Cornwall Contract Disputes: Online Contracts

Forming Online Contracts

Contracts online has revolutionised business as almost all types of contract can be made online and contracting online is the same as contracting off-line??to be legally binding in that there must be an agreed set of terms and both parties must intend to enter into a legally binding agreement and ‘consideration’ ??for the goods or services being provided.

The law breaks down contract formation into an invitation to treat, an offer and an acceptance. The invitation to treat comes before the offer and is the seller saying that they may be prepared to enter into a contract but the seller could refuse to sell it to you for any reason so acceptance is needed

Websites advertisement ??of an item for sale on a site will amount to an invitation to treat so an offer will only be made when a customer gives notice of his intention to buy an item from the site e.g. ??submit an order and which the seller will ??be free to accept or reject the offer.

With the increase of automated online business confusion arises particularly??regarding acceptance. which to be effective must be communicated.

It is not clear legally when an online acceptance is communicated is it ??the seller processing the customer’s order through the site

If by email, is it ??when the seller presses the ‘Send’ button? That is??when it leaves the seller’s email system or when it arrives in the buyer’s email system or when the buyer reads it

There are a number of initiatives whic are intended to help but ??state, in the terms and conditions themselves, when acceptance will be deemed to have taken place.

The use of an automated receipt of order may cause problems if ??there are a limited number of goods or where a serious pricing error an automated acceptance could ??potentially bind the seller so any automated receipt state that it is a receipt of order and not an acceptance and that ??acceptance will follow later

Then the exact point at which the content is formed and the point at which acceptance of order occurring should be made clear in the terms and conditions of sale.

In commercial on line contracts ??consideration is rarely an issue as the buyer receives the goods or services and the seller receives the price .But there are ??occasions on which it becomes important e.g. non-disclosure agreements.

The terms and conditions on which the parties are contracting must be agreed by both parties and incorporated into the contract between them. Simply placing terms and conditions on a website is not enough to incorporate them into a contract: the parties must agree that they contract on the terms, and they must do so before ??becoming bound.

For customers of a website the seller must ensure that the ordering process requires the customers to read and agree to the seller’s terms and conditions. ??So ??ensure the terms and conditions as a separate page in the sales process and requiring the customer to acknowledge he has read and agreed them (for example, by clicking an ‘Agree’ button) before proceeding to place an order.

Many websites use a different process, by placing a link to the terms and conditions from a page during the sales process, and requiring users to tick a checkbox to confirm that they are accepting those terms and conditions so that without ticking the checkbox users should not be able to proceed with the purchase.

Here users should be offered buttons to click to proceed to ‘Contract’ or ‘Buy Now’), but alongside this must be a button allowing them to ‘Cancel’.

Do not use phrases ??like ‘I have read, understand and accept the terms and conditions’ as the Office of Fair Trading say ??you are users to make undertakings that could be untrue (users can check the box without actually reading )

Instead use words such as “I accept the terms and conditions” beside the checkbox.

The words ‘Terms and conditions’ next to the checkbox should be an obvious link to the terms themselves. At the bottom of the linked page you will need to put a link that takes the user back to the purchasing process.

You should avoid relying on JavaScript based client-side validation to confirm whether the user has ticked the checkbox. This may now work with some browsers ??? or where the user has turned JavaScript off ??? meaning that the user doesn’t have to check the box, and your terms and conditions aren’t incorporated.

The use of ‘browse-wrap’ agreements has been heavily criticised by the courts and the Federal Trade Commission in the United States. These give the purchaser the opportunity to follow a link to the supplier’s terms and conditions before placing an order, but does not require the purchaser to read the terms before ordering.

An important term to incorporate is a statement that the contract will be made under English law and subject to the jurisdiction of the courts of England & Wales as in online contracts there may be uncertainty as to where in cyberspace a contract is made.

But consumers will ??have rights ??in the country in which they live so??whilst??you ??try and control the relationship between buyers and sellers in the contract, ??bear in mind that contracts made online are also subject to the same laws as contracts made off-line.

So contracts which are unenforceable off-line (such as certain contracts with children) will also be unenforceable online, and exclusions of liability contained in an English contract made on a supplier’s standard web-published terms can be subject to a test to make sure that the terms are reasonable

The ‘distance selling’ regulations came into force in 2000 and protect consumers involved in ‘distance contracts’ (including contracts concluded online) by requiring the supply of certain information to the consumer before and after the contract is entered into. They also give the consumer a seven day cooling off period during which he can change his mind and withdraw from the contract.

The e-commerce regulations came into force in 2002, and also require a range of information is provided to consumers before they enter into the contract.

The distance selling regulations did not apply to financial services products so similar regulations came into effect in October 2004.

If you need advice regarding on line terms and conditions?? please call us on 01872 302342 ??or email on and we will call you.