Contract Law Unveiled: UCC 2-207, the Battle of the Forms, Clickwrap, Browsewrap and Shrinkwrap Agreements

Welcome to this week’s episode, where we explore the critical principles of contract law, focusing on cases that highlight the nuances of contract formation, the application of the Uniform Commercial Code (UCC), and modern agreement types. In this episode, we break down the following key themes:

Battle of the Forms and UCC 2-207

One of the most contentious areas in contract negotiations is the "Battle of the Forms," where parties exchange documents with conflicting terms. UCC 2-207 helps determine which terms govern the agreement. For example, in DTE Energy v. Briggs Electric, the court ruled that material changes, like forum-selection clauses, require explicit consent. Similarly, in Textile Unlimited v. A..MBH, the court emphasized that conflicting terms are excluded unless agreed upon, particularly when they materially alter the contract.

Post-Sale Terms and Consumer Protection

We then dive into the enforceability of terms presented after a purchase, particularly in shrinkwrap agreements. In Hill v. Gateway 2000, retaining a product beyond the return period was considered acceptance of included terms. However, Klocek v. Gateway 2000 took a more consumer-friendly approach, requiring explicit consent for post-sale terms to be binding.

Indefinite Terms and Relational Contracts

Next, we explore how courts handle contracts with vague or missing terms. The Oglebay Norton v. Armco case, often referred to as the "Edmund Fitzgerald" case, demonstrates that contracts can still be enforced if both parties clearly intend to be bound, even when terms are indefinite. Conversely, Varney v. Ditmars highlights the need for specificity, ruling that vague promises like a "fair share" are unenforceable without clear criteria.

Modern Agreement Types

In today’s digital world, contracts often take the form of shrinkwrap, clickwrap, or browsewrap agreements. Courts have varying standards for enforceability, as seen in Specht v. Netscape, which clarified that browsewrap agreements require clear notice and user acknowledgment. In Cairo Inc. v. CrossMedia, repeated website use with conspicuous terms of use was sufficient to bind users, even without explicit agreement.

Practical Takeaways

For businesses, the lesson is clear: ensure terms are conspicuous and accessible, especially online, to avoid disputes. Consumers, on the other hand, should review packaging and online terms carefully, as continued use often implies consent. Both parties should prioritize clarity and specificity in their contracts to enhance enforceability and reduce potential conflict.

Final Thoughts

Understanding these key principles of contract formation—particularly the nuances of the UCC and modern agreement types—is essential for navigating today’s business and legal landscapes. Whether you're drafting agreements or reviewing terms, the importance of clarity and intent cannot be overstated.

Join us next time as we explore more fascinating concepts in contract law and beyond. Thanks for tuning in to this episode of American Law Cafe!

 Introductory Music for American Law Cafe. In Jazz Short by moodmode / Vlad Krotov.