Hines vs. Overstock.com Inc.
The basic element for a contract to be binding is mutuality. This implies “meeting of the minds” when the parties intend to create a binding contract. Offer and acceptance is another basic doctrine that makes a contract binding where one party offers something valuable (i.e. consideration) to the other party that is free to accept or refuse the offer (Stim, 2014). The capacity of the parties and the legality of the contract are other essential tenets for a binding contract.
Click-wraps are commonly used agreements when forming a contract online. They require the user’s assent to the vendor’s terms and conditions typically by clicking “I agree”. A dialog box displays all of the terms that the user needs to look through before agreeing to them (Thakur, 2019). Other commonly witnessed web-based contracts are browse-wrap agreements in which terms and conditions are usually provided as a hyperlink at the end of the homepage typically. Normally, such contracts don’t require explicit acceptance of the terms and conditions. Presumably, the user is considered a regular visitor of the site; hence well aware of the agreement.
For a browse-wrap agreement to be enforceable by the law, it is required that the website furnishes an actual or constructive notice of the terms and conditions to which the user gives his/her consent (Fletcher, 2019). Such agreements usually state that the use of the website itself indicates the acceptance of the terms. Hence, the courts mainly take into account if the user had any constructive or actual familiarity with the site’s terms. In general, courts uphold browse-wraps when a user is given actual notice of the contract.
The court declared browse-wrap agreement of Overstock.com Inc. unenforceable owing to the website’s failure to provide the link to an online agreement in a way that a user would easily notice (Fletcher, 2019). Overstock.com Inc. stated that merely entering their website represents the user’s acceptance of site terms and conditions which didn’t amount to actual notice.
Fletcher, G. (2019, June 12). Are my browsewrap agreements enforceable? PactSafe. https://www.pactsafe.com/blog/are-my-online-agreements-valid-part-3-browsewrap.
Thakur, A. (2019, September 26). ALL YOU KNOW NEED TO KNOW ABOUT ONLINE CONTRACTS. iPleaders. https://blog.ipleaders.in/all-you-know-about-online-contracts/.
Stim, R. (2014, October 30). What Is a Contract? www.nolo.com. https://www.nolo.com/legal-encyclopedia/contracts-basics-33367.html.