E-commerce!

Almost every modern business selling goods engages in e-commerce (and if it’s not, it should!).  E-commerce, put simply, is the act of conducting business on the Internet, and in many cases consists of buying and selling goods or providing services.  This blog post focuses on online sale of goods.

First, it’s important to keep in mind that at the end of the day these transactions all involve contracts for the sale of goods.  To that end, basic contracting principles apply: you need an offer, an acceptance, and valid consideration to create a valid contract to sell your goods.

Remember the contract cannot be illusory.  Illusory contracts are those that do not have valid consideration–in other words, there is not agreement to exchange A for B. An excellent example would be, “I promise to give you $10 if I feel like it.” On the one side, there is a promise to give $10, but nothing is had in return.  This is a basic tenet of contract law.

A common legal tool deployed by businesses engaging in e-commerce are contracts by adhesion.  These are contracts where the user is bound by virtue of the fact they logged onto the website.  Another tool used are click to accept contracts.  It’s incredibly tempting to stick in illusory terms where the business owner can change the terms of the contract unilaterally and without notice.  These are not enforceable contracts.

Zappos found this out the hard way by trying to enforce a contract by adhesion with a term allowing them to unilaterally alter the contract at any time. (In re Zappos.com Inc., Customer Data Security Breach Litigation, 2012 WL 4466660 (D. Nev. Sept. 27, 2012))  While Zappos addressed the validity of a terms of use – the same principle will apply to anyone having customers sign a sale of goods as well online.

Businesses can also create disclaimers of liability for the goods they distribute.  Remember liability disclaimers are typically required to be displayed in a clear and conspicuous manner.  Doing this involves knowledge of web design or closely partnering with a web developer.  As attorneys devote an increasing amount of their practice to online issues facing businesses with e-commerce issues, they also have to keep up with the basics of CSS, HTML, scripting and basic web design.

There are also extensive issues related to sales tax as congress and the courts search for methods to alleviate conflict and enforcement issues, but that’s an issue for another post.

This blog post was co-written with Sean Lynch.  Sean is an Intellectual Property and Patent attorney with Fish & Tsang in Irvine, California.  He is the author of www.priorartful.com.  Find out more about him at www.smlynch.org.




About Brian Lynch

Brian Lynch graduated from the Georgia Institute of Technology with high honors and a degree in Public Policy studying science and technology policy. Brian earned a Juris Doctor from California Western in 2012. Brian is a member of the State Bar of California and admitted to practice in the U.S. Southern District of California and the U.S. Central District of California. Brian also manages and implements policy for an online community of over 40 million users and started www.goerwin.com in 2016 to tackle some of the pain points associated with trademark and copyright filing.


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