MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Electronic Contracts.

MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE

Electronic Contracts


International contracts Jurisdiction Different laws Conflict of Laws International conventions

Vienna Sales Convention UNCITRAL Model Law on Electronic Commerce International Chamber of Commerce E-Terms

repository

This lecture deals only with Australian law


Formation of Contract Legal capacity Intention to contract Offer Acceptance Consideration Certainty


Vitiating Factors Misrepresentation Duress Undue Influence Unconscionable conduct Mistake Illegal or against public policy


eCommerce Issues Form of contract Time and place of offer and acceptance Incorporation of terms Capacity of software agents


Form Many statues require:

Writing Signature Sealed and delivered (Deed) Witnesses etc

Section 8 Electronic Transactions Act A transaction is not invalid because it took

place wholly or partly by means of one or more electronic communications


Time & Place of Offer & Acceptance An offer is a clear statement of the terms on

which a party promises to be bound if the other party accepts

A party can indicate acceptance in many ways A mere mental assent with nothing more will not

be acceptance Unless waived by the offeror, acceptance must

be communicated


Time & Place of Offer & Acceptance Invitations to treat:

Advertisements Shop displays Catalogues

Objective test: Would a reasonable person think it was an

offer


Time & Place of Offer & Acceptance Clicking “I accept” button

Is this the offer or acceptance? Depends whether seller can accept or reject

Electronic Auctions The bid is the offer Auctioneer can accept or reject But, there may be a collateral contract with

auctioneer that he will accept the bid


Time & Place of Offer & Acceptance Offeror can specify method of acceptance Instantaneous communications

Contract is formed at place and time receipt of acceptance

Postal rule (non-instantaneous communications) Contract is formed at time & place that letter is posted Available where offeror indicates to offeree that the

offeree can use non-instantaneous communications


Time & Place of Offer & Acceptance “instantaneous”

does not refer to speed of communication Can recipient immediately notify sender if he

does not receive whole or part of message Vienna Sales Convention

Applies to contracts involving signatory countries

Doesn’t apply to consumer goods or auctions Contract is formed when acceptance is

delivered to the offeror’s mailing address


Time & Place of Offer & Acceptance Use of email

Is it instantaneous? Vienna Sales Convention

The acceptance is sent when it is put in the offeror’s mailbox


Time & Place of Offer & Acceptance Online Shopping

Is online shopping instantaneous? Vienna Sales Convention

Offer is made when it is delivered to the seller’s URL


Time & Place of Offer & Acceptance Section 14 Electronic Transactions Act

Dispatch occurs when it enters the first information system outside the control of the sender

Receipt occurs when it enters the information system designated by the recipient

If no information system designated then receipt occurs when it comes to the recipient’s attention



Dispatch occurs at the sender’s place of business

Receipt occurs at the recipient’s place of business

If more than one place of business then Place of business most closely related to

the transaction Otherwise, principal place of business



If no place of business Place of residence

Does not modify the postal rule


Best Practice ModelStandard terms should include: Reference to fair business practices Identity of the business Contractual information (method of offer\

acceptance) Jurisdiction & applicable law Dispute resolution Protection of privacy Methods of payment Security and authentication


Shrinkwrap Agreements Terms and conditions are not shown to

purchaser until after he has bought the box and opened it

Terms cannot be imposed after contract formed Purchaser must be given reasonable notice of

terms before contract formed


Shrinkwrap Agreements (cont.) Are there 2 contracts?

One to buy the box One to licence the software

Recent cases have recognised practical importance of allowing terms to be made known after sale McRobertson Miller Airlines v Commissioner for State

Taxation (1975) 133 CLR 125 Hill v Gateway 2000 Inc.

Try and return clauses


Clickwrap Agreements Best Practice

Provide notice regarding terms Place user accept option at end of all terms Require an affirmative act Record date & time of user acceptance Allow user to exit at any time Online user registration


Electronic Agents Can a party’s intention be expressed by a

computer Can a computer act as an electronic agent Ostensible (apparent) authority of agents

Principal is bound where he puts agent in a position where he appears to have authority

Principal is not bound where it is clear to others that agent is acting outside ostensible authority

Applies, by analogy, to electronic agents


Electronic Agents (cont.)Section 15 Electronic Transactions Act(1) For the purposes of a law of the Commonwealth, unless otherwise

agreed between the purported originator and the addressee of an electronic communication, the purported originator of the electronic communication is bound by that communication only if the communication was sent by the purported originator or with the authority of the purported originator.

(2) Subsection (1) is not intended to affect the operation of a law (whether written or unwritten) that makes provision for: a) conduct engaged in by a person within the scope of the

person's actual or apparent authority to be attributed to another person; or

b) a person to be bound by conduct engaged in by another person within the scope of the other person's actual or apparent authority.


Signatures Functions

Identification Attribution Assent

Authentication = identification + attribution


Signatures (cont.) Subsidiary functions

Legal requirements Goods worth more than a certain amount Guarantees Sale of land Bill of exchange Wills Certificates by Company directors

Focusing attention


Signatures (cont.) Supplementary considerations

Message integrity Confidentiality

eCommerce Requirements Authentication Non-repudiation = authentication + message

integrity confidentiality


Electronic Signatures3 possible legal scenarios

1. Minimalist Only recognise that electronic signatures

can be the same as written signatures

2. Prescriptive Specify details of technology to be used

3. Set broad criteria for electronic signature to be effective


Electronic Signatures (cont.)Section 10 Electronic Transactions Act adopts minimalist approach Requires identification, attribution and assent Does not require signature to verify message

integrity Technology used must be “as reliable as [is]

appropriate”


Electronic Signatures (cont.)Section 10 Electronic Transactions Act Recognises the need for different levels of

authentication Caters for technological advances Does not favour one technology Is consistent with international developments

(e.g. UNCITRAL) Only applies to Commonwealth law States are enacting parallel legislation

MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Electronic Contracts.

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