Optimize Your Terms of Use Agreement with eSignature Legality in India

How to eSign a document: eSignature legality for Terms of Use Agreement in India

hello and welcome to another exciting edition of business law today and in this particular episode we're going to talk about econ tracks and the exciting world of online digital contracts and the first thing that we look at is a e contract now an e contract is just a regular old contract and so all of the normal common law principles for contract law still apply in the e contract context and so understanding that whether it's the ACT laughs principles of offer and acceptance and capacity and consideration and legality and form and all of those kinds of things still apply and so we have to have the normal contract principles satisfied but then there are some extra issues that arise when we talk about online interactions so the first thing we look at is the online offer of course we have to have offer and acceptance so where does the offer take place now the sellers website controls the transaction and in some ways online interactions are actually cleaner than on offline or real world transactions because you don't have any usually any face-to-face conversation so it really kind of eliminates a lot of potential disputes because everything is done online so what exactly is the offer well the sellers website should include the hyperlink to the page with the full contract so when you click buy now there's a little link underneath there that says click here to see the full contract terms that is part of the contract and even though you never click on that I'm sure you don't even though you never do you're still bound to those particular provisions that's called a click on agreement and it's part of the requirement part of part of the contract itself so what kinds of things would we expect to see in an agreement like that well let's look at an example here's my favorite website for buying cool junk online and that's what but my real favorite part of whoot is the shirk section and so they have top 20 shirts of all time there's some real good ones in here let's see where's the one I really like oh this one's really cool you've got Indiana Jones discovering han Solo frozen in carbonite this one's kind of funny outside where real stuff happens kind of a good plug for our online contract so where is the agreement where are the terms that we would look for in fighting well anytime you're looking for that stuff look all the way down to the bottom and where is it well let's look back on the main page and see if we can find it there shall we I mean where else could you find a website where you could buy a bidet and shoes with toes on the same website come on it's awesome okay so let's see here terms and conditions that's what we're looking for and as you can expect with loot anything like that you expect it to be really funny and it's not so there are terms and conditions what kinds of things do you find well in an agreement like this you're going to expect to see a return policy if you expect to see copyright and trademark type things how communications are going to be handled a license and access is usually part of it and how they're going to handle reviews comments and things like that returns and refunds are always included pricing information if there's any software terms of use are applied and it's usually in a different place you can see that here and then we get to the meat of it the disclaimer of warranties and limitation of liabilities and so here you have you know they really want you to see that so it's in all caps and that really makes it stand out and so you're gonna really gonna read that legalese and they're disclaiming all kinds of warranties including the implied warranty of merchantability and fitness for a particular purpose which you don't even know what that means right now we're gonna get to that for chapters from now and you're gonna see that in order to disclaim those warranties it must be in writing and it must be conspicuous and that's why it's in all caps another thing you're going to see in an agreement like this would be a dispute resolution provision and you notice here that they say everything will be done by binding arbitration and you now know what that is because you've had business law there is no judge there is no jury there is no court the arbitrator Awards damages you're always going to find an applicable law provision and so because of that you're going to always have because it's an online transaction you're always going to have people in different states and different places and so this one says state of Washington is where the law which is kind of interesting because whoot as a company is based in Texas they're incorporated in Delaware and yet they're choosing the state of Washington and usually the reason for that is the state of Washington has very good arbitration laws for businesses and so that's why you have that and then they have additional terms and conditions so kind of interesting just to see how a website like this would operate the other biggie that I'll show you is amazon.com right so I was looking at really cool masks for my son to play paintball and airsoft guns right so where am I gonna go on Amazon to find the terms and conditions well we're gonna go all the way down to the bottom not in this row not in this row not even in this row all the way down here to conditions of use and on that we find a situation where we have all kinds of the same exact thing so we have the copyright the trademark the patent licensing access for the account reviews and comments copyright complaints risk of loss returns those are always there and notice again with the all-caps disclaimer of warranties and limitation of liability notice again with disputes Federal Arbitration Act applies applicable law Federal Arbitration Act and wouldn't you know state of Washington again of course this company's actually based in Seattle Washington so it makes a little bit more sense that they would do that and you see the rest of what is only described as an epic Terms of Use provision so Amazon's got it nailed down pretty good so what kinds of things do we see we see a return policy the disclaimer of liability for various uses and goods a privacy policy limitation on remedies and those kinds of things so online offers often have the form selection Clause choice of law clause we've noticed those and and that's how they are viewed now are they enforceable yes click on agreements are considered to be enforceable and so whether it's a website that you're viewing and buying something on or a software that you are installing when you click I agree whether you read it or not it is enforceable it the law does not require the parties to read all the terms so surprise surprise you can't have a defense to say well I didn't actually read it or agree yes you did when you clicked I agree you took that risk so another type of agreement you got the click on agreement that's when you agree when you software or use a website the other kind you get is called a shrink-wrap agreement and this is a handy little thing software companies back in the olden days software companies would send you the actual software rather than just downloading so I happen to have an example of that here this is a snap survey software and we used to use we used to use this for course evaluations I happen to have a box in my desk and so I thought hey I wonder if this is a shrink wrap agreement so sure enough when this box came to us it was low and behold shrink wrap there was no way to view inside the box you could not get into it the only way to get into it was to take off the shrink wrap there was a sticker on the outside of the shrink wrap that said accessing this software by removing the shrink wrap indicates your acceptance to additional terms provided inside the box and so sure enough if you look inside the box you have even more boxes and so here we have the sleeve and inside the sleeve the DVD protective case we have a book and inside the book we have license agreement and it starts on page six and it goes for the rest of the book and it's kind of interesting here because I've highlighted this part right here and what that says is this License Agreement is accepted as soon as we accept your order of this software this Agreement takes effect when snap Servais accepts your order which occurs when it sends you an email or it supplies you the software hmm so I supposedly agreeing to something that I could not possibly have read because it was behind shrink-wrap that I could not possibly have even known was present because it was it was supposedly accepted when I placed my order and then you mailed it to me in a shrink wrap container well that's kind of an interesting way to look at things the first case that really took this this issue on was actually a gateway case there was an old computer company called gateway and they had the big cow boxes and let me tell you something when those cow boxes arrived that was an exciting day and they had additional terms inside you didn't know you were agreeing to and so here's what the courts have basically said sometimes these are enforceable and sometimes they are unenforceable they are unenforceable when they expand dork or Redoute when they expand the contract beyond what would reasonably be anticipated or when they contradict terms that the parties had already agreed on and so if there are additional limitations of liability if they try to change the return or warranty periods or things like that then the courts will not enforce those because obviously the party couldn't have agreed to something didn't know and he had expressly said otherwise and so shrink-wrap agreements are kind of going out of style but there have been cases where they have been enforced that is different than what they call a browse wrap agreement some enterprising websites have taken upon themselves to put all kinds of onerous terms of use in a very buried legalese type of a page and supposedly just by using their website you are agreeing to these terms and then they try to to limit you or make claims against you when they feel like you violated those terms for the most part it's kind of like a click on agreement because you really didn't read it right but the difference is there isn't any affirmative acceptance it's just like well you use the website and so therefore you have agreed to all of these terms and conditions well the one case we have on this that really kind of analyzed it pretty well said unless it was very conspicuous and in that case they wanted to see it up in the upper left-hand part of the page that everyone would see immediately and wouldn't be kind of scrolling down in the bottom like we had to do with Amazon and whoot and so they said if you had it right at the top or if you had a pop-up that everybody had to agree to and affirmative lis click I agree then we will enforce it but if not we're not going to enforce browser app terms and so for example I give me example one website said that if you leave negative comments on a third party website about their service that that violates their Terms of Use well I mean come on you can't do that another website tried to go after Google and said well our Terms of Use said that in a browser app agreement said that robots your your spiders and robots cannot crawl our website and index it for search engine e and that if you did you owed us five hundred dollars every time and so then they were keeping track of every time Google's BOTS went through their website and sending a bill to Google for five hundred dollars claiming contract you agreed to this when you accessed our site that's just not going to hold up in court so those are brows rap agreement in the second half of this unit on econ tracks we're going to look at two national laws that govern this particular area the first is a federal law and the second is a uniform law that's been adopted by all of the states so the first one we're gonna look at is called the e-sign act and this was passed in 2000 somewhat in response to the growing industry and changing rules the changing technologies and so the e-sign act is very simple and it's actually a very good law and it simply says that just because a signature is in an electronic form does not make it invalid in fact if I could state that more positively it says electronic signatures are just as valid as physical signatures and so as long as the contracting parties have agreed to using ecig matures then they are just as enforceable as any other signature so that's a very good law gives a lot of application and so it's it's it's been a good development for for contract law and businesses in this area now it doesn't really define what an eSignature is and so that's in some ways you could say well that's kind of a weakness of the law but what it basically has boiled down to is that any electronic indication of identity can be considered as a signature so in one case even someone's email address that was attached to an email that they sent even though they didn't sign it themselves at the bottom they didn't try to recreate their signature with the mouse if you ever tried to do that that's kind of hard and they didn't do any of that but they had sent an email and it had their name in the email address and a court said that's good enough that's an indication of their identity attached to this record so it doesn't apply to all documents it doesn't apply to court documents courts out of their own system for electronic signatures it doesn't apply to divorce decrees prenuptial agreements wills power of attorney things like that have to be physically signed and so you can't have an e signature on a will that was we one exception to that particular rule so the purpose was was to give a an across-the-board acceptance to electronic signatures now that was good but it didn't go quite far enough and so what has come along since then is called the uniform electronic transactions Act and the u ETA has a little bit of overlap with e-sign and so we're gonna see how that works but it goes much much further and the u ETA was designed to remove barriers to forming electronic contracts and engaging in commerce engaging in business online unlike the e-sign Act which doesn't even define what an eSignature is the u ETA has a definition of e signature and it's very broad notice this here on the con the slide an eSignature is an electronic sound symbol or process associated with a record and adopted by a person with intent to sign the record okay so a sound can be a signature a symbol or even a process and so we can have the process it's talking about for example a click if you click I agree that is a process that is an action that indicates your acceptance and your identity if you've ever seen how ecig matures are handled on PDF documents we use PDF see signatures on all of our contracts with like oh if we have outside adjunct instructors that teach for us in an online class we send them a PDF and they just simply say sign here they click and it puts their name and the date and then this long string of symbols and characters and that is meant to be an indication of their identity and their intention of signing the record you say well I've also seen PDFs where people have taken a graphical picture of their signature and use that does that count and let me see if I can show you an example of that my thing will launch here you say do you have to do it that way no you don't have to do it that way in fact if I just show you here insert and I even have it in my quick parts so I can just boom there's my signature okay now is that an eSignature ing to the definition well sure does it have to be that no it could simply be me typing my name now I have esign to this document and so an eSignature is it would include that kind of thing but doesn't necessarily have to be that kind of graphical representation of a traditional signature now notice the word that's underlined here at the bottom record what is a record under the U ETA I'm glad you asked a record is any information that is inscribed on a tangible medium or stored in electronic or other medium that is retrievable in visual form and that's really the key retrievable it has to be reproducible it has to be the kind of thing that we can with certainty know what it was when that person signed it so it's kind of the difference between a PDF and a Word document what's the difference between a Word document and a PDF well a Word document changes all the time a PDF is kind of like a snapshot that's what it looked like and if we can't reliably know what the document said when it was signed then it's not going to serve as the basis of a very good contract and so in order to be a record a Word document would probably not count unless it had serious levels of reliability about the changes that could or could not have been made after it was signed so there are ways to secure a Word document I don't want to lead you astray there are possibilities but in general a PDF is a much better way to go when it comes to e contracts and documents so what does the u ETA apply to well it does not create any new rules for a long online contracts instead it says okay all the real world rules the the physical world rules apply also in electronic contracts and notice it only applies to e records and ecig matures that relate to a transaction and so it has to be a transaction it's the uniform electronic transactions Act it does not apply to wills or power of attorney or legal documents that are not part of a deal so we're talking about interactions between businesses doesn't apply to wills or trusts and does not apply unless both parties have agreed to conduct an electronic transaction you can still opt out if you prefer not to do that so I mentioned in the beginning of this unit that there's a little overlap between esign and you ETA what do we do in that case well the e sign came actually after you ETA was already making the round and it said that if a state adopts the u ETA and conforms to the minimum esign procedures then the u ETA will preempt the e-sign act that means normally a state law and you have a federal law normally what happens federal law wins right in this case the federal law explicitly says if you if you adopt the u ETA in your state as state law and your version of the u ETA has these minimal criteria that are established these procedures that are established in the e sign Act then your UT u ETA in your state will preempt the federal esign Act and that just makes sense basically it's just saying that you've already got it covered we don't need the federal law all right that's our special mini unit on key contracts I hope this has been helpful and I look forward to seeing again next time we get together bye bye