MANY LAWYERS APPEAR to forget the teachings of their first-year contracts course when they establish procedures for parties to create valid online contracts. These online contracts are often referred to as "click-through agreements" because they are allegedly formed by clicking a mouse on a button labeled "Agree." There are a number of cases that suggest that many of the procedures now used for creating click-through agreements are deficient in handling one of the basic elements of contract formation: assent.

The leading case in this area of online contract formation, which was decided recently, is Specht v. Netscape Communications Corp., S.D.N.Y., No. 00-Civ. 4871 (AKH), 7/3/01 (6 ECLR 747, 7/18/01). In Specht, a New York federal district court refused to enforce the terms of a click-through agreement. Specifically, the court refused to enforce a provision compelling arbitration of claims arising out of the use of certain software that had been downloaded from Netscapes’s Web site by users. Netscape’s Web site was configured so users could download the software without first affirmatively assenting to the terms of the agreement. In fact, users could download the software without even reading the agreement. The Specht court concluded that the downloading of the software by the users was not a sufficient indication that they assented to the terms of Netscape’s user agreement. The court further concluded "Netscape’s failure to require users of (the software) to indicate assent to its (agreement) as a precondition to downloading and using its software is fatal to its argument that a contract has been formed."

What then are the requirements for a valid indication of assent? The Specht court began with a reminder from the first week of first-year contracts:

Assent may be registered by a signature, a handshake or a click of a computer mouse transmitted across the invisible ether of the Internet. Formality is not a requisite; any sign, symbol or action, or even willful inaction, as long as it is unequivocally referable to the promise, may create a contract.

The Specht court then suggested four necessary, if not sufficient, specific requirements. First, the user must be presented with the terms of the agreement. The user must be required to read, or take an action to avoid reading, the terms of the agreement. For example, in Ticketmaster v. Tickets.com Inc., C.D. Cal., No. 99-7654 HLH (BQRx), 3/27/00 (5 ECLR 347, 4/5/00), the terms of the contract in question were bypassed by users arriving at the Web site from links created outside the site. As a result the contract was held invalid because there was no valid assent.

Second, there must be a means for the user to take action to indicate his assent to the terms of the agreement. As mentioned, one of the most common means is clicking a button labeled "Agree" or "Consent."

Third, there must be notice of the consequences of taking action to assent to the terms of the agreement. For example, there could be language stating that a legal contract will bind the user to its terms as soon as he clicks on the "Consent" button.

Fourth, the Web site should be configured so that the user cannot obtain access to the value of the agreement without having first indicated assent to the agreement. Technically, this requirement may go not to creating a valid online agreement but to proving it exists. This requirement goes to the evidentiary question of proving that assent, through compliance with the first three requirements, exists. Otherwise, there is no record that assent actually occurred.

These suggestions only constitute necessary, if not sufficient, requirements for a court to find assent to an online agreement. There are certainly many other considerations. A working group within the American Bar Association’s Business Law Section, the Committee on the Law of Cyberspace, has undertaken the creation of a basic set of tactics for creating enforceable click-through agreements. The result, "Click-Through Agreements: Strategies for Avoiding Disputes on Validity of Assent," was discussed in August at the ABA’s Annual Meeting in Chicago. The complete document will be published in the Business Law Section’s "Business Lawyer" in November. This document should be reviewed by everyone who is faced with the question of the validity of an online agreement.

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