The digital revolution has invaded every aspect of our lives including the way we make contracts. For as long as anyone can remember, certain kinds of contracts had to be evidenced by a writing including contracts for the sale of goods priced at $500 or more. The typical records of millions of such contracts made every day were the purchase order and acknowledgment, the preprinted forms used by buyers and sellers. Suddenly, contracts were being made electronically and new laws had to be enacted to allow for electronic records and electronic signatures. Instead of contract terms appearing in preprinted paper forms, these "boilerplate" clauses now appear on computer screens. Courts are now confronted with determining whether a buyer has agreed to be bound by clauses on a Web site. While there are only a few cases to this point, they provide a glimpse of how the law will react to new ways of making contracts.

The historic concept of a contract is that two or more parties have agreed to be bound by their promises to buy and sell goods or services. Courts have always required a demonstration of "mutual assent" to hold the parties to their bargain. One of the more difficult challenges arose through use of printed forms such as purchase orders and acknowledgments. These forms recorded the goods or products to be bought and sold, the price and delivery terms. The purchase order and acknowledgment were identical with respect to these terms because they were the consciously considered terms the parties had agreed upon. The printed forms, however, typically contained many other "boilerplate" clauses, which were often ignored by the buyer and seller. These clauses dealt with warranties, remedies for breach of contract, and dispute resolution terms such as whether the dispute would be resolved in a traditional lawsuit or whether the parties had agreed to arbitration. When the clauses did not match on the respective forms, courts were confronted with the "battle of the forms." It was an open secret that parties paid little or no attention to these clauses. The basic question, therefore, was whether it was fair to say that a buyer or seller would be held to such clauses since there was no conscious "assent" to them. Courts now face similar questions when the terms are visible on a computer screen.

In recent years, a series of cases dealt with terms that were not disclosed until after the purchase was made. This was particularly true in transactions involving software. Typically, one does not buy software but, rather, licenses it. Because owners of the software were eager to restrict its use by the licensee and protect the rights of the owner (licensor), the transaction included a significant number of license terms. The practice of not disclosing those terms at the inception of the transaction became common. Where, for example, a company agreed to license software, the license terms were not disclosed until the box containing the software was delivered and the terms were printed on the outside of the box together with a statement that, by opening the box, the company agreed to the license terms. While the court in that case decided that the company was not bound by such belatedly revealed terms, courts in similar cases disagreed. Thus, where a party bought and paid for software and did not see the license terms until he or she "ran" the program, the court held that he or she was bound by the terms that flashed on the screen. The court stated that the contract was not completely formed by taking the software and paying for it. That was only the first "layer" of contract formation. When the license terms appeared on the screen, the user had to click the "I agree" button before the software would run. If the user chose not to agree, he or she could return the software and recover the purchase price. The court held that the user was bound by clicking the "I agree" button at which point the contract was completely formed and the user was bound by the license terms.

The box containing the software disk may include a printed copy of the license terms inside the box. And though you pay for the disk and take delivery before you open the box to retrieve the disk, a few courts have held that you are bound by the terms "inside the box" unless you choose to return the disk and recover the purchase price. Often called "shrink-wrapped" licenses, these terms are not being upheld. Similar cases involve the sale of goods binding a purchaser to terms "inside the box." Contracts made through the Web site of a seller may contain a number of terms. If you are required to agree to these terms before the sale is complete by clicking on an "I agree" or similar button, courts will hold you to these terms—a "clickwrap" transaction. If, however, the Web site terms are merely available to you but do not require you to agree to them to complete the transaction, at least one court has held that you are not bound by such terms. The case involved a Web site containing notice of contract terms, which you could see if you clicked on a button taking you to such terms. It was not necessary to click that button, however, to complete the transaction. The court characterized this Web site as containing "browsewrap" terms, which could be ignored. Still another case involved Web site contract terms that were visible only if you scrolled down to another screen and did not appear to require any agreement to such terms. The buyer was not held to such terms.

The new contract formation methodologies have focused the attention of courts on the basic requirement of any contract, the requirement of mutual assent. Even where it will be impossible to complete a transaction unless you click on the "I agree" button, you may decide to click that button without bothering to read the terms. The fact that you have signaled your agreement to even unread terms, however, binds you to such terms. The emphasis, therefore, is on the opportunity to review such terms before you agree. If the opportunity is provided and you indicate you agree, the fact that you have not chosen to review the terms is irrelevant. You are bound by the terms.

Courts will continue to struggle with the central issue in any new method of making contracts: were each of the parties afforded a reasonable opportunity to review the terms of the deal before the transaction was completed. Only if that opportunity was provided will a court find that the basic requirement of mutual assent has been satisfied.