With the advent of the Web as the new commercial medium, merchants and consumers alike should be aware of some basic principles of contract formation and how they apply to Web transactions. The law does, however, draw the line at certain kinds of transactions which must be manifested in signed hard-copy. Generally, an enforceable contract is formed when a party unequivocally communicates its intent to be bound by the terms set out in the other party's offer. Although this principle seems simple enough, whether or not a party really intended to be bound by the terms of an offer has been the subject of litigation in contract cases for centuries, and is sure to arise again in virtual business deals. In the area of commerce, this means that the offer must contain at least the subject matter of the agreement, price, and time and manner for performance.
Issues frequently arise when the offeree attempts to accept an offer by changing the terms.
The offeree's alteration of the terms constitutes a counteroffer, and now the ball is in the court of the party who originated the offer in the first place to accept what is deemed a whole new offer. Only when one party has unequivocally manifested its assent to be bound by the exact terms as set out in the original offer is a binding contract formed. A few other rules come into play that may arise in virtual contracts on the Web. In other words, the offering party may not withdraw its offer if the offeree has already sent notification of its acceptance of the agreement, even if the offering party is not aware of that acceptance. Even at this early stage of virtual contracting, potential legal issues arise.