Evolution of the Contract

The first contract in human history was not a written one but a promise between two prehistoric people. Something like, “If you bring me some wood, I will build you a fire.”

“The first promise where there was some sort of societally sanctioned way to enforce that promise-that was the first contract,” says Professor Nancy S. Kim, who teaches Contract Law at California Western. “A contract is an agreement you can legally enforce.”

Enforced at the point of a spear? Who really knows? But the idea of a contract is at least as old as the Bible.

“In the Judeo-Christian tradition the word for a contract would be a covenant,” according to Professor Thomas D. Barton, who also teaches Contracts. “The basic covenant is an arrangement between the deity and humans. In exchange for devotion you’ll be offered the opportunity for salvation. It’s not bargained for, but the idea is that both people benefit from the arrangement.”

Modern contracts often don’t look like the “all parties sign on the dotted line” paper contracts we think of. They’ve evolved to the point where in the Internet age; you can easily enter into a legally binding contract without even knowing it-at the push of a button.

You Click, You’re Bound

“You click, you’re bound,” says Kim of one new kind of contract-the “wrap contract”-that she feels is a “seismic shift” in the way we enter into contract agreements. Kim’s new book, Wrap Contracts: Foundations and Ramifications, explores non-traditional agreements that look nothing like legal documents. When an Internet user visits a website, checks email, or downloads music, they enter into a digital “wrap contract” that they probably don’t know exists.

“Wrap contracts-contracts in a non-traditional form-are not limited to online agreements, but they include online agreements,” says Kim. “Whatever it is, you don't sign it, so that’s the main distinction. Often, they are ‘click agreements.’ Little boxes or hyperlinks that pop up. Even if you do click, a lot of times you don’t even realize you’ve clicked, like agreeing to Facebook terms of service. We just do it on autopilot now.”

The age old adage “read the fine print” is really not of much use if you don’t understand what it means.

“We don’t bother to read things and we wouldn’t understand it if we did,” says Barton. “So who would we negotiate with if we don’t like the Facebook agreement? It’s kind of a fantasy world. As a consumer you feel a little bit like a victim in a sense.”

He gives a practical example of making an online contract that’s not really enforceable. “Let’s say someone buys a pair of pants for $50 on eBay from a seller in the United Kingdom. If something goes wrong with the trousers, even though it is technically a legal contract, they would have no legal recourse-who could afford to do that over a $50 pair of pants?”

When it comes to selling online, reputation is everything.

“When I buy something on eBay I’m not relying on the law anymore,” says Barton. “I’m relying on reputation. Just as we did in a little village 600 years ago.”