At a glance: electronic contracts in USA

Bizar Male

Contracting on the internet

Contract formation

Is it possible to form and conclude contracts electronically? If so, how are contracts formed on the internet? Explain whether ‘click wrap’ contracts are enforceable, and if so, what requirements need to be met?

Contracts may be concluded electronically through any reasonable means that evidences the parties’ intention to be bound. There is no required process to form contracts online.

Courts have long recognised the formation of contracts through a clickwrap (the ‘I Accept’ button). However, a mere link to terms and conditions may be insufficient to put a user on notice of the agreement’s terms.

Applicable laws

Are there any particular laws that govern contracting on the internet? Do these distinguish between business-to-consumer and business-to-business contracts?

Generally speaking, the law and jurisprudence of contract formation applies equally to the formation of contracts online. The Uniform Computer Information Transactions Act (UCITA) codifies the formation of contracts through click wraps, but the Act has only been adopted in Maryland and Virginia.

Electronic signatures

How does the law recognise or define digital or e-signatures?

At the federal level, the Electronic Signatures in Global and National Commerce Act (the E-Sign Act) recognises electronic records and signatures used in interstate and foreign documents, and provides that no document will be denied effectiveness only on the basis that it has been entered into electronically. Similar legislation has been enacted at the state level in all 50 states, through the Uniform Electronic Transactions Act or equivalent statute.

Data retention

Are there any data retention or software legacy requirements in relation to the formation of electronic contracts?

There are no such requirements in order to form a binding agreement. However, clicktrails and other records may provide evidence of a contract in the event the formation of an electronic contract is challenged.

Breach

Are any special remedies available for the breach of electronic contracts?

Ordinary remedies for breach of contract are available for the breach of a contract formed online.

Content is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Prior results do not guarantee similar outcomes. For more information, please visit: www.bakermckenzie.com/en/disclaimers.

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