Using Technology to Form Better Contracts

We have written before that businesses do not necessarily have to have written contracts to form a binding contract.[1]  If a customer verbally offers to pay you $200 to do X, and you verbally agree to do X for $200, you may have a binding contract. To form an oral contract, there must be an offer, an acceptance, and mutual assent.  This last requirement, also called “meeting of the minds,” means that you both agree to the terms of the contract – which can be tricky if the contract is not written down.​

Even though oral contracts are valid, we always recommend contracts in writing because (1) then there is proof that the parties contracted with each other, other than just two people’s versions of the truth, and (2) there are oftentimes many more terms and conditions other than X and the price that need to be included in the contract.  What time does X have to be completed?  When is payment due?  Inclusions/exclusions?  For example, if X is painting a house, does the painter include white paint on the front porch railings but exclude the stain on the wood deck? 

If you and the customer are not on the same page and do not have a “meeting of the minds” as to these terms, there can be no contract.  However, if you hand your customer a piece of paper with terms and conditions written on it, that is simply an offer (or a counteroffer to their offer).  How do you know the agree to the terms?  This is why people get their customers to sign it, which acknowledges that they agree to the terms (even though a signature is NOT a legal requirement to form a contract).

For a lot of our clients, written contracts and signatures just aren’t practical.  The house painter is going to want the homeowner client to agree to the terms and conditions BEFORE the painter buys supplies and drives out to the house, for example. 

These days, everyone has e-mail.  A lot of our clients are already utilizing e-mail to send their customers appointment reminders and quotes.   Why not incorporate terms and conditions into the email?  To legally guarantee that those e-mailed terms are incorporated into the contract, the customer would need to take some affirmative step to acknowledge that they’re agreeing to it.  They could hit reply to the e-mail and say they agree to everything, you could include a way for them to electronically sign a document, or you could utilize software that allows the customer to click “I agree” or “I disagree” to the terms.  This latter example is called “click-wrap” and technology companies like Apple have been using it for years to get consumers to agree to their terms of service.  Click-wrap contracts are universally upheld as long as some procedures are put in place, like allowing the customer to click “I disagree,” putting the terms and conditions near the “I agree” button, and allowing the customer to download or print the terms of service.

​Putting all the terms of the contract in writing helps to avoid confusion between the parties and prevent potential lawsuits if customers become unhappy.  Please keep Jesson & Rains in mind if you or a colleague needs assistance drafting a click-wrap contract or other terms and conditions.