UCITA

UCITA

Applies to computer information.

Software is not a “good” but intellectual property.

Software is licensed, not sold;

License contract gives Buyer (Licensee) only specific rights.

Attribution and Authentication.

Mass Market Licenses.

Attribution—process to ensure person sending an electronic record is in fact the real person.

Electronic Errors.

“E-Mailbox” Rules.

§ Dispatched when leaves control of sender.

§ Received when enters recipient’s processing system.

Highlights of UETA

Highlights of UETA

Parties must agree to Conduct Transactions Electronically.

§ A party can “opt out” of UETA terms.

Attribution—process to ensure person sending an electronic record is in fact the real person.

Electronic Errors.

“E-Mailbox” Rules.

§ Dispatched when leaves control of sender.

§ Received when enters recipient’s processing system.

UETA and E-SIGN

UETA and E-SIGN

E-SIGN explicitly refers to UETA.

Provides that E-SIGN is pre-empted by state passing of UETA.

But state law must conform to minimum E-SIGN procedures.

UETA

UETA

Purpose is to remove barriers to forming electronic commerce.

E-Signature is “electronic sound, symbol or process associated with a record and adopted by a person with intent to sign the record.”

UETA applies only to e-records and e-signatures  relating to a transaction.

 § Asymmetric Cryptosystem.

§ Cyber Notary.

State Law Governing E-Signatures.

§ Uniform Electronic Transactions Act (1999).

Federal Law.

§ E-SIGN (2000) gives e-signatures and e-documents legal force.

Partnering Agreements

Partnering Agreements

Sellers and Buyers agree as to protocols to create online agreements.

Useful for electronic inventory (Just in Time) ordering of parts and supplies. 

E-Signatures

E-Signatures

E-Signature Technologies.

§ Asymmetric Cryptosystem.

§ Cyber Notary.

State Law Governing E-Signatures.

§ Uniform Electronic Transactions Act (1999).

Federal Law.

§ E-SIGN (2000) gives e-signatures and e-documents legal force.

Online Acceptances

Online Acceptances

Click-on Agreements.

Shrink-Wrap Agreements.

§ Contract terms are inside the box.

§ Party opening box agrees to terms by keeping merchandise.

Enforceable Contract Terms. (UCC 2-204).

Additional Terms.

Case 18.1:  Klocek v. Gateway Inc. (2000).

Click-On Agreements occur when Buyer “checks out” or clicks on “I Accept” button on Seller’s website or when software is installed.

Case 18.2:  i.LAN Systems Inc. v. NetScout Service Level Corp. (2002).

Browse-Wrap Terms.

Case 18.3: Specht v. Netscape Communications (2002).

Online Contract Formation

Online Contract Formation

Online Offers should include:

§ Remedies for Buyer.

§ Statute of Limitations.

§ What constitutes Buyer’s acceptance.

§ Method of Payment.

§ Seller’s Refund and Return Policies.

§ Disclaimers of Liability.

§ How Seller will Use Buyer’s Information (Privacy).

Dispute Settlement Provisions.

§ Choice of Law.

§ Choice of Forum.

§ E-Bay uses online dispute resolution.

Displaying the Offer (via hyperlink).

How Offer Will Be Accepted.

§ Amazon.com--Checkout.

§ “I Accept” Button to Click.

E-Contracts

E-Contracts

Introduction

Most courts find E-Contracts involve basic principles of contract law, applied in the online context.

Contract Provisions Limiting Remedies

Contract Provisions Limiting Remedies

Exculpatory clauses. 

§ Provisions stating that no damages can be recovered.

Limitation of liability clauses.

§ Provisions that affect the availability of certain remedies.

Waiver of Breach

Waiver of Breach

A pattern of conduct that waives a number of successive breaches will operate as a continued waiver.

Nonbreaching party can still recover damages, but contract is not terminated.

Nonbreaching party should give notice to the breaching party that full performance will be required in the future.

Election of Remedies

Election of Remedies

Doctrine created to prevent double recovery.

Nonbreaching party must choose which remedy to pursue.

UCC rejects election of remedies.

§ Cumulative in nature and include all the available remedies for breach of contract.

Recovery Based on Quasi Contract

Recovery Based on Quasi Contract

Equitable theory imposed by courts to obtain justice and prevent unjust enrichment.

Party seeking quantum meruit must show the following:

§ A benefit was conferred to the other party.

§ Party conferring did so with the reasonable  expectation of being paid.

§ The benefit was not volunteered.

§ Retaining benefit without paying for it would result in unjust enrichment of the party receiving the benefit.

Reformation

Reformation

Equitable remedy allowing a contract to be reformed, or rewritten to reflect the parties true intentions.

Available when an agreement is imperfectly expressed in writing.

Specific Performance

Specific Performance

Equitable remedy calling for the performance of the act promised in the contract.

Remedy in cases where the consideration is:

§ Unique (land);

§ Scarce; or

§ Not available remedy in contracts for personal services.

Rescission and Restitution

Rescission and Restitution

Rescission.

§ A remedy whereby a contract is canceled and the parties are restored to the original positions that they occupied prior to the transactions.

Restitution.

§ Both parties must return goods, property, or money previously conveyed.

Note: Rescission does not always call for restitution. Restitution is called for in some cases not involving rescission.

Liquidated Damages

Liquidated Damages

Liquidated Damages.

§ A contract provides a specific amount to be paid as damages in the event of future default or breach of contract.

Penalties.

§ Specify a certain amount to be paid in the event of a default or breach of contract and are designed to penalize the breaching party.

Case 17.3:   Green Park Inn v. Moore (2002).

Mitigation of Damages

Mitigation of Damages

When breach of contract occurs, the innocent injured party is held to a duty to reduce the damages that he or she suffered.

Duty owed depends on the nature of the contract.

Case 17.2: Fujitsu Ltd. v. Federal Express Corp. (2001).

Damages

Damages

Compensatory Damages—direct losses.

§ Sale of Goods: difference between contract and market price.

§ Sale of Land: specific performance.

§ Construction Contracts: varies.

Consequential (Special) Damages—foreseeable losses.

§ Breaching party is aware or should be aware, because the injury party additional loss.

Case 17.1: Hadley v. Baxendale (1854).

Punitive Damages—punish or deter future conduct.

§ Generally not available for mere breach of contract.

§ Usually tort (e.g., fraud) is also involved.

Nominal Damages—no financial loss.

§ Defendant is liable but only a technical injury.

Breach of Contract and Remedies

Contracts: Breach of Contract and Remedies

Introduction

Most Common Remedies:

§ Damages.

§ Rescission andRestitution.

§ Specific Performance.

§ Reformation.

§ Recovery Based on Quasi Contract.

Discharge by Operation of Law

Discharge by Operation of Law

ü Alteration of The Contract.

ü Statutes of Limitations.

ü Bankruptcy.

ü  Impossibility or Impracticability. à

Impossibility or Impracticability of Performance

Objective Impossibility of Performance.

§ Death or incapacitation prior to performance;

§ Destruction of the Subject Matter; or

§ Illegality in performance.

Commercial Impracticability.

§  Key: Circumstances not foreseeable.

Case 16.4: Cape-France v. Estate of Peed (2001).

ü Frustration of Purpose.

ü Temporary Impossibility.

Discharge by Agreement

Discharge by Agreement

Discharge by Rescission.

Discharge by Novation.

§ Previous Obligation.

§ All parties agree to new contract.

§ Extinguishment of old obligations.

§ New Contract Formed.

Discharge by Substituted Agreement.

Accord and Satisfaction.

Anticipatory Repudiation

Anticipatory Repudiation

If before performance is due, one party refuses to perform his or her contractual obligation.

Results in material breach.

The nonbreaching party should not be required to remain ready and willing to perform when the other party has repudiated the contract.

The nonbreaching party should have the opportunity to seek a similar contract elsewhere.

Time for Performance.

Case 16.3:  Manganaro Corp v. Hitt Contracting Inc. (2002). 

Material Breach of Contract

Material Breach of Contract

Breach of Contract - the nonperformance of a contractual duty.

Material breach occurs when there has been a failure of consideration.  Discharges the non breaching party from the contract.

In a non-material breach, the duty to perform is not excused and the non-breaching party must resume performance of the contractual obligations undertaken.

Case 17.2: Van Steenhouse v. Jacor   Broadcasting of Colorado, Inc.  (1998).