How Enforceable is a Contract Made Over the Internet?

[loro]

What is the name of your state? Pennsylvania

Greetings,

I don't know if this is the correct forum to ask such a general question, but I just wanted to know to what extent contracts made over the Internet (i.e. by clicking on a button or checking a text box) are enforceable. Can any contract that can be made on paper be made by pushing a button on the Internet?

There are many websites out there that offer some sort of service, and require you to push a button saying "I agree to these Terms & Conditions" or something of that sort. These terms and conditions are often long and annoying to read. But could some organization, for example, hide a clause somewhere in a 30-page contract, saying something like "If you use this service, you will owe Us 1,000,000 U.S.D?" Of course, the courts wouldn't be able to enforce that provision for most people because most people don't have that much money, but what if someone did? Or a clause transferring all of one's possessions to the company? Is there some sort of law protecting people from completely malicious and totally unwarranted hidden clauses in contracts?

 

[moburkes]

Yes, contracts entered into over the internet are enforceable. Yes, oftentimes people don't read the terms & conditions, and don't expect to be held accountable since they did not. However, a legal contract is a legal contract.

 

[BoredAtty]

The fact that a person "signed" a contract by clicking a mouse rather than by using a pen is generally of no consequence.

However, the type of contract you are referring to (called an adhesion contract) may be unenforceable (or partially unenforceable) if it includes a term that is not reasonably expected or is unconscionable.

 

[loro]

So, in response to my original question - would you say that if I installed a piece of software on my computer that required me to accept an adhesion contract that somewhere in between the 30 pages of terms had something totally unreasonable such as "User will pay $1,000,000 U.S.D. to Whatever Corporation," would you say that provision would be declared void by a court if Whatever Corporation then asked for payment?

Do any of the following have a bearing on the answer:

- Whether the contract used difficult legalese or was written to be easy to understand to the average person
- How long the contract was (this might change the likelihood of it being "reasonable" for someone who's not a lawyer to read the contract?)
- Whether there are any clauses that are almost certainly intended at confusing the average person

And let me get this straight (sorry people, I'm no contract lawyer): If there are any limitations whatsoever as to what can be placed into a contract, it's only for adhesion contracts, right? For any contract that is actually negotiated between two parties, both parties would be completely and absolutely responsible for understanding the terms, right? Even if one party somehow managed to sneak in a clause that was intended to confuse the other party into accepting entirely unreasonable terms (such as handing over all of a corporation's property for a simple software license or something like that)?

And what exactly do you define as "reasonable" terms? I've seen software contracts where it says somewhere in the ten pages of capital letters (is this done intentially among lawyers to make text hard to read?), it says that the software has the right to install any programs it wants at any time on your computer (so any amount of spyware, etc.). Is this a "reasonable" term? Or is it "reasonable" until someone sues?

 

[tranquility]

You ask a books worth of questions. Go to the library and learn. For the quick and dirty:

Software "click"-type contracts are upheld all the time. It is assumed you read and knew what was in them. It would be very rare to have one be an adhesion contract. But, California recently found a standard cell-phone contract to be one of adhesion and has ordered some relief.

 

[BoredAtty]

You ask a books worth of questions. Go to the library and learn. For the quick and dirty:

Software "click"-type contracts are upheld all the time. It is assumed you read and knew what was in them. It would be very rare to have one be an adhesion contract. But, California recently found a standard cell-phone contract to be one of adhesion and has ordered some relief.

An adhesion contract is generally one which is not negotiated and is entered into between parties with unequal bargaining power. Therefore, almost any type of contract like the OP describes is an adhesion contract, as are most contracts with cell phone companies, cable companies, auto dealers, banks, etc.

Of course, there is nothing inherently wrong with adhesion contracts. It's just that judges have the latitude to ignore terms found in them that are unreasonable and/or unconscionable.

 

[BoredAtty]

So, in response to my original question - would you say that if I installed a piece of software on my computer that required me to accept an adhesion contract that somewhere in between the 30 pages of terms had something totally unreasonable such as "User will pay $1,000,000 U.S.D. to Whatever Corporation," would you say that provision would be declared void by a court if Whatever Corporation then asked for payment?

Do any of the following have a bearing on the answer:

- Whether the contract used difficult legalese or was written to be easy to understand to the average person
- How long the contract was (this might change the likelihood of it being "reasonable" for someone who's not a lawyer to read the contract?)
- Whether there are any clauses that are almost certainly intended at confusing the average person

And let me get this straight (sorry people, I'm no contract lawyer): If there are any limitations whatsoever as to what can be placed into a contract, it's only for adhesion contracts, right? For any contract that is actually negotiated between two parties, both parties would be completely and absolutely responsible for understanding the terms, right? Even if one party somehow managed to sneak in a clause that was intended to confuse the other party into accepting entirely unreasonable terms (such as handing over all of a corporation's property for a simple software license or something like that)?

And what exactly do you define as "reasonable" terms? I've seen software contracts where it says somewhere in the ten pages of capital letters (is this done intentially among lawyers to make text hard to read?), it says that the software has the right to install any programs it wants at any time on your computer (so any amount of spyware, etc.). Is this a "reasonable" term? Or is it "reasonable" until someone sues?

The answer to all of your questions is "it depends." What is reasonable/conscionable for one contract might be unreasonable/unconscionable for another. Judges may look at a many factors in making their decisions (e.g. sophistication of the parties, expectations of the parties, industry standards, costs involved, value involved, burden to the parties, etc.).