Can Avatars Make Contracts?

edadams sends in a story about the legal questions that are starting to crop up over property disputes in virtual worlds. A lawsuit in March 2008 that stopped one Second Life user from selling a virtual product created by another user marked the beginning of a significant amount of casework for several law firms, in large part due to the way Second Life's currency interacts closely with real money. (And yes, apparently the product in that particular case was for cybersex — did you have to ask?) "As transactions grow in volume, it's inevitable that disagreements will crop up. Linden says that although it will enforce its terms of service, including its ban on violating other users' intellectual property, it can't settle most disputes for users." A lawyer for one intellectual property firm handled a case in which the co-ownership of virtual real estate had to be determined, ending with a financial settlement given to two users who helped a virtual land developer run a group of Second Life islands. As virtual worlds get more popular and their business models more directly affect real-life finances, we can expect these legal issues to become more common as well.

Comments

IAAL but not a SL expert...

[Smidge207]

Ultimately for a contract to be valid, both sides have to agree to it.

Exactly. Plus, the Statute of Frauds requires certain transactions to be documented in a signed "writing." But what is a "writing" under the law? Does this mean hard copy? Will the courts really enforce the Statute of Frauds strictly enough to avoid liability under electronic contracts as the Internet proliferates? Now that handwriting software and peripherals are an alternative to keyboard input, the signature requirement of the Statute of Frauds may no longer be an issue.

And what about the three-day right of rescission afforded consumers in certain transactions in California? For example, home solicitation contracts may be rescinded within three days of formation of the contract. These agreements are the result of solicitations by vendors at the consumer's home. The consumer must be provided with a hard-copy form that simply requires his or her signature and mailing within the three day period to void the contract. This "change of mind" provision may or may not apply to solicitations on the Internet if received on a PC at home. But perhaps they should. Likewise, seminar sales solicitations also allow a three-day right of rescission under different provisions of the California Civil Code.

And what about the Mailbox Rule? If contracts are accepted upon dispatch, does the sending of email cut off the right of an offeror to withdraw his or her offer notwithstanding the fact that the emailed acceptance has not yet been received? And what if the offeror sends his or her withdrawal of the offer before the acceptance is emailed, but the withdrawal is not received until after dispatch of the acceptance? Issues such as these must be addressed within the context of a technology that causes email delivery to be unpredictable and delivery records to be easily manipulated. The solution to these issues may be dealt with on a case-by-case basis as the specific fact patterns surface in the courts. However, a more efficient approach would be legislative committee research and formulation of a set of commercial statutes that will accommodate virtual contracts before litigation proliferates. Legislatures need not be visionaries to anticipate and resolve the inadequacy of present-day commercial law. The "Internet Commercial Code" would facilitate the free flow of commerce in the new medium and avoid the unnecessary burden of what is now foreseeable litigation. Indeed, an organization called the National Conference of Commissioners of Uniform State Laws is already working on a revised Uniform Commercial Code that will accommodate the new legal issues created by virtual contracts.

=Smidge=