> ## Documentation Index
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> Use this file to discover all available pages before exploring further.

# Session 08 - Battle of the Forms, Digital Contracts, and Acceptance

> Battle of the Forms, Digital Contracts, and Acceptance

## I. Battle of the Forms (UCC § 2-207)

### A. Material Alterations and Surprise Hardship

#### **Marvin Lumber & Cedar Co. v. PPG Industries**

* **Facts**: Marvin manufactured wooden doors/windows; PPG sold wood preservatives. PPG sent 66 acknowledgements with limitation of liability clause on back in fine print
* **Issue**: Does limiting liability clause involve element of unreasonable surprise and fail to become part of contract?
* **Rule**: UCC § 2-207 - Clause limiting remedy in reasonable manner involves no element of unreasonable surprise will become part of contract
  * **Comment 4**: Agreement is materially altered if addition would result in **surprise or hardship** without express awareness
* **Analysis**: Court followed Comment 4, rejecting Seventh Circuit's view that hardship alone isn't basis for finding material alteration
* **Holding**: Economic hardship here = court won't impose additional language on opposing party without full awareness
* **Key Principle**: If **surprise OR hardship**, courts won't enforce unless party was fully aware

**Exam Tip**: Arbitration clauses = always material alteration

### B. Last Shot Doctrine (Common Law Mirror Image Rule)

#### **Diamond Fruit Growers (Krack v. Metal-Matic)**

* **Facts**: Krack manufactured cooling units using Metal-Matic steel tubing. Metal-Matic acknowledged each release order with disclaimer of consequential damages and limitation of liability. After 10 years, tube defect caused ammonia leak in Diamond's warehouse
* **Issue**: Can Metal-Matic rely on contractual disclaimers to avoid contribution?
* **Common Law Result**: Under mirror image rule, seller's acknowledgement = counteroffer; buyer accepted by accepting goods (Last Shot Principle)
  * Buyer had "last shot" to reject but didn't
* **UCC § 2-207 Analysis**:
  1. Acknowledgement = definite and seasonable (timely) expression of acceptance
  2. If no contract under subsection 1, go to subsection 3
* **Holding**: Court upheld jury verdict; Metal-Matic partially responsible despite limitation provisions

## II. Digital Contracts and Shrinkwrap Licenses

### A. Shrinkwrap Licenses (Inside-the-Box Terms)

#### **ProCD v. Zeidenberg** (7th Cir.)

* **Facts**: ProCD marketed SelectPhone database at different prices (lower for consumers, higher for commercial). License inside packaging restricted use to non-commercial purposes. Zeidenberg bought consumer version, created company to resell database commercially
* **Issue**: Can shrinkwrap license inside box be valid contract?
* **Rule**: UCC § 2-204(1) - Contract may be made in any manner sufficient to show agreement, including **conduct by both parties**
  * UCC § 2-606(1)(b) - Buyer accepts goods when, after opportunity to inspect, fails to make effective rejection under § 2-602(1)
* **Analysis**:
  * ProCD extended opportunity to reject if terms unsatisfactory
  * Zeidenberg inspected package, tried software, learned of license, did not reject
  * ProCD conditioned acceptance on using software after reading license
* **Holding**: Shrinkwrap license enforceable; Zeidenberg breached by commercial use
* **Key Principle**: Acceptance through **conduct** + opportunity to **return** = binding contract

**How to avoid**: Return in timely manner; argue no reasonable notice if box damaged/language hidden

#### **Gateway (Hill v. Gateway 2000)**

* **Facts**: Computer ordered by telephone, paid by credit card. Box arrived with terms inside (30-day return period). Computer had problems after 30 days. Plaintiffs filed class action under RICO
* **Issue**: Are terms shipped inside packaging enforceable?
* **Rule**: Follows ProCD - buyer bound by terms accepted by keeping computer beyond return period
* **Holding**: Buyer must arbitrate dispute; terms enforceable
* **Arbitration Clause Discussion**:
  * Prevents jury trial and court access
  * Cost-effective but potentially biased
  * Limits class actions
  * Protects companies more than consumers

### B. Clickwrap vs. Browsewrap Agreements

#### **23andMe (In re 23andMe)**

* **Facts**: DNA testing service. Purchase stage didn't require viewing/accepting Terms of Service (only hyperlink). Account registration required review and assent to terms. Terms included arbitration clause
* **Issue**: Is arbitration clause enforceable under internet contract formation laws?
* **Distinctions**:
  * **Browsewrap**: User continues without knowing contract exists - insufficient notice during purchase
  * **Clickwrap**: During registration, customers reviewed terms and gave assent - sufficient notice
* **Holding**:
  * Terms NOT enforceable for customers who only purchased kit
  * Terms ENFORCEABLE for customers who created account + purchased kit
* **Key Principle**: **Reasonable notice** determines enforceability

#### **Meyer v. Uber Technologies**

* **Facts**: Plaintiff registered for Uber on Samsung phone, agreed to T\&C including arbitration
* **Evidence**: Screenshots show registration process (page 190)
* **Holding**: Clickwrap agreement enforceable; plaintiff bound to arbitration
* **Key Elements**: Clear display, must click to proceed

#### **Cullers v. Uber Technologies** (Mass. 2021)

* **Facts**: Blind man denied rides three times due to guide dog; sued Uber
* **Issue**: Are app conditions enforceable if user not properly informed?
* **Rule**: Agreement not enforceable without **reasonable notice** of terms and conditions
* **Holding**: Against Uber - blind plaintiff not given reasonable notice
* **Key Principle**: Reasonable notice accounts for disabilities/circumstances

**Americans with Disabilities Act**: Companies must follow ADA accommodation requirements

#### **Hastings v. Unicoin**

* **Facts**: Online token sale; checkbox stating "I read statements, agree to privacy policy and terms of service" but no requirement to click hyperlink first
* **Issue**: Is arbitration clause enforceable?
* **Rule**: Reasonable internet user must understand they need to click hyperlink for terms
* **Holding**: Terms not enforceable - not clear to user
* **Key Principle**: Terms of service must be **conspicuous and clear**

### C. Constructive vs. Actual Notice

**Constructive Notice**: Notice law imputes to person even without actual knowledge because:

* Information publicly available, OR
* Could be reasonably discovered through ordinary care

**Examples**:

* Real estate deeds (recorded to give notice)
* Liens (filed to give notice to world)

**Application**: Courts examine whether user had actual OR constructive notice of terms

## III. Acceptance Principles and Hypos

### A. Counteroffers vs. Mere Inquiries

#### Problem 1: Counteroffer Effect

* **A**: Offers Blackacre for \$5,000 (30 days)
* **B**: "I will pay \$4,800"
* **A**: Refuses
* **B**: Accepts within 30 days
* **Result**: NO CONTRACT
* **Rule**: Counteroffer **kills original offer** (acts as implied rejection)
* **Case**: Dead = dead for eternity unless revived

#### Problem 1(B): Revival of Offer

* **A**: Offers Blackacre for \$5,000 (30 days)
* **B**: "I will pay \$4,800"
* **A**: "Cannot reduce price"
* **B**: Accepts within 30 days
* **Result**: YES - CONTRACT
* **Rule**: A's response "cannot reduce price" = continued willingness to sell at \$5,000, **revives A's offer**
* **Case**: Livingston v. Evans (1925)

#### Problem 1(C): Mere Inquiry

* **A**: Offers Blackacre for \$5,000 (30 days)
* **B**: "Won't you take \$4,800?"
* **A**: Refuses
* **B**: Accepts within 30 days
* **Result**: YES - CONTRACT
* **Rule**: **Mere inquiry does not terminate offer** (no implied rejection)
* **Distinction**: "I'll pay $4,800" (counteroffer) vs. "Would you take $4,800?" (inquiry)

**Exam Tip**: Heavily tested on MBEs - know difference between counteroffer and mere inquiry

#### Problem 1(D): Counteroffer with Reservation

* **A**: Offers Blackacre for \$5,000 (30 days)
* **B**: "I'm keeping your offer under advisement, but if you wish to close now, I'll give you \$4,800"
* **A**: Refuses
* **B**: Accepts within 30 days
* **Result**: YES - CONTRACT
* **Rule**: Counteroffer acts as rejection UNLESS offeree manifests **contrary intention**
* **Analysis**: "Keeping under advisement" = not rejecting original offer while exploring alternative

#### Problem 1(E): Grumbling Acceptance

* **A**: Offers Blackacre for \$5,000 (30 days)
* **B**: "I accept, but I still insist you are driving a hard bargain"
* **Result**: YES - CONTRACT
* **Rule**: **Grumbling acceptance** (expressing dissatisfaction but accepting) = valid acceptance
* **Example**: "Yes, but you're charging too much" = still acceptance

### B. Implicit vs. Additional Terms

#### Problem 2: Good Title

* **A**: Written offer to sell Blackacre
* **B**: "I accept if you can convey me good title"
* **Result**: YES - CONTRACT
* **Rule**: Providing **good title is implicit** in real estate offers - not violation of mirror image rule
* **Distinction**: "If you convey good title" (implicit) vs. "If you add tow package" (new term)

**Key Principle**: Some conditions are **implicit/given** in offers, don't constitute material changes

#### Problem 3: Indefiniteness (Express Industries)

* **Facts**: DOT offered lease renewal for \$3.5M. Express signed and returned, but cover letter stated "certain parts still under discussion with HRC regarding 70,000 sq ft exclusion"
* **Later**: DOT received \$4.5M offer from another party, accepted it
* **Issue**: Can Express enforce contract?
* **Trial Court & Appellate Division**: For Express (essential terms agreed)
* **Court of Appeal**: REVERSED - entire agreement **too indefinite**
* **Reasoning**:
  * Third party (HRC) needed to make decision
  * Not clear what would happen
  * Cannot enforce contract without knowing essential terms
* **Key Principle**: Court can only provide remedy if can find breach; requires valid contract with essential terms

**Equitable Remedies**: Always consider promissory estoppel/reliance damages as alternative

### C. UCC § 2-207 Applications

#### Problem 4: Additional Acknowledgement Term

* **A**: Offers sale of goods to B
* **B**: Accepts but adds "Prompt acknowledgement must be made of receipt of this letter"
* **Issue**: Is there contract? What are terms?

**Pre-UCC** (Case: Poel v. Brunswick):

* Prompt acknowledgement = qualification/condition
* Result: Counteroffer

**Post-UCC § 2-207(1)**:

* "Prompt acknowledgement" does NOT expressly condition acceptance on offeror's assent
* Result: **Contract exists**
* Additional term = proposal for addition

**If Both Merchants** (§ 2-207(2)):

* Issue: Does it materially alter contract?
* If no: Becomes part of contract
* Breach by failure to give notice = **immaterial breach** with only **nominal damages** (\$1)

**If NOT Merchants**:

* Additional term = mere proposal (not part of contract)

## IV. Key Exam Concepts

### Reasonable Notice Standard

* **Central principle** for digital contracts
* Courts evaluate: Was notice **conspicuous**? Hidden? Clear opportunity to read/reject?
* Factors: Font size, placement, ability to scroll/review, opportunity to reject

### Material Alteration Test

1. Does it cause **surprise**?
2. Does it cause **hardship** (especially economic)?
3. Was party fully aware before agreeing?

### Acceptance Methods

1. **Express acceptance**: Clear "I accept"
2. **Conduct**: Using product beyond return period, keeping goods
3. **Silence**: Only when duty to speak OR custom/usage indicates acceptance
4. **Grumbling acceptance**: Complaining but accepting = valid

### Duty to Read

* General rule: Parties have duty to read contracts before signing
* Exception: Some jurisdictions (CA) require translation into buyer's language (e.g., car sales in Spanish)
* Protecting yourself: Initial each paragraph, get copies, read before signing

### Arbitration Clauses

**Benefits**:

* Cost-effective
* Faster than litigation
* Confidential

**Drawbacks**:

* Limits jury trial right
* Prevents class actions
* Potentially biased (arbitrators paid by repeat players)
* Limits damages recovery

**California Exceptions**: Sexual harassment in workplace = unenforceable

### Objective Theory Application

* How would **reasonable person** in that position interpret the language?
* Subjective intent irrelevant
* Focus on manifestation to other party

## V. Practice Tips

1. **Always argue in the alternative**: If contract claim fails, argue promissory estoppel/reliance
2. **Cover yourself**: Include multiple causes of action
3. **Look for defenses**: Economic duress, unconscionability, lack of notice
4. **Don't be afraid to ask questions**: Even experienced lawyers ask basic questions
5. **Make detailed notes**: Add personal comments to create your own outline
6. **Do practice MBEs**: Repetition reduces mistakes, reveals nuances