Why Online Businesses Need Contracts, Too

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq., owner of Ask The Business Lawyer, is an award-winning business attorney, speaker, and Entrepreneur Magazine online contributor. She saves consulting and professional services companies time, money, and aggravation by serving as their outsourced legal counsel.

Posted on April 16, 2014 in Business Transactions, IP & Social Media

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Last month, the Federal District Court in Brooklyn, N.Y., decided a case involving a dispute between a purchaser and a company providing information reports online.  As reported by Eric Goldman in his Technology & Marketing Law Blog, the case of Scherillo v. Dun & Bradstreet confirmed that “acknowledgment check boxes” can provide a powerful defense against the claim by an online purchaser that “I didn’t mean it/I didn’t know what I was buying/I didn’t agree to these terms” (choose the lame excuse of your choice).

Here’s why that’s so important for online businesses [With apologies to History of the World Part 1]:

In the beginning, there was the handshake. That’s what sealed a deal.

Then, you had stone carvings. Sealed wax on parchment. As literacy became more prevalent, people signed written agreements.

With fax machines, acceptance of fax signatures (that is, not requiring original ink on the document) grew.

So in this brave new Internet Age, how can you make sure that both sides truly agree to the terms when there isn’t actually a document to sign?

That’s where having mandatory click-through agreements on your website is so vital to staving off contract disputes. Ading “agree” checkboxes can help close the possible loopholes. They provide an important advantage over an e-mail exchange: The terms you set are yours. It’s a take-it-or-leave-it proposition, which streamlines your customer intake process. Also, the steps that a customer needs to go through in order to make a purchase confirm their consent to your terms. Again, it’s a strong defense to an “I didn’t know I was getting into this” attempt to weasel out of the transaction. Without some form of confirmation that your customer has agreed to your terms, you risk having to fight off contract disputes in any place your customer has come from (which, given the reach of the internet, could be the entire world).

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