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The Legal Architecture of Virtual Stores: World Wide Web Sites and the Uniform Commercial Code

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The Legal Architecture of Virtual Stores: World Wide Web Sites and the Uniform Commercial Code American University Washington College of Law Digital Commons @ American University Washington College of Law Articles in Law Reviews & Other Academic Journals Scholarship & Research 1997 The Legal Architecture of Virtual Stores: World Wide Web Sites and the Uniform Commercial Code Walter Effross Follow this and additional works at: https://digitalcommons.wcl.american.edu/facsch_lawrev Part of the Commercial Law Commons, Computer Law Commons, and the Internet Law Commons The Legal Architecture of Virtual Stores: World Wide Web Sites and the Uniform Commercial Code WALTER A. EFFROSS* TABLE OF CONTENTS I. INTRODUCTION ....................................... 1266 II. JUST BROWSING: VISITING A COMMERCIAL WEB SITE ........... 1289 A. Reaching the Home Page ............................ 1290 B. "DrillingDown" to a Product ........................ 1294 1. Browsing .................................... 1295 a. Profiling ................................. 1296 2. Searching ................................... 1297 3. Index Scanning ................................ 1298 III. THE ON-LINE DEFINITION OF "MERCHANT...................... 1298 A. "Business Practices" Merchants ....................... 1301 1. Answering Electronic Mail (E-mail) ................. 1304 2. PeriodicallyReviewing the Site's Integrity and Operation ................................ 1305 3. "Backing Up" Information ....................... 1307 * © 1998 Walter A. Effross. Associate Professor, Washington College of Law, American University, and Chair, American Bar Association Subcommittee on Electronic Commerce. The author appreciates the helpful comments of Professor Egon Guttman and the research grants provided by the Washington College of Law. This Article reflects developments through December 31, 1997. The information in this Article is not offered as legal advice, nor does the author endorse or recommend any of the products or sites referred to. 1263 4. Protecting Customer Information in Transit and in Storage ................................ 1308 5. Sending Confirmation by E-mail to the Customer ........ 1308 6. ClarifyingAmbiguities in E-mail Messages ............ 1309 7. Monitoring "On-Site" Forums ..................... 1310 B. "Goods" Merchants ............................... 1310 C. "Business Practices" or "Goods" Merchants .............. 1314 D. Draft Revised Article 2 and Draft Article 2B Definitions of Merchant ............................. 1315 1. "Consumers" and Their Transactions ................ 1315 E. Attaining "Merchant" Status Through Linking to a Merchant's Site ................................... 1317 F Attaining "Merchant" Status Through Meta-Tags ........... 1319 G. Firm Offers ..................................... 1320 IV. CHECKING OUT: ACCEPTING ON-LINE ORDERS ................ 1322 A. Means of Ordering ................................ 1322 1 Off-Line Messages ............................. 1322 2 E-mail Messages .............................. 1323 3. Electronic Order Forms .......................... 1324 V. CONTRACT FORMATION ON THE WEB ....................... 1328 A. Manner of Forming a Contract ....................... 1328 1. Article 2: Any Manner Sufficient to Show Agreement ..... 1328 a. Owner's Offer to Sell, or Visitor's Offer to Buy? ..... 1329 2. Draft Revised Article 2 and Draft Article 2B: Any Manner,Including Electronic Agents ................. 1332 B. Statute of Frauds ................................. 1336 1. Article 2 .................................... 1337 a. The "Merchant'sException" .. .................. 1339 2. Draft Revised Article 2 and Draft Article 2B ........... 1340 C. Binding the Unwary Consumer ........................ 1343 1. Article 2: Unconscionability ....................... 1343 2. DraftRevised Article 2: Consumer Contracts ........... 1343 3. Draft Article 2B: Mass-Market Licenses .............. 1344 D. The Battle of the Forms ............................. 1346 1. Article 2 .................................... 1346 2. DraftRevised Article 2 .......................... 1348 3. Draft Article 2B: Standard Forms ................... 1349 E. Assent and Conspicuousness: Enforceability of "Shrink-wrap" and "Webwrap" Agreements ......................... 1351 1. Article 2 .................................... 1352 2. Draft Revised Article 2 ........... ............ 1356 3. DraftArticle 2B: "ManifestingAssent" Electronically .... 1357 VI. WARRANTY IssuEs ..................................... 1359 A. Types of Warranties and Their Disclaimer ................ 1360 1. Article 2 .................................... 1360 a. Express Warranties .......................... 1360 b. Implied Warranty of Title ...................... 1362 c. Implied Warranty Against Infringement ............ 1363 d. Implied Warranty of Merchantability .............. 1363 e. Implied Warranty of Fitnessfor a Particular Purpose .................................. 1364 1264 [VOL. 34: 1263, 1997] World Wide Web SAN DIEGO LAW REVIEW 2. DraftRevised Article 2 .......................... 1365 a. Express Warranties .......................... 1365 b. Implied Warranties .......................... 1366 3. DraftArticle 2B ............................... 1367 a. Express Warranties .......................... 1367 b. Implied Warranties of Authority and Non-Infringement . 1368 c. Implied Warranty of Merchantability .............. 1370 d. Implied Warranty of Informational Content ......... 1370 e. Implied Warranty of Fitness .................... 1371 B. Disclaiming Warranties Through a Web Site .............. 1372 1. The "Copyright Sign" Dodge ...................... 1377 2. The Small "Legal" or "Disclaimer"Notice ............ 1378 3. Warranties of Fitnessfor a ParticularPurpose: PersonalProducts ............................. 1379 VII. JURISDICTIONAL AND CHOICE-OF-LAW IsSUES .................... 1381 A. Current and Draft Revised Article 2 .................... 1381 B. Draft Article 2B .................................. 1382 C. Adopting DraftArticle 2B Contractually ................. 1385 D. Reasonable Relation ............................... 1385 1. GeneralJurisdiction ............................ 1386 2. Specific Jurisdiction ............................ 1387 a. Trademark Infringement, Without "Active/Passive" Considerations ............................. 1388 b. Web-Based Advertising and Contracting ........... 1390 i. Repeated Active Contacts With Forum Residents... 1390 ii. Providing "Passive" Web Sites ............... 1392 iii. Questioning "Passivity":A Sliding Scale? ....... 1394 E. Recommendations ................................. 1397 VIII. CONCLUSION ........................................ 1398 APPENDIX. CHECKLIST OF COMMERCIAL LAW ISSUES FOR WEB SITE OWNERS 1399 1265 If you can buy1 something in person, chances are you can buy it online. New models of commercial interactionare develop- ing as businesses and consumers participate in the electronic marketplace and reap the resultant benefits.2 It is intended to make it possible for the law embodied in [the Uniform Commercial Code] to be developed by the courts in the light of unforeseen and new circumstances and practices. However, the proper construction of the Act requires that its interpretationand application be limited to its reason.3 I. INTRODUCTION A major "selling point" of the World Wide Web4 is its ability to offer 1. Tracy LeBlanc, Online Shopping Brings the Mall to You, in PC NOVICE GUIDE TO GOING ONLINE 128, 128 (1997). 2. INTERAGENCY WORKING GROUP ON ELECTRONIC COMMERCE, A FRAMEWORK FOR GLOBAL ELECTRONIC COMMERCE 2 (1997) (available on-line at About a Framework for Global Electronic Commerce (visited July 2, 1997) <http://www.whitehouse.gov/WHINew/Commerce/about.html>; cf. KIm KOMANDO, CYBERBUCK$: MAKING MONEY ONLINE 16 (1996) ("Being online doesn't let you do new things as much as it lets you do things in a new way."); Ann Davis, Tangled Web: How the Net Became Land of Opportunity for Legal Profession, WALL ST. J., Oct. 13, 1997, at Al ("Even sophisticated businesspeople," claims one attorney, "mistake the Internet for a world apart from the real world,' where existing laws don't apply."). 3. U.C.C. § 1-102 cmt. 1 (1996). 4. The Internet system of computer networks was introduced by the federal government in 1969 to link "computers and computer networks owned by the military, defense contractors, and university laboratories conducting defense-related research." ACLU v. Reno, 929 F. Supp. 824, 831 (E.D. Pa. 1996). It has been characterized variously as a "unique and wholly new medium of worldwide human communication," id. at 844, and "the most participatory form of mass speech yet developed." Id. at 883. The World Wide Web (the "Web") has been characterized as "a collection of protocols and standards for accessing information on the Internet, [which is] the physical medium used to transport the data." NET.GENESIS & DEvRA HALL, BUILD A WEB SITE 5 (1995). The Web was created in 1990 by Tim Bemers-Lee of CERN, the European Particle Physics Laboratory, and achieved enormous popularity in 1993 with the introduction of Mosaic, the first graphical "Web browser." See ROBERT H. REID, ARCmTECrs OF THE WEB: 1,000 DAYS THAT BUILT THE FUTURE OF BUSINESS at xxiii- xv (1997); Robert Wright, The Man Who Invented the Web, TIME, May 19, 1997, at 64, 66 (discussing Mr. Berners-Lee's invention of the "three technical keystones of the Web"); ADAM BLUM, BUILDING BusINEss WEB SrrIES 5-6 (1996); DAVID ANGELL & 1266 [VOL. 34: 1263, 1997] World Wide Web SAN DIEGO LAW REVIEW a "virtual storefront" to anyone, from an individual
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