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Clicking or e-mailing can create a binding contract

A New York company ran a loan-application website. As part of the application process, users had to click a box to get from one screen to the next. Above the box it said, “Clicking the box below constitutes your acceptance of … the borrower registration agreement.”

The borrower registration agreement wasn’t on the page, but the words “borrower registration agreement” were a hyperlink to another page that included the complete contract. In fine print, the contract said that disappointed borrowers couldn’t sue in court and had to take all claims to arbitration.

Was this binding?

Yes, said a federal court. Even though the agreement wasn’t visible and could be accessed only via a hyperlink, it was still a valid contract, and clicking on the box meant that borrowers gave up their right to sue.

In another case in Indiana, an LLC filed an insurance claim for storm damage, and the insurance company denied it, saying the damage occurred outside the policy period. After some e-mail negotiations, the LLC and the insurer agreed on settlement terms. An official of the LLC sent an e-mail saying, “Agreed. Go ahead and draft the paperwork.”

A short time later, the LLC changed its mind and reneged on the deal.

But a federal judge said the e-mail agreement was valid and could be enforced by the insurance company, since the two sides had agreed to all the terms.

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