Lindsey Wilson College Issues in Cyber Law Discussion

Discussion Question:

What are the basic requirements for a valid contract entered into via the Internet?

Chapter 5:
E-Commerce and Online
12
Contracts
Cyberlaw: The Law of the Internet and Information
Technology
1st Edition
Brian Craig
Class Name
Instructor Name
Date, Semester
LEARNING OBJECTIVES
After this lecture, you should:
12
5.1
Explain the sources of contract law relating to e-contracts,
including the Uniform Electronic Transactions Act (UETA), ESIGN Act, and the Principles of the Law of Software Contracts
5.2
Describe the basic requirements for a valid
contract, including mutual assent and
consideration.
5.3
Explain fundamental principles of contract law,
including capacity, legal purpose, and the
statute of frauds.
Class Name
Instructor Name
Date, Semester
Cont’d
LEARNING OBJECTIVES
After this lecture, you should:
12
5.4
Compare and contrast clickwrap agreements
and browsewrap agreements
5.5
Explain the enforceability of e-contracts.
5.6
Explain and identify primarily whether visitor to
website had actual or constructive knowledge for
a site’s terms and conditions prior to using the site.
Class Name
Instructor Name
Date, Semester
Learning Objective
After this lecture, you should be able to:
5.1
Explain the sources of contract law
relating to e-contracts, including the
Uniform Electronic Transactions Act
(UETA), E-SIGN Act, and the Principles
of the Law of Software Contracts.
5
5.1
Sources of Contract Law for
Electronic Contracts
•
Common law
•
Restatement (Second) of Contracts
•
Uniform Commercial Code (UCC)
•
Uniform Electronic Transactions Act (UETA)
•
E-Sign Act
•
Principles of the Law of Software Contracts
Learning Objective
After this lecture, you should be able to:
5.2
Describe the basic requirements
for a valid contract, including
mutual assent and
consideration.
7
5.2
Basic Requirements for a
Contract
•
Mutual assent (“meeting of the minds”)
– Offer/acceptance
•
Consideration: something of legal value given
in exchange for a promise
Learning Objective
After this lecture, you should be able to:
5.3
Explain fundamental principles
of contract law, including
capacity, legal purpose, and the
statute of frauds.
9
5.3
Fundamental Principles of
Contracts
•
Capacity (age 18 and over)
•
Legal purpose
5.3
Statute of Frauds (SOF)
•
Certain contracts must be in writing and signed
by “party to be charged?”
•
Types of contracts subject to SOF: real estate,
contracts that is not to be performed within one
year
5.3
Statute of Frauds and E-mail
• E-mail generally insufficient to for writing requirement
for contracts under statute of frauds
• Leist v. Tugendhaft, 64 A.D.3d 687 (2009): Court held
that e-mail exchange to buy house failed to satisfy
the writing requirement since the “party to be
charged” did not authorize the transaction
12
Learning Objective
After this lecture, you should be able to:
5.4
Compare and contrast
clickwrap agreements and
browsewrap agreements.
13
5.4
Clickwrap Agreements
•
Electronic version of shrink-wrap license
– Computer user agrees by pointing the cursor
to a particular location on screen and clicking
“I Agree”
•
Common with software downloaded from the
Internet or for software installed on a CD-ROM
5.4
Browsewrap Agreements
•
Browsewrap agreement: website terms and
conditions of use are posted on the website
typically as a hyperlink at the bottom of the
screen
•
Agreement allows user to view terms of
agreement, but does not require the user to
take any affirmative action
•
Users do not need to “click” to accept website
terms
EULAs and Terms of Use
Agreements
5.4
End User License Agreement (EULA) or Terms of
Use Agreement
•
–
•
Alternative names for clickwrap or browsewrap
agreements
May be considered counteroffers or proposals
for additional terms
Learning Objective
After this lecture, you should be able to:
5.5
Explain the enforceability of econtracts.
17
5.5
Enforceability of Electronic
Contracts
•
Forrest v. Verizon Communications: “[a]
contract is no less a contract simply because it
is entered into via a computer.”
•
Courts consider primarily whether visitor to
website had actual or construction knowledge
of a site’s terms and conditions prior to using
the site.
•
Online contract my be considered
counteroffers or proposals for additional terms.
Learning Objective
After this lecture, you should be able to:
5.6
Explain and identify the
common clauses contained in
an End User License Agreement.
(EULA).
19
5.6
Common Clauses in EULAs
•
Warranties
•
Limitation of liability
•
Arbitration
•
Indemnity
•
Severability
•
Merger
•
Choice of law/forum selection
20
Chapter Summary
12
5.1
Explain the sources of contract law relating to e-contracts,
including the Uniform Electronic Transactions Act (UETA), ESIGN Act, and the Principles of the Law of Software Contracts
5.2
Describe the basic requirements for a valid
contract, including mutual assent and
consideration.
5.3
Explain fundamental principles of contract law,
including capacity, legal purpose, and the
statute of frauds.
Class Name
Instructor Name
Date, Semester
Cont’d
Chapter Summary
12
5.4
Compare and contrast clickwrap agreements
and browsewrap agreements
5.5
Explain the enforceability of e-contracts.
5.6
Explain and identify primarily whether visitor to
website had actual or constructive knowledge for
a site’s terms and conditions prior to using the site.
Class Name
Instructor Name
Date, Semester
Cont’d
Chapter 6:
Online Tax Related Issues
12
Cyberlaw: The Law of the Internet and Information
Technology
1st Edition
Brian Craig
Class Name
Instructor Name
Date, Semester
LEARNING OBJECTIVES
After this lecture, you should:
12
6.1
Describe the role of the Internal Revenue Service
(IRS) in tax collection and tax law enforcement.
6.2
Explain when state sales tax is imposed for online
transactions.
6.3
Describe the scope and application of the
Internet Tax Freedom Act.
Class Name
Instructor Name
Date, Semester
Cont’d
LEARNING OBJECTIVES
After this lecture, you should:
12
6.4
Describe the income tax responsibility for online
sellers.
6.5
Describe the current issues relating to taxing
winnings from online gambling.
6.6
Explain the state income tax issues for
telecommuters.
Class Name
Instructor Name
Date, Semester
Learning Objective
After this lecture, you should be able to:
6.1
Describe the role of the Internal
Revenue Service (IRS) in tax
collection and tax law
enforcement
5
6.1
Internal Revenue Service (IRS)
•
Bureau of U.S. Department of the Treasury
responsible for tax collection and tax law
enforcement
•
Enforces Internal Revenue Code (IRC) and
Treasury Regulations condified in CFR
Learning Objective
After this lecture, you should be able to:
6.2
Explain when state sales tax
imposed for online transactions.
7
6.2
State Sales Tax
•
Sales Tax: a tax imposed on a sale of goods
and services, usually measured as a
percentage of their price
•
States with no sales tax: Alaska, Delaware,
Montana, New Hampshire, and Oregon
6.2
Substantial Nexus Test
•
Test set forth in Quill v. North Dakota, 504 U.S. 298
(1992) that retailers are exempt from collecting sales
taxes in states where they have no “nexus” or
physical presence, such as a store, office, or
warehouse
•
Test applies to online retailers
9
6.2
Substantial Nexus Test
•
St. Tammany Parish Tax Collector v.
Barnesandnoble.com, LLC, 481 F. Supp. 2d 575 (E.D.
La. 2007): Barnesandnoble.com did not have a
sufficient nexus to pass the test set
•
Factors: membership, gift cards, commissions,
advertising, return policy
10
6.2
Streamlined Sales Tax Project
(SSTP)
•
Multi-state initiative to make sales tax laws, rules,
and systems more uniform across states and, thus
make it easier for vendors to collect states’ sales
taxes
•
Streamlined Sales and Use Tax Agreement (SSUTA):
Adopted by 29 states
11
Learning Objective
After this lecture, you should be able to:
6.3
Describe the scope and
application of the Internet Tax
Freedom Act.
12
6.3
Internet Tax Freedom Act (ITFA)
•
ITFA: Federal law that mainly prevents states
from imposing a sales tax on Internet
connection fees
•
Does not prevent states from collecting state
sales tax
Learning Objective
After this lecture, you should be able to:
6.4
Describe the income tax
responsibility for online sellers.
14
6.4
Income Tax
•Income Tax: tax on individual’s or entity’s net
income (federal and most states)
•Online sellers who engage in e-commerce on
websites such as eBay or Amazon may face
income tax liability
6.4
Income Tax for Online Sellers
•
All income from online auctions generally taxable
unless certain exceptions are met
•
IRS Fact Sheet 2008-23: Guidelines for determining
whether an activity is engaged in for profit or a
hobby
16
Learning Objective
After this lecture, you should be able to:
6.5
Describe the current issues
relating to taxing winnings from
online gambling.
17
6.5
Income Tax from Online
Gambling
•All income from online auctions generally taxable
unless certain exceptions are met
•IRS Fact Sheet 2008-23: Guidelines for determining
whether an activity is engaged in for profit or a
hobby
6.5
Income Tax form Online
Gambling
• Unlawful Internet Gambling Act (UIGEA): Federal law
outlawing unlawful Internet gambling
• UIGEA: Prohibits financial institutions from accepting
transactions made in the pursuit of unlawful Internet
gambling
• Repeal of UIGEA would allow for legalization of
domestic online gambling and give the IRS and states
to collect income tax from gambling winnings
19
Learning Objective
After this lecture, you should be able to:
6.6
Explain the state income tax
issues for telecommuters.
20
6.5
Income Tax Issues for
Telecommuters
•
Telecommuting on the rise
•
States may impose state income taxes on nonresidents who telecommute
•
New York State: aggressive collection practices
(see Huckaby and Zalinksy cases)
•
Possible constitutional issues (Due Process,
Privileges and Immunities)
6.5
Tax Reciprocity Agreements
•
Agreement between two or more states for income
tax
•
Example: Non-residents who work in the District of
Columbia can claim exemption from withholding for
DC income tax
•
States can enter into tax reciprocity agreements;
possible federal legislation
22
Chapter Summary
12
6.1
Describe the role of the Internal Revenue Service
(IRS) in tax collection and tax law enforcement.
6.2
Explain when state sales tax is imposed for online
transactions.
6.3
Describe the scope and application of the
Internet Tax Freedom Act.
Class Name
Instructor Name
Date, Semester
Cont’d
Chapter Summary
12
6.4
Describe the income tax responsibility for online
sellers.
6.5
Describe the current issues relating to taxing
winnings from online gambling.
6.6
Explain the state income tax issues for
telecommuters.
Class Name
Instructor Name
Date, Semester
Cont’d