Part 3- Contracts, Chapter 10: The Agreement Offer, Doc 3

Summary and Key Concepts for the Case and Contract Principles Hines v. Overstock.com (2010) Case Summary    Background: Cynthia Hines ordered a vacuum cleaner from Overstock.com, believing it to be new. She later discovered it was refurbished and returned it, expecting a full refund. Overstock credited her account but deducted a $30 restocking fee. Hines then filed a class-action suit to recover this fee. Overstock’s Defense: Overstock argued that its website's "Terms and Conditions" included an arbitration clause, which would require disputes to be resolved through arbitration rather than in court. Court's Decision: The court ruled in favor of Hines, affirming that Overstock had failed to show that Hines had actual or constructive knowledge of the website’s terms, including the arbitration clause. New York courts hold that for online terms to be binding, users must take an action (like clicking "I agree") that demonstrates awareness of the terms, which did not happen here. Online Contracting Methods and Their Enforceability    Browsewrap Agreements: These agreements do not require explicit acknowledgment by the user (such as clicking "I accept"). Enforceability is contingent upon whether users were sufficiently notified of the terms. In Hines v. Overstock.com, the court held that there was no binding agreement because Hines had no clear notice of the terms. Clickwrap Agreements: These require users to click a button indicating they have read and agreed to the terms before proceeding, often making them more enforceable than browsewrap agreements. Shrinkwrap Agreements: Common in software purchases, these agreements often state that opening the package implies acceptance of the terms. Although controversial, they have been enforced when terms are accessible prior to opening. Key Concepts on Contract Formation and Termination 1. Requirements for Offer and Acceptance: o For an offer to be valid, it must indicate a present intent to contract, be sufficiently definite, and be communicated to the offeree. Acceptance must indicate agreement to the terms and be communicated back to the offeror, forming a binding contract. 2. Termination of Offers: o Offers can terminate by:  Revocation: The offeror withdraws the offer before acceptance. This is effective once the offeree receives it.  Rejection: The offeree can reject the offer, which terminates it. Lapse of Time: If the offer specifies a timeframe for acceptance, the offer expires after that period; if not, it is open for a reasonable time.  Death or Insanity of either party.  Intervening Illegality: If the subject matter becomes illegal before acceptance, the offer terminates. 3. Irrevocable Offers: o Options Contracts: A separate contract where the offeror agrees to keep the offer open for a certain period in exchange for consideration. o Unilateral Contract Offers: If an offeree starts performing the requested act, courts may prevent revocation until a reasonable time to complete performance has elapsed. o Firm Offers (UCC): In sales of goods, a merchant’s signed written offer with assurance to keep it open is irrevocable without needing consideration, typically for up to three months. 4. The Global Context (CISG): o In international settings, such as those governed by the CISG, an offer may be irrevocable if the offeree has reasonably relied on it, even without a formal agreement or consideration.  This case and the contractual principles surrounding it emphasize the importance of clarity and explicit consent, especially in online agreements, where enforceability hinges on the user’s awareness and acknowledgment of the terms.