Magazine article Business Credit

Careless Clicking: The Consequences of "I Agree"

Magazine article Business Credit

Careless Clicking: The Consequences of "I Agree"

Article excerpt

Browsing on the Internet one day, Sally decides to make a purchase online. Before completing the transaction, Sally reaches a screen that requires her to click "I agree" before she is able to proceed to the next screen to complete her purchase. Anxious to submit her payment information and complete her purchase, Sally quickly clicks the "I agree" box without paying much attention to the terms and conditions displayed on her screen. She completes her purchase. A short while later, Sally receives her merchandise and gives little thought to her experience.

Sound familiar? In recent times, a majority of us have experienced the above scenario with little thought. Parties complete purchases and transactions online without a second thought to the legalese that may appear on the screen. However, if you have ever encountered a problem with an online transaction, you may have found yourself bound by the terms and conditions that were quickly overlooked when the "I agree" button was selected in order to click though and complete the purchase. Although small personal purchases might pose little more than aggravation and nuisance, for companies completing thousands of dollars in transactions online, the terms and conditions can pose devastating consequences if they are breached. This begs the question, "Are those terms really binding?"

Prior to heavy use of the Internet, a buyer might send a purchase order with the buyer's terms and conditions to a seller. The seller would either confirm with its own terms and conditions in an acknowledgement or might just ship with an invoice listing seller's terms and conditions. If there was a problem, the "battle of the forms" might break out. Now that much of purchasing is conducted electronically, the buyer is very likely not to have any means of stating its terms and conditions to the seller. This provides the seller with a greater opportunity to have its terms and conditions accepted through the ordering process.

Recent case law suggests that courts are often willing to enforce many of the electronic terms and conditions on a company website. As with traditional contract principles, courts hold that, absent a showing of fraud, a failure to read and understand the terms and conditions is not a valid defense and will not excuse compliance with the terms. Courts are generally willing to find that a contract has been formed if the parties act as if they have an agreement. Clicking an acceptance followed by the shipment of goods is likely to demonstrate there is agreement to form a contract.

Lawyers spend time crafting terms and conditions, attempting to provide a resolution to any unexpected conditions that may arise. Of course, the merchant seeks to enforce its terms and conditions, which are typically drafted with its interests in mind. Therefore, it is essential that companies conducting business online, whether as a buyer, seller or both, be cognizant of the terms and conditions governing their agreements and aware of the potential issues that may arise. As a seller or merchant, businesses will seek to enforce the terms and conditions posted on their websites because they are more likely to be favorable to the seller. As a buyer, there may be no real alternative to completing orders or purchases online, but how can buyers complete their purchasing while simultaneously protecting themselves from terms and conditions they find unfair and/or unreasonable?

What Terms Govern?

The textbook example of conflicting terms and conditions occurs when ABC Co. seeks to purchase goods from XYZ Inc. XYZ Inc. sends a price quotation to ABC Co., containing XYZ Inc.'s terms and conditions for the sale. In response, ABC Co. responds with a purchase order form, containing ABC Co.'s terms and conditions, which conflict with XYZ Inc.'s price quotation terms. The parties complete the transaction with little attention paid to the terms and conditions that appear on the standard forms and without resolving the conflicting terms. …

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