CHAPTER 12
AGREEMENT IN TRADITIONAL AND E-CONTRACTS
ANSWER TO CRITICAL THINKING QUESTION
IN THE FEATURE
DIGITAL UPDATE—CRITICAL THINKING
How can a company structure e-mail negotiations to avoid “accidentally” forming a con-
CASE 12.1—CRITICAL THINKING
WHAT IF THE FACTS WERE DIFFERENT?
Suppose that the day after Lucy signed the purchase agreement for the farm, he decided
that he did not want it after all, and Zehmer sued Lucy to perform the contract. Would this
change in the facts alter the court’s decision that Lucy and Zehmer had created an en-
2 UNIT THREE: CONTRACTS AND E-CONTRACTS
CASE 12.2—CRITICAL THINKING
WHAT IF THE FACTS WERE DIFFERENT?
Assume that, instead of exchanging e-mails, the attorneys for both sides had a phone
conversation that included all of the terms to which they actually agreed in their e-mail
exchanges. Would the court have ruled differently? Why or why not? Probably not. As the
court pointed out, “the issues [were] whether the . . . terms were sufficiently complete and defi-
nite to form an agreement and whether Amazon had intended to be bound by them.” Terms ex-
pressed orally can be as binding as those expressed in writing. The court also determined that
“the essential circumstance of this disputed agreement is that it concluded a trial.” If the trial
court had given the same effect to a phone conversation as the court gave to the e-mail ex-
change, it is unlikely that the appellate court would have interpreted it differently.
LEGAL ENVIRONMENT
What does the result in this case suggest that a businessperson should do before agree-
2. What were the appellant’s arguments in support of her claim? Which of those conten-
CHAPTER 12: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 3
3. How did the court distinguish its conclusion in this case from its decision in Beck–
4 UNIT THREE: CONTRACTS AND E-CONTRACTS
CHAPTER 12: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 5
ANSWERS TO ISSUE SPOTTERS
AT THE END OF THE CHAPTER
1A. Fidelity Corporation offers to hire Ron to replace Monica, who has given Fidelity a
month’s notice to quit. Fidelity gives Ron a week to decide whether to accept. Two days
later, Monica signs an employment contract with Fidelity for another year. The next day,
Monica tells Ron of the new contract. Ron immediately sends a letter of acceptance to
Fidelity. Do Fidelity and Ron have a contract? Why or why not? No. Revocation of an offer
12-1A. Agreement
12-2A. Offer and acceptance
(a) Death of either the offeror or the offeree prior to acceptance automatically termi-
nates a revocable offer. The basic legal reason is that the offer is personal to the parties and
cannot be passed on to others, not even to the estate of the deceased. This rule applies even if
the other party is unaware of the death. Thus, Schmidt’s offer terminates on Schmidt’s death,
and Barry’s later acceptance does not constitute a contract.
(b) An offer is automatically terminated by the destruction of the specific subject mat-
ter of the offer prior to acceptance. Thus, Barry’s acceptance after the fire does not constitute a
contract.
(c) When the offer is irrevocable, under an option contract, death of the offeror does
not terminate the option contract, and the offeree can accept the offer to sell the equipment,
6 UNIT THREE: CONTRACTS AND E-CONTRACTS
12–3A. SPOTLIGHT ON CRIME STOPPERS—Communication
One of the requirements for an effective offer is communication, resulting in the offeree’s
knowledge of the offer. One of the requirements for an effective acceptance is also communica-
tion—in most situations, the offeror must be notified of the acceptance. In a unilateral contract,
the full performance of some act is called for. If acceptance is evident, notification may be un-
12–4A. BUSINESS CASE PROBLEM WITH SAMPLE ANSWER—Online acceptances
No. A shrink-wrap agreement is an agreement whose terms are expressed inside the box in
which the goods are packaged. The party who opens the box may be informed that he or she
agrees to the terms by keeping whatever is in the box. In many cases, the courts have enforced
the terms of shrink-wrap agreements just as they enforce the terms of other contracts. But not
all of the terms presented in shrink-wrap agreements have been enforced by the courts. One
important consideration is whether the buyer had adequate notice of the terms.
A click-on agreement is formed when a buyer, completing a transaction on a computer, is
required to indicate his or her assent to be bound by the terms of an offer by clicking on a button
CHAPTER 12: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 7
12–5A. Acceptance
Judy’s reply was effective, and Judy and Kristy had an enforceable binding contract—Kristy’s
offer did not limit its acceptance to one exclusive mode. Thus, Judy was entitled to an order of
specific performance.
Acceptance is a voluntary act by the offeree that shows assent (agreement) to the terms
of an offer. The offeree’s act may consist of words or conduct. The acceptance must be une-
quivocal and must be communicated to the offeror. A means of communicating acceptance can
be expressly authorized by the offeror or impliedly authorized by the facts and circumstances
surrounding the situation. When an offeror specifies how acceptance should be made, express
12–6A. Agreement
No, Statewide and Kemper did not have an enforceable agreement. Under the mirror image
rule, the offeree’s acceptance must match the offeror’s offer exactly. If the acceptance changes
or adds to the terms of the original offer, it will be considered a counteroffer. A counteroffer is a
rejection of the original offer and the simultaneous making of a new offer. If an offer is rejected,
it is terminated.
8 UNIT THREE: CONTRACTS AND E-CONTRACTS
12–7A. Requirements of the offer
No, TCP is not correct—the bonus plan was not too indefinite to be an offer. One of the re-
quirements for an effective offer is that its terms must be reasonably definite. This is so a court
can determine whether a breach has occurred and award an appropriate remedy. Generally,
these terms include an identification of the parties and the object or subject of the contract, the
consideration to be paid, and the time of performance.
In this problem, TCP provided its employees, including Bahr, with the details of a bonus
plan. A district sales manager such as Bahr who achieved 100 percent year-over-year sales
12–8A. Acceptance
The terms for a settlement that Lucas originally e-mailed to Altisource are most likely to be con-
sidered by a court to satisfy the element of agreement to establish a contract. One of the ele-
ments for the formation of a valid contract is agreement—mutual assent to the terms of a bar-
gain. Agreement is evidenced by an offer and an acceptance. An offeree’s acceptance of an of-
fer leads to the creation of an enforceable contract. Acceptance is a voluntary act that shows
assent. The act may consist of words or conduct. The acceptance must be unequivocal—it must
mirror the terms of the offer.
CHAPTER 12: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 9
12-9A. A QUESTION OF ETHICS—E-contract disputes
(a) The court held that the arbitration clause was not a part of the contract between
Dell and the plaintiffs, and that if the clause were a part of the contract, it would be unenforcea-
ble because it was unconscionable. Dell appealed to a state intermediate appellate court, which
reversed the lower court’s holding and remanded the case. The appellate court held that the
plaintiffs were bound by Dell’s terms, including the arbitration clause.
The appellate court emphasized in part that the blue hyperlink entitled “Terms and Condi-
tions of Sale” appeared on many of the Web pages completed in the ordering process. A state-
ment on three of those pages explained that sales were subject to those terms. The court rea-
soned that these statements placed a reasonable person on notice that there were terms at-
tached to a purchase and that the hyperlink's contrasting blue type made it conspicuous. The
court also found that these particular purchasers were not novices with respect to computers, as
shown by their ability to configure their own computers before making their purchases and to
distinguish the speeds among different types of processors.
(b) Arguments for and against these terms are discussed in the text. As long as
shrink-wrap, click-on, and browse-wrap terms are fair and reasonable, it could be maintained
that they do not impose too great a burden on purchasers, even though most of whom are indi-
10 UNIT THREE: CONTRACTS AND E-CONTRACTS
ANSWERS TO LEGAL REASONING GROUP ACTIVITY QUESTIONS
AT THE END OF THE CHAPTER
12–10A. E-contracts
(a) Terms that most likely favor the business that created them include forum-
selection, dispute-resolution, limited liability, disclaimer, and remedies provisions. Other favora-
ble terms might include agreements to receive notices, ads, and “member” e-mail electronically.