Defendant Trambert, a resident of California, listed a Toyota SUV for sale to the highest bidder on eBay in November of 2008. Defendant was later notified that Plaintiff MacNeil, a resident of Illinois, was the winning bidder, and the two made arrangements for payment and delivery. As part of the eBay Terms and Conditions, MacNeil was responsible for pick-up or shipping of the vehicle. In December, Plaintiff’s agent in California inspected the vehicle and accepted title and possession, and delivered Plaintiff’s cashier’s check, which was drawn on an Illinois bank. After personally inspecting the vehicle Plaintiff discovered that there was no satellite radio and no DVD screens in the headdress, as had been indicated in the eBay listing. In February of 2009, Plaintiff filed an Illinois small claims court action for $2,546 and Defendant moved to dismiss for lack of personal jurisdiction. The trial court granted defendant’s motion and the appellate court affirmed.

A plaintiff has the burden of establishing a prima facie case for jurisdiction when seeking jurisdiction over a nonresident defendant. Bolger v. Nautica International, Inc., 269 Ill. App. 3d 947, 949 (2007). Illinois has a long-arm statute that permits jurisdiction over foreign defendants that comports with the due process requirements of the Constitution. To satisfy federal due process, a defendant must have minimum contacts with the forum state such that defending a lawsuit there would not offend “ ‘ “traditional notions of fair play and substantial justice.” ‘ “ Spartan Motors, Inc. v. Lube Power, Inc., 337 Ill. App. 3d 556, 560 (2003), quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 102, 66 S. Ct. 154, 158 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463, 85 L. Ed. 278. 283, 61 S. Ct. 339, 343 (1940). In deciding the question of jurisdiction a court will determine whether there was purposeful availment of the benefits and protections of the forum state.

Plaintiff’s complaint averred that the had only seen Defendant’s ads for the vehicle on eBay and that was insufficient to establish general jurisdiction. Plaintiff argued, however, that the court had personal jurisdiction over Defendant because, after listing the car on eBay, which is accessible worldwide, Defendant should have anticipated being brought to court in Illinois if the winning bidder was a resident of Illinois. The appellate court rejected this argument and cited the case of Foley v. Yacht Management Group, Inc., No. 08 – -C – - 7254 (N.D. Ill. July 9, 2009), which also dealt with a failed eBay sale. In Foley, the Defendant refused to accept payment from the winning bidder and the Plaintiff brought suit. In determining whether the court had jurisdiction, the court ruled that Defendant had no tied to the forum state other than the fact that the winning bidder lived there. The Foley court held the Defendant, as an eBay seller, had no control over where the buyer of its item would live and therefore there was no purposeful availment.

While Plaintiff argued that the various telephone calls and emails that occurred between the parties was enough to establish minimum contacts, the court disagreed. Plaintiff also sought to establish jurisdiction based on precedent involving the use of “interactive websites.” Not only does Defendant not run the eBay site, nothing in the record indicated that Defendant’s listings or personal eBay pages were interactive enough to trigger jurisdiction. Plaintiff’s final argument for jurisdiction, that Defendant committed tortuous conduct in the forum, was similarly rejected by the appellate court; the so-called “Effects Doctrine” applies only to intentional torts, and not to breach of contract.

Ultimately Defendant’s business contacts with Illinois were nothing more than random and attenuated and therefore the court was unable to assert jurisdiction in this case.

Here are some simple steps you can follow to ensure that your contract will be seen by your customers and enforced by the court if a problem does arise:

1. Don’t Hide Your Terms

This step should be fairly obvious but too many website operators choose to bury their terms of service either on unrelated pages that customers are unlikely to visit, or at the very bottom of a page in a small font. No matter what size font you use, if your users have to scroll way down a page to view the terms (and they don\’t have to do the same amount of scrolling to make a purchase) chances are you’re running an unnecessary risk

2. Have Plenty of Links

This step is really a continuation of your efforts NOT to hide the terms of a website. If you have multiple pages required to finalize an order, have a link to the terms on each page, and have each link be visible. This doesn’t mean that your website needs to be plastered with links but one visible link per page should suffice without disrupting the look and feel of your site.

3. Use Blue, Underlined Links

This may sound silly, but courts like consistency and precedent and while you may like the look of a yellow hyperlink for your terms in italic, courts are familiar with standard blue, underlined links. Chances are your customers are familiar with blue links as well so make it as easy as possible for them to recognize the links to your terms by showing them the convention they’re used to.

4. Consider a Clickwrap Agreement

Clickwrap agreements require a user to check a box or push a button signifying that they have seen and read the terms before making a sale. Browsewrap on the other hand, assumes that users have read and agreed to terms because they have been conspicuously posted. While both types of agreements will be enforced under the right conditions, if the organization and structure of your site permits a clickwrap agreement it is always best to have an affirmative action that shows a manifestation of intent to enter into an agreement.

For more information about e-commerce and online contracts visit the WLF Lawyers website: http://www.wlflawyers.com.

The following are a few examples of reasons to perform an audit of your legal documents.

1. Technology Policies

Most employment agreements do more than just set the salary of an employee and the number of vacation days allowed. These agreements contain employee policies and workplace procedures that must be followed, and the more complicated and high-profile the position, the more restrictive these agreements are of work, and even some personal, activities.

There was a time when having an e-mail or computer policy seemed ridiculous and overly controlling but today these are commonplace clauses in most employee contracts. Now, more and more companies are adding policies for cell phones and even social networking sites. If your employee policies don’t include the word “Twitter,” chances are they need to be reviewed.

2. “Personal” Online Activities

The Federal Trade Commission (FTC) recently released updated guidelines aimed at protecting consumers from potentially misleading endorsements. Under these new rules, an employer could be liable for statements made on non-employer maintained websites (such as personal blogs, MySpace, Facebook, and Twitter) by employees. Employees are now required to disclose their relationship to an employer when making endorsements even if those endorsements reflect their own thoughts, opinions, and beliefs. A misleading statement by an employee made on one of these social networking sites can expose an employer to expansive liability but I’m guessing most employees won’t consider such activities damaging, or even covered by the terms of their employment.

3. Non-transferability Clauses

When parties come together to form a contract they usually only want to deal with the other party and require that the terms of the contract are nontransferable without their written consent. These types of clauses are generally not argued about and present few problems, that is, until a Court decision in September of 2009. In the case of Cincom Sys, Inc. v. Novelis Corp., the 6th Circuit held that a nontransferable software license was violated when a party to the contract merged with another subsidiary of its parent company, thereby changing its corporate structure.

Because this type of language that prevents transfer or assignment of a contract is so common it is highly recommended that an audit be performed in advance of any mergers or sales.

Conclusion

Most businesses realize that there are certain legal services included in the cost of doing business. My firm deals with many individuals who have recently started a business or are contemplating taking their first steps to a new venture. Too often, however, we encounter people who simply want the minimum work possible to allow them to move on to “more important things” and who have no interest in developing an ongoing relationship with an attorney or law firm. In many cases these individuals turn to form contracts and non-attorney legal providers to give them standardized templates and forms that they try to adapt to suit their needs to save money. While these practices may appear to work at the time you never really know the value of your legal documents, or of a relationship with a good law firm, until you are paying to enforce your rights in court.

Why should you prepare a term sheet?
This document, which will outline the basic points of your intended agreement, will not only make dealing with your attorney easier, and faster, it might even save you some money.

Identify the parties
Identifying the parties to an agreement is one of the most important steps to proper contract formation. Who signs an agreement and possibly more important, what their position in a company is, determines the extent of your ability to enforce the rights and obligations memorialized in the contract. If you will be signing this agreement, will you be signing as an individual or the representative of a company? Will your counterpart in another company be signing as well or, if this is going to be a form contract, will the other party be a customer?

What is the purpose of the contract?
Telling your attorney why you’re entering into this agreement will do more than help him/her write a title, it will give insight into the circumstances or industry surrounding the agreement. Write a short description of the type of agreement, such as “contract for marketing services related to local doctor’s office.” You may know what terms and provisions should be in your contract but an attorney will likely do some research before starting to draft the agreement to make sure it complies with industry standards and any applicable laws.

How long will the contract last?
The term of an agreement is another extremely important provision that is often overlooked in informal conversations between the parties before seeking legal advice. Will this contract be for a set length of time? A few months? A few years? Or will it continue until the parties agree to terminate the relationship? While your attorney can advise you on a favorable term for your position it is best to come prepared with at least some idea of how long the agreement should last.

How will payment be made?
Most contracts involve payment and, if everything goes well, payment will be made. If you are the party who will be receiving payment consider what form you would prefer payment to take. If you are the party who will be making payments discuss this with the other party to make sure their preferred method is reduced to writing. The method of payment will not only affect the physical act of payment it will also have an impact on terms that address late payments and possibly even penalties. Wire transfers and credit card or check payments over the phone can be made almost instantly but payments by check must be sent in advance.

Will there be penalties for late payment?
If payment is being made by check it might be reasonable to allow a few days for receipt because mail is often delayed, however if payment is made by wire transfer it might be reasonable to incur late fees even 24 hours after payment was due. If your business is depending on funds from the sale of goods or performance of services covered under an agreement any delay can negatively impact your livelihood. Late fees act not only as a deterrent to prevent late payment they can also compensate one party for expenses incurred for obtaining credit to continue operation of the business or even lost profits due to halted operation.

Can this contract be transferred?
If you’re contracting for the specific services of an individual or company you may not want to allow a transfer of the rights and obligations of the agreement but what about if one of the parties is sold?

What is the location of the parties and where will the contract be carried out?
If both parties reside in the jurisdiction where the contract will be carried out this information may not be necessary but when dealing with an entity in another state it is important to decide on the forum for legal disputes and the applicable law to be applied. Additional information, such as where the contract will be carried out, will help your attorney determine your leverage for making the forum convenient to you and your interests.

Will you be exchanging sensitive information?
Most contracts require at least one party to disclose sensitive information and trade secrets. Some of this information, such as client information may be protected by privacy statutes and any disclosure should be carefully guarded. Alerting your attorney to the possibility of such an exchange will allow him/her to include provisions to prevent unnecessary disclosure and to properly penalize any breaches.

Summary
Even a short list of key terms or contract expectations faxed to your lawyer in advance of a meeting or conference call will make your consultation much more productive.