Turns out, it isn’t girls who run the world, but contracts that do. Sorry, Beyonce You can barely get through a week without agreeing to one whether it is getting a cell phone, signing up for a new social media account, or getting an oil change. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2016 was awarded jointly to Oliver Hart and Bengt Holmström “for their contributions to contract theory.” They are everywhere.
To be valid, a contract needs to have three basic parts: Offer, acceptance and consideration. That includes even those online. The first part is the offer. Something has to be offered up to another. That seems obvious, but sometimes it isn’t clear that there is an offer.
You may ask, “How on earth do you not know something is being offered? It should say so right there!” And that is true for straight-forward written contracts. But what about oral contracts? Sometimes what is being offered is less clear. Also very common is “shrink-wrap” or “click-wrap” licenses. For example, some companies claim that by opening a box containing the good you bought, you are now subject to a bunch of terms and conditions. But you had no idea what those terms were. You didn’t even know it might be possible there were terms. Same can be true with websites. How can you be held to terms you didn’t even know existed? And that’s why you have to scroll through those terms before clicking OK. That is the offer, and they have to make sure you had the chance to read or ignore them at your choice.
Next, the terms must be accepted. Sometimes that is simply saying “Yes, I’ll take that!” or clicking “I Agree.” Other times, it is by action. “I’ll pay you $50 if you eat that cockroach,” and you eat the cockroach. Issues happen when you have a battle of the forms. I send you my proposal, and you send back your order form. Each paper has slightly different terms. Does that mean you accepted my terms or proposed new ones? And that is how litigation is born, my dearest ones.
Finally, consideration is necessary. Consideration is simply that each side gives something to the other that they didn’t have to. I will let you use my awesome social media site until the old people figure it out, but I get to collect data on your use. I get data that I otherwise couldn’t get, you get to share photos of your meals. Or perhaps I get the “pleasure” of watching you eat insects, and you get $50. But there has to be something. As in life, there is no free lunch. Even the offer of a free lunch usually comes with them getting your email so they can spam you for the next millennium.
Therefore, if you want a deal done, make sure there is a clear way to track the offer, the acceptance and the exchange of something from both sides. And be sure to floss to get the roach legs from between your teeth.
Want to know more about contracts relating to your website, join us at our presentation: Growing Strong: iClick.