Indiana Law Journal
Copyright (c) 2000 Trustees of Indiana University
Fall, 2000, 75 Ind. L.J. 1125
Humans, Computers, and Binding Commitment
Addison C. Harris Lecture, October 26, 1999
Margaret Jane Radin
(William Benjamin Scott & Luna M. Scott Professor
of Law and Co-Director of the Program in Law, Science & Technology, Stanford
Copyright 2000 by Margaret Jane Radin. Permission is hereby granted to reproduce
and distribute this Article in whole or in part for personal, professional
or educational purposes, provided such copies are disseminated at or below
cost, provided that each copy bears this notice, and provided that the Indiana
Law Journal is credited as the original published source.
* * * * *
II. Emerging Forms of Online Contract
Let me begin by outlining three methods of contract formation in electronic
commerce. They can go by the names "click-wrap," "machine-made," and "viral"
contracts. In each case, the procedure raises questions about whether it is
really contractual, because it deviates from the traditional conceptualization
of contract- as-consent.
A. Contract as Click (a.k.a. "Click-Wrap")
A great many commercial websites have taken to posting fine-print terms
on interior pages. There are enough of them to have spawned a couple of acronyms-"TOS"
(Terms of Service) and "COU" (Conditions of Use). At [*1129] www.Disney.com,
for example, "where the magic lives online," n6 the following link
appears at the bottom of the home page in small print. Many users probably
will not scroll down to the bottom of the page, and if they do not, they
will not see the link. "Please click here for legal restrictions and terms
of use applicable to this site. Use of this site signifies your agreement
If you do click on this link, you will find a lot of fine print. One portion
By uploading materials to any Forum or submitting any materials to us, you
automatically grant (or warrant that the owner of such rights has expressly
granted) us a perpetual, royaltyfree, irrevocable, nonexclusive right and
license to use, reproduce, modify, adapt, publish, translate, create derivative
works from, and distribute such materials or incorporate such materials into
any form, medium, or technology now known or later developed throughout the
universe. In addition, you warrant that all so-called moral rights in those
materials have been waived. n8
Another portion says:
You agree that any action at law or in equity arising out of or relating
to these terms shall be filed only in the state or federal courts located
in Los Angeles County and you hereby consent and submit to the personal jurisdiction
of such courts for the purposes of litigating any such action. n9
Consider another example, found at Beyond.com, a purveyor of downloadable
software whose commercials have featured a naked telecommuter. n10 On
the home page you will find, if you take the trouble to scroll down all the
that you click on it. If you choose to click on it you will find a lot of
fine print, including this: "Beyond.com reserves the right to make changes
to this site and to these terms and conditions at any time. Any such modifications
will become effective upon the date they are first posted to this site."
Amidst the fine print you will also find this:
This Agreement shall be construed in accordance with and governed by the
internal laws of the State of California (as permitted by Section 1646.5 of
the California Civil Code or any similar successor provision) without giving
effect to any choice of law rule that would cause the application of the
laws of any jurisdiction other than the internal laws of the State of California
to the rights and duties of the parties. . . . Beyond.com may freely transfer,
assign, or delegate all or any part of this Agreement, and any rights and
duties thereunder, without the requirement of consent. This Agreement will
be binding upon and inure to the [*1130] benefit of the heirs,
successor, and permitted assigns of the parties. n12
There is every reason to believe that almost all commercial websites will
use a TOS or COU. Right now, each TOS or COU seems to be individually drafted.
The examples I have given so far lean toward the contract-as-product model;
the terms are there whether you see them or not. A contrasting approach is
taken by eBay.com. That site makes every effort to get you to read and understand
its terms, with explanatory resources you can click on, people you can e-mail,
or even talk to on the phone. n13 It is an example of trying to implement
a consent model. In spite of the proliferation of different terms, and in
spite of the fact that some sites lean toward the contract-as-product approach
and others toward a contract-as-consent approach, it is very possible that
industries will soon settle on standardized sets of terms. I will return later
to the interesting issues surrounding standardization in this context.
B. Machine-Made Contract
By machine-made contract, I am referring to a loose category of transactions
that are structured in the first instance by machines, with the humans in
the background at some remove. Strictly speaking, it is a machine-implemented
transactional structure when I use my personal computer to click on a box
on my screen which then registers with a server computer somewhere else. I
am dubbing transactional structures (whether or not contractual is a question
to be answered) machine-made, however, only if the human pushing the key is
not so directly involved. Machine-made contract in this sense falls into two
broad categories: computers as electronic "agents," and computers as electronic
1. Electronic "Agents"
In this category of machine-made contract, the idea is that two computers
(rather than two humans, or one human and one computer) "negotiate" with each
other and arrive at "agreement" with each other. Using the term "agency" in
the locution "electronic agency" has become common, so I am adopting the usage,
but before proceeding I want to register a caveat. The terms should seem
peculiar in this context. When a computer does something "for" me that I
have allowed it to be programmed to do, it is only an "agent" in a mechanical
sense; it carries out the instructions of the program automatically so I will
not have to do it manually. The term "agent" means something else when we
are considering human "agency." Human "agency" refers to the freedom of autonomous
beings. Human "agency" figures prominently in the traditional picture of
contract-as-consent: it takes a human "agent" to be able to give voluntary
consent. The law of "agency," which developed to cover situations in which
one human delegated tasks to another, perhaps partakes of both senses; but
no "agent" in a "principal-agent" relationship could be in the mechanized
relationship that one who causes a computer to run a program is with that
computer's activities. Use of the term "electronic agent" runs together these
meanings and may cause us not [*1131] to see how the issue of
consent is being submerged or metamorphosed.
Right now, the computer-to-computer electronic agent scenario is primarily
being developed in industrial procurement and general supply-chain management.
In the generation following Electronic Data Interchange ("EDI")-a set of protocols
developed in the 1980s for information sharing between trading partners-both
extranets and the Web are being used to couple the vast power of digital
automation with principles of just-in-time manufacture and distribution.
n14 In this form of industrial organization, many repetitive tasks are or
will be accomplished by machine. Among these tasks are ordering and paying
for supplies that are routinely needed at certain points in a process. The
ordering, delivery, and payment for such supplies means that there are contractual
terms surrounding the transaction-the time of delivery, what to do if the
supplies do not arrive in time or are defective, what to do if the payment
is late, and all the other transactional parameters that people contract about.
All of this can in principle be handled primarily by machine, using computer
programs that "negotiate" with each other and enter into "agreements" with
Although automated supply-chain management is in the vanguard of the form
of machine-made contract I have (reluctantly) designated electronic agency,
in the near future these machine-made contracts may well become very widespread.
Electronic agents may shop for us, organize our homes and offices for us,
and so on.
2. Electronic Enforcers
In the second category of machine-made contract, known as digital rights
management systems or trusted systems, computer programs enforce the terms
of a transfer of digital content. The system is "trusted" (more trustworthy
than a human) because it is technologically incapable of deviating from the
instructions it is given. n15 Those instructions may be, for example,
to enforce a thirty-day license by erasing the content from the licensee's
machine when the thirty days are up; or to enforce a restriction against copying
either by preventing the copy from being made or by erasing the content from
the licensee's machine if copying is attempted. Such detailed self-enforcement
mechanisms will likely be a significant aspect of the human/computer interface
for electronic commerce. They are viewed with alarm by some, but welcomed
by others whose vision of anarchic self-ordering in cyberspace includes widespread
technological self-enforcement. n16
C. Viral Contracts
The analogy of viral propagation has proved apt for various aspects of information
transfer in a networked digital environment. Information can be rapidly replicated,
and each replica in turn can be rapidly replicated, and so on through a chain
of replication throughout the network. Most people are familiar with computer
viruses, which are destructive software programs that are spread through successive
replication in this way. But the analogy holds more broadly. The economics
of the networked environment have engendered a phenomenon known as viral
marketing. In this form of marketing, the seller provides incentives for
buyers to obtain other customers, and for those customers in turn to obtain
other customers, and so on. n17 Many commercial websites have "affiliates"
programs designed to do this. n18
In the future, we should expect to see more and more viral marketing. Instead
of locking up intellectual property, for example, many purveyors of content
will be better off by allowing their content to propagate freely, as soon
as there is a viable automatic payment mechanism than can cause payment to
be extracted from whoever downloads the content, wherever it goes. Moreover,
much content on the Web is (and more will be) free advertising for follow-on
services. The more this content propagates, the better for its initiator,
as long as technological safeguards exist to maintain its integrity and keep
the advertiser's name on it.
In keeping with the viral character of content propagation, a transactional
phenomenon I call viral contract is arising. A viral contract (or attempted
viral contract, because we do not know yet whether these attempts will result
in an actual contract) is simply an attempt to make commitments run with a
digital object. For example, in the viral advertising program I described
above, the advertiser who initiates the spread of the content would like to
make each and every user into whose hands the content comes be obligated not
to alter the content or remove the advertiser's name from it. The initiator
would like, in other words, to attach the obligations regarding the content
to the content itself, so that everyone who comes into possession of the content
would also inherit the obligations to the initiator. Viral contract attempts
to make the fine print run with the product. In a sense, it is the ultimate
instantiation of the contract-as-product model.
The clearest instance of attempted viral contract today involves open source
software. The Linux operating system, which now has a nontrivial share of
the market, is governed by a version of the General Public License promulgated
by Richard Stallman and the Free Software Foundation, in conjunction with
a kernel developed by Linus Torvalds. The open source "movement" is based
on the idea that each recipient in a chain of distribution is bound to make
public (or make [*1133] available to all those in the chain) any
improvements effected in the source code. n19 The license uses copyright
to make copyright narrower (keeping in the public domain what otherwise would
have been property of the improvers). Because of this narrowing effect, the
license is known as "copyleft." However, in what might be called "supercopyright,"
the same technique can also be used to attempt to broaden copyright (or for
that matter other intellectual property entitlement schemes). An example would
be a "running" waiver of the fair use defense to copyright infringement, in
which a distributor seeks to foreclose that defense for all users in a chain
Software publishers have hitherto "licensed" rather than sold copies of
their software so that they could restrict transfer, and so that they could
maintain restrictions after a sublicense was effected. Software publishers
most likely would prefer viral sales contracts with running obligations on
all transferees in a chain of distribution, and merely doubt their legal
enforceability (as well as whether transferees would accept such obligations
in the market). But if market forces bring the total restraint-on-alienation
model into disfavor, and changes in the law validate viral contracting, we
might see viral contracting become very commonplace.
n8 Disney Legal Conditions (visited Feb. 12, 2000) <http://disney.go.com/legal/conditions
n13 See eBay.com (visited Jan. 20, 2000) <http://www.ebay.com>.
n14 See John P. Fischer, Note, Computers as Agents: A Proposed Approach
to Revised U.C.C. Article 2, 72 Ind. L.J. 545 (1997).
n15 See, e.g., Mark Stefik, Letting Loose the Light: Igniting Commerce in
Electronic Publication, in Internet Dreams 219, 226-28 (Mark Stefik ed., 1996);
see also Julie E. Cohen, Lochner in Cyberspace: The New Economic Orthodoxy
of "Rights Management", 97 Mich. L. Rev. 462, 471 (1998).
n16 Of the many who believe that technology, not law, will structure cyberspace,
some think that technological self-enforcement will succeed in locking up
property rights even more securely than fences in real space (a result that
some deplore and some applaud); and some think that hackers will always stay
one step ahead of technological locks, undermining property rights in information
(a result that some deplore and some applaud). A particular configuration
of contradictory beliefs is held by those I call "anarcho-cyberlibertarians,"
who are committed to anarchic nonlegal self-organization and at the same time
to strong property rights, which must stem from a legal regime. See Margaret
Jane Radin & R. Polk Wagner, The Myth of Private Ordering: Rediscovering
Legal Realism in Cyberspace, 73 Chi.-Kent L. Rev. 1295, 1297 (1998).
n17 Note www.mobshop.com, whose business model involves viral marketing.
The site offers an item for sale whose price goes down as you get more people
to buy it (and they in turn get more people to buy it) within a set time frame.
n18 See, e.g., Associate Web (visited June 8, 2000) <www.associateweb.com>.
n19 See The Open Source Page (visited Feb. 12, 2000) <http://www.opensource.org>;
see also Open Sources: Voices from the Open Source Revolution (Chris Dibona
et al. eds., 1999); Eric S. Raymond, The Cathedral and the Bazaar: Musings
on Linux and Open Source by an Accidental Revolutionary (1999); Eben Moglen,
Anarchism Triumphant (last modified Dec. 2, 1999) <http://emoglen.law.columbia.edu/my