When have you entered into a contract online?

The internet is tricky when it comes to contract formation. Many of us enter into contracts or think we enter into contracts multiple times a day. Every time we use something or download something the provider is attempting to bind you into a contract…

How do you know if you have successfully entered into a binding contract?  Here are some guidelines:

Notice of the terms and assent or agreement are the key elements to determining if an enforceable contract has been entered. If you are not given notice of terms and the opportunity to easily back out if you do not agree there is likely no contract.  When determining if notice was given courts will consider the following:(1) whether the terms are obvious, (2) the course of dealing between the company and the customer, and (3) industry practices.

Additionally, if you have not agreed to the terms there is likely no contract. Whether “reasonable people in the parties’ positions would understand [the actions] to be assent” is the standard used by courts. Therefore, if a “reasonable person” wouldn’t think that the actions taken would equate to agreement, then there is likely no contract.

What, how, and when terms appear and if your actions can be considered agreement are important if trying to determine if a contract has been formed.  It is common for additional terms to be the start of a new and also binding contract, so be aware that each interaction can form a new contract that you are obligated to uphold.

Main takeaways:

  • Companies must clearly provide notice of additional terms
  • Parties must clearly agree to additional terms
  • Customers should expect additional terms as part of the initial contract formation event. Courts will apply a reasonable person analysis to both the terms of the contract as well as the method used to notify the customer of the additional terms.

Contract formation is a determination made by the court, these are merely guidelines. Read everything you agree to and be aware of the site or company’s policies so you know your potential obligations.

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