E-CommerceE-Commerce 1. What is e-Commerce? 1. What is e-Commerce?

2. What is a contract? 2. What is a contract?

3. Elements of an enforceable contract 3. Elements of an enforceable contract

4. Standard terms of a contract 4. Standard terms of a contract

5. Form and execution of contract 5. Form and execution of contract

6. Benefits of a written contract 6. Benefits of a written contract

7. Contract issues in the digital 7. Contract issues in the digital environment environment

8. Jurisdiction 8. Jurisdiction

9. When is an e-contract formed? 9. When is an e-contract formed?

10. 10. Electronic Transactions ActElectronic Transactions Act 1999 (Cth) 1999 (Cth)

11. Electronic payment systems 11. Electronic payment systems

12. Secure contract formation in a digital 12. Secure contract formation in a digital environment environment

13. Identity and capacity to contract 13. Identity and capacity to contract

14. Secure storage of electronic records 14. Secure storage of electronic records

15. E-commerce best practice 15. E-commerce best practice

16. 16. EFT Code of Conduct EFT Code of Conduct

17. Scams and Swindles 17. Scams and Swindles

18. 18. UNICITRALUNICITRAL Model Model

Commerce and contractsCommerce and contracts 1. What is Electronic Commerce? 1. What is Electronic Commerce? 2. What is a contract? 2. What is a contract? 3. Elements of an enforceable contract 3. Elements of an enforceable contract 4. Standard terms of a contract 4. Standard terms of a contract 5. Form and execution of contract 5. Form and execution of contract 6. Benefits of a written contract 6. Benefits of a written contract 7. Contract issues in the digital environment7. Contract issues in the digital environment

1. Electronic Commerce1. Electronic Commerce2. What is Electronic Commerce?2. What is Electronic Commerce? Commercial transactions that occur on the Internet. Commercial transactions that occur on the Internet. In e-commerce transactions In e-commerce transactions

the parties rarely the parties rarely meet each other face to facemeet each other face to face: : Creates obvious Creates obvious trusttrust issues between the parties issues between the parties Makes it difficult to ensure the Makes it difficult to ensure the parties act lawfullyparties act lawfully, and , and transaction itself is legaltransaction itself is legal Particular concern: Unequal Particular concern: Unequal bargaining power bargaining power between the parties. between the parties. Online contracts play an important role in e-commerce as they stipulate the terms Online contracts play an important role in e-commerce as they stipulate the terms

and conditions governing a transaction between two or more parties. A body of law and conditions governing a transaction between two or more parties. A body of law has developed to ensure the legality of all aspects of e-commerce and the online has developed to ensure the legality of all aspects of e-commerce and the online contracting process.contracting process.

2. What is a contract? 2. What is a contract? LLegally binding agreement, egally binding agreement, between two or more people or organisations. between two or more people or organisations. The The TermsTerms of a contract may be expressed in writing or orally, implied by conduct, of a contract may be expressed in writing or orally, implied by conduct,

industry custom, and law, or by a combination of these things.industry custom, and law, or by a combination of these things.

3. Elements of an enforceable contract 3. Elements of an enforceable contract

A binding contract is usually formed when the elements below are satisfied:A binding contract is usually formed when the elements below are satisfied: One party makes an One party makes an Offer,Offer, setting out the terms of the proposed contract to another party or setting out the terms of the proposed contract to another party or

parties. The terms must be parties. The terms must be sufficiently sufficiently certaincertain.. An An unequivocalunequivocal AcceptanceAcceptance of the offer is communicated to the party who made the offer. of the offer is communicated to the party who made the offer. In ‘common law’ countries (Australia, US, Canada, UK and other countries whose law originated In ‘common law’ countries (Australia, US, Canada, UK and other countries whose law originated

from UK), contract must be supported by from UK), contract must be supported by ConsiderationConsideration. . – Consideration is a ‘promise for a promise’. Consideration presumed to exist if certain formal requirements Consideration is a ‘promise for a promise’. Consideration presumed to exist if certain formal requirements

are followed (for example where contract is executed as a deed).are followed (for example where contract is executed as a deed). The parties to the transaction must have an The parties to the transaction must have an Intention to create legal relationsIntention to create legal relations. Courts will not force . Courts will not force

people into a contract if they did not intend to be legally bound. The following people into a contract if they did not intend to be legally bound. The following rebuttable rebuttable presumptions presumptions exist:exist:

– if the parties are in a if the parties are in a commercialcommercial (but not domestic) environment, the parties are presumed to have an (but not domestic) environment, the parties are presumed to have an intention to create legal relations;intention to create legal relations;

– if the parties are in a if the parties are in a domesticdomestic environment (e.g family members or neighbours), the presumption is that the environment (e.g family members or neighbours), the presumption is that the parties did not intend to create legal relations.parties did not intend to create legal relations.

All parties to the transaction must have the All parties to the transaction must have the Legal capacity Legal capacity to effect the transaction.to effect the transaction.

If any one of these elements do not exist or are ‘vitiated’ (e.g due to fraud) If any one of these elements do not exist or are ‘vitiated’ (e.g due to fraud) there will be no contract between the parties. there will be no contract between the parties.

4. Standard terms of a contract 4. Standard terms of a contract Subject to exceptions (for example, consumer transactions), Subject to exceptions (for example, consumer transactions),

the parties are free to choose the terms of their contract. the parties are free to choose the terms of their contract. An online contract should at least contain the following terms:An online contract should at least contain the following terms:

1.1. a clear identification of the a clear identification of the PartiesParties to the transaction; to the transaction;2.2. the the subjectsubject matter of the transaction, including a matter of the transaction, including a descriptiondescription of any goods or of any goods or

services to be supplied; services to be supplied; 3.3. the the price, delivery and payment price, delivery and payment terms;terms;4.4. warranties, liability, insurance, intellectual property and dispute resolutionwarranties, liability, insurance, intellectual property and dispute resolution;;5.5. how how ordersorders are to be placed and accepted including use of electronic agents; are to be placed and accepted including use of electronic agents;6.6. recordrecord keeping, audit trails and evidence; keeping, audit trails and evidence;7.7. security, format and authentication security, format and authentication of messages;of messages;8.8. when and where messages are when and where messages are sent and receivedsent and received;;9.9. responsibility for responsibility for lost, incomplete or garbled messageslost, incomplete or garbled messages; and; and10.10. the the lawlaw governing the transaction. governing the transaction.

5. Form and execution of contract 5. Form and execution of contract SomeSome contracts – inc. conveyance of land, or consumer credit transactions – must be contracts – inc. conveyance of land, or consumer credit transactions – must be

in a in a particularparticular formform, or , or signedsigned a certain way. a certain way. Otherwise there is no general requirement under Australian law that a contract be in Otherwise there is no general requirement under Australian law that a contract be in

a particular form, or be executed in a particular manner. (Side of a cow case)a particular form, or be executed in a particular manner. (Side of a cow case) Apart from contracts which must be completed with certain formal requirements, Apart from contracts which must be completed with certain formal requirements,

there is no reason in principle that contracts cannot be formed by there is no reason in principle that contracts cannot be formed by emailemail exchange, or exchange, or ""click throughclick through" agreement, or executed by " agreement, or executed by digital signaturesdigital signatures. .

In each case, the question will be: whether anything in the formation of the contract In each case, the question will be: whether anything in the formation of the contract might leave either party at risk that the other party will later challenge the might leave either party at risk that the other party will later challenge the enforceabilityenforceability of the contract, for example on the basis that of the contract, for example on the basis that

– termsterms were not brought to their attention, or were not brought to their attention, or – that they did not in fact participate in the formation of any contract that they did not in fact participate in the formation of any contract

(perhaps because another person (perhaps because another person impersonatedimpersonated them). them). The legal The legal statusstatus of computer-generated evidence is not the same in all jurisdictions. of computer-generated evidence is not the same in all jurisdictions.

To reduce the risk that a court will reject the evidence on which a party relies to To reduce the risk that a court will reject the evidence on which a party relies to establish a contract, a establish a contract, a jurisdiction clause jurisdiction clause in an online contract should specify a in an online contract should specify a jurisdiction whose laws of evidence accept electronic evidence.jurisdiction whose laws of evidence accept electronic evidence.

6. Benefits of a written contract 6. Benefits of a written contract Benefits of a written contract include:Benefits of a written contract include:

Risk Risk terms will be implied terms will be implied into the contract by a court is reduced;into the contract by a court is reduced; when signed, the parties are when signed, the parties are deemed to have read deemed to have read the contract and the contract and

accepted the written terms, making it difficult for either party to deny the accepted the written terms, making it difficult for either party to deny the existence of the written contract, existence of the written contract, exceptexcept in the case of fraud, mistake, in the case of fraud, mistake, unconscionable conduct or other exceptions recognised by the law;unconscionable conduct or other exceptions recognised by the law;

when properly drafted, the parties should when properly drafted, the parties should know with certainty know with certainty their their respective obligations;respective obligations;

identifiesidentifies the parties to the transaction and the commencement of the the parties to the transaction and the commencement of the commercial arrangement; andcommercial arrangement; and

a conventional or electronic signature on an original contract provides a conventional or electronic signature on an original contract provides protection against tampering or repudiation protection against tampering or repudiation by the signatory.by the signatory.

7. Contract issues in the 7. Contract issues in the digital environment digital environment

The parties to an electronic contract should:The parties to an electronic contract should: satisfy themselves about the satisfy themselves about the identity and capacity of the other parties identity and capacity of the other parties to to

the contract;the contract; determine determine whenwhen a binding contract is formed; a binding contract is formed; determine thedetermine the governing law governing law of the contract;of the contract; agree on the agree on the electronic payment system electronic payment system used;used; ensure information exchanges leading up to and including the formation ensure information exchanges leading up to and including the formation

of a contract are of a contract are securesecure to prevent later repudiation; to prevent later repudiation; determine by appropriate terms in the contract the determine by appropriate terms in the contract the consequences of consequences of

breach, frustration and other factors breach, frustration and other factors which may affect the performance which may affect the performance of the contract; andof the contract; and

store electronic data relating to or evidencing the contract in a manner store electronic data relating to or evidencing the contract in a manner that prevents that prevents alteration by any agent without detectionalteration by any agent without detection..

JurisdictionJurisdiction

– 8.1. Where is an electronic contract formed? 8.1. Where is an electronic contract formed? – 8.2. Jurisdiction and online contracts8.2. Jurisdiction and online contracts

8. Where formed? ETA8. Where formed? ETA The The Electronic Transaction Act 1999 (Cth)Electronic Transaction Act 1999 (Cth) (ETA), establishes presumptions about when and (ETA), establishes presumptions about when and

where a contract is formed over the internet. The presumptions can be displaced by where a contract is formed over the internet. The presumptions can be displaced by agreement between the communicating parties. In the absence of agreement, default agreement between the communicating parties. In the absence of agreement, default presumptions apply. Default presumptions:presumptions apply. Default presumptions:

Time of Dispatch: Time of Dispatch: the time of dispatch of an electronic communication is as soon as it enters the time of dispatch of an electronic communication is as soon as it enters the first information system outside the control of the originator (sender) (ss 14(1) and 14(2)). the first information system outside the control of the originator (sender) (ss 14(1) and 14(2)). An An Information SystemInformation System is defined as ‘a system for generating, sending, receiving, storing or is defined as ‘a system for generating, sending, receiving, storing or otherwise processing electronic communications’ (section 5). Note that this definition is so otherwise processing electronic communications’ (section 5). Note that this definition is so broad as to include anything a standalone internet connection at home, to a large network of broad as to include anything a standalone internet connection at home, to a large network of computers running its own server.computers running its own server.

Time of Receipt: Time of Receipt: the time of receipt of an electronic communication is when it enters into the the time of receipt of an electronic communication is when it enters into the information system designated for receipt of electronic communications by the addressee information system designated for receipt of electronic communications by the addressee (section 14 (3)). (section 14 (3)). Where there is no such delegated information system, then it is the time that it comes to the Where there is no such delegated information system, then it is the time that it comes to the attention of the addressee (section 14 (4)). attention of the addressee (section 14 (4)).

LocationLocation: Under the ETA, the parties are deemed to be located at their respective place of : Under the ETA, the parties are deemed to be located at their respective place of business, or if they have not place of business, at their residential address (section 14(5)). business, or if they have not place of business, at their residential address (section 14(5)).

Electronic aspectsElectronic aspects

9. When is an electronic contract formed? 9. When is an electronic contract formed? 10. Electronic Transactions Act 1999 (Cth) 10. Electronic Transactions Act 1999 (Cth) 11. Electronic payment systems 11. Electronic payment systems

– 11.1. Types of payment systems 11.1. Types of payment systems – 11.2. Regulation of EPSs 11.2. Regulation of EPSs – 11.3. Consumer friendly EPS 11.3. Consumer friendly EPS

When is an e-contract formed? When is an e-contract formed? The general law rules are that The general law rules are that

– acceptance must be communicated before a contract will come into existence, and acceptance must be communicated before a contract will come into existence, and – a contract is formed in the jurisdiction where acceptance is received.a contract is formed in the jurisdiction where acceptance is received.

Offer or mere invitation to treat?Offer or mere invitation to treat? Displaying information about a product or service for sale on a website may be construed either as a binding Displaying information about a product or service for sale on a website may be construed either as a binding

offer, or a mere "invitation to treat". The courts will look at the intention of the alleged offerer, gathered offer, or a mere "invitation to treat". The courts will look at the intention of the alleged offerer, gathered from all the circumstances to determine how the display of information is characterised. from all the circumstances to determine how the display of information is characterised.

– If the seller’s intention shows a willingness to be contractually bound without any further negotiations, If the seller’s intention shows a willingness to be contractually bound without any further negotiations, the display may be regarded as an offer. the display may be regarded as an offer.

– If the trader’s intention falls short of this, the display is likely to be interpreted as a mere "invitation to If the trader’s intention falls short of this, the display is likely to be interpreted as a mere "invitation to treat". An "invitation to treat" is invitation to the website visitor to make an offer that the seller may treat". An "invitation to treat" is invitation to the website visitor to make an offer that the seller may accept or reject. accept or reject.

It may be in a trader’s interests to ensure that information displayed on a website is not characterised as a It may be in a trader’s interests to ensure that information displayed on a website is not characterised as a binding offer, as this will provide an opportunity to review their capacity to supply goods (or other issues, for binding offer, as this will provide an opportunity to review their capacity to supply goods (or other issues, for example, any legal restrictions on entering into contracts with users from particular jurisdictions) before a example, any legal restrictions on entering into contracts with users from particular jurisdictions) before a binding contract is formed.binding contract is formed.

Assuming a website is an invitation to treat, and the website visitor makes an offer in relation to the goods Assuming a website is an invitation to treat, and the website visitor makes an offer in relation to the goods or services displayed and the seller communicates acceptance of that offer to the purchaser through the or services displayed and the seller communicates acceptance of that offer to the purchaser through the website, it is likely that the law may regard the contract as forming in the jurisdiction of the website visitor website, it is likely that the law may regard the contract as forming in the jurisdiction of the website visitor (that is the place where the offeror received communication of the acceptance). (that is the place where the offeror received communication of the acceptance).

Timing of acceptance - can be revoked prior Timing of acceptance - can be revoked prior The timing of acceptance is critical, because generally an offer may be revoked at any time before it is The timing of acceptance is critical, because generally an offer may be revoked at any time before it is

accepted. accepted.

11 Types of payment system 11 Types of payment system There are a number of ways payment of goods can be effected through cyberspace. A paramount concern for electronic payment systems There are a number of ways payment of goods can be effected through cyberspace. A paramount concern for electronic payment systems is the security of the transaction, including ensuring that payment reaches the vendor, and the customer’s credit card information or the is the security of the transaction, including ensuring that payment reaches the vendor, and the customer’s credit card information or the customer’s identifier for some other form of electronic payment is not intercepted and used without the customer’s knowledge. The customer’s identifier for some other form of electronic payment is not intercepted and used without the customer’s knowledge. The following are some of the common electronic payment systems (EPS):following are some of the common electronic payment systems (EPS):

Internet banking Internet banking Current Internet banking only permits cash deposits and withdrawals to be made using existing ‘non-Internet’ methods such as Current Internet banking only permits cash deposits and withdrawals to be made using existing ‘non-Internet’ methods such as cheques, cash or electronic funds transfer. Future PCs or telephones with smart card readers will permit the transfer of value from cheques, cash or electronic funds transfer. Future PCs or telephones with smart card readers will permit the transfer of value from an account onto a stored smart card, using the Internet or telephone lines. an account onto a stored smart card, using the Internet or telephone lines.

Credit cards Credit cards Credit card details are entered into a merchant’s web form on the Internet. The details may be manually sent by e-mail and verified Credit card details are entered into a merchant’s web form on the Internet. The details may be manually sent by e-mail and verified by the merchant as a mail-order/telephone-order (MOTO) transaction, or encrypted using secure socket layering (SSL) techniques by the merchant as a mail-order/telephone-order (MOTO) transaction, or encrypted using secure socket layering (SSL) techniques and then automatically processed by the relevant bank. Transactions using SSL are more secure but are also more costly. and then automatically processed by the relevant bank. Transactions using SSL are more secure but are also more costly.

Virtual credit card Virtual credit card Appearing as an icon on a computer screen, the card is used to purchase products using secure electronic transaction (SET) protocol Appearing as an icon on a computer screen, the card is used to purchase products using secure electronic transaction (SET) protocol to authenticate the buyer and seller by use of digital signatures. Under the SET mechanism, it is a third party not the merchant who to authenticate the buyer and seller by use of digital signatures. Under the SET mechanism, it is a third party not the merchant who verifies the credit card details, increasing confidentiality and security.verifies the credit card details, increasing confidentiality and security.

Digital cash Digital cash Digital cash is a payment or transfer of value initiated and processed electronically within current inter-bank payment systems. Digital cash is a payment or transfer of value initiated and processed electronically within current inter-bank payment systems. Digital cash is effectively money stored as computer code. The digital cash is essentially a message issued by a bank containing its Digital cash is effectively money stored as computer code. The digital cash is essentially a message issued by a bank containing its value, the bank’s identity, the bank’s Internet address and a serial number. The digital cash is securely transferred using data value, the bank’s identity, the bank’s Internet address and a serial number. The digital cash is securely transferred using data encryption methods.encryption methods.

Stored value cards (SVCs) (including smart cards) Stored value cards (SVCs) (including smart cards) SVC is a plastic card that can contain a microprocessor chip (more commonly known as a smart card) or a magnetic strip. The chip SVC is a plastic card that can contain a microprocessor chip (more commonly known as a smart card) or a magnetic strip. The chip stores more information than magnetic strip cards and can perform simple computing operations. The SVC is inserted into a stores more information than magnetic strip cards and can perform simple computing operations. The SVC is inserted into a terminal with a read/write mechanism that allows information to pass between the card and the terminal. terminal with a read/write mechanism that allows information to pass between the card and the terminal.

Secure contractingSecure contracting

12. Secure contract formation in a digital 12. Secure contract formation in a digital environment environment – 12.1. Legal risks in electronic transactions 12.1. Legal risks in electronic transactions – 12.2. Digital signatures 12.2. Digital signatures – 12.3. Legal risk with digital signatures 12.3. Legal risk with digital signatures

13. Identity and capacity to contract 13. Identity and capacity to contract

Secure storage of e-records Secure storage of e-records

14. Secure storage of electronic records 14. Secure storage of electronic records – 14.1. Electronic records and the record keeping 14.1. Electronic records and the record keeping

requirements of Commonwealth or State law requirements of Commonwealth or State law – 14.2. When electronic records must be kept 14.2. When electronic records must be kept – 14.3. Corporations Act 2001 (Cth) 14.3. Corporations Act 2001 (Cth) – 14.4. Limitations legislation 14.4. Limitations legislation – 14.5. Retaining electronic contract records 14.5. Retaining electronic contract records

Good and bad practiceGood and bad practice

15. E-commerce best practice 15. E-commerce best practice 16. EFT Code of Conduct 16. EFT Code of Conduct 17. Scams and Swindles 17. Scams and Swindles

– 17.1. Bank Scams – NetBank 17.1. Bank Scams – NetBank

InternationalInternational

18. UNICITRAL Model 18. UNICITRAL Model – 18.1. UNCITRAL Model Law on Electronic 18.1. UNCITRAL Model Law on Electronic

Commerce Commerce – 18.2. UNCITRAL Model Law on Electronic 18.2. UNCITRAL Model Law on Electronic

Signatures Signatures

(end)(end)

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Consumer Protection OnlineConsumer Protection Online

1. Consumers and Technology 1. Consumers and Technology 2. Trust and Confidence 2. Trust and Confidence 3. Case Study: Online Financial Services 3. Case Study: Online Financial Services 4. Policy Framework 4. Policy Framework 5. Legislation 5. Legislation 6. Australian Codes of Conduct 6. Australian Codes of Conduct 7. International regimes 7. International regimes 8. Conclusion8. Conclusion

IntroductionIntroduction

1. Consumers and Technology1. Consumers and Technology

2. Trust and Confidence2. Trust and Confidence

3. Case Study: 3. Case Study: Online Financial ServicesOnline Financial Services

– 3.1. Complexity of Products3.1. Complexity of Products – 3.2. Online Calculators 3.2. Online Calculators – 3.3. Independence 3.3. Independence – 3.4. Disclosure 3.4. Disclosure – 3.5. Identification 3.5. Identification – 3.6. Complaints 3.6. Complaints – 3.7. Privacy 3.7. Privacy – 3.8. Access and cost3.8. Access and cost – 3.9. Jurisdiction 3.9. Jurisdiction – 3.10. Terms and Conditions3.10. Terms and Conditions

4. Policy Framework4. Policy Framework

– 4.1. Contract 4.1. Contract – 4.2. Payment4.2. Payment – 4.3. Conduct4.3. Conduct

‘‘Instruments’Instruments’ 5. Legislation5. Legislation

– Trade Practices Act/Competition and Consumer ActTrade Practices Act/Competition and Consumer Act 6. Australian Codes of Conduct6. Australian Codes of Conduct

– 6.1. EFT Code of Conduct 6.1. EFT Code of Conduct – 6.2. Smart Card Code6.2. Smart Card Code – 6.3. Telecommunications Codes 6.3. Telecommunications Codes – 6.4. Internet Industry Association Code of Conduct 6.4. Internet Industry Association Code of Conduct – 6.5. Australian Direct Marketing Association (ADMA) 6.5. Australian Direct Marketing Association (ADMA)

Industry Code of Practice Industry Code of Practice – 6.6. The Model Code6.6. The Model Code

Looking furtherLooking further

7. International regimes7. International regimes – 7.1. EU Directive7.1. EU Directive – 7.2. OECD Guidelines 7.2. OECD Guidelines

8. Conclusion8. Conclusion