Question

MGT345 Business law Week 2: Assignment 1 (Analysis) Instructions: Read the following information. Then submit a minimum 500-750 word analysis of the questions presented. Proper APA formatting should be followed. Issue: Online retailers and service providers frequently have a variety of agreements that consumers must consent to, including purchasing terms, privacy policies, etc. Consumers or site users typically must click a box indicating their agreement to the terms listed. Address the following issues: Using what you know about the required parts of a contract, do these agreements constitute an enforceable contract? Address each contract requirement and whether this type of agreement meets each requirement. Explain in detail. Is there anything that an online platform could do in structuring the agreement to aid in its enforceability as a contract?

Answer 1

"Clickwrap" agreements and their enforceability as a legal contract

Abstract
Many online retailers and service providers have a variety of agreements which are meant to be accepted by the users by clicking on a box indicating their assent. Such contracts are called "Clickwrap" agreements. The characteristics of clickwrap agreements were examined in terms of an enforceable contract. Their features were compared to determine whether they are legally enforceable or otherwise. It was found that clickwrap agreements possess most of the features of an enforceable contract. On the few occassions, where it doesn't, changes can be made to the agreements.

Elements of a Contract
The requisite elements that must be established to demonstrate the formation of a legally binding contract are (1) offer; (2) acceptance; (3) consideration; (4) mutuality of obligation; (5) competency and capacity; and, in certain circumstances, (6) a written instrument. We shall address each rquirement in terms of a clickwrap agreement.

1. Offer: An offer is a promise to act or refrain from acting, which is made in exchange for a return promise for the same. Online terms of service, purchasing terms or privacy policies are ubiquitous. Every website has some form of service terms or privacy agreements, from sites that are purely informational and passive , to those which focus on e-commerce. But merely posting agreements on a site does not make them enforceable. The mere offering of the terms does not guarantee enforceability.
2. Acceptance: Acceptance of an offer is the expression of assent to its terms. Acceptance must generally be made in the manner specified by the offer or in a reasonable manner, if the manner is not specified. An acceptance is only valid, however, if the offeree knows of the offer, the offeree manifests an intention to accept, and the acceptance is expressed as an unequivocal and unconditional agreement to the terms of the offer. Under clickwrap agreements, users are required to affirmatively "accept" terms as an express condition to initially engage with a website, whether to purchase or sell goods online, post videos, subscribe to video-on-demand services or download games. Clickwrap agreements are generally enforceable because end-users must affirmatively accept the agreement by clicking that are conspicuously posted on or linked to directly from the same page as the acceptance mechanism (such an "I accept" icon), even if they choose not to read it.
3. Consideration: Each party to a contract must provide something of value that induces the other to enter the agreement. The law calls this exchange of values “consideration.” The value exchanged does not need to be money. The offeree must suffer a legal detriment. As a general rule, legal detriment is found if the offeree relinquishes a legal right in fulfilling his or her contractual duties. Under a clickwrap agreement, the offeree signs or affirmatively accepts the terms and consideration of contract. This is thought of as consideration in return for availing ecommerce facilities.
4. Mutuality of Obligation: Under the mutuality of obligation doctrine, both parties must be bound to perform their obligations or the law will treat the agreement as if neither party is bound to perform. When an offeree and offeror exchange promises to perform, one party may not be given the absolute and unlimited right to cancel the contract. Clickwrap agreements are binding on both the consumers and the e-commerce websites and enforceable by both parties.
5. Competency and Capacity: A natural person who enters into a contract is assumed to possesses complete legal capacity to be held liable for the duties he or she agrees to undertake, unless the person is a minor, mentally incapacitated, or intoxicated. When a party does not understand the nature and consequences of an agreement that he or she has entered, the law treats that party as lacking mental capacity to form a binding contract. It is difficult to ensure mental capacity, age requirement or intoxication under clickwrap agreements. This could affect the enforceability of such an agreement considerably.
6. Written Instrument: Not every contract needs to be in writing to be valid and binding. But nearly every state legislature has enacted a body of law that identifies certain types of contracts that must be in writing to be enforceable. In legal parlance this body of law is called the statute of frauds. The statute of frauds attempts to accomplish this objective by prohibiting the enforcement of particular contracts, unless the terms of the contract are expressly reflected by written note, memorandum, or agreement that is signed by the parties or their personal representatives.

Remedies

Online platforms can restructure and reform agreements to increase their enforceability. One of the methods is to ensure a minimum age requirement for accessing an online platform. A maths question or captcha image could be used to ensure that the user accepting the terms is mentally capable of understanding the terms and is not intoxicated. The online platform should try to make the agreements precise and concise for better understanding of a layman. The online platform could also make it compulsory for users to read the terms by not allowing a user to click on accept until a certain amount of time has passed. A timer could be inserted after which acceptance box should be displayed.

Conclusion
Clickwrap agreements possess many features of an enforceable contract, i.e., Offer, Acceptance, Consideration and Mutuality of Obligation. The agreements do not have to be written agreements except in certain cases. However, establishing the competency and capacity of a natural person is difficult under such agreements. Certain changes could be made to ensure this requirement is fulfilled. While clickwrap agreements are enforceable, the changes made could help dissuade users or platforms from challenging the validity of such agreements.

References:
www.contracts.uslegal.com
www.mondaq.com, "Ensuring Enforceability Of Online E-Commerce", Barry Werbin, June 21, 2016