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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-
tract? The company should make sure that all e-mail conversations explicitly indicate that they
are subject to any relevant conditions and that they are subject to further review and comment
by the senders’ clients or colleagues. All negotiations via e-mail should include appropriate dis-
claimers such as “This email is not an offer capable of acceptance.” or “This e-mail does not ev-
idence an intention to enter into an agreement.” or “This e-mail has no operative effect until a
definitive agreement is signed in writing by both parties.” Another possibility is to indicate that
“No party should act in reliance on this e-mail until a definitive contract is signed in writing by
both parties.”
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
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
LEGAL ENVIRONMENT
What does the result in this case suggest that a businessperson should do before agree-
ing to a settlement of a legal dispute? The result in this case suggests that a businessperson
CASE 12.3—LEGAL REASONING QUESTIONS
1. What indicated that the terms in the agreement at issue in this case were accepted?
One of the elements for the formation of a valid contract is agreement—mutual assent to the
terms of a bargain. Agreement is evidenced by an offer and an acceptance. An offeree’s ac-
ceptance of an offer leads to the creation of an enforceable contract.
2. What were the appellant’s arguments in support of her claim? Which of those conten-
tions did the court imply was irrelevant? Why? Melinda Hinkal sought to recover for injuries
that she allegedly sustained while exercising under the supervision of personal trainer Gavin
Pardoe at a facility operated by Gold’s Gym, Inc. The defendants asserted that Hinkal had
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–
Hummel? To support her claim, Hinkal cited Beck–Hummel v. Ski Shawnee, Inc., a previous
case before the same appellate court. At issue in Beck–Hummel was a ski lift ticket that con-
tained a release of liability on its face but did not require a signature or an acknowledgment that
its terms are read and accepted.
ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
1A. Offer
A bid can be an offer if it contains all of the requisite elements: a serious, objective intent on the
part of the offeror and an offer communicated to the offeree in certain, definite terms compre-
hensible to both parties. Amstel’s bid met the requirements His intent appeared to be that of a
4 UNIT THREE: CONTRACTS AND E-CONTRACTS
2A. Acceptance
To create a contract, an offer must be accepted unequivocally. Durbin questioned the materials
included in the bid and asked about the possibility of substituting different acoustic tiles and dis-
3A. Theory
When individuals rely on promises, as Amstel would have done in this scenario, and the reliance
is considered to form a basis for contract rights and duties, under the doctrine of promissory es-
4A. Termination
Yes, Durbin asked about better quality tiles; until that issue was settled, because it likely
changed the price, a contract was never formed, so Durbin had the right to cancel the deal. The
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
The terms and conditions in click-on agreements are so long and detailed that no
one ever reads the agreements. Therefore, the act of clicking “I agree.” is not really an
acceptance. The terms and conditions included in click-on agreements have become so de-
tailed, confusing, and most importantly, long, that no one would ever take the time to read
one. Knowing, though, that one is unable to purchase or license a product or service purchased
on the Internet without clicking “yes” means that everyone just clicks “yes.” That is far from what
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
2A. Applied Products, Inc., does business with Beltway Distributors, Inc., online. Under
the Uniform Electronic Transactions Act (UETA), what determines the effect of the elec-
tronic documents evidencing the parties’ deal? Is a party’s “signature” necessary? Ex-
plain. First, it might be noted that the UETA does not apply unless the parties to a contract
ANSWERS TO BUSINESS SCENARIOS
AT THE END OF THE CHAPTER
12-1A. Agreement
For an offer to exist, the offeror must show a definite intention to make and be bound by the of-
fer. Invitations to trade or negotiate or mere statements of intentions to enter into a contract up-
12-2A. Offer and acceptance
(a) Death of either the offeror or the offeree prior to acceptance automatically termi-
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
6 UNIT THREE: CONTRACTS AND E-CONTRACTS
(d) When the offer is irrevocable, under an option contract, death of the offeree also
does not terminate the offer. Because the option is a separate contract, the contract survives
ANSWERS TO BUSINESS CASE PROBLEMS
AT THE END OF THE CHAPTER
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-
necessary, unless of course the offeror asks for it.
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
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
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
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.
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-
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
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-
vidual consumers. Without such terms, a merchant might find itself embroiled in numerous law-
(c) Sometimes, it is asserted that most buyers, especially individual consumers, do
not read shrink-wrap, click-on, or browse-wrap terms. The law does provide ways to avoid these
terms for consumers who have been taken advantage of by a clause in “fine print” or “legalese”
that the consumers may not have read and may not even have known about. These avenues
include protection against fraud, unconscionability, and adhesion contracts, as well as consumer
protection statutes.
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-
(b) A privacy statement of terms most likely benefits the individual user or consumer.
(c) Any terms that are onerous, burdensome, or unconscionable from the individual
