For today’s post we will take a look at the 5th key element of a contract which is Consent.
Consent
Both parties must give their consent to the terms of the agreement freely and without coercion. If one party is forced or coerced into entering into the contract, it may be invalid.
Specht v. Netscape Communications Corp. (2002): This case involved a contract for the download of free software (SmartDownload), in which the terms of the contract were only accessible through a hyperlink that was not visible to the user at the point of download. Because of the way Netscape had its download setup online, Plaintiffs were not required to read the full terms of the contractual agreement, including the arbitration clause, before they clicked the download button. The District Court found that the downloading of software did not constitute an acceptance of Defendant’s terms because there was no reasonably conspicuous notice and because a reasonable internet user would not expect to submit to an arbitration clause upon installing a free download.
Defendant appealed. Defendant’s Motion to Compel Arbitration was denied. In this case, unlike bundled software and electronics, the court held that a reasonably prudent consumer would not assent to contractual terms that are so inconspicuous that they could completely overlook them.
As a result of this case, the vast majority of websites that have license agreements or disclosure statements associated with their online products and / or services, prominently and expressly link their license agreements / disclosure statements to the purchase or download of their products and services.
Williams v. Walker-Thomas Furniture Co. (1965): This case involved a contract for the purchase of furniture, in which the buyer signed a contract that contained a “security clause,” which allowed the seller to repossess all items sold to the buyer if any payments were missed, regardless of which item the payments were for. Williams made numerous furniture purchases from 1957 – 1962 as well as monthly payments during that entire time span. When he defaulted on a stereo in 1962, Walker-Thomas Furniture Co. repossessed all of his furniture.
The court ruled that the security clause that allowed Walker-Thomas to repossess all of Williams’ furniture was unconscionable because it was hidden in the fine print and the buyer did not have a reasonable opportunity to understand the terms of the contract.
The judge in the case, J. Skelly Wright, held that a contract can be set aside if it has unconscionable terms:
“…we hold that where the element of unconscionability is present at the time a contract is made, the contract should not be enforced…
Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party….
In many cases the meaningfulness of the choice is negated by a gross inequality of bargaining power …
The manner in which the contract was entered is also relevant to this consideration. Did each party to the contract, considering his obvious education or lack of it, have a reasonable opportunity to understand the terms of the contract, or were the important terms hidden in a maze of fine print and minimized by deceptive sales practices? Ordinarily, one who signs an agreement without full knowledge of its terms might be held to assume the risk that he has entered a one-sided bargain. But when a party of little bargaining power, and hence little real choice, signs a commercially unreasonable contract with little or no knowledge of its terms, it is hardly likely that his consent, or even an objective manifestation of his consent, was ever given to all the terms. In such a case the usual rule that the terms of the agreement are not to be questioned should be abandoned and the court should consider whether the terms of the contract are so unfair that enforcement should be withheld.”
To give some further insight into this element of consent, let’s take a look at a few definitions of consent in Black’s Law Dictionary:
“Consent is an act of reason, accompanied with deliberation, the mind weighing as in a balance the good or evil on each side… Consent is implied in every agreement. It is an act unclouded by fraud, duress, or sometimes even mistake.” Black’s Law Dictionary, Sixth Edition, p. 305
So in summary, for an agreement to have full consent of both parties:
- all of the terms of the agreement must be obviously presented to each party,
- the terms must not be unconscionable,
- the agreement must be unclouded by fraud
- and neither party must be under duress