United States: Securing Assent: The Internet Twist Of Electronic Contracts

If any area of the law could be shielded from the all-consuming influence of the Internet, it ought to be the age-old law of contracts. Nothing about the Internet changes basic elements of contract law, like requirements of offer, acceptance, and consideration. 

But one crucial bit of evidence about making contracts electronically seems to bedevil courts: When and how does a user agree to a contract electronically? This crucial element of contract formation — manifestation of assent — is the Internet twist for contract making.

The Business Law Basics

Lots of contracts occur every day, with few formalities. When you order a hamburger for lunch, you are agreeing to pay the prescribed price, and the restaurant is agreeing to provide you the burger. The transaction is probably over before you realize you've been a party to a contract. Most transactions in daily life proceed like this.

Other contracts are attended to with a mixture of solemnity and formality. A real estate closing may be conducted at a special time and place, with all the parties brought together to sign the documents, and notaries to authenticate the signatures. You'll see similar attention to signatures and authentication in lending agreements, legal settlements, and major corporate transactions. 

The difference between the relatively informal everyday contracts and the formal ones that are signed in writing is a critical element of contract law that lay people often overlook or misunderstand. Popular sayings like "get it in writing," or "oral contract" seem to presume that an agreement is less valid, or less enforceable if it is not in writing.

But in fact most contracts don't have to be in writing. In the long course of Anglo-American law, contracts moved to writing (a process known as textualization) only relatively recently. Oral contracts aren't an aberration or mistake; they're the foundation of our contract law.

Even now, a formal written document signed by the parties is rarely necessary; in fact, much commerce would grind to a halt if a written contract were required. In many situations, a contract may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of a contract. 

Thus, writing and signature are only required in particular situations. State laws (called "statutes of frauds") determine which contracts must be signed and in writing, and in most states only six categories of contracts need to be memorialized in a writing, signed by the party to be charged:

  • Contracts for marriage
  • Contracts that cannot be performed within one year
  • Contracts for the transfer of an interest in land
  • Contracts by the executor of a will
  • Contracts for the sale of goods totalling $500 or more
  • Contracts of suretyship

Law students often remember these categories using the mnemonic "MY LEGS": Marriage, contracts for more than one Year, Land, Executor (or Estate), Goods ($500 or more), Surety.

That's why signatures are required for real estate contracts, but not hamburger orders (unless, perhaps, you are ravenous and order $500 worth of burgers).  In the vast majority of cases, the key to contract formation is whether there has been a "manifestation of assent" by written or spoken words between the parties or by other action (or even by failure to act).

For those cases where a writing and a signature are required, the next questions are, "What is a writing?" and "What is a signature?" In each case, it may not be what you think.

To satisfy the statute of frauds, you don't need a formally written contract. Even a scrap of paper could qualify, so long as it contained the essential terms of the deal. The signature can be as simple as a party's initials, his or her printed name, or even a stamp or reference to the names tied to a description of the deal. 

The Internet Law Twist

If contracts are so simple and flexible in the bricks-and-mortar world, you'd think that contract principles should be readily adaptable to the online world. And indeed lawmakers have taken care to smooth the application of contract principles to the Internet.

Most states have enacted some form of the Uniform Electronic Transactions Act (UETA). UETA provides for recognition of electronic records and signatures. With only a few exceptions (such as wills and trusts), if a contract requires a writing and written signature, an electronic record and signature will work. For the few states that haven't enacted UETA, a federal law, Electronic Signatures in Global and National Commerce Act (E-SIGN) provides the same result, though it has more exceptions.

Under either UETA or E-SIGN, all parties must consent to use of electronic records and signatures. That's a bit of a Catch-22, since parties that deal with one another electronically rarely explicitly agree to electronic dealings — and if they do so electronically, how is that consent enforceable? But in most electronic courses of dealings, the consent of the parties is apparent, and consent is rarely contested.

The concept of an electronic signature confuses many people. Some think of electronic signatures as a graphic representation of their written signature — what might be called a facsimile signature. Others think of electronic signatures as complex exchanges of encrypted computer files — what is often called a digital signature. An electronic signature can be either of these, or more.

Just as, for example, initials or the imprint of a rubber stamp may qualify as a signature on paper, your initials or name at the bottom of your email can also qualify. Even an email signature automatically added to the text when you hit "send" can qualify as a signature (so watch those emails more carefully — any one of them can create a contract). Your name on a text message or instant message may qualify as well. 

And perhaps most importantly, a signature doesn't even need to include your name or initials. The purpose of the signature requirement of the statute of frauds was simply to clearly establish your assent. If that can be done in other ways, a traditional signature is not required. The ubiquitous "click-through" pages on Internet sites is a prime example.

Under UETA and E-SIGN, a signature is defined as "an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record." Courts have interpreted that language to mean that the click of a button online can replace an actual signature. 

And that brings us to the crucial legal twist for online contracting: What kind of electronic dealings demonstrate a "manifestation of assent" to make a contract? For online contracts, courts must determine what electronic activity constitutes proof of an agreement (and, for deals subject to the statute of frauds, whether the "writing" and "signature" requirements have been met).

Courts often examine initially whether the user showed assent through some kind of "click-through." This can involve electronically checking a graphic of some kind, clicking on "I agree," or clicking on a direction to enter an order where that click-through button makes it clear that doing so subjects the buyer to the seller's terms. 

In some cases, particularly where the statute of frauds does not require a signature, contracts can be created without a click-through, if, in the circumstances, the user had reasonable notice of the terms to which he or she was subject. In many cases, for example, a website user is found to have reasonable notice of website terms that are can be readily accessed through links on the website.  

Unfortunately, as Eric Goldman, a law professor who follows this area closely has noted, some court decisions have cast "a hazy fog of anarchy" over the nomenclature and classifications of online assent. 

For example, one important case classified a common situation, where the buyer is clearly warned at the time of ordering that the order will be subject to the seller's terms, as an arguably inferior "browse-wrap" (equivalent to simply browsing the web site or opening the box containing a software CD) and not a classic and effective "click-through" (requiring some affirmative "click" to indicate assent) — a distinction that is hard to understand. 

The importance of assent

Parties doing business electronically probably should disregard these legal labels and focus simply on getting clear evidence of the buyer's assent. An affirmative click, especially on a button labeled "I agree," or otherwise unequivocally consenting to the seller's terms, is usually best. If a check box or order button is used, the language surrounding it should be clear as to its meaning and significance. 

Getting clear assent in real time, however, isn't always enough. You also may need to prove at a later date that consent occurred. Your ordering software should record customer activity, such as the click-through consents. And you should retain records of your past website forms and contract terms, so that you can recreate those that were in place at the time of any contested transaction. 

Finally, in some cases even the user's proven consent to your terms of sale won't save those terms. In many cases, consumers attack certain contract terms as "unconscionable," essentially meaning that they were so grossly unfair that courts should not enforce them. These claims are often made with respect to indemnity, warranty-waiver, and arbitration provisions. Though unconscionability isn't a unique online issue, some courts seem especially concerned about ordinary online consumers getting caught up in such unexpected and severe terms given our natural impatience with wading through dense legalese (how many of us have actually read each word of an iTunes license?). 

Ultimately, assent is the big Internet twist for contract-making. If you are doing business on the Internet, take care to obtain clear assent from the parties with whom you are dealing, and preserve good evidence of that assent. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions