The body of contract law -- defining the way that the legal system will, or will not, enforce the promises that people make to one another -- is as complex and profound as any. It is the foundation upon which most commercial activity (and much non-commercial activity) takes place in the "real world," and it will surely play a significant role in determining the shape of "e-commerce" in the coming years. Needless to say, this is not the forum for an extensive discussion of the many subtleties of contract doctrine. Our focus here is on a small slice of contract doctrine: do interactions on the global electronic network pose any special contract problems, or require any change in the way we ordinarily think about contractual relationships?
Like many complicated subjects, contract law has a simple set of principles at its foundation. Contracts are fundamentally *voluntary* exchanges, and contract law looks for evidence that the parties have MUTUALLY ASSENTED to the terms of a particular set of obligations before it will impose those obligations on them. Anglo-American law has stylized this idea as follows: before the law will recognize the existence of a binding contract, there must be
1. A definite OFFER by one party (called the "offeror"), and
2. A timely ACCEPTANCE (by the "offeree").
Thus, if one party makes an offer -- "Pay me $500 and I will paint your living room" -- and another party accepts the offer -- "OK, that sounds like a good deal, go ahead and I'll pay you when you're done" -- the law infers that the parties have voluntarily agreed to be bound to the set of mutual obligations.
In addition, there is another pre-requisite:
3. Some CONSIDERATION must pass between the offeree and the offeror.
This needs a bit of explaining. Suppose you meet someone at a party (call her Alice), and during the conversation you discover that a few months ago she began work as a computer consultant. "That's funny," you say, "My firm is looking for a consultant to help out with a new system we're installing. First thing tomorrow, I'm going to call our MIS Director and tell him to get in touch with you." Alice replies "That would be terrific - thanks so much for your help." Unfortunately, you completely forget to make the call. Have you "breached your contract"?
The answer is no -- your promise to Alice is not enforceable as a binding contract. Not because you didn't make an offer (to call the MIS Director), or that Alice didn't accept it. And it's not because your promise was not in writing; as we'll see, the legal system is prepared to enforce all sorts of contracts merely on the basis of an oral understanding. The reason this is unenforceable is that there was no *exchange* between you, no quid pro quo; Alice didn't give *you* anything of value in exchange for your promise. Without that -- without what the law calls "consideration" for your promise -- your promise is not enforceable in court.
With this basic framework in hand, let's look, in the next few messages, at common contract problems that are likely to crop up on the Net.
authors:
| Larry Lessig | David Post | Eugene Volokh |
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