Source: https://cyber.harvard.edu/ilaw/Contract/Kidd_Full.html
Timestamp: 2017-09-20 00:15:37
Document Index: 160628191

Matched Legal Cases: ['§ 110', '§ 164', '§ 1', '§ 1', '§ 1', '§ 102', '§ 1', '§ 1', '§ 1', '§ 1', '§ 85', '§ 187', '§ 332', '§ 65', '§ 189', '§ 6', '§ 109', '§ 109', '§ 109', 'art. 7', 'art. 11', 'art. 1', 'art. 9']

Kidd, Adapting Contract Law to Accomodate Electronic Contracts: Overview and Suggestions
[*215] I. INTRODUCTION
Law is not a static body of inflexible rules and unyielding tradition. The dynamism of contemporary economic, cultural, and technological evolution requires the law to adapt itself to modern demands. Attempts to graft archaic legal systems onto ever-changing circumstances result in a struggle to conform novel issues into an out-dated legal framework. n1 Currently, courts and legislatures are facing issues raised by business conducted over the Internet. Failing to blanket current developments, old law leaves new problems exposed for litigation and requires attorneys and judges to explore uncharted seas of legal complexity.
Although the continued application of traditional laws that are unresponsive to changes in the underlying society may promote injustice, a judicial activism that randomly develops "new law" to remedy inadequacies is equally deficient. When confronted with modern problems left unaddressed by existing law, a "rapid [*216] solution" is to create novel law to fit the situation. The American legal system, however, relies upon precedent and a coherent, predictable body of authority. Rather than granting arbitrary discretion to create law as needed on a case-by-case basis, the American legal regime requires application of prior law by analogizing existing authority to the issues in question. This process leads to an adaptation of the law through stretched analogies that construct a bridge between prior authority and novel legal problems.
A theory of adaptation presumes that the existing legal framework can be structured to fit novel circumstances that arise. This presumption implicitly requires that new issues can be analogized to issues already addressed by the current law. n2 Further, adaptation recognizes that politics, culture, and technology are forces that shape the social environment and the law that governs it. If the political, cultural, and technological climate remains stable, the law adapts gradually over time as circumstances remain unchanged. Stability promotes only minor variations of existing legal issues that the law can address by analogy without warping the framework. If a force that shapes society and its law rapidly changes, however, new fundamental issues may arise that do not fit within the traditional legal framework that developed under much different circumstances. At this juncture, in recognition of altered circumstances, courts and legislatures must choose to apply existing law blindly, create new law, or adapt existing law by analogy.
The history of America alone contains numerous instances when rapid alterations in the social fabric forced adaptations of the law. Following the American Revolution, the democratic government developed a legal system to reflect the new political environment, but did so through adaptation of English law. During the [*217] nineteenth century, the Industrial Revolution introduced powerful technologies that rapidly precipitated economic and cultural changes. n3 Although this era witnessed several new legal theories, including the creation of corporations and the evolution of tort law, the changes arose through adaptation by analogizing existing law to new circumstances. The Great Depression of the 1930s led to expansion of the role of federal government. Cultural revolution during the 1960s emphasized racial and gender equality, promoting affirmative action programs, as well as recognition of environmental concerns.
A major beneficiary of improved technology is the business sector, which utilizes improvements to enhance efficiency and reduce transactional costs. n4 The Internet provides rapid communication capabilities at reduced costs and expands access to a global market. Business can be conducted almost anywhere by [*218] using the Internet. n5 An important product of this technological development is the increasing phenomenon of electronic commerce, or "e-commerce," n6 that harnesses the Internet's abilities for commercial purposes. Electronic commerce encompasses a broad category of economic activity conducted on-line, including everything from e-mail contracts and memoranda to advertising and on-line sales of both tangible goods and information delivered over the Internet.
The recent technological advances, however, have fundamentally altered the structures of many businesses and broadened enterprise opportunities. n7 While regulation of corporate activities and protection of consumers remain vital in e-commerce, n8 the existing law also must address the world of paper contracts, tangible property, and geographical boundaries. n9 Few companies are likely to rely exclusively on the "old ways" of doing business. Accordingly, the law governing business transactions must recognize e-commerce to promote certainty in the law, a precious [*219] goal for the business community. To retain a viable legal framework while recognizing extensive technological changes, the desirable solution is the adaptation of existing law by analogizing current problems to issues earlier addressed by the legal system. n10
Three fundamental issues affecting a business are its amenability to suit (jurisdiction), the validity and enforceability of its agreements (contracts), and its rights and obligations in transactions (sales). n11 The existing law embodied in statutes and case precedent resolves many of the issues that arise in these three areas. Electronic commerce, however, has affected all of these [*220] areas through its use of technological innovation. n12 As mentioned, the Internet has expanded the potential geographic business market while reducing the cost of access. Contract formation and performance can be conducted over electronic media and can occur without using a single sheet of paper or a drop of ink. n13 "Virtual" products may be purchased with "virtual" currency before being transferred from one computer to another in the form of electronic packets of information. n14 Since existing law rests upon a more limited business scope, physical documentation, and transactions involving more than electronic signals, an urgent need exists to adapt the law to reflect new business practices while retaining the predictability and authority of legislation and common law. n15
This article asserts that adaptation of current law to address the novel issues presented by e-commerce is the proper course of action. Legal problems arising in e-commerce can be analogized to issues already resolved within the established legal framework. Important variations in the legal structure will be required, however, to ensure that the law addresses the reality of e-commerce while remaining grounded in pre-existing judicial and legislative authority. n16 Primarily, this article will demonstrate that commercial [*221] law, as embodied in the Uniform Commercial Code (hereinafter "U.C.C.") and common law contract principles, can adapt to the circumstances of e-commerce and serve equally well as an analytical tool for evaluating issues that may arise in electronic contracts.
Section IV continues the analysis of commercial law and e-commerce through a discussion of how to define e-commerce [*222] transactions. Beyond characterizing e-commerce transactions as "transactions in computer information," the section also analyzes application of the Uniform Computer Information Transactions Act (UCITA) to "mixed" contracts that may involve more than merely a transaction in information. Finally, Section V concludes that the obvious changes that e-commerce embodies, nonetheless, can be analogized within the context of prior circumstances. Commercial law can be adapted to analyze the issues without sacrificing predictability in the law or restricting healthy development of commercial activity. n17
Electronic commerce does not alter the substance of business contracts so much as it alters the process of agreement. n18 For example, a magazine subscription purchase agreement will have the same terms regardless of whether it is made on a slip of paper, over the telephone, or on the Internet. The real issue is whether contract law will recognize that each process produces an equally enforceable agreement. n19 In other words, will agreements made via the Internet receive the same protection under commercial and contract law as other types of agreements. n20 A key factor to the [*223] solution is determining how the process of transacting business on the Internet operates and how agreements formed over the Internet are finalized.
The Internet n21 provides four principal processes by which parties may enter an agreement: (1) e-mail, (2) listserv and chat services, (3) World Wide Web interfaces, and (4) electronic data interchange (EDI). While each process is similar to the others, subtle differences require that each receive separate legal attention. Additionally, many agreements will utilize a combination of these processes during negotiations and in the formation of an agreement. A discussion of basic processes is the most rewarding approach for conceptualizing the electronic tools of commerce. n22
First, electronic mail, or e-mail, is the most basic process used to form agreements. Simply stated, e-mail permits an individual to send an electronic message to another individual or group of individuals. n23 Underlying the simple definition, however, is a complex mechanical process. To create an e-mail message, an individual writes a message and the computer breaks it down into a digital stream that is further disassembled by the computer's modem into analog tones. n24 The tones are carried over communications links (usually telephone lines) to a computer network where the tones are reassembled into several digital [*224] "packets" that are each individually stamped with information concerning the content of the message, its level of confidentiality, time, and the identity of the sender and receiver. n25 The packets are then transformed back into analog form. They are sent independently over the communications link and eventually arrive at the recipient's computer network, where they are reassembled and switched to a digital form readable by the recipient. n26
Similar to letters sent through the postal system, e-mail is usually written and distributed by a person for another specific person or group. The contents of a message generally are personal and communication includes only the sender and recipient. E-mail messages can be "digitally signed" n27 for authentication and verification purposes. Additionally, senders may "attach" other electronic files to an e-mail message that the recipient can view or use after opening the e-mail. The advantages of e-mail include ease of use, insignificant costs, direct communication, and ubiquity.
Parties can use e-mail for business or commerce in a number of ways. The text of an e-mail may include information relating to negotiations, offer and acceptance, or a draft of the contract itself. Additionally, if the transaction involves electronic products, the e-mail itself, or an attachment to the e-mail, may be the object of the transaction. n28
Second, individuals may use listservs or chat-rooms to form transactions. n29 Listservs, or electronic bulletin boards, provide a forum for individuals to discuss particular topics by "posting" messages for others to read. n30 Similarly, chat-rooms allow individuals to have real-time dialogs as each person types messages that are immediately viewable by other individuals in the chat room.
A listserv provides a public forum for persons to communicate [*225] on a wide variety of subjects. By typing a message or attaching files, an individual creates a "post" for a listserv. The post is broken down by the individual's computer into analog pieces and transferred over communications lines to the listserv network. The listserv network computer reassembles the message and "posts" it to an electronic bulletin board with other messages from individuals. The posts are public and can be read by anyone who uses the listserv until the messages are purged after a given amount of time. n31 Posts often respond to earlier messages and a "thread" of discussion arises. A useful conceptual device is to imagine a chalk board on the hallway of a large office building. Different parts of the chalk board will have messages relating to the company picnic, job openings, office goals, current projects, marketing, and other information. Everyone who uses the building can read the chalk board and write a new message or response to an existing message at any time. Eventually, older messages will be erased to make room for new messages.
Following a similar mechanism, chat-rooms are electronic fora in which individuals gather at the same time to engage in real-time dialog. Once an individual types a short text message, the message is transferred from the individual's computer to the communications lines and sent to the chat-room network. The network adds the message to a continuous string of messages that is [*226] refreshed at short-time intervals to simulate real-time conversation. All individuals using the chat-room may read the stream of messages as they are updated and respond by sending their own message to the chat-room. Often, a systems operator moderates discussion and controls a chat-room through the power to edit messages or remove chat-room users. Messages are not saved or "posted" for later perusal; rather, a message usually appears and is gone within a minute.
The third tool for Internet communications, including agreement formation, is the World Wide Web. n32 The Web is a graphical user interface (GUI) for intercommunication between a Web page and an individual who visits that page. n33 On a basic level, an individual uses an Internet browser to type in a Web page address, and the browser displays the Web page. The individual can then "navigate" the site through links and buttons to access additional text and graphical material. n34 On a technical level, the individual types in a Web page address, or uniform resource locator (URL), which the computer transforms into a binary code that is unique for a particular Web page. Using the URL to find where the Web page is located, the individual's computer contacts the Web page server over communications lines. Once contacted, the Web page's server transforms the page, written in hypertext mark-up language (HTML), into binary code "packets" that are transferred to the individual's computer to be reassembled.
Web pages combine multimedia and the ability to intercommunicate. These characteristics not only permit a seller to provide product and service information, but also to communicate [*227] directly with potential buyers. Many electronic commercial Web sites include on-line purchase forms and permit payment over the Internet. n35 The individual need only type personal information into specified fields and click on a "return" or "accept" button to complete the transaction. n36 Transactions may include the purchase of physical goods such as luggage or clothing, or may involve the purchase of software or electronic files that are downloaded to the individual's computer immediately upon payment. n37 For these transactions, negotiations are not common.
Finally, transactions may occur electronically using electronic data interchange (EDI). The simple definition of EDI is the "computer-to-computer transmission of data in a standardized format." n38 Essentially, computers act as "electronic agents" for agreement formation without human intervention. n39 The process may work as follows: n40 an individual completes an electronic form [*228] requesting quotations for goods or services that he seeks to purchase. The request is sent electronically to a computer network that forwards the requests to bidders, who then return quotations for the suggested transaction. This process may be entirely automated without any human involvement once the process begins. n41 Noticeably, EDI not only lacks negotiation of an agreement, but may involve no human element during the process itself. n42 While convenient and efficient, EDI demands investigation of whether computers have legal capacity to contract as electronic agents.
Differences arise, however, within each class of electronic communication. E-mail is private and sent directly among actively participating parties. n43 Bulletin boards and chat-rooms are public, but neither retain messages indefinitely. Electronic commerce Web pages contain standard forms for interested parties to complete without negotiation of the contract terms. EDI involves automated messaging without any human intent involved for the creation of the actual agreement.
Accordingly, the question raised is whether these processes [*229] produce agreements that are legally enforceable as contracts. n44 Do these electronic processes fit within traditional concepts of contract law? Will proposed changes in commercial law effectively resolve problems generated by electronic agreements? Will a "one-size" legal framework fit all electronic processes or will different rules be required for different types of electronic contracts? Although this article argues that agreements created by various electronic processes can be enforced as contracts, the analysis to arrive at that conclusion requires explanation. Primarily, this article analyzes traditional contract requirements of a written document, signatures and intent in conjunction with recent proposals for changes in commercial law, technological innovation and electronic commerce. Before beginning that analysis, however, a brief review of jurisdiction is required to set the stage for any subsequent contract enforcement action.
The Internet provides businesses with an additional way to communicate with customers and prospective customers. n45 Whether using a Web site to provide information about the company, sending e-mail to solicit potential clients or allowing customers to purchase and download software directly from the World Wide Web, n46 sellers can use the Internet to conduct operations around the world. Commercial activity is no longer necessarily confined to regional boundaries. Instead, the Internet allows a company to expand its commercial endeavors globally to all persons who can access the Internet. Companies that were once unable to afford mass advertising campaigns or national sales representatives now can use the Internet's technology to turn a one-person home office into a global competitor. For many businesses, access to the national or international markets is available because the Internet ignores boundaries and provides links to areas once [*230] commercially inaccessible.
Expansion of markets, however, includes an increased risk of litigation. The threat of litigation not only concerns lawsuits by an expanding number of customers, but where those customers can sue the Internet businesses. As businesses increase their market area they become subject to the jurisdiction of a greater number of courts. While companies now have the power to access national markets, they also may be subject to suit in any court of the nation. Focusing upon issues of greater personal jurisdiction due to Internet commerce, this section examines the courts' evolving treatment of businesses' amenability to suit in a particular forum as a result of their Internet activities. n47
As is well known, personal jurisdiction permits a court to exercise its authority over a defendant based upon the defendant's connection with the forum. n48 Personal jurisdiction imposes a due process limitation upon the courts insofar as no court may exercise its power over a defendant who has no connection with the forum in which the court is located. n49 The decisive question, however, is the kind of "connections" the defendant must have to satisfy the due process requirement. Formerly based solely upon a defendant's physical presence in the forum, n50 the "connections," or "contacts" analysis of personal jurisdiction addressed not only a defendant's place of residence, but its activities in the forum. n51 [*231] When telephones and automobiles made it easier for business to expand its boundaries, courts responded by expanding their jurisdiction to include those geographic areas which the defendant purposefully selected for economic gain. n52
The relaxed basis for jurisdiction notwithstanding, a court located in a specific forum could not exert its power over a defendant whose activities had no substantial contact with the forum itself. The United States Supreme Court, addressing the issue of personal jurisdiction, has developed the law to reflect the increasing ability of businesses and others to "reach out" into distant areas of the nation. Having provided a baseline rule of personal jurisdiction in Pennoyer v. Neff, n53 the Court advanced the law in International Shoe Co. v. State of Washington n54 to reflect the reality that automobiles permitted companies to expand their business into distant forums and thus, appropriately render the entrepreneurs subject to the power of courts beyond their home ports. n55 Establishing the "minimum contacts" doctrine, International Shoe permitted courts to exercise personal jurisdiction over businesses or other persons not residing in the forum so long as they engaged in continuous activities in the forum. n56 The Court continued to expand the test for personal jurisdiction as "modern transportation and communication . . . made it much less burdensome for a party sued to defend himself in [*232] a State where he engages in economic activity." n57
Although adjusting the scope of personal jurisdiction by recognizing the increased fluidity of national transportation, the Court began to restrain the minimum contacts doctrine. In World-Wide Volkswagen Corp. v. Woodson, the Court found that, although technology had permitted increased access to distant places, personal jurisdiction was not proper when the defendant's contact with the forum was not substantial enough for the defendant to "reasonably anticipate being haled into court there." n58 In Helicopteros Nacionales de Colombia v. Hall n59 and Asahi Metal Industry Co. v. Superior Court of California, n60 the Court also limited the exercise of personal jurisdiction. Helicopteros noted the Court's aversion to general personal jurisdiction, n61 and Asahi [*233] Metal introduced the "stream of commerce" argument that limits personal jurisdiction even if the defendant is aware that its products likely will end up in the forum. n62
Today, personal jurisdiction analysis requires several components. n63 First, a plaintiff invoking jurisdiction must establish that the defendant has sufficient "minimum contacts," which include any business activities or purposeful availment of the forum's residents for business, as well as obtaining the benefit of the forum's laws. n64 The contacts must be directed at the forum and cannot be random, fortuitous, or attenuated. n65 The contacts must be such that the defendant can reasonably anticipate being haled into court in that forum. n66 Second, assertion of personal jurisdiction must satisfy due process such that maintenance of the suit does not offend "traditional notions of fair play and substantial justice." n67 If the facts satisfy these two criteria, the basic constitutional requirements are met and the court may exercise authority over the [*234] defendant. Although state courts may further limit assertions of personal jurisdiction beyond the constitutional minimum, many states have enacted "long-arm" statutes permitting state courts to assert personal jurisdiction to the full extent allowed by due process. n68
Recently, courts have begun to consider whether use of the Internet constitutes "contact" with a forum sufficient to establish personal jurisdiction. n69 Analogous to cars and the telephone, n70 the Internet permits companies to communicate and do business with persons in distant places. Unlike cars and telephones, however, the Internet permits a company to be everywhere at the same time. Given the Internet's ubiquity, courts have had to question whether mere use of the Internet subjects a defendant to personal jurisdiction anywhere a user may log on to the Internet. Different courts have arrived at three possible, but significantly different, responses. n71
Response One (Simplistic Approach): Several courts have held that use of the Internet is alone sufficient to assert personal jurisdiction. While some of these holdings have noted that the specific use of the Internet to transfer a product on-line or contracting via e-mail meets the minimum contacts analysis, n72 other [*235] opinions have gone further and found that even advertising on the Internet is a sufficient contact wherever the advertisement can be accessed. n73 Courts adopting the "simplistic rule" have addressed the global nature of the Internet as well as the ability to access Internet information at any time by any potential user. n74 Additionally, courts using this analysis have relied upon the historical expansion of personal jurisdiction whenever improvements in technology have permitted persons greater access to distant areas. n75 Given the Internet's power to reach a national audience, coupled with the conduct of businesses that target commercial markets through the Internet, courts adopting the "simplistic approach" have held that use of the Internet in this manner constitutes a "minimum contact" and places the party on notice that it may be haled into court in any forum where the [*236] Internet is accessible. n76
Response Two (Balancing Approach): Other courts have held that use of the Internet alone is not sufficient to satisfy the minimum contact requirement for personal jurisdiction. n77 Several of these cases involved Internet websites that merely served as the defendant's advertisements and were not targeted for a national audience, although the sites were accessible nationwide. n78 [*237] Recognizing the informational and passive character of these Internet advertisements, courts adopting the "balancing approach" have refused to assert personal jurisdiction merely because information concerning a company was available to forum residents.
Response Three (Sliding Scale Approach): Several cases provide intermediate analysis synthesizing the two approaches previously discussed. This third line of analysis adopts a "sliding scale" approach that examines how a defendant uses the Internet. n79 The sliding scale method focuses on the level of interactivity between the defendant's Internet presence and the forum residents who use the Internet. n80 Thus, the "likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet." n81 One end of this sliding scale consists of those defendants who do business over the Internet, while the other end consists of defendants who only use the Internet to post information passively. n82 All other activity falls between the two ends of the spectrum, and assertions of personal jurisdiction depend upon the "level of interactivity and commercial nature of the exchange . . . ." n83 Courts using this sliding scale approach have welcomed it as a reasonable compromise to the increasingly confusing issue of Internet contacts and personal jurisdiction. n84
Issues of personal jurisdiction are an important consideration for businesses seeking to expand their customer market. Such issues are acute for businesses seeking to take advantage of the Internet because courts vary significantly in their exercise of personal jurisdiction based upon Internet contacts. Following this section, [*238] the authors present a series of non-jurisdictional issues that may arise whenever businesses electronically enter contracts using the Internet. These issues may give rise to litigation. If a company uses the Internet to actually conduct business, rather than the mere passive presentation of advertisements or other information, suits could be filed against it anywhere in the United States, absent a forum-selection clause. n85
Jurisdictional problems arise because advanced and advancing technology transcends geographical boundaries. n259 First, addressing only contracts formed within the United States, the attempt to enforce an electronic contract requires a threshold determination of whether the parties (or their transaction) have sufficient contacts with a forum to provide the courts requisite [*272] power to adjudicate the dispute. n260 As the discussion in Section III noted, courts are split widely on the jurisdictional rules applicable to electronic transactions. n261
Electronic contracts exacerbate jurisdictional issues. Transnational communications by e-mail or the Internet are fast, efficient, and inexpensive - often requiring merely the clicking of a button or the pressing of a key. Additionally, transactions may arise through negotiations and require performance that has no distinct geographical location. Similar to automobiles and the telephone, computer technology is likely to stretch the fabric of due process across an expanded framework of "presence" when establishing the parameters of personal jurisdiction. n262 Unless due process demands are satisfied, the court does not resolve issues involving contract existence and its terms.
Choice of law issues arise concerning not only the appropriate body of law to be applied to an electronic contract, but also the issue of identifying the factors that influence choice of law. n263 Although choice of law in the contract area has generally remained stable, n264 a number of interesting issues remain. n265 One issue is [*273] whether a jurisdiction applies either Restatement (First) of Conflict of Laws n266 or the Restatement (Second) of Conflict of Laws. Although a majority of jurisdictions have adopted the modern trend followed by the latter, jurisdictions that follow the Restatement (First) may encounter problems similar to those encountered in determining personal jurisdiction. n267 Even under the modern "interest analysis" approach, however, problems may arise in grafting conflict of law rules onto electronic contracts. Notably, the Restatement (Second) details rules for specific types of contracts based on their character. n268 Section IV, however, acknowledged the difficulty in characterizing mixed contracts and revealed that an "electronic contract" itself is not a special type of contract. n269 For other cases, the Restatement (Second) requires the "most significant relationship" test that focuses on the geographic locations for negotiations, performance, formation, and place of the subject matter. n270 Yet again, the concentration on geographic location falls short of providing a strong method of analysis for electronic contracting with its unlimited expanse. Thus, even if the applicable substantive law addresses electronic contracts, choice of law rules may fail to recognize the methods of electronic contracting and thereby cripple predictability and certainty of party expectations. n271
[*274] C. International Agreements
Moving to international business transactions, the technological revolution has expanded the ability to communicate and interact across the globe. Problems arising domestically regarding electronic contracts (such as jurisdictional and choice of law issues) are also of critical importance for international parties. n272 The Internet and related electronic components are parts of a global media that spin an intricate web of connections useful for inducing and entering business deals. If an electronic contract arises, the most basic questions - which countries have jurisdiction, whose law applies, and which rules of the chosen law apply - quickly become intertwined.
A potential solution to these dilemmas is the Convention on Contracts for the International Sale of Goods (CISG). n273 Promoting uniformity and "good faith in international trade," the CISG provides a substantial body of regulation for international sales contracts. n274 A notable highlight is the CISG's permissive stance toward contracts not evidenced by a writing. n275 The CISG, [*275] however, applies only to goods n276 and, moreover, presumes the parties are somewhat knowledgeable of the customs and practices of international law. n277 Whereas the CISG abandons rigid rules by reliance on the strength of international custom and the presumption of sophistication of international traders, this reliance may not translate into a viable system of law to govern a vast subset of electronic contracts entered by everyday persons who have access to the entire world at their fingertips.
The final point returns to the concerns raised at the beginning of this article n278 - establishing a legal framework for electronic contracts. Parties rely on traditional legal rules for certainty, predictability, and satisfaction of expectations. Methods of electronic contracting do not challenge the purpose of the rules. Rather, they challenge the application and interpretation of the existing rules. Section IV of this article highlights the important point that rules such as the Statute of Frauds and the parol evidence rule further the purposes and principles important to the success of e-commerce. Problems arise in litigation, however, because technology has significantly challenged the concepts used to express the traditional values. n279 Additionally, the recent explosion of available technological manipulations is neither easy to understand nor is the full potential completely realized. Thus, courts, legislatures, and lawyers are left to explore an uncharted sea of legal possibilities, trying neither to restrain modern developments nor relax the law to invite unforeseen and undesirable consequences.
[*276] Examining the problem closely, electronic contracting challenges the usual benefits of legal analogy. The mechanics of electronic contracting cover a broad range of possibilities that existing rules and concepts define without contemplation of e-commerce. The analogies sometimes are not a good fit, thereby requiring expansion. The expansion, however, must continue to fit the purposes underlying the rules of contract law. The important task is to redefine the terms without undermining the purposes. The law governing electronic contracts must navigate around technological shoals and hold the safe course in the interest of commerce and sound social policy. Contract law need not be reinvented because of the advent of electronic contracts. It needs, simply, to adjust to continue its longstanding policies in domestic and foreign commerce.
n1 See Ethan Katsh, Law in a Digital World: Computer Networks and Cyberspace, 38 VILL. L. REV. 403, 405-06 (1993).
n2 The [legal] metaphor was a symbolic attempt to promote the law's legitimacy and to bring order to the law. . . . [It] paralleled the attempts of scholars . . . to portray the law as possessing an all-encompassing structure, to identify links between apparently inconsistent judicial decisions and to demonstrate that natural connections can be found in seemingly disparate parts of the law.
n3 See generally LAWRENCE M. FRIEDMAN, A HISTORY OF AMERICAN LAW 337 (2d ed. 1985) (discussing legal themes of the late nineteenth century).
n4 See Craig W. Harding, Trends in Electronic Commerce: Doing Business over the Internet, 509, 512 (PLI Pat., Copyrights, Trademarks & Literary Prop. Course Handbook Series No. G4-3988, 1996); see also Raymond T. Nimmer, Information Age in Law: New Frontiers in Property and Contract, N.Y. ST. B.J., May/June 1996, at 28.
n5 A striking example is the Internet company CDNow. Following unsuccessful attempts to locate Miles Davis recordings, the CDNow founders spent $ 1,500 to buy an Internet server they set up in the basement of their parents' home and began an on-line music store. Today, CDNow is a multimillion-dollar enterprise and at one point owned one-third of the market share for on-line music retailing. See Gus Venditto, Building a Better Music Store, INTERNET WORLD, Dec. 1997, at 52.
n6 "E-commerce," as used in this article, includes two facets. First, e-commerce includes the "automation of business-business transactions through the use of telecommunications and computers to exchange and process electronically commercial information and business transaction documents." Harding, supra note 4, at 514. Second, e-commerce includes the sale of both tangible and intangible property, the latter of which may be delivered in the form of information or software transferred by electronic means. See Raymond T. Nimmer, Selling Product Online: Issues in Electronic Contracting, 823, 825 (PLI Pat., Copyrights, Trademarks & Literary Prop. Course Handbook Series No. G4-4000, 1997).
n7 See The White House, A Framework for Global Electronic Commerce (visited Aug. 15, 1999) <http://www.ecommerce/framewrk.htm> [hereinafter Framework] (detailing President Clinton's initiative for electronic commerce).
n8 See id.
n9 Simply stated, "'law lags technology.'" John Anecki, Comment, Selling in Cyberspace: Electronic Commerce and the Uniform Commercial Code, 33 GONZ. L. REV. 395 (1998) (quoting HENRY H. PERRITT, JR., LAW AND THE INFORMATION SUPERHIGHWAY 2 (1996)).
n10 The White House's Framework for Global Electronic Commerce proposes a "simple legal environment based on a decentralized, contractual model of law" that recognizes the Internet's unique qualities, but also remains rooted in existing commercial laws that will be modified only to the extent necessary to support electronic technologies. Framework, supra note 7. But see David J. Loundy, E-Law: Legal Issues Affecting Computer Information Systems and Systems Operator Liability, 3 ALB. L.J. SCI. & TECH. 79, 88-89 (1993) (discussing some analogies that have been used to characterize cyberspace and dismissing them as being inappropriate); Tammy S. Trout-McIntyre, Comment, Personal Jurisdiction and the Internet: Does the Shoe Fit?, 21 HAMLINE L. REV. 223, 250-51 (1997) (discussing the idea of declaring cyberspace a sovereign state and the creation of "cybercourts" of extraterritorial jurisdiction). See generally Scott E. Bain, Book Note, 12 BERKELEY TECH. L.J. 231 (1997) (reviewing HENRY H. PERRITT, JR., LAW AND THE INFORMATION SUPERHIGHWAY 2 (1996), for the assertion that existing legal metaphor is the proper guide for structuring Internet law).
n11 This statement does not infer that these are the only concerns of electronic commerce. See, e.g., Elizabeth K. King, Technology and the Securities Markets, 459 (PLI Corp. L. & Prac. Course Handbook Series No. B4-7241, 1998) (discussing securities regulations in light of technological change); Walter A. Effross, Withdrawal of the Reference: Rights, Rules, and Remedies for Unwelcomed Web-Linking, 49 S.C. L. REV. 651 (1998) (discussing litigation and theory concerning web-linking); Janine S. Hiller and Don Lloyd Cook, From Clipper Ships to Clipper Chips: The Evolution of Payment Systems for Electronic Commerce, 17 J.L. & COM. 53, 55 (1997) (discussing the evolution of electronic payment systems); David S. Prebut, State and Local Taxation of Electronic Commerce: The Forging of Cyberspace Tax Policy, 24 RUTGERS COMPUTER & TECH. L.J. 345, 345 (1997) (discussing the conflict between federal tax policy and state and local government attempts to tax burgeoning e-commerce); Kyrie E. Thorpe, Comment, International Taxation of Electronic Commerce: Is the Internet Age Rendering the Concept of Permanent Establishment Obsolete?, 11 EMORY INT'L L. REV. 633 (1997) (discussing the international taxation difficulties due to Internet components and noting that e-commerce businesses do not qualify as permanent establishments).
n12 Prominent e-commerce businesses have begun to address these issues through the Global Business Dialogue on E-Commerce, an initiative which seeks to impose self-regulation on taxation, privacy, security, jurisdiction, and content problems arising in e-commerce. See Andrea Petersen, Electronic-Commerce Initiative Is Set by Top Executives at 17 Companies, WALL ST. J., Jan. 15, 1999, at B6.
n13 Nonetheless, paper-based transactions are presumed in commercial law and they remain viable in the Information Age. See Patricia Brumfield Fry, X Marks the Spot: New Technologies Compel New Concepts for Commercial Law, LOY. L.A. L. REV. 607, 607, 610-11 (1993).
n14 See LILIAN EDWARDS & CHARLOTTE WAELDE, LAW & THE INTERNET 15 (1997) (explaining the concept of "packet-switching" by which information is transferred over the Internet).
n15 See generally David R. Johnson & Kevin A. Marks, Mapping Electronic Data Communications onto Our Existing Legal Metaphors: Should We Let Our Conscience (and Our Contracts) Be Our Guide?, 38 VILL. L. REV. 487 (1993) (discussing the use of traditional legal metaphors to describe legal issues involving the Internet).
n16 See I. Trotter Hardy, The Proper Legal Regime for "Cyberspace," 55 U. PITT. L. REV. 993, 994-96, 1053-54 (1994) (proposing that Internet regulation will require application of current law, modification of existing law, or creation of new law depending upon the specific issue); David R. Johnson & David Post, Law and Borders - The Rise of Law in Cyberspace, 48 STAN. L. REV. 1367 (1996); Katsh, supra note 1 (arguing that changes in communications structures have altered fundamental legal analysis).
One of the most extensive forays into this area was the drafting of proposed Article 2B of the U.C.C. The drafters of Article 2B engaged in an ambitious effort to develop an extensive framework for agreements covering transactions in computer information. Following completion of draft Article 2B, however, the American Law Institute (ALI) and the National Conference of Commissioners on Uniform State Laws (NCCUSL) announced that the proposed rules would not be promulgated as Article 2B, but instead would be promulgated as an independent uniform law called the Uniform Computer Information Transactions Act (UCITA). See NCCUSL to Promulgate Freestanding Uniform Computer Information Transactions Act (visited Feb. 16, 2000) <http://www.2bguide.com/docs/040799pr.html>. UCITA retained virtually all of proposed Article 2B's language and comments, and the ALI and NCCUSL's decision appeared to rest upon the belief that codification of the material within the U.C.C. was inappropriate. See id.
n17 Although this article addresses only issues of commercial law, discussion of contract principles that apply to Internet transactions may also provide valuable insight into other Internet legal issues. Many commentators argue that on-line governance is a matter of contract law. See Johnson, supra note 15, at 490-91; Framework, supra note 7; see also Hardy, supra note 16, at 1028-32.
n18 See, e.g., Thorpe, supra note 11, at 646-51 (defining e-commerce as a "methodology" and listing numerous examples of e-commerce). For a business perspective on the characteristics of e-commerce and the digital economy, see generally Harding, supra note 4.
n19 Another example is a contract for the sale of land by either written or oral promises. While both the written and oral contract will have the same substantive terms, the law will enforce only the written contract because the Statute of Frauds operates against the process of making the same agreement by oral representations. See RESTATEMENT (SECOND) OF CONTRACTS § 110(d) (1981) [hereinafter RESTATEMENT]. These examples are in contrast to the unenforceability of agreements produced by the influence of fraud, duress, or coercion, in which the circumstances underlying the process of contract formation probably have affected the substantive terms. See id. § § 164, 175 (addressing when a contract is unenforceable for fraud or coercion).
n20 See generally 1 JOHN K. HALVEY, COMPUTER LAW AND RELATED TRANSACTIONS 565-96 (1994 & Supp. 1997) (addressing general contract and commercial law for computer transactions).
n21 The Internet is a "bundle" of various services, including e-mail, the World Wide Web, Internet Relay Chat (IRC), listservs, telephony services, and video-conferencing. See M. Louise Turilli & Joseph Kershenbaum, Securities on the Internet: Changes in Laws Required to Increase Online Offerings, N.Y. ST. B.J., Dec. 1998, at 22, 24; see also Ilene Knable Gotts & Alan D. Rutenberg, Navigating the Global Information Superhighway: A Bumpy Road Lies Ahead, 8 HARV. J.L. & TECH. 275 (1995).
n22 See Loundy, supra note 10, at 154 ("If judges, juries, lawyers and legislators do not understand current technology, the technology will have changed before the law catches up to it. Many of our current laws will work if adapted to computer information systems.").
n23 See Reno v. American Civil Liberties Union, 521 U.S. 844, 850 (1997); see generally KENT D. STUCKEY, INTERNET AND ONLINE LAW § 1.02[4][e] (discussing the mechanics of e-mail and how it can be used to contract).
n24 See J. Christopher Gooch, The Internet, Personal Jurisdiction, and the Federal Long-Arm Statute: Rethinking the Concept of Jurisdiction, 15 ARIZ. J. INT'L & COMP. L. 635, 640-41 (1998) (explaining the "anatomy" of e-mail).
n25 See id. For a short discussion of packet-switching, see Thorpe, supra note 11, at 641-42.
n26 See Gooch, supra note 24.
n27 See infra Section IV.B.1.b.i.
n28 Two examples include a subscription newsletter published by e-mail and the transfer of a computer application using an e-mail attachment.
n29 See Reno v. American Civil Liberties Union, 521 U.S. 844, 850 (1997).
n30 See Loundy, supra note 10, at 82-84 (discussing bulletin board functions).
n31 An electronic bulletin board is much like a physical bulletin board used by individuals to post flyers, pamphlets, posters, for-sale signs, employment opportunities and other information. At the end of the week, the maintenance staff clears the bulletin board, and the process begins again.
n32 See Reno, 521 U.S. at 850.
n33 Cf. STUCKEY, supra note 23, at xvi (describing the World Wide Web).
n34 See Thorpe, supra note 11, at 642-44 (discussing the World Wide Web).
n35 A proposed model electronic contract requires a personal computer, Internet connection, electronic commerce software for payment services, a credit card, and a digital signature. See Anecki, supra note 9, at 408. Many current electronic agreements, however, will lack at least one of these elements.
n36 See Holly K. Towle, Electronic Transactions and Contracting, 515, 519 (PLI Pat., Copyrights, Trademarks, & Literary Prop. Course Handbook Series No. G0-0001, 1998); see also STUCKEY, supra note 23, § 1.02[3] (discussing "point-and-click" agreements).
n37 See Andrew Urbaczewski et al., A Manager's Primer in Electronic Commerce, BUS. HORIZONS, Sept. 1, 1998, at 5.
n38 John P. Fischer, Computers as Agents: A Proposed Approach to Revised U.C.C. Article 2, 72 IND. L.J. 545, 547 (1997). EDI has been used since the 1960s between trading partners in on-going relationships, usually with a signed document entered into prior to using EDI for future orders, by use of a Value-Added Network (VAN) dedicated to EDI. See F. LAWRENCE STREET, LAW OF THE INTERNET § 1-4(a) (1998). Use of Internet EDI, however, creates two problems: (1) a dedicated EDI network no longer insures communications integrity and (2) parties may not have executed a physical document prior to using EDI. See id.
n39 An "electronic agent" is a "computer program, or electronic or other automated means, used by a person to initiate an action, or to respond to electronic messages or performances, on the person's behalf without review or action by an individual at the time of the action, or response to a message or performance." UCITA § 102(a)(27) (1999); see also STREET, supra note 38, § 1-9(b)(4) (discussing electronic agents).
n40 See generally Harding, supra note 4, at 528-33; see also ABA, Electronic Messaging Task Force Subcommittee, Model Electronic Data Interchange Trading Partner Agreement and Commentary, § 1.1 (1990), in The Commercial Use of Electronic Data Interchange - a Report and Model Trading Partner Agreement, BUS. LAW., June 1990, at 1645, 1723 (specifying a process for EDI purchase orders). Additionally, the process may be partially automated, such as when a person places a telephone order and keys requests into a computer by using the phone's number pad. See Anecki, supra note 9, at 414-15.
n41 For example, Company X maintains a computerized inventory system that is programmed to send out a request for offers when less than ten widgets are in inventory. When the inventory falls, the computer will automatically send out a request to bidders. The bidders' computers may be programmed to respond immediately with quotes that are sent back to Company X's computer, which then will select the best quote and send an electronic confirmation.
n42 See Anecki, supra note 9, at 414.
n43 The principal problem for e-mail contracts is determining manifestation of intent when the intent is not expressed. See STUCKEY, supra note 23, § 1.02[4][e].
n44 The basic issues of electronic contracts involve the "battle of the forms," the parol evidence rule, the "mailbox rule," and determining assent through authentication of signature. See id. § 1.02[4].
n45 See text supra Section II.
n46 See Anecki, supra note 9, at 405.
n47 For purposes of simplicity, the authors address only personal jurisdiction for domestic litigation and do not attempt to provide an analysis of Internet activity and international jurisdiction. The global reach of the Internet and the threat of international judicial actions relating to on-line operations, however, has been the subject of commentary. See Stephen Wilske & Teresa Schiller, International Jurisdiction in Cyberspace: Which States May Regulate the Internet?, 50 FED. COMM. L.J. 117 (1997).
n48 A plethora of articles concerning personal jurisdiction and the Internet continue to appear in print. See, e.g., William S. Byassee, Jurisdiction of Cyberspace: Applying Real World Precedent to the Virtual Community, 30 WAKE FOREST L. REV. 197 (1995); Christine E. Mayewski, Note, The Presence of a Web Site as a Constitutionally Permissible Basis for Personal Jurisdiction, 73 IND. L.J. 297 (1997); Timothy B. Nagy, Comment, Personal Jurisdiction and Cyberspace: Establishing Precedent in a Borderless Era, 6 COMM. L. CONSPECTUS 101 (1998).
n49 See Pennoyer v. Neff, 95 U.S. 714, 733 (1877).
n50 See id. at 722.
n52 See infra text accompanying notes 70-72.
n53 95 U.S. 714, 722 (1877) ("No State can exercise direct jurisdiction and authority over persons or property without its territory. . . . The laws of one State have no operation outside of its territory, except so far as is allowed by comity . . . ."). For further discussion, see infra notes 55-69 and accompanying text (discussing court decisions that address problems of personal jurisdiction).
n54 326 U.S. 310 (1945).
n55 See id. at 313-14. International Shoe found that courts in the state of Washington had jurisdiction over a business that did not have offices or make sales contracts in the state, but had sent traveling salesmen into the forum, made numerous sales to state residents, and kept permanent display rooms in the state. See id.
n56 See id. at 317-320; see also Shaffer v. Heitner, 433 U.S. 186, 202 (1977) ("The advent of automobiles, with the concomitant increase in the incidence of individuals causing injury in States where they were not subject to in personam actions under Pennoyer, required further moderation of the territorial limitations on jurisdictional power.").
n57 World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 293 (1980). See also McGee v. International Life Ins. Co., 355 U.S. 220, 223 (1957) (holding that personal jurisdiction by California court was appropriate where defendant based in Texas had sold and maintained a single insurance policy in California). See also Gray v. American Radiator & Standard Sanitary Corp., 176 N.E.2d 761, 766 (Ill. 1961).
Advanced means of distribution and other commercial activity have made possible these modern methods of doing business, and have largely effaced the economic significance of State lines. . . . Today's facilities for transportation and communication have removed much of the difficulty and inconvenience formerly encountered in defending lawsuits brought in other States.
n58 Id. at 297. World-Wide Volkswagen decided whether an Oklahoma state court could assert personal jurisdiction over a New York defendant with regard to an automobile accident that occurred in Oklahoma where persons who had purchased a car from the New York defendant were injured while traveling through Oklahoma. See id. at 288-89. Although the defendant could foresee that one of its cars could end up in Oklahoma, the Court held that mere foreseeability of possible contacts with the forum was insufficient to assert personal jurisdiction; instead, the Court required that the defendant must also have a reasonable belief of being subject to suit in the forum as a result of such contacts. See id. at 295, 297.
n59 466 U.S. 408 (1984).
n60 480 U.S. 102 (1987).
n61 See Helicopteros, supra note 59, at 413-19. General personal jurisdiction arises when the defendant's contacts with the forum are unrelated to the cause of action. See id. Helicopteros involved a Colombian defendant in a wrongful death action that resulted from an accident that occurred in South America. See id. at 409-11. The plaintiff brought suit in Texas, asserting that the defendant's purchase of several helicopters and its contract negotiations in the state sufficed for personal jurisdiction. See id. Finding the defendant's contacts with Texas both unrelated to the cause of action and insufficient, the Court dismissed the suit for lack of personal jurisdiction. See id. at 412-13.
A given State exercises "specific jurisdiction" over a particular defendant when "[that] State exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum. . . ." Id. at 414 n.8. In contrast, a State exercises "general jurisdiction" over a particular defendant when "[that] State exercises personal jurisdiction over a defendant in a suit not arising out of or related to the defendant's contacts with the forum . . . ." Id. at 414 n.9.
n62 See Asahi, supra note 60, at 111-12. The Court determined that merely placing an item into the stream of commerce with the ability to foresee that product ending up in a particular forum was insufficient to establish personal jurisdiction in that forum. See id. Asahi Metal involved a Japanese manufacturer which sold valves to a Taiwanese tire company, which then sold its tires equipped with these valves to a California distributor. Id. at 105-106. Following a fatal accident resulting from a defective valve, the plaintiffs attempted to assert personal jurisdiction over the Japanese manufacturer in California. See id. at 106.
n63 Federal courts, as well as most state courts, require the defendant to assert lack of personal jurisdiction at the beginning of a suit. See FED. R. CIV. P. 12(b). Failure to assert the defense constitutes a waiver of objection to the court's lack of personal jurisdiction and permits the court to continue presiding over the action. See FED. R. CIV. P. 12(b), (h).
n64 See Burger King Corp. v. Rudziewicz, 471 U.S. 462, 476 (1985).
n65 See id. at 486.
n66 See id.; see also World-Wide Volkswagen, 444 U.S. 286, 295-97 (1980) (noting that mere foreseeability of suit is not sufficient for personal jurisdiction).
n67 International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted).
n68 See generally, Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 713 (1982) (Powell, J., concurring) (discussing the role of long-arm statutes in personal jurisdiction analysis); see, e.g., Synergetics v. Marathon Ranching Co., 701 P.2d 1106, 1109-10 (Utah 1985) (examining a long-arm statute that expanded protection of constitutional due process).
n69 For a detailed and often-cited review of personal jurisdiction and the Internet, see William S. Byassee, Jurisdiction of Cyberspace: Applying Real World Precedent to the Virtual Community, 30 WAKE FOREST L. REV. 197, 199 (1995). See also Stephan Wilske & Teresa Schiller, International Jurisdiction in Cyberspace: Which States May Regulate the Internet, 50 FED. COMM. L.J. 117 (1997).
n70 The use of cars and telephones gave rise to the significant expansion of the court's jurisdictional powers. See supra notes 55-58 and accompanying text.
n71 See generally, Donnie L. Kidd, Jr., Note, Casting the Net: Another Confusing Analysis of Personal Jurisdiction and Internet Contacts in Telco Communications v. An Apple A Day, 32 U. RICH. L. REV. 505, 520-28 (1998) (discussing the three approaches in light of existing case law).
n72 See CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1264-65 (6th Cir. 1996) (asserting personal jurisdiction over a defendant that had used the Internet to transfer and sell goods within the forum, sent e-mail into the forum concerning its business, and advertised on an Internet service based in the forum); Gary Scott Int'l, Inc. v. Baroudi, 981 F. Supp. 714, 716 (D. Mass. 1997) (asserting personal jurisdiction over a defendant who had advertised humidors on the Internet and sold the products to twelve residents of the state); Digital Equip. Corp. v. Altavista Tech., Inc., 960 F. Supp. 456, 465-66 (D. Mass. 1997) (asserting personal jurisdiction over software company based upon Internet advertising in the forum and three sales to forum residents); Maritz v. Cybergold, Inc., 947 F. Supp. 1328, 1330, 1333-34 (E.D. Mo. 1996) (asserting personal jurisdiction over defendant who solicited potential advertisers in the forum and had generated a list of potential customers from Internet users who lived in the forum); Edias Software Int'l, L.L.C. v. Basis Int'l Ltd., 947 F. Supp. 413, 415, 422 (D. Ariz. 1996) (asserting personal jurisdiction over software company through use of the Internet and e-mail to communicate with customers in the forum and solicit almost $ 1 million in sales); State v. Granite Gate Resorts, Inc, No. C6-95-7227, 1996 WL 767431, at *1 (Ramsey County Dist. Ct. Minn. Dec. 11, 1996) (asserting personal jurisdiction over an off-shore gambling service operated using the Internet when evidence showed forum residents were using the service and actively targeted as customers).
n73 See Inset Sys., Inc. v. Instruction Set, Inc., 937 F. Supp. 161, 164 (D. Conn. 1996). See also Animation Station, Ltd. v. The Chicago Bulls, L.P., 992 F. Supp. 382, 383-84 (S.D.N.Y. 1998); Telco Communications v. An Apple A Day, 977 F. Supp. 404, 406-07 (E.D. Va. 1997).
n74 See Inset Sys., 937 F. Supp. at 163.
n75 See CompuServe, 89 F.3d at 1262 (noting the Internet's role in a continuing trend of technological improvements that effect personal jurisdiction analysis). See also Maritz, 947 F. Supp. at 1334 ("While modern technology has made nationwide commercial transactions simpler and more feasible, even for small businesses, it must broaden correspondingly the permissible scope of jurisdiction exercisable by the courts").
n76 See generally CompuServe, 89 F.3d at 1263-68.
n77 See Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 419-20 (9th Cir. 1997) (dismissing for lack of personal jurisdiction based upon lack of evidence that defendant intended to target forum residents with its website and lack of any actual contact with forum residents); Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27, 29 (2d Cir. 1997) (finding that mere Internet advertisement was not sufficient to assert personal jurisdiction); SF Hotel Co. v. Energy Investments, Inc., 985 F. Supp. 1032, 1036 (D. Kan. 1997) (holding that a website that did not permit viewers to interact with the defendant was not a contact sufficient to assert personal jurisdiction).
n78 See Bensusan Restaurant, 126 F.3d at 29 (finding by New York court that Internet advertisement for restaurant in Missouri was limited to local residents and not intended for New York residents who could nevertheless view the advertisement on-line); see also IDS Life Ins. Co. v. Sunamerica, Inc., 958 F. Supp. 1258 (N.D. Ill. 1997) (comparing an Internet advertisement to an advertisement in a nationally published magazine and refusing to assert personal jurisdiction).
n79 See Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997); see also Weber v. Jolly Hotels, 977 F. Supp. 327, 333 (D.N.J. 1997) (using Zippo's sliding scale to test to deny an assertion of personal jurisdiction over an Internet advertiser).
n80 See Zippo, 952 F. Supp. at 1123-28.
n81 Id. at 1124.
n84 See, e.g., SF Hotel Co. v. Energy Inv., Inc., 985 F. Supp. 1032, 1034-36 (D. Kan. 1997) (applying the sliding scale approach).
n85 Recall that courts using the simplistic approach to personal jurisdiction and Internet contacts hold that mere use of the Internet extends personal jurisdiction to any place where the Internet is accessible. See supra notes 73-77, and accompanying text. Since a person may access the Internet from anywhere (by telephone line or satellite link), the import is that personal jurisdiction also would extend anywhere.
n259 See supra notes 45-48 and accompanying text (discussing personal jurisdiction issues and Internet contacts).
n260 See supra notes 73-85 and accompanying text (discussing the three possible response to Internet jurisdiction).
n261 See id.
n262 Although states with long-arm statutes may consider adding special provisions for electronic contracts, the statutes are constrained by the Due Process Clause, which requires expanded application to address the increased ability of persons to electronically reach out into distant forums.
n263 See Nimmer, supra note 6, at 840-41 (discussing domestic choice of law issues under UCITA).
n264 See WILLIAM M. RICHMAN & WILLIAM L. REYNOLDS, UNDERSTANDING CONFLICT OF LAWS § 85 (2d ed. 1993).
n265 The easiest solution to any potential problem is to use a choice-of-law clause. See Willis Reese, Choice of Law in Torts and Contracts and Directions for the Future, 16 COLUM. J. TRANSNAT'L L 1, 22 (1977) (noting that both traditional and modern choice of law jurisdictions will enforce choice-of-law clauses). So long as the clause does not violate public policy, the provision will be upheld. See RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 (1971). See, e.g., DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 678, 681 (Tex. 1990) (refusing to enforce a no-compete clause that was valid under the law specified by the parties); General Elec. Co. v. Keyser, 275 S.E.2d 289, 295 (W. Va. 1981) (refusing to recognize a choice-of-law provision due to lack of connection between the law chosen and the parties).
n266 RESTATEMENT (FIRST) OF CONFLICT OF LAWS (1934) (applying territorial-based rules to conflict of laws situations).
n267 See id. § 332 (relying on "place-of-the-making" to determine which forum's law applies). Note that even if one can easily identify the arbitrary locations demanded by the Restatement (First), the escape devices that arose to defeat application of those rules present an entirely different problem that is independent of the electronic contract. See RICHMAN & REYNOLD, supra note 264, § 65(a)-(b).
n268 See Restatement (Second) of Conflict of Laws § § 189-90 (1971) [hereinafter (Second) Conflicts].
n269 See supra note 239 and accompanying text. The upshot to this concern is that a court applying clever choice of law rules by manipulating characterization could defeat an electronic contract that fails under the chosen law due to formation defects arising under undeveloped, inflexible contract law.
n270 See (SECOND) CONFLICTS, supra note 268, § § 6, 188 (1971) (stating the general factors for choice of law analysis).
n271 UCITA attempts to remedy some choice of law concerns. See UCITA § 109 (1999). Absent a choice-of-law provision, UCITA provides a series of rules for choice of law to govern the contract. See UCITA § 109(b). If information is delivered electronically, the law of the licensor's jurisdiction applies; however, if a consumer transaction requires delivery in a tangible medium, the law of the place of delivery governs. See id. Otherwise, the "most significant relationship" test is applied to determine applicable law. Id. Additionally, UCITA anticipates contracts with foreign parties and provides that the law of the foreign jurisdiction may apply only if "it provides substantially similar protections and rights" as UCITA. Id. § 109(c). If the foreign jurisdiction does not provide this protection, the law of the jurisdiction in the United States with the most significant contacts will apply. See id.
n272 See Nimmer, supra note 6, at 841-47 (discussing international choice of law issues).
n273 U.N. Convention on Contracts for the International Sale of Goods, Apr. 11, 1980, 19 I.L.M. 668 (entered into force Jan. 1, 1988) [hereinafter after CISG].
n274 Id., art. 7, 19 I.L.M. at 673.
n275 See id., art. 11, 19 I.L.M. at 674. This single three line article obviates the "signed writing" and "authenticated record" problems arising for electronic contracts and the Statute of Frauds.
n276 See id., art. 1(1), 19 I.L.M. at 672. Section IV discussed the fact that the subject matter of electronic contracts is not limited, but extends over the field of all possible subjects - not just transactions in goods. See supra notes 250-58 and accompanying text.
n277 See CISG, supra note 273, art. 9(2), 19 I.L.M. at 674 (stating that "parties are considered . . . to have implied" into their agreement or its formation, international trade usages for that particular type of contract). Modern communications enable parties to enter simple "one-shot" contracts without any prior dealing or opportunity to establish a trade usage, not to mention that the average person in the United States surfing the Internet for a good deal on tea sold by web-sites based in India is not likely to appreciate or intend to incorporate the international customs applicable to his contract.
n278 See supra notes 7-10 and accompanying text.
n279 See supra Section IV.