Electronic contracts and evidence in

Tanzania
By Ubena John

Model of delivery: drafting, participatory, and interactive while the facilitator plays role
model.

Modality of presentation: the opening, the chair, time keeper, etc.

- What are the Objectives of the presentation/training

Objectives

Outline

- What is electronic contract + agreement enforceable by the law.

- Formation of electronic contract+ how was the contract formed? By the exchange of
data messages!
- Types of electronic contracts
- Jurisdictional challenges

What is electronic contact? See part VI of ETA

What are the laws governing electronic contracts in Tanzania?

The Law of Contract Act [CAP 345 R.E. 2002] and Electronic Transactions Act of 2015

How is electronic contract formed?

Time and place where e-contract was formed

Offer and acceptance

Communication of offer

Communication of acceptance

A contract is an agreement enforceable by law. It must meet requirements under the Law of
Contract Act. These pre-requisites include; offer and acceptance, consensus ad idem,
capacity, consideration, intention to create legal relation, and not induced by the vitiating
factors.

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Often during formation of contract the problem is when is the contract formed? The English
law relies on ‘postal rule’ established in Adams v. Lindsell (1818)1B&Ald 681. In this rule the
communication of acceptance is complete when the acceptor put his acceptance (letter of
acceptance) in the hand of post office. This deems that the acceptance has reached the
knowledge of the offeror.

‘instantaneous receipt rule’ Entores LD v. Miles Far East Corporation [1955] 2 QB

327(CA)334 The House of Lords confirmed that rule in Brinkibon Ltd’ case[1983]2 AC 34
(HL)42.

In Apple Corps Ltd v. Apple Computers Inc. [2004]EWHC 768 (Ch) para 37 Mann J. opined
that the rule in Entores and Brinkibon cases should be reconsidered. About instantaneous
communication he opined that “The law may have no notion of a contract made in two (or
more) jurisdictions at the same time.”

In Entores case supra, Denning LJ said that “In all instances I have taken so far, the man who
sends the message of acceptance knows that it has not been received or has reason to know it.
So he must repeat it.”

This could apply to e mail communication where one has set a deliver report message. Or
recipient set automatic message (reply) acknowledging receipt of message. This though does
not guarantee that the message arrived in time or it has not been altered because HyperText
Transfer Protocols (HTTPs) were not designed for legal purposes. Because of that Murray
2005, suggests the use of ‘postal rule’ in e-contract formation (communication of offer and
acceptance).
- See EU e-Commerce Directive (ECD)–contracts concluded by e-mails only
recognized-orders should be acknowledged. When contract concluded by e mail, the
domestic law of contract applies. ECD covers information society service providers
(ISSPs). Note the exception kinds of contracts excluded.
- See EU Distant Selling Directive (DSD)-both e-mail and web based contracts are
valid- all contracts formed by means of distance communications-covers only B2C.
DSD is specifically designed to protect consumers. Note the exception kinds of
contracts excluded-e.g., data or MP3.
- Unfair Terms in Consumer Contractual Terms Directive (UTCCD)

- NB: Both DSD and ECD protect e-consumers(with respect to clarifying ordering
process and correcting errors in web based contracts), but they failed to harmonize
rules on formation of contracts at EU level because of common law, civil law divide.
- See EU e-Signature Directive
- See UK Distant Selling Regulations

- For a distinct approach, see UNCITRAL Model law on e-commerce 1996 (UMLeC).
See UNCITRAL Model Law on e-signature (UMLeS). Provides a detailed procedure
on formation of contract in the online environment.
- Tanzania Law of Contract Act

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 - Tanzania Electronic Transactions Act of 2015 covers e-Transactions, e-Signature and
admissibility of electronic evidence
- Tanzania Sale of Goods Act
- TCRA Act 2003 does not cover e-Transactions
- Electronic and Postal Communications Act 2010 does not cover e-Transactions
- See Uganda’s e-Signature Act
- Kenya Communications Act
- South Africa’s Electronic Transactions Act

- See John, (2012), e-Signature & e-Documents in Tanzania, IGL.

- Sizwe Snail, e-Contracts in South South Africa-a comparative study, JILT

NB: B2C web contracts are rarely negotiated. These are standard form contract or contracts
of adhesion. Cf. §5 ETA provides for validity of electronic transactions. According to ETA
§21(2), the contract shall not be denied validity or enforceability because it was formed
electronically. Does this mean that all types of electronic contracts are valid and enforceable?
The types of electronic contracts are browse-wrap, shrink-wrap and click wrap.

‘Click-wrap’ contracts - clicking “I agree” or Buy etc on a website amounts to “signing” or at

least assent to the terms makes a binding contract (John, U., 2015 p. 281). See The US case
of Moore v. Microsoft Corporation, 2002 where the court held that clicking ‘I agree button
could and did create legal obligation.’

Browse-wrap contract - terms are posted on a web page and anybody browsing the web is
bound by them. (John, U., 2015 p. 281)

Shrink-wrap contracts – CD case is sealed with a sticker, removing the sticker means
accepting the terms and bound by them. The sticker is an offer and removing it amounts to
acceptance. (John, U., 2015 p. 281)

Negotiation of electronic contracts

(a) A opens a Face Book account and start using Face Book services. A student should
mention that it is a click wrap contract. Then proceed to define what click wrap
contract is.
(b) A buys Diamond’s new release single Nataka Kulewa CD from MK music shop.
When he reaches his home he removes the seal and opens the CD case takes out the
CD and starts to play it in his CD player. A student should mention that it is a shrink
wrap contract. Thereafter define what shrink wrap contract is.
(c) A visits www.amazon.com and finds electronic version of Sand Johnston’s Novel
Circumstance Pending Police Investigation – CUPPI, he fills the online order form, he
enters his credit card details and finally he clicks the button submit. A student should

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 mention that it is a browse wrap contract. Then should define what browse wrap
contract is.

Negotiation of electronic contracts

According to Snail (2008)1

The first method is “e-mail contract where the parties can exchange e-mails and even
attachments setting out the terms and conditions of their contract in detail. This is quite
similar to offer and acceptance between the parties (Lotz & du Plessis, 2005, p 4).

The second method is known as contracting on the World Wide Web (www), this way is
similar to a mail order. In this method, one party maintains the website at which he advertises
his goods and services. The prospective buyer accesses the website and then completes an
electronic form, whereby he orders goods or services from the seller (Pistorius, 1999, p 286).

The third manner is where the parties trade under the framework of an Electronic Data
Interchange Agreement (EDI). EDI can be defined as „computer-to-computer transmission of
data in a standardized format‟. EDI enables businesses to exchange documents over either the
internet or their private networks (Shim, et al., 2000, p 141 )

The fourth method is where natural persons whilst chatting online in a virtual chat-room can
make legally relevant agreements that are valid and binding.”

Disputes relating to electronic contracts

Some of the most important issues include:

Validity of the electronic contract: whether an electronic contract is valid, that is, whether it
must comply with certain formalities, see §21 of ETA (providing for recognition of electronic
contracts). The ETA §21(1) provides that a contract may be formed electronically, §21(2)
states that a contract shall not be denied validity or enforceability because it was formed
electronically.

Authentication of the electronic contract: is the contract binding the parties? How is a party
tied to the contract? The e-signature ties the party to the e-document/e-contract s/he signed
i.e. non-repudiation. But the question is what electronic signature is? And what is e-document
and e-contract?

Another important question is whether electronic signature is admissible as evidence of intent

and agreement,

and what law applies to an electronic contract (if it is between international parties). 

1
Electronic contracts in South Africa – A comparative analysis, JILT, p.4

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Jurisdictional challenges

Which law (of which country) should be applicable in case the agreement does not mention
the applicable law?

Issue of time and place: when and where was the contract formed?

Communication of offer via electronic means

Time of dispatch and receipt of electronic communication (electronic offer) ETA §22(1)
information (offer) in electronic form is dispatched when it enters a computer system outside
the control of the originator (offerer) or of the person who sent the electronic communication
on behalf of the originator (offerer).

(2) Where the originator (offerer) and the addressee (offeree) are in the same computer
system, information in electronic form is communicated when it is capable of being retrieved
by the addressee (offeree).

(3) If the addressee (offeree) has designated a computer system for the purpose of receiving
electronic communication, that information (offer) is received at the time when the electronic
communication enters the designated computer system.

(4) When the electronic communication (offer) is sent to an information system of the
addressee that is not the designated computer system, that information (offer) is
communicated –
(a) at the time when the electronic communication (offer) is capable of being retrieved by
the addressee (offeree) at that address; and
(b) the addressee (offeree) becomes aware that the electronic communication (offer) has
been sent to that address.

(5) Where the addressee has not designated an information system, receipt occurs when the
electronic communication (offer) is retrieved by the addressee (offeree), or should
reasonably have been retrieved by the addressee (offeree).

Acknowledgement of receipt 23(1) Acknowledgement of receipt of an electronic

communication may, where the originator has not agreed
with the addressee on the form or method, be given by-

(a) any electronic communication by the addressee, automated or otherwise; or

(b) any act of the addressee, sufficient to indicate to the originator that the electronic
communication has been received.

(2) Where the originator has stipulated that an electronic communication shall be binding only
on receipt of an acknowledgment, and the acknowledgment has not been received, the
originator shall -

(a) within the time specified or agreed or, if no time has been specified or agreed to within a
reasonable time, then the originator may give notice to the addressee stating that no

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 acknowledgment has been received by him and specifying reasonable time by which the
acknowledgment shall be received by him;

(b) within the aforesaid time limit, he may after giving notice to the addressee, treat the
electronic communication as though it has never been sent.

Place of dispatch and receipt of electronic communication 24.-(1) Unless otherwise agreed
between the originator and the addressee, an electronic communication (offer) is deemed to be
dispatched at the place where the originator (offerer) has its place of business and is deemed to
be received at the place where the addressee(offeree) has its place of business.
(2) Subsection (1) shall apply-

(a) even if the originator or addressee was not at his usual place of business; and

(b) to determine the place where a contract was concluded for the purposes of taxation.

(3) For the purpose of subsection (1), if the originator or the addressee-

(a) has more than one place of business, the place of business is:

(i) that which has the closest relationship to the underlying transaction having regard to the
circumstances2 known or contemplated by the parties at any time before or at the conclusion
of the contract; or
(ii) where there is no underlying transaction, the principal place of business. Important for
determining applicable law and forum

(b) does not have a place of business, the place of business shall be his habitual residence.
Important for determination of applicable law and forum

(4) If a body corporate does not have a place of business, the place of business shall be the
business address of the body corporate or the place where it is incorporated or otherwise
legally constituted. Important for determination of applicable law and forum

(5) This section shall apply notwithstanding that a place where a computer system supporting
an electronic address is located is different from the place where the electronic
communication is deemed to be dispatched or received. Thus the question where the server is
or where the website or computer is located is irrelevant here! The subsection is important for
determination of applicable law and forum

Time and Place of contract formation 25.-(1) Where parties conclude a contract electronically,
that contract shall be formed at the time and place where acceptance of the offer becomes
effective.
(2) An offer in the form of an electronic communication becomes effective at the time it is
received by the offeree.

2
What are these circumstances? Examples...? But §3 defines “place of business” as any place where a party
maintains a non-transitory establishment to pursue an economic activity other than the temporary provision of
goods or services out of a specific location.

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Contracts with interactive systems

26.-(1) A contract formed by the interaction of an interactive system and a person, or by

interaction of interactive systems, shall not be denied legal effect, on the
ground that no person reviewed each of the individual actions carried out by the interactive
systems.
(2) An interactive system shall provide an opportunity for a person to correct an input error made
in an electronic communication exchanged with the interactive system of another party.
(3) Where a person makes an input error in an electronic communication exchanged with the
interactive system of another party and an interactive system does not provide the person with an
opportunity to correct the error, that person has the right to withdraw the electronic
communication in which the input error was made if the person-

(a) notifies the other party of the error as soon as practicable after having learned of the error and
intends to cancel the contract or cancel the input error;

(b) takes reasonable steps, to comply with instruction by the other part to return the goods or
services received as a result of the error, or to destroy the goods or services, or to cancel the
input error; and

(c) has not used or received any material benefit or value from the goods or services, or the input
error, from the other party.

(4) A person who has paid for goods or services prior to exercising a right under subsection (1),
is entitled to a full refund of such payment within thirty days upon cancellation of the
transaction.
(5) Nothing in this section shall affect the application of any law that may govern the
consequences of any errors made during formation or performance of the type of contract in
question other than an input error that occurs in the circumstances under subsection (3).

Online auction

27. Where a written law requires a contract of sale by auction, the requirement of the fall of
hammer is met in an online auction using the time at which an electronic communication was
received as the time limit as the means of selecting the last bidder.

Which court/forum (of which country) has jurisdiction to adjudicate the matter in case the
agreement lacks the arbitration clause?

Do not forget the issue of time: when was the contract formed? (use time stamp) see above
on the issue of offer and acceptance (see ETA)