E-commerce has existed since at least 1972, and has grown to comprise annual sales and shipment value worth $6 trillion in the US alone, a number greater than the entire gross domestic product of Japan or Germany. This incredible value is protected by the robust Anglo-American system of commercial law, and primarily by simple contract law, which has protected commerce for centuries. However, this ancient law is showing signs of strain against new challenges posed by the proliferation of electronic activities, which have crept beyond simple commerce into virtually all areas of human interaction. Below are three weak spots where courts, governments and businesses struggle to apply the traditional contract system to the brave new electronic world.


Courts claim to analyse the validity of online terms and conditions using standard contract notions, but rarely do they apply the first year law student’s classic formation of offer, acceptance and consideration. Instead, they focus on such things as assent and opportunity to review. Using these touchstones, courts characterise various agreements as ‘clickwrap’ (where a user must actively acknowledge her consent in order to move on) or ‘browsewrap’ (where a site merely makes its terms and conditions available in varying degrees of conspicuousness). In the vast spectrum of online commerce, however, many variations exist. In two recent cases, Savetsky vs. Pre-Paid Legal Services, Inc. and Friedman vs. Guthy-Renker, LLC, federal courts in California shot down the terms and conditions of two different websites for lack of assent. This is of particular note because both online retailers were attempting to use those terms and conditions to enforce arbitration clauses. Such clauses are often given deference by our overworked courts as a matter of public policy. If courts are willing to set aside something as respected as an arbitration clause, the clear message is that retailers may not be able to enforce any terms unless the consumer has clicked an assent button prior to purchase – and the retailer can prove it happened.

Jul-Sep 2016 Issue