Electronic Contracting

Electronic Commerce Law

(Sourse: https://www.slideshare.net)
 Outline
1. Online contracts
2. Legal requirements
3. Terms
4. Formation
5. Governing law
Online contracts
What can I contract to buy
online?
How do I make an online
contract?
 Who can I make an online
contract with?
• ANYONE, ANYWHERE!
 How do I enforce an online
contract?
• Does the contract satisfy all legal
requirements?
• What are the terms of the contract?
• When was the contract formed?
• What is the governing law of the
contract?
Legal requirements
Online contracts
 Legal requirements
• Common law elements
• Electronic Transactions Acts
• Form and signature
 Common law elements
• The elements of a contract at common
law
– Offer and acceptance
– An intention to create legal relations
– Consideration, i.e. a price paid for a
promise
– Capacity to contract, e.g. age, mental
capacity
– Consent, i.e. lack of misrepresentation,
duress/ threats, constraint,, undue influence,
mistake, etc
 Common law elements
• Generally, contracts do not need to be in
writing, or even verbal
• Property Law Act 1974 (Qld)
– 10 (1) No assurance of land shall be valid to
pass an interest at law unless made by deed
or in writing signed by the person making
such assurance.
• Insurance contracts
• IP assignments
 Electronic Transactions Acts
• The Acts seek to remove legal
impediments to the use of electronic
documents and digital signatures
• They are based on the UNCITRAL Model
Law on Electronic Commerce
 ETAs - Commencement
• Thai – April 2002
• Aust, 1st stage - 24 March 2000 – 2nd
stage 1 July 2001
• Vic - 1 September 2000
• Tas - 1 June 2001
• NT - 13 June 2001
• ACT - 1 July 2001
• NSW - 7 December 2001
• Qld - 1 November 2002
 Electronic Transactions Acts
• Two key principles:

FUNCTIONAL EQUIVALENCE
As far as possible, paper based commerce and electronic
commerce should be treated equally by the law..

TECHNOLOGY NEUTRALITY
The law should not discriminate between different forms of
technology..
 UNCITRAL
• United Nations Commission on
International Trade Law (UNCITRAL)
• Model Law for consumer protection in an
electronic environment
• Purpose to remove legal obstacles to e-
commerce and to create a more secure
legal environment
 Model Law on Electronic
Commerce
• http://www.uncitral.org/pdf/english/texts/
electcom/05-89450_Ebook.pdf

• Aim - to provide national legislatures

with a template
• Facilitates - use of electronic
communication and storage of
information (electronic data
interchange and electronic mail)
 Model Law on Electronic
Commerce
• Singapore, Illinois, Columbia, Australia,
Canada, United States, New Zealand,
Thailand
www.uncitral.org/english/texts/elect
com/m-ec.htm
• 6 Requirement of Writing
• 7 Signature
• 8 Original Copy
• 9 Admissibility and evidential weight of
data messages
• 10 Retention of data messages
• 11Formation and validity of contracts
• 12 Recognition by parties of data
messages
 UN
• General Assembly recommended:
– all States give favourable consideration
to the Model Law
– all efforts be made to ensure that the
Model Law, together with the Guide,
become generally known and available
 Purpose

• Set of internationally acceptable rules

as to how a number of such legal
obstacles may be removed
• For individual users for contractual
solutions
• UNCITRAL’s response to countries
existing legislation which was
inadequate or outdated In certain
cases, existing legislation imposes
restrictions on modern means of
 Objects
• Enabling or facilitating the use of
electronic commerce
• Provide equal treatment for fostering
economy and efficiency in international
trade
• Provide media-neutral environment
 Electronic Transactions Acts
• Validity of transactions:
• For purpose of complying with a law, a
transaction will not be invalid simply
because it is made wholly or partly by an
electronic communication (unless
regulations provide otherwise)
 Electronic Transactions Acts
• The following legal requirements can now
be met in electronic form:
– a requirement to give information in writing
– a requirement to provide a signature
– a requirement to produce a documents
– a requirement to record information
– a requirement to retain a document
 Electronic Transactions Acts
• Provided that:
– it must be readily accessible for subsequent
reference (i.e. recipient must be able to
decipher it)

– USA, Australia, NZ, Ireland - the recipient

consents to the information or document
being provided electronically
 Consent Provision
• Explanatory Memorandum
• “This provision is based on the
Government's general policy that a person
should not be compelled to use an
electronic communication to conduct a
transaction in order to satisfy requirements
or permissions to give information in
writing under Commonwealth law.”
Time and place of dispatch and receipt of
electronic communications

• Section 14
• Postal Acceptance Rule
– Adams v Lindsell (1818) 1 B & Ald 681, 106
ER 250.
 Attribution
• UNCITRAL and Thailand

• Compare to Australia
 Writing and signature
• When is writing and signature legally
obligatory?
– Real property transactions
– Wills
– Cheques
– Insurance contracts
– Consumer credit transactions
 Writing and Signature
• What is writing?
 Writing and signature
• Why is some form of writing or signature
often desirable?
– To ensure the availability of reliable evidence
that the party intended to proceed with the
transaction
– To encourage deliberation and reflection and
to emphasise that the transaction may have
significant legal consequences
– To authenticate the identity of the other party
 Writing and signature
• How do you ‘sign’ an online contract?
• What is electronic writing?
 Chữ ký điện tử
• Chữ ký điện tử là dấu hiệu dưới dạng số hiệu,
ký hiệu, chữ, số hay các hình thức thông tin
khác dưới dạng số hoá được gắn với bản tin
điện tử nhằm mục đích xác nhận người sở hữu
bản tin đó.
• Chữ ký số là chữ ký điện tử được tạo ra bằng
sự biến đổi một bản tin điện tử sử dụng hệ
thống mật mã không đối xứng theo đó người có
được bản tin điện tử ban đầu và khoá công khai
có thể xác định được chinh xác.
• chữ ký số thực ra chỉ là một loại của chữ
ký điện tử.
• Do nhu cầu, tính phổ biến và mức độ an
toàn cao nhất hiện nay của loại chữ ký
này, nên trong Nghị định điều chỉnh Luật
Giao dịch điện tử do Bộ Bưu chính Viễn
thông chủ trì soạn thảo chỉ đề cập đến
Chữ ký số và dịch vụ chứng thực chữ ký
số.
 Writing and signature
• Electronic Transactions Acts:
• Writing see ss 9-13 (Qld)
• Signature see ss 14-15 (Qld)
• một thông báo bằng chứng từ điện tử về
đề nghị giao kết hợp đồng, không có bên
nhận cụ thể thì chưa được coi là đề nghị
giao kết hợp đồng.
• Trong trường hợp, chủ thể thông báo có
quy định rõ ràng trong thông báo trách
nhiệm của mình khi nhận được trả lời
chấp thuận thì thông báo đề nghị giao kết
đó có giá trị.
 Electronic agents
• It is possible for users of a computer to
instruct the computer to carry out
transactions automatically. Eg., electronic
agents may be used by a person:
– to initiate or respond on their behalf to
electronic messages without review by the
person
– as an online shopping agent programmed to
surf the internet and make purchases
– as an inventory control system programmed
to place orders when stocks reach a particular
level
 Terms
Online contracts
 Terms of the contract
• The terms of a contract may be expressed
in writing or orally, implied by conduct or
by custom, or be a combination of these
things
• Subject to certain important exceptions
(eg. consumer protection laws) parties are
generally free to set whatever terms they
like
• The commercial reality is that the terms of
the contract are usually set by the seller
 Terms of the contract
• Clearly expressed terms are important
because:
– The risk that terms will be implied into the
contract by a court is reduced
– The parties will usually be deemed to have
read the contract and accepted the written
terms, making it difficult for either party to
deny the existence of the written contract
– When properly drafted, the parties should
know with certainty their respective
obligations
 Common terms – Online
transactions
• The names of the parties
• The subject matter of the transaction,
including a clear description of the goods
or services to be supplied
• Price, delivery and payment terms
• Warranties, liability, insurance, intellectual
property and dispute resolution
 Common terms – Online
transactions
• How orders are to be placed and accepted
including use of electronic agents
• Record keeping, audit trails and evidence
• Security, format and authentication of
messages
• When and where messages are sent and
received
• Responsibility for lost, incomplete or
garbled messages
 Common terms - Websites
• Disclaimers
 Incorporation of terms
• Terms are incorporated into a contract by:
– Signature
– Reasonable notice
– Course of dealing
Shrinkwrap Contracts
 Shrinkwrap Contracts
• Step-Saver Data Sys Inc v Wyse
Tech 939 F 2d 91 (1991)
• ProCD Inc v Zeidenberg 86 F 3d
1447 (7th Cir 1996)
 Incorporation of terms
• Is click-wrap reasonable notice?
 Incorporation of terms
• CASE: Hotmail Corporation v Van$
Money Pie Inc (1998)
• Steven J Caspi v Microsoft (NJ App Div
1999)
 Browswrap
• Specht v. Netscape (SDNY 2001)
• Ticketmaster Corp v Tickets.com Inc
(Wash 1999)
• Net2 Phone Inc v Los Angeles Superior
Court (Cal CA 2002)
• Thorton v Shoe Lane Parking Station Ltd
[1971]
 Incorporation of terms
• CASE: Specht v. Netscape (2001)

Please review and agree to the terms of the Netscape

SmartDownload software license agreement before
downloading and using the software.

Unless otherwise agreed in writing, all disputes

relating to this Agreement … shall be subject to final
and binding arbitration in Santa Clara County,
California, under the auspices of JAMS/EndDispute,
with the losing party paying all costs of arbitration.
 Incorporation of terms
• CASE: Specht v. Netscape (2001)

‘Promises become binding when there is a meeting of the minds and

consideration is exchanged. So it was at King’s Bench in common law
England; so it was under the common law in the American colonies;
so it was through more than two centuries of jurisprudence in this
country; and so it is today. Assent may be registered by a signature, a
handshake, or a click of a computer mouse transmitted across the
invisible ether of the Internet. Formality is not a requisite; any sign,
symbol or action, or even wilful inaction, as long as it is
unequivocally referable to the promise, may create a contract.’
 Incorporation of terms
• CASE: Specht v. Netscape (2001)

‘Where click-wrap license agreements and the shrink-wrap agreement

at issue in ProCD require users to perform an affirmative action
unambiguously expressing assent before they may use the software,
that affirmative action is equivalent to an express declaration stating,
‘I assent to the terms and conditions of the license agreement’ or
something similar. For example, Netscape’s Navigator will not
function without a prior clicking of a box constituting assent.
Netscape’s SmartDownload, in contrast, allows a user to download
and use the software without taking any action that plainly manifests
assent to the terms of the associated license or indicates an
understanding that a contract is being formed.’
Governing law
Online contracts
 What is the governing law
(proper law) of the contract?
• In the absence of agreement to the
contrary, the governing law is the law
where the contract was formed
• Webpage - invitation to treat or offer
• If the buyer makes the offer online and the
seller communicates acceptance of that
offer to the buyer through the website, the
contract is formed in the jurisdiction of the
buyer
 Jurisdiction clauses
• If a jurisdiction clause is effectively
incorporated into the terms and conditions
of the contract of sale, this may alter the
outcome
• NB. In certain circumstances a court may
override the effect of a jurisdiction clause
 Jurisdiction clauses
• Amazon: www.amazon.com

“By visiting Amazon.com, you agree that

the laws of the state of Washington,
without regard to principles of conflict of
laws, will govern these Conditions of Use
and any dispute of any sort that might
arise between you and Amazon.com or its
affiliates.”
• Telstra Big Pond: www.bigpond.com
16.1 This agreement is governed by the
law in force in the State of New South
Wales, Australia, and the parties
irrevocably submit to the non-exclusive
jurisdiction of the courts of New South
Wales, Australia and courts of appeal from
them for determining any dispute
concerning this agreement.
 Hotmail
• If this Agreement is with Microsoft Corporation, claims
for enforcement, breach or violation of duties or rights
under this Agreement will be adjudicated under the laws
of the State of Washington, without reference to conflict
of laws principles. If this Agreement is with a Microsoft
affiliate, claims for enforcement, breach or violation of
duties or rights under this Agreement will be adjudicated
under the laws of the place of incorporation for such
Microsoft affiliate, without reference to conflict of laws
principles. All other claims, including, without limitation,
claims under or for violation of consumer protection laws,
unfair competition laws, and in tort, will be adjudicated
under the laws of your state of residence in the United
States, or, if you reside outside the United States, under
the laws of the country to which the subject MSN Web
Sites are directed. If this Agreement is with Microsoft
Corporation, you hereby irrevocably consent to the
exclusive jurisdiction and venue of state or federal courts
 Online contracts

Electronic Commerce Law