Contract Law and Modern Communication

Two of the necessary conditions for the formation of a contract are offer and acceptance. Over the years, courts have faced a number of questions as to what, specifically, constitutes offer and acceptance. Issues relate to wording, timing and medium, among others. The advent of electronic communications, and its constant evolution, has opened the door to more grey areas that ultimately need to be resolved with respect to what constitutes offer and acceptance. A number of issues spring to mind -- is a text message sufficient to be deemed "in writing," is the shorthand in which many electronic communications are written valid for the formation of a legal contract, and what about electronic forms, which are essentially a one-way form of a communication? This paper will examine the case law that surrounds the evolving field of electronic communication, and how case law has dealt with modern methods of communication.

Application of the Mailbox Rule

The mailbox rule in contract law reflects the idea that a meeting of the minds is achieved when acceptance is communicated to the offeree, when the acceptance enters the postal system. Where instantaneous means of communication are concerned, the mailbox rule applies to everything from faxes to telex machines, and it is the precedent established for these archaic devices that forms the basis of instantaneous communication law today, as pertains to email, texting or Internet. The basic notion is that instantaneous communication is analogous to face-to-face communication (Cameron & Castell, 1997). If there is a break in the communication, both parties would be aware. This abuts reality, however, in that someone's email server could be down, causing a one-sided break in communication that the other party is unaware of. In such situations, the mailbox rule is more applicable.

Authentication

One of the issues that has arisen where electronic communication is concerned is authentication -- how do we know that there has been a meeting of the minds? The courts have typically held that a signature line, even one that is automatically generated, such as would appear at the bottom of an email, is sufficient to established authenticity of a communication, and bind the communicator to their respective offer or acceptance (Speziale, 2013). This applies both to the formation of a contract, and to its modification -- the general rules about both parties meeting minds still hold regardless of the mode of communication.

Specific Cases

Since the mainstreaming of electronic communication, a number of issues have arisen. The area of one-sided communications is of interest. In Specht v. Netscape, it was determined that clicking on a download button did not show assent to license terms if those terms were not conspicuous, establishing that no contract could be formed if the terms of said contract were not conspicuous and displayed in advance of any download or similar action.

Click through licenses are deemed to be a form of acceptance of terms, however, should the buyer click through, as established in Procd v. Zeidenberg (Baker, 1997). In other cases, breaking the seal of a software product is sufficient to deem acceptance of the terms of use, as in Hill v. Gateway 2000 (Harper, 2004).

In many instances, the same rules have been found to apply with instantaneous communication as with conventional. For example, in Rubenstein v. Clark & Green, a series of emails was exchanged. In those emails, one party made it clear that it intended to continue discussions with the other, in anticipation of forming a contract at a later date. If there was question about the formation of a contract, such communication would have ended it -- the email dialogue was considered as a conversation -- a discussion awaiting formal contractual assent (Aquila & Payne, 2012).

Authority to enter into a contract also comes into play -- an email writer may or may not have such authority, but courts do not always look into such context. In Enable Commerce v. Std. Register, there was language contained within the email exchange noting that senior management would need to render its approval, so for a company there should be clarity as to what an email exchange means -- especially if there is no intention for the parties to be bound by contract on the basis of that exchange (Aquila & Payne, 2012). This matters because emails are considered "a writing" by law, different from a verbal discussion.

That electronic communications are treated as writings means that there is the risk of unintended entering into contract. Many states have adopted the Uniform Electronic Transactions Act, which means that communications uniquely associated with an individual can be deemed an electronic signature. In other words, your email or text can be binding, but a generic tweet sent by the company is not (Troxell, 2011). In Foxcelli v. Gelco the legal representative of Gelco was found to have entered into contract with Foxcelli by email, contrary to Gelco's claims. This follows general contract law defining who can represent a company (Herzfeld, 2013).

In general, the basic tenets of contract law are found to apply to instantaneous communication. The trickiest aspect is that typed matter -- emails, texts, social media postings -- can be found by law to be "writings" even if they are created as quickly as verbal communication. It is therefore important for people engaging in such means of communication to establish clearly if there is no intention to form a contract, lest they inadvertently enter into a contract in the course of their electronic communications.

References

Aquila, F. & Payne, S. (2012). Inadvertent contract formation -- the perils of electronic communications. Bloomberg BNA. Retrieved November 11, 2016 from http://www.bna.com/inadvertent-contract-formation/

Baker, D. (1997) Note: Procd v. Zeidenberg. Northwestern University Law Review 379 (1997-1998) Vol. 92, 1.

Cameron, D. & Castell, D. (1997) Electronic contract formation. Jurisdiction.com. Retrieved November 11, 2016 from http://www.jurisdiction.com/ecom3.htm

Harper, B. (2004) Drafting electronic software licenses to prevent reverse engineering. Jones Day. Retrieved November 11, 2016 from http://www.jonesday.com/Drafting-Electronic-Software-Licenses-to-Prevent-Reverse-Engineering-02-03-2004/

Herzfeld, O. (2013) Are your emails enforceable contracts? Forbes. Retrieved November 11, 2016 from http://www.forbes.com/sites/oliverherzfeld/2013/12/09/are-your-emails-enforceable-contracts/#28ada489383c

Specht v. Netscape Communications Corp. (2002) United States Court of Appeals, 2nd Circuit. Retrieved November 11, 2016 from https://cyber.harvard.edu/stjohns/Specht_v_Netscape.pdf

Speziale, L. (2013). Modifications to contracts by electronic communications. Gross Mcginley LLP. Retrieved November 11, 2016 from http://www.grossmcginley.com/wp-content/uploads/2013/12/Contracts-and-Electronic-Communications.pdf

Troxell, H. (2011). Modern communication methods affect contractual protections. Hawley Troxell. Retrieved November 11, 2016 from http://www.hawleytroxell.com/2011/05/modern-communication-methods-affect-contractual-protections/