Electronic contracting is a subject that caused courts significant aggravation for years. You should care because you will need to sign contracts with your customers. 

Electronic contracting may seem like some form of legalese you don't really need to know about, but you do. When you sell something online to someone, you are forming a contract. If you don't do it correctly, you can run into problem wherein a customer is able to get their full purchase price back whether they deserve it or not. For instance, let's assume you have a membership site and a person is a member for a year. If you don't get the contracting right, they could complain and get the full 12 monthly payments back. 

A contract in the brick and mortar world always required some symbol of acceptance by each party to be valid. For example, you signed a contract when buying or renting your home and it became valid when the landlord/seller signed it as well. This also points out the problems that can arise when doing a transaction online. How does one "sign" a contract in the virtual world? Electronic contracting is the answer. 

To sign a contact online, a party needs to make an affirmative act indicating as much. Let's take the example of a site selling something. I go to buy the product in question, enter my credit card and that is it. Have I signed the contract? Any argument I can come up with is pretty weak. Some parties try to remedy this by including a statement that says if you buy from me, you are agreeing to all my terms and conditions. Again, this is pretty week since there is no affirmative action taken by the customer or client. What would an affirmative action be? It would be clicking an 'I Agree" button that sites the appropriate terms. It is that simple.

Finally, one needs to keep a record of the transaction. A mere sign that the credit card went through is not enough. Most payment processors now handle this provision, but the burden is on you to make sure that you have evidence to support your claim of an electronic contract. 

Electronic contracting is an area that is constant flux. Contact me to learn more about the latest developments and getting your site in compliance.

Richard A. Chapo, Esq.