of law, to combine or reduce the points into
short statements. For example, the mailbox rule may be phrased as:
The mailbox rule applies only to express, bilateral, properly communicated acceptances, which are effective when
sent—unless (1) the offer says that the mail cannot be used, (2) the offer is an option contract, for which
acceptance must be received before the option expires, and (3) the offeree changes his or her mind. If the offeree
changes his or her mind, and accepts first and then rejects, the acceptance is effective on dispatch—unless the
offeror received the rejection first and acted on it. If the offeree rejects first and then accepts, whichever gets
there first is effective.
4. Review the terms of sample shrink-wrap agreements and click-on agreements with the class, and discuss how fair
or objectionable the students find the terms. Have they readily agreed to such terms in the past? How likely are they
to agree to such terms in the future, at least without reading them?
5. You might point out that the UETA supports all e-transactions, but it does not create rules for them. Also, the UETA
does not apply to a contract unless the contracting parties agree to use e-commerce in their transactions.
or in part.
6. In reading and studying cases, including the cases in this chapter and particularly including those that involve
complex circumstances, your students may find it helpful to keep in mind that generally a case can have only one of
three results:
• The plaintiff proves his or her side of the case and wins.
• The plaintiff fails to prove his or her side of the case and loses.
• The defendant proves his or her side of the case, and the plaintiff loses.
Cyberlaw Link
How might the mailbox rule apply in the context of contracts entered into over the Internet? Why are uniform laws
like the UETA necessary? Does it make any difference if these uniform laws are not enacted in every state? How
should the law be applied to a dispute arising from a deal that involves parties in different countries?
DISCUSSION QUESTIONS
1. In the context of an offer, how is intent and its seriousness determined? Serious intent is determined by what a
reasonable person in the offeree’s position would conclude the offeror’s words and actions meant, not by the subjective
intentions, beliefs, and assumptions of the offeror. Offers made in obvious anger, jest, or undue excitement do not qualify.
2. Why must a contract have “reasonably definite terms” and how “definite” must the terms be? A contract must have
reasonably definite terms so that a court can determine if a breach has occurred and can give an appropriate remedy. Courts
may supply a missing term when the parties have clearly manifested an intent to form a contract, but they will not do so if the
parties’ expression of intent is too vague or uncertain (an employer’s promise that an employee will “share in the profits of the
business”). An offer may invite an acceptance to be worded in specific terms so that the contract is made definite. If the
acceptance is not so specifically worded, there may be no enforceable contract. The UCC requires less specificity in a contract
for the sale of goods. Specificity is more important in an international sales contract.
3. How do the parties terminate an offer? The parties can terminate an offer by: (1) revocation, (2) rejection, or (3) a
counteroffer. Revocation is withdrawal of the offer by the offeror. Generally, an offer may be revoked any time before
acceptance, even if the offeror agreed to hold it open, but revocation is effective only on receipt (thus a letter of revocation is
not effective until the offeree receives it). Revocation can be express (“I withdraw my offer”) or implied by conduct inconsistent
with the offer (property that would be the subject of the contract is sold to a third party). Revocation of an offer made to the
general public must be communicated in the same manner in which the offer was communicated. An offeree may reject an
offer, expressly (“I don’t need what you’re selling”) or impliedly (by conduct showing an intent not to accept). Rejection is
effective only on receipt. Asking about an offer (“Is that your best offer?”) is not rejection, but an ambiguous response may be
construed as a rejection (“The price seems low. I’ll bet you can do better than that.”). A subsequent attempt to accept will be
construed as a new offer. A counteroffer is a rejection and a simultaneous making of a new offer. The mirror image rule
requires that the acceptance match the offer—any material change in the terms automatically terminates the offer and
substitutes a counteroffer. An offeree may make an offer without rejecting the original offer, in which case two offers exist,
each capable of acceptance (“I don’t have the price that you ask but will try to raise it. I will offer to buy your goods for the
amount that I do have.”).
or in part.
4. Who may accept an offer? Only the person to whom the offer is made can accept it unless: (1) the offer is an option
contract (in which case the right to exercise the option is generally considered a contract right and is assignable or transferable,
with exceptions) or (2) the offeree is an agent (in which case the principal may accept, and a contract will be formed between
the principal and the offeror). If an offer is made to two or more persons, it must be accepted by all of them. (If individual
offers are made to two or more persons individually, contracts are formed only with those persons who accept the offer.)
5. What is unequivocal acceptance? Unequivocal acceptance is acceptance that adds no new terms or terms that
materially change the offer (“I accept the offer, but only if I can pay on ninety days’ credit”). Under the mirror image rule, an
acceptance subject to new conditions or with terms that materially change the offer may be considered a counteroffer. An
acceptance may be unequivocal even though the offeree expresses dissatisfaction (“I accept the offer, but I wish I’d gotten a
better deal”). An acceptance that is made conditional is a rejection (“I accept if you send a written contract”). Under the UCC,
acceptance is valid even if terms are added.
6. Why is a court likely to enforce a shrink-wrap agreement? A court is likely to enforce a shrink-wrap agreement partly
because it is more practical, from a business’s perspective, to enclose the full terms of a sale in a box. The court may reason
that the seller proposed an offer the buyer accepted after an opportunity to read the terms.
7. On what reasoning might a court refuse to enforce a shrink-wrap agreement? A court may reason that a buyer
learned of the shrink-wrap terms after the parties entered into their contract. On this basis, the court might conclude that the
terms were proposals for an addition to the contract, which means that they were not part of the contract unless the buyer
expressly agreed to them.
8. Is a court likely to enforce a click-on agreement? Yes, unless the agreement is objectionable on grounds that apply to
contracts generally. This is if the party who agrees to the terms has an opportunity to read them before the contract is made.
9. When does the UETA apply, and what is its effect? The UETA supports all electronic transactions, but it does not create
rules for them. The UETA does not apply unless the contracting parties agree to use e-commerce in their transactions.
10. Can parties to a contract that would otherwise be covered by the UETA choose to waive its provisions? Yes, contracting
parties can waive or change for their contract any or all of the UETA provisions (except for the rules that concern good faith,
diligence, public policy, and unconscionability, which cover all contracts). Parties whose contracts would not otherwise be
subject to the UETA can also bring their contracts within its provisions. The UETA applies in the absence of an agreement to the
contrary.
ACTIVITY AND RESEARCH ASSIGNMENTS

1. Have students bring current catalogs, advertisements, classified advertisements, and direct mail advertisements to
class. Tell them to be prepared to discuss which are offers and which represent preliminary negotiations.
2. Students like to ask about mail-order book and music club contracts. Ask students to bring some advertisements for
current offerings to class and discuss them.
or in part.
3. Have students bring to class examples of shrink-wrap and click-on agreements and review them in class. What terms
are they likely to object to, once they have examined the agreements more closely?
or in part.
EXPLANATIONS OF SELECTED FOOTNOTES IN THE TEXT

Footnote 3: The American Association of the Advancement of Science (AAAS) maintains Science NOW, a daily Internet
news service, and publishes Science, a scholarly journal. An ad on Science NOW asks for “news tips.” Erik Trell, a professor and
medical doctor, submitted a manuscript in which he claimed to have solved a famous mathematical problem, popularly known
as Beal's Conjecture. AAAS decided that Trell’s manuscript was neither news nor a solution to Beal’s Conjecture, and declined to
publish it. Trell filed a suit in a federal district court against AAAS, alleging breach of contract. Trell asserted that the Science
NOW ad was an offer, which he had accepted. The defendants filed a motion to dismiss. In Trell v. American Association of
Advancement of Science, the court dismissed the complaint. Science NOW’s ad for “news tips” was not an offer, but an in-
vitation for offers. “Advertisements are not offers—they invite offers. Likewise, responses to advertisements are not
acceptances—they are offers. At best, it was Trell's submission of the manuscript that was the offer, which Trell clearly admits
defendants declined to accept. This is the controlling law. The Court finds no distinction requiring a different analysis or result
merely because the advertisement was soliciting ideas (i.e., ‘news tips’) rather than goods, or because it was communicated
over the internet as opposed to through television, radio or newspaper advertisement.”
Could the Science NOW ad be construed as an “offer of reward”? Trell made this argument. The court stated simply,
however, that this was “unpersuasive and inapplicable to the solicitation for news tips. There is simply nothing in the Amended
Complaint which could reasonably be construed to support a holding that this advertisement was an offer of prize or reward.”
What would have been the purported prize? There is an offer of a cash prize of between $5,000 and $70,000 for a solution to
Beal’s Conjecture, but this is offered by an individual with no affiliation to AAAS or the other defendants
Besides breach of contract, Trell charged the defendants with fraud, misappropriation of property, breach of fiduciary
duty, unfair competition, conversion, and conspiracy with intent to defraud. What might have been Trell’s motivation for all of
these charges? Is this a reasonable basis for a lawsuit? Discuss. Trell might have been motivated by feelings of hurt over the
rejection of his manuscript and its proposed solution to Beal’s Conjecture. As painful as this might seem to a person enamored
of his or her ideas, it does not seem a reasonable basis for a lawsuit. Arguably, it could be unethical to pursue legal redress on
this ground, according to any of the approaches to ethical reasoning suggested in the text..
Should the court have made an exception to the rule applied in this case for an ad posted on the Internet? Why or why
not? No, because, as the court stated, there is “no distinction requiring a different analysis or result merely because the
advertisement was . . . communicated over the internet as opposed to through television, radio or newspaper advertisement.”
Yes, because the Internet is a more “personal” medium than the other sources that the court cites and its postings are more
readily taken to heart, or more reasonably construable as “offers,” and “accepted.”
Footnote 15: Mortgage Plus, Inc., asked DocMagic, Inc., for software to prepare and manage loan documents, and for
document preparation services. DocMagic sent Mortgage Plus a CD-ROM containing the software. Before it could be installed, a
click to agree to a “Software License and User Agreement” was needed. The agreement included a clause designating California
as the venue for resolution of disputes. After borrowers filed claims against Mortgage Plus, charging it with mistakes, which cost
$150,000 to resolve, the firm filed a suit in a federal district court against DocMagic, alleging that its software was to blame. The
defendant filed a motion to transfer the suit to a court in California. In Mortgage Plus, Inc. v. DocMagic, Inc., the court
concluded that the software licensing agreement was a valid contract because a user had to agree to its terms before the
software could be installed and used. The forum selection clause was thus enforceable, and the court ordered the suit
transferred to a federal district court in California. “[T]he software required users to accept the terms by clicking through a
series of screens before they could access and subsequently install the software. . . . Plaintiff had a choice as to whether to
download the software and utilize the related services; thus, . . . installation and use of the software with the attached license
constituted an affirmative acceptance of the license terms.”
or in part.
Was there consideration for the software licensing agreement? The court “finds sufficient consideration to enforce the
parties’ mutual obligations, i.e., Mortgage Plus agreed to pay DocMagic a fee in exchange for DocMagic’s permission (a) to
install the loan preparation computer software program; and (b) to use the loan document preparation and delivery services
provided by DocMagic in conjunction with such software.”
Should the court have applied the Uniform Commercial Code (UCC) to the agreement in this case? On this question, the
court said, “The U.C.C. applies only to the sale of goods and is not applicable to the sale of services. Even if the contract here is
construed to include both services and goods, . . . the U.C.C. will apply only when the predominant purpose of the contract is a
sale of goods. In this case, the service provided by DocMagic in preparing documents for Mortgage Plus and other lender cus-
tomers clearly is the predominant purpose of the Agreement. The software provided to DocMagic customers is worthless
without the actual loan preparation services; thus, the software is wholly incidental to the agreement.”
If click-wrap agreements were not enforceable, what effect would this have on the software industry? Most likely,
software sellers would not do much business online, and would package their products differently. There would be little reason
to use click-on agreements if they were not enforceable.
Suppose that the individual who clicked on the “Yes” button and installed the software was not authorized to do so.
Would the result have been different? Why or why not? No. Mortgage Plus made this argument, but the court noted that even
if an unauthorized person clicked the “Yes” button, the firm “thereafter ratified its acceptance of the Software Licensing
Agreement.” Ratification is the adoption or confirmation of an unauthorized act. For six years after the software was initially
installed, Mortgage Plus “utilized the software to create and electronically submit literally hundreds of user worksheets to
DocMagic for processing and preparation of final loan documents. By doing so, Mortgage Plus obtained the benefits of the
Agreement, and thereby ratified any unauthorized acceptance of its terms.”
ANSWERS TO ESSAY QUESTIONS IN

STUDY GUIDE TO ACCOMPANY BUSINESS LAW TODAY, NINTH EDITION
1. What is an offer? What are the elements necessary for an effective offer? An offer is a promise to do or refrain from
doing some specified thing in the future. The elements necessary for an effective offer are: (1) a serious intent by the offeror to
be bound by the offer; (2) reasonably certain, or definite, contractual terms; and (3) communication of the offer by the offeror
to the offeree.
2. Are shrink-wrap and click-on agreements enforceable? A shrink-wrap agreement is an agreement whose terms are
expressed inside a package that contains computer hardware or software. The terms usually focus on warranties, remedies, or
other issues related to the product’s use. A court is likely to enforce this agreement partly because from a business perspective,
it is more practical to enclose the full terms of a sale in a package rather than, for example, to read them over a phone while
taking an order for a product. The court might explain that the seller proposed an offer the buyer accepted after an opportunity
to read the agreement. The agreement would not be enforced if the court reasoned that the buyer learned of the terms after
the parties made their contract, and the buyer did not then agree to the terms. On this basis, the terms would be proposals for
addition to the contract, which would require the buyer’s express assent. A click-on agreement occurs when a buyer, to
complete a transaction on a computer, indicates his or her assent to be bound by the terms of an offer by clicking on a button
that says, for example, “I assent.” This agreement is likely enforceable, unless it is objectionable on grounds that apply to
contracts generally, providing that the party who agrees to the terms has an opportunity to read them before the contract is
made.
or in part.
REVIEWING—
AGREEMENT IN TRADITIONAL AND E-CONTRACT

Ted and Betty Hyatt live in California, a state that has extensive statutory protection for consumers. The Hyatts
decided to buy a computer so that they could use e-mail to stay in touch with their grandchildren, who live in another
state. Over the phone, they ordered a computer from CompuEdge, Inc. When the box arrived, it was sealed with a
brightly colored sticker warning that the terms enclosed within the box would govern the sale unless the customer
returned the computer within thirty days. Among those terms was a clause that required any disputes to be resolved in
Tennessee state courts. The Hyatts then signed up for Internet service through CyberTool, an Internet service provider.
They downloaded CyberTool’s software and clicked on the “quick install” box that allowed them to bypass CyberTool’s
“Terms of Service” page. It was possible to read this page by scrolling to the next screen, but the Hyatts did not realize
this. The terms included a clause that stated all disputes were to be submitted to a Virginia state court. As soon as the
Hyatts attempted to e-mail their grandchildren they experienced problems using CyberTool’s e-mail service, which
continually stated that the network was busy. They also were unable to receive the photos sent by their grandchildren.
Ask your students to answer the following questions, using the information presented in the chapter.
1. Did the Hyatts accept the list of contract terms included in the computer box? Why or why not? What is the name
used for this type of e-contract? The contract between the Hyatts and CompuEdge was a shrink-wrap agreement. The
company conspicuously notified consumers of the terms included in the agreement in the box. In addition, the
company emphasized on the box that the purchasers had thirty days to return the computer and rescind their contract.
By opening the box and failing to return the computer within the thirty days, the Hyatts would likely be held to have
assented to the terms.
2. What type of agreement did the Hyatts form with Cyber Tool? The contract between the Hyatts and CyberTool was
a click-on agreement.
3. Suppose that the Hyatts experienced trouble with the computer’s components after they had used the computer
for two months. What factors will a court consider in deciding whether to enforce the forum-selection clause? Would
a court be likely to enforce the clause in this contract? Why or why not? In deciding whether to enforce the forum-
selection clause, a court will likely consider whether the clause deprives the Hyatts of their rights under state law. For
example, a court might weigh the Hyatts’ rights under California state law against their rights in Virginia. How these
rights balance might determine whether a court would enforce the clause.
4. Are the Hyatts bound by the contract terms specified on CyberTool’s “Terms of Service” page that they did not
read? Which of the required elements for contract formation might the Hyatt’s claim lack? How might a court rule on
this issue? There is no requirement that the parties to a contract must read all of the contract terms for the terms to be
enforceable. Because the Hyatts indicated their assent to the terms by clicking “I agree,” the terms became part of
their contract, and they are bound by the terms regardless of whether they read them. A court will most likely find that
the Hyatts agreed to the contract terms when they clicked on the “quick install” box.
or in part.
LINKING THE LAW TO MARKETING—
CUSTOMER RELATIONSHIP MANAGEMENT

Online companies not only target its individual customers, they also utilize each customer’s buying habits to create
generalized marketing campaigns. Might any privacy issues arise as an online company creates a database for
generalized marketing campaigns? Explain your answer. Increasingly, privacy concerns for online companies have made
the news, but usually because a database has been stolen online by cyber criminals. When such databases are stolen,
they may reveal much more than information about different individuals’ buying habits. Specifically, they can contain
home addresses, phone numbers, and credit card information. Barring such cyber crime issues, reputable online
companies make sure that individual buying-habit information is not accessible to even company employees. Rather,
all such data is utilized in an anonymous environment, and company employees rarely have access to such data.
Moreover, the greater the public’s interest in online privacy, the more online companies will invest in protecting
individual customer privacy rights.
EXAMPREP—
ISSUE SPOTTERS
1. Joe advertises in the New York Times that he will pay $5,000 to anyone giving him information as to the
whereabouts of Elaine. Max sees a copy of the ad in a Tokyo newspaper, in Japanese, and sends Joe the requested
information. Does Max get the reward? Why or why not? Yes. An offer must be communicated to the offeree, so that
the offeree knows it. For example, a reward must be communicated so that the offeree knows of it. If so, the offeree
can claim the reward for doing whatever the reward was offered for doing.
2. Applied Products, Inc., does business with Beltway Distributors, Inc., online. Under the Uniform Electronic
Transactions Act (UETA), what determines the effect of the electronic documents evidencing the parties’ deal? Is a
party’s “signature” necessary? Explain. First, it might be noted that the UETA does not apply unless the parties to a
contract agree to use e-commerce in their transaction. In this deal, of course, the parties used e-commerce. The UETA
removes barriers to e-commerce by giving the same legal effect to e-records and e-signatures as to paper documents
and signatures. The UETA it does not include rules for those transactions, however.
or in part.
Critical Thinking and Writing Assignment—
Case Analysis Question

Case No. 2
Feldman v. Google, Inc.
United States District Court,
Eastern District of Pennsylvania, 2007.
513 F.Supp.2d 229.
1 Issue: The dispute between the parties to this case centered on what agreement and asked which question? In
Google, Inc.’s AdWords program, when an Internet user searches on www.google.com using keywords that an
advertiser has identified, an ad appears. If the user clicks on it, Google charges the advertiser. Google requires an
advertiser to agree to certain terms before placing an ad. These terms—set out in a preamble and seven paragraphs—
are displayed online in a window with a scroll bar. A link to a printer-friendly version of the terms is at the top of the
window. At the bottom of the page, viewable without scrolling, are the words, “Yes, I agree to the above terms and
conditions,” and a box on which an advertiser must click to proceed. Among the terms, a forum selection clause
provides that any dispute over the program is to be “adjudicated in Santa Clara County, California.” Lawrence Feldman,
a lawyer, participated in the program by selecting keywords, including “Vioxx,” “Bextra,” and “Celebrex,” to trigger a
showing of his ad to potential clients. In a subsequent suit between Feldman and Google in a federal district court in
Pennsylvania, Feldman claimed that at least 20 percent of the clicks for which he was charged $100,000 between
January 2003 and January 2006 were fraudulent. Feldman filed a motion for summary judgment. Google asked the
court to transfer the case to a court in Santa Clara County, California. The question was whether the online contract
between Feldman and Google was enforceable.
2 Rule of Law: What rule concerning the existence of a contract did the court apply in this case? An express contract
requires reasonable notice of terms and mutual assent (voluntary consent).
3 Applying the Rule of Law: How did the language in the parties’ agreement and its context affect the application of
the rule of law? The court held that “the requirements of an express contract for reasonable notice of terms and
mutual assent are satisfied” in this situation. Feldman and Google were bound to the terms. The court pointed out that
the contract at issue was a click-wrap agreement (or click-on agreement) that appeared on an Internet Web page.
“Even though they are electronic, click-wrap agreements are considered to be writings because they are printable and
storable. * * * Absent a showing of fraud, failure to read an enforceable click-wrap agreement, as with any binding
contract, will not excuse compliance with its terms.” By clicking “Yes,” Feldman agreed to all of the terms. Without
clicking the “Yes” button, Feldman could not have engaged in an agreement with the defendant.
4 Conclusion: In whose favor did the court resolve this dispute? Why? The court denied Feldman’s motion for
summary judgment and granted Google’s motion to transfer the case. The court held that the online contract between
or in part.
Feldman and Google was enforceable.
or in part.
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PLATE CCI.
AIZOON CANARIENSE.
Purslane-leaved Aizoon.
CLASS XII. ORDER IV.

ICOSANDRIA PENTAGYNIA. Twenty Chives. Five Pointals.
GENERIC CHARACTER.
Calyx. Perianthium monophyllum, quinquepartitum; laciniis lanceolatis,

persistentibus.
Corolla nulla.
Stamina. Filamenta plurima, capillaria, sinui calycis per phalanges in
serta. Antheræ simplices.
Pistilla. Germen pentagonum, superum. Stili quinque, simplices.
Stigmata simplicia.
Pericarpium. Capsula ventricosa, retusa, pentagona, quinquelocularis,
quinque valvis.
Semina plura, subrotunda.
Empalement. Cup one leaf, five-parted; segments lance-shaped,
remaining.
Blossom none.
Chives. Threads numerous, hair-like, inserted into the hollow part of the
cup in bunches. Tips simple.
Pointals. Seed-bud five-sided, above. Shafts five, simple. Summits
simple.
Seed-vessel. Capsule bellied, dented, five-sided, five-celled, five-valved.
Seeds many, roundish.
SPECIFIC CHARACTER.
Aizoon foliis cuneiformi-ovatis; floribus solitariis, subsessilibus,
axillaribus.
Aizoon with leaves between wedge and egg-shaped; flowers solitary,
growing almost close to the stem from the insertion of the leaves.
REFERENCE TO THE PLATE.
1. The Empalement shewn from the inside.

2. The same shewn from the outside.
3. A Chive magnified.
4. The Pointals natural size.
5. The same, magnified.
This plant is herbaceous, and is found near the sea coast, in most parts of the
world, within the tropics. It has a character common to many Genera of the
natural order of succulents, such as Mesembryanthemum, Crassula, &c. that
of an indeterminate number of pointals; which, in this genus, extend from
three, to five, on different plants; this circumstance not having been
sufficiently attended to has unfortunately occasioned some confusion.
Brown in his Natural History of Jamaica has described it as growing on that
Island, and with five pointals, therefore placed it to its right genus. Plumier,
Sloane, &c. treated it as Portulaca, to which, as the genus now stands, it in
no way affines. Læfling in his Iter Hispanicum, published in 1758, having
found the plant in Spain with three pointals, immediately placed it to another
genus, Halimum; upon whose authority, corroborated by Jacquin, (who
acknowledges a variation in the number of pointals, on different plants,
found in the different Caribee Islands,) Linnæus took up the plant, said to
have but three pointals, under the title Sesuvium. As to the plant said to be
cultivated by Miller in the Hort. Kew: under the last named genus, we have
no difficulty in referring that, to the Aizoon canariense of the same work; as
the time of flowering not being noticed, the distinction of character could not
be observed, and the genus introduced, taken upon the gratis dictum of
Miller. Burmann, in his Ed: of Rumphius’s plants of Amboyna, has it as
Halimus; and Plukenet as Portulaca from East Indian specimens; with
numbers of other Botanists from different parts; as Ægypt, the Canary
Islands, &c. &c. under different names.
Seeds received from Spain of our plant were sown by Mr. Anderson in
1798, at the gardens of J. Vere, Esq. Kensington Gore; since which time, it
has annually died to the ground, about November, and re-appeared in Spring;
from this circumstance, the great delicacy of the plant, and having been
treated as an annual, it has been repeatedly lost to this country; though so
constantly introduced, in almost every parcel of seeds which arrives from
either the East or West Indies. It may be increased by cuttings made early in
the year, and put in a hot-bed to accelerate their growth, and should be
planted in rich loamy earth. It flowers from July till September. To preserve
it more than one year, it must be kept in the hot-house.
PLATE CCII.
SAMYDA SERRULATA.
Sawed-leaved Samyda.
CLASS X. ORDER I.
DECANDRIA MONOGYNIA. Ten Chives. One Pointal.
GENERIC CHARACTER.
Calyx. Perianthium monophyllum, interne coloratum; tubus

campanulatus, decemstriatus; limbus quinquefidus, laciniis ovatis planis,
patentissimis, obtusis, duabus acumine auctis.
Corolla nulla.
Nectarium monophyllum, conicum, truncatum, decemstriatum,
longitudine fere calycis, ejusque limbo ad bann insertum, ore obtuse 10 ad
18-dentato.
Stamina. Filamenta nulla. Antheræ decem ad octo-decem, oblongæ,
erectæ, parvæ, dentibus nectarii insidentes.
Pistillum. Germen ovatum. Stylus subulatus, erectus, longitudine
nectarii. Stigma capitatum, obtusum.
Pericarpium. Capsula subrotunda, quadrisulcata, coriacea, crassa,
unilocularis, quadrivalvis.
Semina plurima, subovata, obtusa, basi foraminulo notata, valvulis affixa,
obvoluta pellicula pulposa.
Empalement. Cup one leaf, coloured within; tube bell-shaped, ten-
striped; border five-cleft, segments egg-shaped, smooth, very much spread,
obtuse, two lengthened by a pointed end.
Blossom none.
Honey-cup, one leaf, conical, appearing cut off, ten-striped, nearly the
length of the cup and fixed to it at the base of the border, obtusely from 10 to
18-toothed at the mouth.
Chives. Threads none. Tips from 10 to 18, oblong, upright, small, fixed to
the teeth of honey-cup.
Pointal. Seed-bud egg-shaped. Shaft awl-shaped, upright, the length of
the honey-cup. Summit headed, blunt.
Seed-vessel. Capsule roundish, four-furrowed, leathery, thick, one-
celled, four valves.
Seeds many, nearly egg-shaped, blunt, marked with a small hole at the
base, fixed to the valves, surrounded with a slight pulpy skin.
SPECIFIC CHARACTER.
Samyda floribus roseis, dodecandris; foliis ovato-oblongis, serrulatis.

Samyda with rosy coloured flowers having twelve chives; leaves between
egg-shaped and oblong, slightly sawed.
1. The Empalement, with its honey-cup, and the tips, cut and
spread open.
2. The Pointal and seed-bud natural size, the summit detached and
magnified.
3. The Seed-bud cut transversely and magnified, to shew the
number of valves and situation of the seeds.
The Sawed-leaved Samyda is an inhabitant of most of the West India
Islands, but was received in England, about the year 1795, from the Island of
St. Vincent; transmitted from thence, by Mr. Anderson, curator of the
Botanic garden, originally established there, under the sanction of our
government, by Dr. Young. It is a very tender plant, grows to about three feet
in height, making but few small branches, and rather weak in the stem. Our
drawing was taken in July this year at the garden of T. Evans, Esq. Stepney,
who we believe first had it to flower in this kingdom. It is propagated by
cuttings; must be kept in the bark-bed of the hot-house, and should be
planted in very rich mould.
PLATE CCIII.
IXIA COLUMNARIS.
Columnar-chived Ixia.
CLASS III. ORDER I.

TRIANDRIA MONOGYNIA. Three Chives. One Pointal.
ESSENTIAL GENERIC CHARACTER.
Corolla 6-petala, patens, æqualis.

Stigmata tria, erectiusculo-patula.
Blossom 6 petals, spreading, equal.
Summits three, upright-spreading.
SPECIFIC CHARACTER.
Ixia filamentis basi cohærentibus, floribus capitatis; corollis purpureis.

Ixia with threads united at the base; flowers grow in heads; blossoms
purple.
1. The two Valves of the empalement.

2. A Blossom cut open.
3. The Chives and Pointal, with the tube of the blossom, the border
cut off.
4. The Chives cut and spread open, with the tube of the blossom,
magnified.
5. The Pointal and Seed-bud, with one of the Summits detached
and magnified.
Here we have a plant which presents one of those obstacles, constantly
met, in all attempts to a systematic arrangement of the productions of nature.
Every feature of Ixia we find positively expressed, but in the unison of the
Threads; a circumstance, which Linnæus in his system, always deemed of
such singular moment, that a number of Genera have been formed, from this
natural order of plants, hinging on this only character.
But, as this plant has been named, and accurately described by Mr.
Salisbury, in the Prodromus to his garden 36. n. 18; and continued, from
him, by Professor Martyn, in his Edit. of Miller’s Dict. article Ixia, 50; in the
following therefore such superiour judgments to our own, we have thought it
proper, not to make any alteration; and in consequence, have retained his
Generic and Specific title. The extreme brilliance of the flowers of Ixia
Columnaris, pervading all the varieties, (of which we have drawings of 6,) is
not exceeded by any in the whole Genus; they generally, are not longer
expanded than for about four hours, and that only under a hot sun; from
about eight, till twelve o’clock; when they close for the day; but nevertheless
they have a permanence not usual in Ixias, as the same blossoms will open
diurnally for above a week. It is a native of the Cape of Good Hope, and
came first to England, by the way of Holland, about the year 1794. It flowers
in June and July, amongst the latest of the tribe, and increases by the root in
abundance. Our figure was taken at the Hammersmith Nursery.
PLATE CCIV.
GERANIUM LACINIATUM. Var. flore purpureo.
Ragged-leaved Geranium. Purple flowered Variety.
CLASS XVI. ORDER IV.

MONADELPHIA DECANDRIA. Threads united. Ten Chives.
Monogyna. Stigmata quinque.

Fructus rostratus, penta-coccus.
One Pointal. Five summits.
Fruit furnished with long awns; five dry berries.
SPECIFIC CHARACTER.
Geranium foliis radicalibus, integris laciniatisque, petiolis filiformibus;

calycibus monophillis; staminibus quinque fertilibus; radice tuberosa;
floribus purpureis.
Geranium with leaves growing from the root, entire and jagged,
footstalks thread-shaped; cups one-leaved; five fertile chives; root tuberous;
flowers purple.
1. The Empalement magnified.

2. The Chives spread open.
3. The Pointal and seed-bud magnified.
This very handsome variety, (for we cannot consider it as a species,) of the
Geranium laciniatum, was imported in 1800, from the Cape of Good Hope,
by G. Hibbert Esq.; in whose collection it flowered, last year, in the month
of June, when our drawing was taken; and we believe it is in no other at
present in this kingdom. Mr. Allen, under whose care that collection is
preserved in such high order and perfection, and to whose kind
communications, we are much indebted; informs us, that he has not, as yet,
been able to increase it; but, from every appearance, the plant, he has no
doubt, may, by the root, as are the other species which have the tuberous
character; and that he did not treat it differently from the rest of the
Geraniums which compose this branch of that interesting family.
PLATE CCV.
PLATYLOBIUM LANCEOLATUM.
Lance-shaped-leaved Flat-pea.
CLASS XVII. ORDER IV.

DIADELPHIA DECANDRIA. Chives in two Sets. Ten Chives.
Calyx campanulatus, quinquesidus; laciniis duabus supremis maximis,

obtusis. Stamina omnia coalita. Legumen pedicellatum, compressum, dorso
alatum; polyspermum.
Cup bell-shaped, five-cleft; the two upper segments very large and
obtuse. Chives all united. Pod on a footstalk, compressed, winged along the
back; many seeded.
See Plate CXCI. Vol. III. Platylobium scolopendrum.
SPECIFIC CHARACTER.
Platylobium foliis glaberrimis, distichis, lineari-lanceolatis; floribus

solitariis, axillaribus; ramis junioribus sub-compressis.
Flat-Pea with very smooth leaves pointing opposite ways, linear-lance
shaped; flowers grow solitary from the lower part of the leaves close to the
branches; the younger branches are rather flatish.
1. The Empalement of the flower.

2. The Standard, or upper petal of the blossom.
3. One of the Wings, or side petals of the blossom.
4. The two lower Petals, or keel of the blossom.
5. The Chives, natural size.
6. The same, magnified.
7. The Seed-bud, natural size.
8. The same magnified, but rather more mature.
No Class, amongst the 24, is more distinct in its natural character than
Diadelphia; yet, since the discovery of New South Wales, no one has
presented more difficulty to the botanist. From the great number of plants of
that country, appertaining to this Class, and the strong differing characters
which most of them exhibit, such indeed, as might formerly have been
thought of sufficient moment to constitute new Genera; many must now
bend a little for the ease of science; or otherwise they will in a short time
become doubled in number; a matter of no small moment to weak although
willing memories. Our having placed the P. scolopendrum of this Volume,
Pl. CXCI., and our present plant to the Genus Platylobium, is the occasion of
the above prelude; as it may be thought by some who have not seen the seed
vessel and seeds, the principal parts upon which the Genus is founded, that
nature is a little outraged in so doing; but, without we had so joined them,
we must have given them a new title. This plant was introduced at the same
time as the P. scolopendrum, and the three other species now in Britain; not
one of them, but has baffled all our most experienced cultivators to increase
it, by any other mode than from the seed; some of which has been procured
from the P. formosum, only. They all require to be kept in the dryest part of
the green-house, as they are impatient of damp. Our drawing was made in
November 1801, at the Nursery of Messrs. Lee and Kennedy, Hammersmith,
by whom it was first raised in 1792. The general height of the Platylobiums,
is about three feet and a half, at most, in this country, and they do not form
bushy shrubs. They require a light, sandy peat soil, with rather less root
room, than is in general necessary for plants of equal size.
PLATE CCVI.
DRACÆNA BOREALIS.
Oval leaved Dracæna.
CLASS VI. ORDER I.

HEXANDRIA MONOGYNIA. Six Chives. One Pointals.
GENERIC CHARACTER.
Calyx nullus.
Corolla. Petala sex, oblonga, erectiuscula, æqualia, unguibus
cohærentia.
Stamina. Filamenta sex, unguibus inserta, subulata, medio crassiora, basi
membranacea, longitudine vix corollæ. Antheræ oblongæ, incumbentes.
Pistillum. Germen ovatum, sexstriatum. Stylus filiformis, longitudine
staminium. Stigma trifidum, obtusum.
Pericarpium. Bacca ovata, sexsulcata, trilocularis.
Semina solitaria, ovato-oblonga, apice incurvata.
Obs. Character fere Asparagi, habitus diversus.
Empalement none.
Blossom. Petals six, oblong, rather upright, equal, cohering by the claws.
Chives. Threads six, inserted into the claws, awl-shaped, thicker about
the middle, skinny at the base, almost the length of the blossom. Tips
oblong, incumbent.
Pointal. Seed-bud egg-shaped, six-streaked. Shaft thread shaped, the
length of the chives. Summit three-cleft, obtuse.
Seed-vessel. Berry egg-shaped, six-furrowed, three-celled.
Seeds solitary, oblong-egg-shaped, turned inward at the end.
Obs. The Character is very near Asparagus, the habit different.
SPECIFIC CHARACTER.
Dracæna, herbacea, subcaulescens, foliis elipticis.

Dracæna, herbaceous, rather aspiring to a stem, leaves eliptic.
1. A Petal with its chive.

2. A Chive, magnified.
3. The Pointal, magnified.
4. A ripe Berry.
5. The same, cut transversely.
About the year 1776, this plant was first received in England, by Messrs.
Lee and Kennedy from Montreal, Canada, N. America. It is a native of all
the northern parts of that country, as far as New England; propagates itself
by the root, and flowers in July. It will not thrive but on a shady border,
which should be made of light sandy peat.
Much we revere the name of Solander, and highly rate his merit as a
Botanist; yet we cannot forbear stating our dissent from the arrangement of
this plant, as a Dracæna, certainly nothing can be more dissimilar, in every
part; this may be easily traced by comparing our figure and dissections, as
connected with the Generic character. The whole natural habit of the plant,
points out Convallaria for its genus, to which it is much nearer allied than
Dracæna, even in the sexual characters. However, we only state our
opinions, without even thinking of change, as the plant is known as
Dracæna, having been figured and described in the First Vol. of the Kew
Catalogue, page 454, under the present title.

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ADDITIONAL CASES ADDRESSING THIS ISSUE —

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Case 10.2: Basis Technology Corp. v. Amazon.com, Inc.

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Restatement (Second) of Contracts, Section 33

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