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Cyberspace Contract

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DQI Bureau
New Update

While selling online is still to take off in a big way, for companies and

entrepreneurs wanting to take the gamble, it is worthwhile to spend time on

designing online agreements.

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The terms and conditions contained in an on-line agreement will be not be

negotiated–they will be drafted unilaterally by the merchant for the customer

on a take-it-or-leave-it basis and predominately for the benefit of the

merchant. However, the benefit that the merchant proposes to achieve will not be

possible unless the terms and conditions have been made known to the customer

before the customer places an order. If the merchant’s terms and conditions

were not made known before the contract was concluded, the merchant runs the

risk of finding the terms that it plans to impose on the customer not to be

binding.

In the case of an online agreement, this will probably mean that onerous

terms should be placed on the ordering form itself, as part of the sequence of

placing orders, and not just on the page containing the terms and conditions.

Something startling could also be used, such as flashing icons that the customer

must click through before being able to proceed any further.

Unlike real-world businesses, merchants’ websites have various means of

displaying their terms and conditions to their customers. A few are mentioned

below:

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  • Reference statement without hyperlink: A reference with a hyperlink to a

    separate page containing the standard terms and conditions of the merchant

    seems to be the most popular method of making known to the customer its

    standard terms and conditions. It does, after all, achieve some kind of

    credibility without substantial disruption of content and the purchasing

    process of the customer.
  • Displaying terms and conditions at the bottom of the page: The merchant’s

    standard terms and conditions may be placed on the same page as the order

    form itself. Such a form is usually extremely long and unsightly, but does

    lend greater weight to the legal requirement of giving notice as ascribed in

    the aforementioned cases. However, as the customer may not necessarily

    interact with the terms, it may not be possible to establish that the

    customer has had the opportunity to read the terms and conditions.
  • Use of click-wrap agreements or dialogue boxes: This is most likely the

    best available method of ensuring that the customer goes through the terms

    and conditions. These are made part of the ordering sequence, and the

    customer must scroll to the bottom of the box or page before being able to

    press the ‘I accept’ button, agreeing to the merchant’s terms and

    conditions before being able to proceed or to type the words: "I agree

    to the above terms and conditions." Only when the words have been

    correctly typed in, can the customer click the ‘proceed’ button and

    accept the merchant’s terms and conditions.

Although the methods may, in the opinion of the merchant, seem tedious and

troublesome, they are most effective and beneficial to the merchant in cases of

dispute. Because the customer has interacted with the merchant’s standard

terms and conditions, the customer must have realized that it has agreed to be

bound by those terms and conditions irrespective of the fact that the customer

may not have read the contents contained in the click-wrap agreement or dialogue

box. Finally, in the light of the above cases, there is no doubt in the

strengths of click-wrap agreements and that the use of this method ought to be

the way forward.

Naturally, the most ‘unattractive’ method usually affords the best legal

protection and may be designed so that the customer is ‘forced’ to go

through the terms and conditions before being able to make an offer to purchase.

Such design may well be off-putting, in particular to those who are only

purchasing items of low value, which may result in such potential customers

leaving before they even have the opportunity to make an offer to purchase

anything.

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The merchant will therefore need to weigh its options and consider whether it

wants the protection or not. Since virtually all on-line contracts require

advance payment before delivery of goods and the probability that the customer

is from a different jurisdiction is high, the chances that a customer will argue

about the legality of the terms and conditions or whether it is bound by them,

may be small, especially when the value is insignificant.

Designing the Web Page



From the above, we have seen what an online merchant has to be wary of when

setting up a website to sell products; how a contract for sale is created; and

what must be done for its standard terms and conditions to be binding on the

customer.

In order for the merchant to reap the rewards of selling on-line, it must

have the purchasing process laid out in synchronicity so that the sequence the

customer must follow will ensure that a valid, binding and enforceable contact

is created together with the proper incorporation of its standard terms and

conditions. In addition, the merchant must also ensure that records recording

each step of the transaction are maintained. Thus an audit trail, which records

customer’s every click, should be maintained and may be used as evidence in

the event of a dispute.

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At each of the above stages, it is necessary for the customer to be given the

opportunity to cancel or discontinue the process and that such cancellation

option should be placed prominently. Furthermore, it will be ideal to design the

page so that the ‘proceed’ button is at a different position on each page

and placed near the button so that the customer has to scroll to the bottom of

the page and look for the button. The purpose of this is to increase the

customer’s interactivity with Web pages.

The long, tedious and comprehensive sequence of events leading to the

customer making an offer, together with an audit trail recording the customer’s

actions and pages viewed, will make it hard for the customer to argue afterwards

that it had accidentally pressed the ‘proceed’ buttons at the end of the

transaction and claim that he had no intention of creating a legal relationship

at any time.

A Parting Thought



Designing and creating a successful website for electronic commerce is no

small feat, let alone having to worry about the legal implications of how the

site is set out and designed. There are many pitfalls awaiting the unwary

merchant. Leaving the design and layout purely in the hands of a novice designer

may bring about lawsuits one never contemplated. An entrepreneur hoping to be

successful in a dot-com venture should probably consult his legal adviser first

before consulting his designer!






RODNEY D RYDER, advocate, is a consultant
on trade and technology law. The first part of this series was published in the

October 15, 2003 issue of Dataquest

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The ‘Perfect Site’ If a lawyer designed your website...

  • Products selected by the customer

    should be placed in a shipping cart no matter what types of products

    are being sold.

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  • When proceeding to the check-out,

    express terms such as the description of the product (where possible

    including a photo), price, quantity, and availability, and estimated

    delivery time (after a mode of delivery has been selected by the

    customer) should be clearly stated. The customer should also have the

    option of removing any item from the shopping cart and be asked to

    confirm if the selection is correct before proceeding.

  • On proceeding to the next step,

    details of the customer are taken and if any particular field is not

    completed in a prescribed manner the customer should not be entitled

    to proceed. When satisfactory details have been given, the customer

    may proceed to the manner of payment.

  • Thereafter, the merchant’s standard

    terms and conditions of the sale should be placed in a dialogue box

    with the customer having to complete a pre-programmed manoeuvre

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  • A final confirmation from the merchant

    detailing the products the customer offered to purchase, along with

    the details referred to, in step 2. This should be accompanied by any

    onerous terms in bold (or pointed to with a red hand) placed in a

    prominent part of the page, and finally the option to cancel the

    order.

  • A final message should be displayed to

    the customer to the effect that "this is the customer’s last

    chance of cancelling," prior to the customer scrolling to the

    bottom of the page and submitting the offer.

  • A screen should be displayed after the

    offer to purchase has been sent to the merchant requesting the

    customer to wait for a confirmation of acceptance.

  • Finally, sending an instantaneous

    confirmation notice to the customer that the offer has been accepted

    should be displayed to the customer, and a subsequent electronic mail

    sent to double confirm.

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