Great Buys is an internet-based company headquartered in New York that sells hou
ID: 434579 • Letter: G
Question
Great Buys is an internet-based company headquartered in New York that sells household electronics to consumers in the United States. The management team at Great Buys has some concerns about its online contracting process.
Great Buys isn't sure it has a binding contract with its customers because the contract is completely online and in electronic format. Customers have argued they are not bound to the online contract because there's no handwritten "pen and ink" signature. Great Buys also wants to know if any international laws will apply when the company starts selling its electronic products internationally. Great Buys has been sued in different state courts all over the country, and it would like to know if an arbitration clause requiring that arbitration be conducted in New York City will be enforceable.
I need help with one or two suggestions on how Great Buys can improve its internal business procedures so that customer product complaints don't turn into contract-related claims or lawsuits.
Explanation / Answer
For a global business, handling contract with customers may be a challenge. Great Buys is facing similar issue due to different legal systems across different regions. The one way to solve this problem will be to make sure, that the contract is of a type that does not require pen and ink signature. This is possible with unilateral contract offers.
In spite of different regions and legal system, one thing universal. That is the elements of contract.
The main challenge with the online business is the process of acceptance and offer. This cannot be made in a one-to-one basis to all the visitors to the website. Naturally a unilateral contract will be more suitable in this case.
A unilateral contract is an open offer to anyone who is willing to accept an offer using a series of particular steps. For example, a reward for bringing in a wanted fugitive is a unilateral contract between the government authorities and the citizens who are willing to do the task. For this there need not be an explicit acceptance but the offeree can simply perform the duty as a sign of acceptance.
In this particular case, Great Buys can put notice on their website stating something like “By purchasing on this site you agree to the terms and conditions of Great Buys” with a link to the terms and conditions section. This could be made more explicit by making it appear at the point of ordering a product. This means there will not no instance where a customer has placed an order and has not come across the warning. If the customer is presented with the terms and conditions and decides not to read them or ignore them then Great Buys cannot be held responsible for the negligence on part of the customer.
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