Over the past decade, the Internet and the web have made new breeds of electronic agreements necessary. E-mail and the web have exploded as means of personal and business communication. Think about it – when was the last time you wrote a letter to someone (besides a Christmas or birthday card)? In business, e-mail and the web are sometimes the methods used to negotiate and agree on the terms of a transaction. For online businesses, these are virtually the only methods of communicating and carrying out transactions.

The question for these businesses is, “Are electronic contracts legally enforceable?” Assuming all of the elements to establish a traditional contract are present, an email or web contract can be a valid and enforceable agreement.

A valid traditional contract requires four elements:

1. Agreement – To have an enforceable contract, there must be an agreement between the parties. This requires an offer and an acceptance of that offer.
2. Consideration – The agreement must be supported by something of legal value given in exchange for the promise.
3. Contractual capacity – The parties to a contract must be able to legally enter into a contract. For example, minors are not legally capable of entering into a contract, so they lack contractual capacity.
4. Lawful object – The goal of a contract must be lawful. Contracts to commit a crime or contracts against public policy are void.

Clickwrap Agreements
The term “clickwrap” refers to agreements that obtain a user’s affirmative acceptance electronically. You see clickwrap contracting virtually every time you install a piece of software. During the installation, you are usually presented with check boxes to either “accept the terms of the License Agreement” or “not accept the terms of the License Agreement” along with a link to view the text of the end-user license agreement.

But, the use of clickwraps is not limited to software. They are often used for acknowledgements of assent to contracts for online services, too. In those cases, the text usually invites the user to click to accept the terms of a service agreement covering the online offering.

Generally, courts have treated clickwrap agreements as valid and enforceable contracts. Moreover, the trend over the past decade has been to find these agreements enforceable even if the contract is first presented after the fact – provided that the customer must be given the right to return the goods for a full refund if not satisfied with the contract terms.

Electronic Signatures
Over the last decade, the law has adapted to the reality that most customers demonstrate their assent to terms of an online agreement document with no more than clicks of a mouse. Many states have passed laws making electronic signatures binding to the same extent as a traditional hard copy signature. In 2000, the U.S. government enacted the Electronic Signatures in Global and National Commerce Act, or E-SIGN, recognizing a digital signature on interstate and foreign contracts as legally binding.

An electronic signature is defined under E-SIGN as:

“an electronic sound, symbol, or process attached to or logically associated with a contract or other record and executed or adopted by a person with intent to sign the record.”

This broad definition means that virtually any form of electronic assent can constitute an effective electronic signature. E-SIGN also provides that a contract “cannot be denied legal effect … solely because it is in electronic form.”

Electronic signature laws mean that most commercial contracts in the United States can be digitally signed and will not be held unenforceable simply because the agreement is in electronic form. There are some exceptions, though. For example, you cannot convey real estate or execute your will with a click.

Summary
Electronic contracts allow a single company to be a party to millions of contracts. They make mass contracting fast, efficient and very low cost, but care must be taken to ensure the traditional elements of a contract are met to provide to ensure enforceability.

As 2010 begins, now is a good time to review and update your employment policies and to ensure managers and employees are following them. More changes in workplace law occurred in 2009 than in the last ten years combined, so it is crucial that you and an employment law advisor review and revise your compliance procedures and formal employee manuals to reflect the changes.

Document Everything
When it comes to employees, make sure that everything is clearly spelled-out in a detailed employee handbook. Ensure that your employees understand what you expect of them, the rewards for success and the consequences of failure. Your up-to-date employee handbook should contain a clear disciplinary procedure that is administered fairly across the entire company.

Also, make sure you document everything relating to your employees. Every business, regardless of its size, should keep accurate and complete records regarding its employees from the date of the employee’s application for employment through the employee’s termination and afterward for at least the statute of limitations period in your state. It will make things much easier for you if you have to go to court after firing someone.

New Employment Provisions
Here is a sampling of a few new employment law provisions enacted in 2009:

Family and Medical Leave Act Amendments
Employees who have family members serving in the armed forces now have expanded rights under the federal Family and Medical Leave Act (“FMLA”). In October 2009, federal legislation changed the definition of which service members are covered under the qualifying exigency category. Employees are now entitled to qualifying exigency leave when a family member who is in the regular armed forces is deployed to a foreign country. Previously, this leave was only available when a family member was called to active duty in the National Guard or military reserves.

Qualifying exigency leave allows an employee to take up to 12 weeks of leave per year to deal with specified issues related to overseas military service by a family member (defined as a spouse, son, daughter, or parent). Examples include arranging for child care, making financial and legal arrangements, and counseling. In addition, federal legislation has also expanded the right of employees to take up to 26 weeks of leave per year to care for a family member with a serious injury or illness incurred as a result of military service.

Employers that are covered by the FMLA should notify employees of the changes, and revise their policies and procedures to ensure that they are in compliance with the new requirements.

New Form I-9, Employment Eligibility Verification
The federal government issued a new Form I-9, Employment Eligibility Verification, on August 7, 2009. The new Form I-9 contains an updated list of acceptable documents employees must present upon hiring. Employers must complete and retain a Form I-9 for each individual they hire for employment in the United States and should immediately stop using all previous versions of the Form I-9. A copy of the new edition of the form can be found on the IRS website here.

Easier for Employees to Unionize
The federal Employee Free Choice Act will virtually eliminate secret ballot elections, allow signed union authorization cards to determine whether an employer must accept a union, and compel employers to arbitrate their terms and conditions of employment if an agreement with the union is not reached within a certain amount of time. Avoid the mistake of failing to educate employees on the burdens of unionization now – long before authorization cards are signed.

The Tip
Update your employee handbooks and policies. The deluge of employment law changes this year compel a review and revision of your written employment policies. It’s much better to take the time now to address these issues than to be surprised in 2010 or beyond by a disgruntled employee.

No business owner wants to lose money. But, if it happens this year, there may be a silver lining — a tax break that enables the owner to recoup taxes paid in prior years. This is called a net operating loss (NOL) carryback, and Congress made things better for owners with losses in 2009.

Small business owners with net operating losses this year will be able to elect a three, four or five year carryback instead of the usual two year NOL carryback; the carryback offsets income in prior years to generate a tax refund for the owner now. This means potentially recouping taxes paid and receiving an immediate infusion of cash that can be used now to keep the business going.

Who is Eligible
The new rule applies only to “small businesses,” defined as businesses with average annual gross receipts of $15 million or less in the prior three years.

The New Carryback Period
Usually, the NOL carryback is limited to the two prior years. But, the American Recovery and Reinvestment Act of 2009 allows eligible businesses to opt for a three, four, or five year carryback for NOLs arising in 2009.

The Tip
Meet with your tax advisor as soon as possible to assess whether and to what extent you may want to use a longer NOL carryback period. If it makes sense, a refund request can be filed as soon as possible after the close of this year. This is done using a tentative refund application or by filing amended returns for the carryback years. Amending a prior tax return may trigger a tax refund for you and a rapid infusion of cash to start 2010.

There is still time to give to charity and claim a tax deduction for 2009. Cash donations by check are deductible this year if mailed before the end of the year. Donations charged to a credit card before January 1st are also deductible this year, even though you pay the credit card bill in 2010.

When making charitable donations, keep these tips in mind:

• Check that the organization is a qualified charity. Only donations to qualified organizations are deductible.
• For all donations of property, including clothing and household items, obtain a receipt from the charity that includes the name of the organization, the date of the contribution and a reasonably detailed description of the donated property.
• If the amount of your deduction for all non-cash donations is over $500, a completed Form 8283 must be submitted with your 2009 tax return.
• Property valued at more than $5,000 requires a written appraisal confirming its fair market value.
• A new provision in tax laws allows taxpayers over age 70-and-a-half to transfer tax-free up to $100,000 per year to an eligible charity from his or her individual IRA.
• Gifts of Securities: Taxpayers who wish to make gifts to charities may consider selling loser stocks, giving away the resulting cash and then claiming the capital loss and the charitable deduction on their returns. Alternatively, taxpayers may consider giving away appreciated stock, avoiding the tax on capital gains while deducting the fair market value of the stock contributed.

The Tip Time is short, so round up your charitable donations and make them before the ball drops on January 1st.

The Recovery Act increased the monthly exclusion for employer-provided transit and vanpool benefits from $120 to $230 for March 1, 2009 through December 31, 2010. After 2010, the amounts will be adjusted for inflation.

If you currently pay more than $120 per month in qualified transportation costs, you may now increase your contribution to a pretax transportation account up to $230 per month. If you are not currently taking advantage of this benefit, now is a great time to start.