De Silva K.G.P.M.
E/15/065
Advantages and Disadvantages of Online Contract
With the advance use of internet and electronic commerce, online contracts have assumed importance
mainly in terms of reach and multiplicity. Online contract or an electronic contract is an agreement
modelled, signed and executed electronically, usually over internet. An Online contract is conceptually
very similar and is drafted in the same manner in which a traditional paper-based contract is drafted. In
case of an online contract, the seller who intends to sell their products, present their products, prices and
terms for buying such products to the prospective buyers.
There are both advantages and disadvantages of online contract.
Advantages
• Time saving
A transaction can be completed in few seconds without physically reaching out to the customers.
Moreover, there are no office hours in cases of online transactions.
• Building customer relationship
Regular feedback from the customer can easily be obtained with the help of e-mail. The after
sales service becomes easy through the internet.
• Reduction in distribution cost
It establishes directly link between the customers and suppliers. Commission paid to middlemen
is done away with. Moreover the cost of documentation, transportation and cost of collection
from the customers are negligible.
• Huge Varieties
Online contract is an attractive opinion for a physical challenged. There are huge varieties. So
customer can easily select products from different providers without having to go around
physically.
• Easily manage all price later and credit sales contract functions.
Quickly sort price later contracts by those that have been signed and by the number of bushels
remaining to be settled.
• Avoid the costs of having to print, mail or hand-deliver contracts to collect signatures.
Multiple location grain dealers can centralize the purchasing, issuing and managing of their price
later contracts.
• Grain dealers do not need to physically store large quantities of unused paper contracts,
eliminating loss or damage.
Disadvantages
• Boilerplate
You should never sign a standard contract in the course of your business without going through
it. You may be a small business owner, but your legal rights are as important as those of
large corporations, who scrutinize every part of the contract before signing. Know the
disadvantages of standard contracts so that you can look out for them when entering into one. You
will usually find the boilerplate towards the end of the contract. It refers to the standardized
language used in most of the contracts. Most of the people do not go through this section,
considering it just to be a legal formality. Often, the issue is not with what the boilerplate contains;
it's rather with what it leaves out. For instance, if the person offering you the contract has removed
the part that requires the losing party to pay the attorney fees of the winning party, you may be at
a disadvantage despite winning a case. Another example is the condition to resolve a dispute
between the parties through arbitration. If you'd like to reserve the suing right, you should either
remove or modify this section of boilerplate. Always make it a point to read the whole of the
boilerplate thoroughly to look out for the sections you don't agree with.
• Price Fixing
One of the major problems in the case of standard contracts is price fixing. If a contract has
specific product prices stated in it, you could be at risk of price fixing. A standard contract should
leave the price up to parties for negotiation. Although you may not ask for a more favorable price
immediately, you should ask for a provision to renegotiate the price at a later date.
Sometimes, trade associations are found to be guilty of price fixing when they issue a standardized
contract for all member-vendors to follow. Whenever prices are standardized, it amounts to price
fixing.
• Language Problems
The law often depends upon the language used in a contract. Every word in your contract has a
specific meaning attached to it. Even though some words may sound right, be aware that an
innocuous-looking change in terminology can alter your legal position.
For instance, the word "shall" gives off a certain connotation. When a contract says, “you shall
do something,” it establishes an obligation to perform that action. It's legally binding terminology.
If a contract uses the word “shall” regarding something you'd rather not be obligated to perform,
you should get it changed to "may."
