From the SelectedWorks of Daudi Mwita

Nyamaka Mr.

November 2011

Electronic Contracts in Tanzania: An Appraisal of

the Legal Framework

Contact Start Your Own Notify Me

Author SelectedWorks of New Work

Available at: htp://works.bepress.com/dmnyamaka/1

 St. Augustine University of Tanzania

SAUT
Faculty of Law

LL M Programme

Electronic Contracts in Tanzania: An Appraisal of the Legal

Framework

A Dissertation in Partial Fulfilment of the Requirements for the Award of Degree of

Master of Laws in Economic Law of Saint Augustine University of Tanzania

NYAMAKA, DAUDI MWITA

LL M/15868

November 2011
 CERTIFICATION
The undersigned certifies that he has read and hereby recommends for acceptance by

Saint Augustine University of Tanzania a dissertation titled: Electronic Contracts in

Tanzania: An Appraisal of the Legal Framework, in partial fulfilment of the

requirements for the degree of Master of Laws (LL M) in Economic Law.

Prof. Dr. N. N .N. NDITI

Signature……………………..

(Supervisor)

Date: ……………….……

i
 DECLARATION

I, Daudi Mwita Nyamaka, declare that this dissertation is my own original work and

that it has not been presented and it will not be presented in any other institution for a

similar or any other degree award.

Signature …………………..

Date………………………….

ii
 COPYRIGHT
This Dissertation is a copyright material protected under the Berne Convention, the

Copyright and Neighbouring Rights Act, 1999 and other international and national

enactments, in that behalf, on intellectual property. It may not be reproduced by any

means, in full or in part, except for short extracts in fair dealing, for research or private

study, critical scholarly review or discourse with an acknowledgement, without written

permission of the author or the SAUT Deputy Vice Chancellor for Academic Affairs on

behalf of the author and the University.

iii
 ACKNOWLEDGEMENTS
I would very much like to acknowledge assistance in the completion of this study work

from the followings:-

A particular word of gratitude must go to my Supervisor, Professor Dr. Nicholas

Nicholas Ngondo Nditi, under whose efficient supervision and intellectual guidance the

study work was conducted. He offered me not only the all- important academic guidance

and direction but also granted me great support and encouragement throughout the time I

worked under him and showed keen interest in my progress.

I wish to record a particular word of thanks to Dr. George Mwaisondola, Mr. Adelarlus

Kilangi of the faculty Law at SAUT and all staff members of the faculty for their

constructive comments and encouragements in my study.

Words cannot fully describe my appreciation for the debt I owe to my Good Mentor,

Rev. Dr. Charles Kitima, the Vice Chancellor for SAUT, who, under his mentorship

used to encouraged me by advice and resources especially books from his home library.

He intended to make me a respectful academician, and here I am. May GOD give him

strength in building the city of GOD.

I heartily thank my beloved brother, Thomas Kibiriti Nyamaka and his family for their

moral and material support for my education.

The data upon which this study is based was collected within a period of 60 days of a

field and library research in Dar es Salaam and Mwanza. So many people I met have

iv
helped me in so many ways and I wish hereby to express my appreciation for their

assistance in making this study possible.

I express my appreciation to SAUT LL.B I students 2010/2011, the first class I taught at

University level, I learnt a lot as to what it means to be a lecturer. The class love and

support encouraged me to carry on my study efficiently. I also express my appreciation

to my classmates at SAUT (LL.M 2009/2011); KULUCHUMILA Victorino Ladislaus,

MUNA Joseph Jerome, MUGISHA Stephen, NATAANYWAKI Grace Letawo, KIWIA

Lizzy, HENGA Msafiri, MUGARULA Pamela, MWITA Neema Bhoke, RWAKINEZA

Benjamin and SALEH Belinda Emmanuel.

To all the above, named and unnamed, may I say in the best way I can, GOD BLESS

YOU…… AMEN.

I remain responsible for any mistakes and shortcomings that may be found in this

research work.

v
 DEDICATION

For my daughter, Ghatimichelle M N

vi
 TABLE OF CASES

1. Adams v. Lindsell (1818) 1B & Ald.681

2. Alfi E. A Ltd v Themi Industries and Distributors Agency Ltd [1984] TLR 256

3. Aspencer1.com Inc. v. Paysystems Corporation [2005]. JQ no 1573

4. Blackpool & Fylde Aero Club Ltd v Black Borough Council [1990] 1 WLR 119

5. Boulder Consolidated Ltd v Tangaere [1980] 1 NZLR 560, 567 (CA)

6. Brinkibon Ltd v Stahag Stahl GmbH [1983], 2 AC 34

7. Brower v. Gateway (2000), 246 AD 2d 246, 676 NYS 2d 56

8. Bryne v Van Tienhoven (1880) 5C.P.D 334

9. Buku v. Magori [1971] HCD, No. 161

10. Busoga Millers & Industries Ltd v Purshottam Patel 22EACA 348

11. Calder v. Jones 465 U.S. 783 (1984)

12. Carlill v. Carbolic Smoke Ball Company [1893]1QB256

13. Cheleta Coffee Plantations Ltd v. Mehlsen [1966] E.A 203

14. Dell Computer Corp. v. Union des consommateurs 2007 SCC 34

15. Dodd v. Nanda (1971) EA 58 and Jirvaj v Dervaj (1968) EA 263

16. Easthaven Ltd. v. Nutrisystem.com Inc. (2001) 55 OR 3d 334

17. Entores v Miles Far East Corporation [1955] 2 QB 327 (CA)

vii
18. Fisher v Bell [1961] QB 394

19. Freeman v Cooke (1848) 2 Exch 554; 6 Dow & L 187; [1843-60] All ER Rep

185

20. GBL & Associates Ltd v Director of Wildlife Ministry of Lands, Natural

Resources and Tourism and 2 others [1989] TLR 195

21. Govindji Mulji Dodhia v National & Grindlays Bank Ltd & Another (1970) E.A

195

22. Gurney Consulting Engineers v Pearson Pension Property Fund Ltd [2004]

APP.L.R

23. Harvela Investments Ltd v Royal Trust of Canada (CI) Ltd [1986] AC 207

24. Hussein Bachoo v. Clove Growers Association of Zanzibar [1957] E. A 193,

25. Inc Hubbert. v Dell Corp 359 Ill.App.3d 976, 835 N.E.2d 113 (5th Dist. 2005)

26. Information Corporation v. American Infometrics (D. Md. April 2001)

27. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95

(1945)

28. JSC Zestafoni Nikoladze Ferroalloy Plant v Ronly Holdings Ltd [2004] 1 C.L.C.

1146

29. Juwata v Kiuta, Civil Appeal No. 29 of 1987 (unreported)

30. Kanitz v. Rogers Cable Inc. (2002), 58.O.R. (3d) 299 (Ont. Sup. Ct.)

31. Keppel v. Wheeler (1927) 1 KB 577 at 584

viii
32. Klocek v. Gateway, Inc104 F. Supp. 2d 1332 - Dist. Court, D. Kansas 2000

33. Leslie and Anderson (Nairobi) Ltd v. Kassam Jivraj & Co. Ltd 17 EACA 84

34. Mactier’s Adm’rs v. Frith, 6 Wend. 103 (N.Y. 1830)

35. Mayers v. Akira Ranch Ltd (1972) EA 347

36. Merali Hirji & Sons Ltd v. General Tyre (E. A) Ltd [1983], T.L.R 175

37. Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077

38. National Bank of Commerce v. Milo Construction Co. Ltd and two others

Commercial Case No 293 of 2002 (unreported), High Court of Tanzania

39. Nyali Ltd v. A.G [1955] 1 ALL ER 646

40. Panavision International v. Toeppen (1998), 141 F.3d 1316 (9th Cir);

41. Pandit v. Sekawa 1964 (2) A.L.R Comm.25

42. Partridge v Crittendem [1968] 2 ALL E.R 421

43. Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd

[1953] 1 ALL E.R 482

44. ProCD v. Zeidenberg 86 F.3d 1447 (7th Cir. 1996)

45. Quenerdaine v. Cole (1883) 32 Weekly Rep. 185

46. R v. Masquid Ali (1966) 1 Q B 688

47. R v. Moore; Ex parte Myers (1884) 10 VLR 322 Jacobs v. Batavia & General

Plantation Trust [1924] 1 Ch. 287

ix
48. Register.com v. Verio, Inc 126 F. Supp. 2d 238 (S.D.N.Y. 2000); aff.d 2004 WL

103400 (2nd Cir. 2004)

49. Sayeedi v. Walser 2007 NY Slip Op 27081

50. Slus Brothers (E.A) V. Mathias & Towari Kitomari [1980] TLR 294

51. Smith v. Hughes, (1871) LR 6 QB 597 (Queen's Bench Division)

52. Society of Composers, Authors and Music Publishers of Canada v. Canadian

Assn. of Internet Providers, [2004] 2 S.C.R. 427, 2004 SCC 45

53. Specht v Netscape Communications Corp 150 F.Supp.2d 585 (S.D.N.Y. 2001),

306 F.3d 17 (2d Cir. 2002)

54. Spencer & others v Harding & others (1869-70) L.R 5C.P 561

55. Spottiswoode Ballantyre & Co. Ltd v. Doreen Appliance Ltd (1947) 2 KB 32 at

35

56. Star Services Co. Ltd v. Tanzania Railways Corporation (1989) 1 HC

57. Storer v Manchester City Council [1974] 1 WLR 1403 at 1408

58. Tanzania Air Services Ltd v. Minister for Labour, the Commissioner for Labour

and A.G [1996] TLR 217 HC at 222

59. Tanzania Cotton Marketing Board v. Corgecot Cotton Company SA [ 1997],

TLR 165 C

60. Ticketmaster Corp. v. Tickets.com Inc. 2000 United States Dist. LEXIS 12987

x
 (C.D. 2000); aff.d 248. F.2d 1173 (9th Cir. 2001)

61. Trust Bank Tanzania v. Le Marsh Enterprises Ltd and Others, (2000),
(unreported).

xi
 TABLE OF STATUTES

Local Statutes

The Bank of Tanzania Act No. 4 of 2006

The Banking and Financial Institutions Act No. 5 of 2006

The Bills of Exchange Act [CAP 215, R.E 2002]

The Civil Procedure Act [CAP 33, R.E 2002]

The Evidence Act [CAP 6, R.E 2002]

The Investment Act, 1990

The Law of Contract Act [CAP 345, R.E 2002]

The Fair Competition Act [CAP 285 R.E 2002]

The Tanganyika Orders-in-council, 1920

The Commission for Human Rights and the Good Governance Act (16/2007)

Tanzania Communications Regulatory Authority Act 2003

Tanzania Communications Act, 1993

The Sale of Goods Act, [CAP 214 R.E 2002]

The Judicature and Application of Laws Act, [CAP 358 R.E 2002]

The Hire Purchase Act no 22 of 1966

xii
The Land Act, No 4 of 1999

Foreign Statutes

The Consumer Credit Act, 1974 of England

The Electronic Funds Transfer Act, 1978 of USA

The Unfair Contract Terms Act, 1977 of England

Electronic Commerce Law in 2000, of Tunisia

The Electronic Communication and Transactions Act No. 25/2002 of South Africa

The Electronic Transaction Act 2000 and Regulations –the Information Technology

(Miscellaneous Provisions) Act of 1998 of Mauritius

Sale of Goods Act, 1893 of England

xiii
 LIST OF TABLES

Table 1: Ecommerce Roadmap……………………………………….…………..22

xiv
 ABBREVIATIONS

ALL ER All England Law Reports

ATMs Automated Teller Machines

CAP Chapter

EAC The East African Community

Ed Edition

EDI Electronic Data Interchange

et al et alia (and others)

Ibid ibidem (in the same place)

ICT Information Communication Technology

ITIDA Information Technology Industry Development Authority

TCRA Tanzania Regulatory Authority

JALO Judicature and Application of Laws Ordinance

LL.B Legum Baccalaureus (Bachelor of Laws)

LL.M Legum Magister (Master of Laws)

Ltd Limited

MBA Master of Business Administration

xv
Op. cit Opera citato (as cited earlier)

Pp Page

R Republic

RUCO Ruaha University College

SADC The Southern African Development Community

SAUT Saint Augustine University of Tanzania

TLR Tanzania Law Reports

TLR Times Law Report

UDSM University of Dar es Salaam

UK United Kingdom

UNCITRAL The United Nations Commission for International Trade Law End

EULA End User License Agreement

UNCITRAL United Nations Commission on International Trade

USA United States of America

www World Wide Website

xvi
 TABLE OF CONTENTS

Certification.................................................................................................................... i

Declaration ……………………………………………………………………………ii

Copyright ..................................................................................................................... iii

Acknowledgements ...................................................................................................... iv

Dedication ..................................................................................................................... v

Table of Cases…………………………………………………………………………vi

Table of Statutes……………………………………………………….………….….xii

List of Tables…………………………………………………………………...…….xiv

Abbreviation…………………………………………………………………………..xv

Table of Contents………………………………………………………………….....xvii

Abstract……………………………………………………………………………....xxii

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study………………………………………………………….1

1.2 Statement of the Research Problem…………………………………………….....5

1.3 Literature Review………………………………………………………………....6

1.4 Hypothesis……………………………………………………………….…….…10
xvii
1.5 Objectives of the Study…………………………………………………......…..10

1.6 Justifications of the Study…………………………………………………........11

1.7 Scope of the Study……………………………..…………………….……….....11

1.8 Research Methodology…………………………………………………….........12

1.8.1 Library Research……………………………………………………………....12

1.8.2 Field Research………………………………………………………………....13

CHAPTER TWO: THE EMERGING JURISPRUDENCE OF CYBER

CONTRACTS

2.1 Introduction……………………………………………………………………...14

2.2 The Development of Ecommerce visa-a-vi Cyber Contracts……………….…...16

2.3 Efforts towards E-legislations in Africa………………………………………....23

2.3.1 A General Overview……………………………………………………...……23

2.3.2 The Southern African Development Community……………………………...28

2.3.3 The East African Community……………………………………...…………..29

2.4 Understanding Cyber Contracts………………………………………………….30

2.41. Salient Features of Cyber Contract…………………………………………….32

2.4.2 Email and Cyber Contracts…………………………………………………….33

xviii
2.4.3 Types of Cyber Contracts…………………………………………………...…34

2.5 The Theoretical Basis for Contractual Liability………………………...……….45

2.5.1 Introduction……………………………………………………………………45

2.5.2 The Promissory Theory………………………………………………………..46

2.5.3 The Reliance Theory…………………………………………………………..50

2.5.4 The Transfer Theory…………………………………………………………...51

2.5.5 The Utilitarian Theory…………………………………………………………53

2.5.6 Conclusion……………………………………………………………………..55

2.6 Historical Perspective of Contract Formation in Tanzania………………………56

2.6.1 Introduction………………………………………………………………..…..56

2.6.2 The Law of Contract and its History in Tanzania…………………………..….56

2.6.3 Contract Formation in Tanzania..................................................................…...58

2.6.3.1 Introduction…………………………………………………………….…....58

2.6.3.2 Offer and Acceptance……………………………………………….……….61

2.6.3.3 Invitation to Treat……………………………………………………………69

2.6.3.4 Consideration………………………………………………………………...73

2.6.3.5 The Mode of Communicating Offer and Acceptance…………………….....74

xix
2.6.4 Conclusion………………………………………………………………..……74

CHAPTER THREEE: LEGAL ISSUES ON CYBER CONTRACTS IN TANZANIA

3.1 Introduction……………………………………………………………………...75

3.2 Construction of Cyber Contracts………………………………………………...75

3.2.1 Offer and Acceptance in Cyber Contracts……………………………………..75

3.2.2 E-contracts Terms……………………………………………………………...77

3.2.3 Signing in Cyber Contracts…………………………………………………....78

3.3 Internet Jurisdiction…………………………………………………………..….79

3.4 International Position in Cyber Jurisdiction……………………………………..81

3.5 Conclusion…………………………………………………………...…………..83

3.6 Examining Possible Legal Challenges ……………………………..…………...84

3.6.1 The Legal Requirement for Consensus ad idem in Contract and Contracts formed

by e-agent....................................................................................................................86

3.6.2 Authentication, Attribution and Repudiation of Online Contract…………….89

3.6.3 The Issue of Consent and Enforceability of Browse-Wrap Agreement ………92

3.6.4 The Issue of Consent and Enforceability of Shrink-wrap Agreement…………95

3.6.5 The Issues of Time and Place of Contract: Examining the Theoretical Basis…97

xx
3.7 Judicial Activism towards E-Contract in Tanzania............................................104

3.8 Conclusion..........................................................................................................106

CHAPTER FOUR: CONCLUSION AND RECOMMENDATIONS

4.1 Conclusion...........................................................................................................107

4.2 Recommendations................................................................................................108

BIBLIOGRAPHY.....................................................................................................110

xxi
 ABSTRACT
The concern of our study was to examine the legal basis for electronic contracts in
Tanzania. The major problems that were being examined are; the ascertainment of e-
contract terms and the other party in the contract with the focus to consent i.e. consensus
ad idem requirements and capacity to contract. With the first problem, e-commerce
involves e-contracts and the business community in Tanzania enters into contractual
arrangements with external world via websites or email in which case the electronic
environment is not suitable in Tanzania in terms of the laws and the technology.
Messages sent via internet may be garbled in transmission and also determination of the
time in which the message is sent or received as to ascertain offer and acceptance.

On the other hand, the requirement of consent i.e. consensus ad idem in contract in
electronic contract has become a challenge because in some e-agents are involved to
contract. It has become a question as to whether e-agent can amount to consent of the
other party to the contract. E-agents are not included in the definition of the laws in
Tanzania to mean a person and hence a problem.

The endeavour‟s to pursue this task were guided by the assumption that; there is a
mismatch between the existing regulatory framework on one hand, and cyber contracts
specifically on the issues of contract terms and consensus ad idem on the other hand.
And that the existing law yet favours a traditional way of contracting i.e. paper based
contracts rather than cyber contracts. We employed interview and review methods in the
field as our tools to collect the data.

The existing laws in Tanzania provide a general guidance to cyber contracts because
there is no specific legislation to govern electronic transactions. This makes it difficult to
respond sufficiently to technological changes. The contracts are generally governed by
the Law of Contract Act but courts of law may extend and develop some principles
where necessary, to fill the gaps.

xxii
 CHAPTER ONE: INTRODUCTION

1.1 Background to the Study

Human history, in a sense, is a story of technology from flint stones to that of genetic

clones. The tribulations and triumph of such a journey, which will continue in the future,

has one constant aspect at its core the laws that govern them.1 The cyber revolution

holds the promise of quickly reaching the masses as opposed to the earlier technologies,

which had a trickledown effect. Such a promise and potential can only be realized with

an appropriate legal regime based on a given socio-economic matrix. 2

In the ambit of technology and law, law has always been at the curve of the highway

chasing the developments of technology and ends often issuing violation tickets. Law

needs to provide a road map to technology with appropriate signals and speed breakers

for its safe driving. The need of the times is that of a strong legal research orientation

which needs to travel along with technological developments. Such an effort can make

law as a management tool; of rights and obligations in the interface of technology and

governance.

1
Law is the informing principle of society at every stage of development; from the maxim ubi societas, ibi
ius, ibi ius ubi societas; meaning where there is society there is law and where there is law there is society;
and the law grows with this society, from flint stones to genetic clones, from oral contracts to paper based
contracts to cyber contract, law is a governing aspect that must reflect the reality to a particular aspect
existing at that particular time. Customary law in Tanganyika reflected the forms and systems of
contracting but with the coming of colonial rule, writing became a new aspect of contracting by colonial
laws.
2
Visit http://cyber.law.harvard.edu./home/ on 6th June 2010.
1
By nature daily human life involves either a commercial or consumer or both

transactions. From the very beginning where barter trade emerged it had an element in

common with the intention to exchange goods for either consumption or some other

value or purposes. All these were transactions and were basically orally made.

Historically, oral contracts can be far traced to pre-colonial societies; however, these

were rather consumer arrangements.

Basically, commercial and consumer transactions are contracts. A transaction is an

agreement, communication, or movement carried out between separate entities or

objects, often involving the exchange of items of value such as information, goods,

services and money. A commercial transaction is that agreement between a buyer and a

seller for the exchange of goods or services for payment with the ultimate aim of doing

business with the goods or services. A consumer transaction may technically be

confined to individual persons who acquire goods or services mainly for their own use

and not for resale or use in production. This is the end user of the goods or services.3

A contract is an agreement with legal force.4 Every promise and every set of promises,

forming the consideration for each other, is an agreement.5 And for a contract to be

enforceable there must be a free consent, competency and lawful consideration or

3
See section 2 of the Fair Competition Act [CAP 285 R.E 2002].
4
See Nditi, N. N. N, (2009), General Principles of Contract Law in East Africa, 1st Edn, DUP, Dar es
Salaam, at P 1.
5
See section 2 (1) (e) of the Law of Contract Act, [CAP 345 R.E 2002].
2
object.6 A contract may be oral,7 in writing or partly oral and partly in writing or may be

implied by conduct of the parties.8If a contract is an agreement with legal force, it is

obviously true that even before colonial invasions in Tanganyika people had customary

systems of contracting. The systems were mainly based on oral agreements and they had

binding force. The coming of colonialists in Tanganyika introduced written laws that

apart from giving emphasis on written forms of contracts also recognized the existing

forms of customary contracts in Tanganyika.9

With recent technological developments a new system of contracting has emerged

mainly incorporating writing and or oral agreements but using electronics as the channel

to communicate the contractual arrangements. Thus, today, paper based contracts are

regarded as traditional (out-dated or old) forms of contract.

While most persons are used to the traditional way of contracting namely by the

exchange of paper, this traditional way of doing business is rapidly changing. Today

most business transactions are made electronically. It is said that by contracting on-line,

businesses can improve efficiencies, reduce paperwork and streamline their operations.

At the same time however, new technologies create challenges for the legal system

6
See section 10 of the Law of Contract Act, op cit.
7
See the cases of Buku v. Magori [1971], n. 161 and Merali Hirji & Sons Ltd v. General Tyre (E. A) Ltd
[1983], T.L.R 175 where the courts held oral agreements to be valid though the alleged relationships were
merely verbal.
8
See Nditi, N.N.N, (2009), op cit, at Pp 196.
9
See the Tanganyika Orders-in-council, 1920 especially under section 13 (4) with emphasis to recognition
and respect of customary laws that are not repugnant to justice or morality. This was introduced in
Tanganyika in 1st July 1920 (General Reception Clause).
3
which must try to apply existing law in a new context.10 Cyber Contracts are entirely

created by exchange of emails whereby an offer and acceptance are made by a

combination of electronic communications, paper documents, faxes and orally.

Existing laws often specify that information must be given "in writing", "certified" or

"signed". These types of references can be interpreted as restricting transactions only to

paper and preclude the possibility of transmitting information electronically.11 It follows

that the existing law needs to be reformed to cope up with technological developments.

Law reform especially in developing countries like Tanzania is always behind the speed

of technological developments, thus, a number of legal issues may revolve around the

new systems of contracting vis-a-vi the existing regulatory and policy framework. Some

of these legal issues include terms of the electronic contracts and possibility of fraud.

These issues need to be addressed in the light of ecommerce.

Electronic commerce is the buying and selling of information, products and services via

the computer networks which make up the Internet. This entails contractual

arrangements electronically. It is contended that the rapid growth of ecommerce over the

world has put the country (Tanzania) in the position of facing challenges and to her

various commercial laws and other related laws. Her legal system is mainly based on

common law. Regulatory steps to secure electronic transactions such as digital

10
Nditi, N.N.N, (2009), op cit, at Pp 48.
11
See Mchome, S.E, (2009), “Diaginostic of Court Administration and Management in Tanzania and
Status of Reform,” UDSM.
4
signatures, reforms to contract law, dispute settlement and others have not yet been

promulgated. The basic commercial laws in Tanzania are derived from Britain in the

19th century .The laws were designed to facilitate paper-based transactions. Despite the

changes and regulatory reforms made by the country since independence, most of the

laws enacted since British Colonial rule before the 1960s are still in force.12

1.2 Statement of the Research Problem

Although in Tanzania ecommerce is still in its infancy, its potential growth is high.

Against this promising potential growth there have been complaints that the legal system

is not at par or is unable to respond appropriately. The businesses have been in forefront

in demanding reform to the legal system to support ecommerce activities. This has been

mostly due to the fact that many laws dealing with business still employ laws passed

under the colonial era that support paper based transactions, and as such: there is always

a great possibility that parties may not clearly address all of the contract terms.

Sometimes the terms may be conflicting due to some errors from the internet or garbled

messages. In such situations, how are the terms of the contract determined? Do the

existing contract laws cut across the problem? Our focus is centred in addressing these

questions by reviewing the law in Tanzania. On the other hand, e- contracts may be

challenged by the requirement of consent i.e. consensus ad idem. It may be difficult to

ascertain consent of the parties in an online environment and for web-based agreements,

12
Visit http://cyber.law.harvard.edu./home/, op cit.
5
especially the shrink-wrap and browse-wrap agreements where the possibility of

negotiation is excluded.

Two major issues may arise as to the ascertainment of the consent in e-communication

and the enforcement of such e-agreements under the existing contract laws in Tanzania.

How does the Law of Contract Act address e-consent? How is the other party in the

contract ascertained? Thus, our research is an attempt to answer these questions.

1.3 Literature Review

Juwana, H in his paper13 contends that the newest development of humankind, cyber

age, which has been in existence in the last two decades, has affected Indonesia. As a

result, Indonesia has been involved in the ecommerce activities. Today, there are many

industries running their businesses through cyberspace. The security and banking

industries have gone electronic for their customers. The security industry has been

introducing paperless trading in stock exchanges while the banking industry has been

running internet banking services. Juwana, H centres his focus on the structure of

Indonesia and the impacts of the existence of the Dutch Colonial laws which can hardly

fit Tanzania, thus it is in view of that reason the researcher intends to examine the

British Colonial laws on contracts in Tanzania which the author does not cover in his

paper.

13
See Juwana, H, (2003), “Legal Issues on Ecommerce and E-contract in Indonesia”, A Paper Presented at
the 8th General Assembly of the ASSEAN Law Association: ASSEAN Laws in the 21 st Century, held in
Singapore on 29th November- 2nd December 2003.

6
Tauzin. B14 contends that the 20th century has witnessed rapid and new innovative

technologies with fundamental changes in the way commerce takes place. The digital

revolution has brought fundamental change to communications and fuelled dramatic

developments for the new digital economy. The efficacy offered by the digital

technology has opened up enormous potentials for participation in international trade for

countries through ecommerce. The global development of ecommerce might be stymied

by old laws enacted at the time when it was still at best a figment of a few technologist‟s

imagination hence require uniform rules. Tauzin. B. focuses much on technological

changes and its impact on ecommerce and the economy but he does not cover e-

contracts which is the centre of our study.

Koffi Anan states that electronic commerce conducted over the computer network is

growing explosively. It can be argued that the current commercial laws are likely to be

affected by these rapid ecommerce changes, inviting alternative regulatory approaches

that would not impede ecommerce while advancing and ensuring consumer protection

interests. Ecommerce through digital revolution offers great opportunities for economic

growth.15 Koffi Anan‟s argument is centred on consumer protection from the impacts of

technological advancements but he does not cover e-contract as a peculiar aspect in

ecommerce, thus, the researcher intends to cover e-contracts and the law of contract in

Tanzania.
14
State impediment to Ecommerce: September 26, 2002, available at
http://energycommerce.house.gov/107/hearing
15
Koffi Anan, (2001), (UN quoted in UNCTAD, at iii.
7
Aida, O.M, et al,16 comment that, Africa is in danger of being left behind on a new and

growing worldwide market. Over the past five years, the Internet, ecommerce and e-

business have all grown dynamically. The process of innovation, driven by

transformation in business supply chains and the growth of online marketplaces, has

widened and intensified in all parts of every major economy. Aida. O. M, et al, contend

more that companies and the private sector in Africa have not been active initiators of

ecommerce. Our study will focus inter alia, on the laws of contract and the challenges of

electronic advancements in Tanzania which the author does not cover.

Mambi, A,17 contends that the current legal system in Tanzania requires transactions that

are paper based and contracts are to be made by deed in writing and evidenced using

original document. The Laws are designed to facilitate paper-based transactions and as a

result lack of regulatory steps to secure e- transactions such as digital signatures and e-

contracts. Our focus however, will be much centered on reviewing the existing Law of

Contract Act on e-contracts which Mambi has not covered in his paper.

John S. Foster in his paper18 contends that for the business world in general, and the

meetings industry specifically; to embrace electronic contracts the exchange and storage

16
Aida. O. M, et al, (2005), “Ecommerce Challenges in Africa: issues, constraints and opportunities”,
Tunis.
17
See Mambi, A, (2006), “The Status of Cyber Laws in Tanzania” Cyber Laws Workshop for EAC
kampala.
18
See John S. Foster, Esq. 1997-2000, “Electronic Contracts and Digital Signatures: Liability and Legal
Issues,” Atlanta.

8
of these records must satisfy certain legal requirements. These requirements generally

include the following: Authenticity, integrity, non repudiation, writing, confidentiality

and signature. Foster does not review any law in his work, whereas the researcher‟s

focus is centred in reviewing the Law of Contract Act.19

Bohlman, Herbert. M 20contends that in the legal environment of business, questions and

disputes about contracts arise daily. Answering those questions and resolving those

disputes are the essence of contract law. The legal framework provides the stability and

structure within which businesses can plan and carry out their contracts. When adverse

business conditions occur, a businessperson cannot rely on the good faith that the other

party to the contract will perform simply out of a sense of duty. It is the businessperson

who negotiates and frequently drafts contracts. Bohlman covers the duty of the parties to

a contract but he does not cover e-contract terms which the researcher intends to cover in

his study.

Davidson, Alan21 comments that the majority of legal problems arising through the use

of ecommerce can be answered satisfactorily by the application of standard legal

principles. Davidson further comments that contract law, commercial law and consumer

law, for example, all apply to the internet, email, e-communication, e-banking and

cyberspace generally. However, cyberspace gives rise to unique and unusual

19
CAP 345 R.E, 2002.
20
See Bohlman Herbert M, (1996), The Legal, Ethical and International Environment of Business, 3rd
edn, at Pp 211-237.
21
See Davidson, A, (2009), the Law of Electronic Commerce, Cambridge University Press, at Pp 1-7.

9
 circumstances, rights, privileges and relationships that are not adequately dealt with by

traditional law. Davidson suggests that the unique and unusual circumstances of

cyberspace necessitate legislation, international agreement and a plethora of cases before

the courts to resolve the myriad questions.

However, Davidson, Alan does not specify the traditional law he mentions in his

commendation above. In our study, the Law of Contract Act22 forms part of our

discussion as a traditional law to the new phenomenon of cyberspace law, and

particularly ecommerce and e-contracts.

1.4 Hypothesis

The study assumes that there is a mismatch between the existing regulatory framework

on cyber contracts specifically on the issues of contract terms and consensus ad idem.

1.5 Objectives of the Study

It is in view of such anomalies that this study is to be conducted in an effort to first,

analyze the existing contract laws and policies and secondly, to come up with some

suggestions for possible reforms. Specifically, the objectives of the study are:-

a) To review and analyse the existing Law of Contract Act [CAP 345 R.E 2002] in the light

of electronic contracts.

b) To review and analyse the ICT Policy of 2003 and its efficacy to e-contract in Tanzania.

22
Op cit.

10
c) To analyse the legal issues like e- contract terms and consensus ad idem and their

challenges to the legal system in Tanzania.

d) To recommend reforms for efficient and integrated systems for sustainable legal

development

1.6 Justification of the Study

This study is undertaken for several reasons including the followings:-

a) To enable the researcher gain more knowledge in Cyber Contracts.

b) To enable citizens understand the law and legal issues in cyber contract and thus raise

awareness among them.

c) To form part of the knowledge sources to prospective researchers and also serve as a

reference to academicians.

d) To fulfil the compulsory requirement of a dissertation for the SAUT LL.M degree

Programme.

e) To contribute to the literature of Contract Law in Tanzania.

1.7 Scope of the Study

This work limits its inquiry to the challenges of the modern technology to a specific

branch of law, namely, contract. However, the researcher will try to make this work as

wide as the confines of its restricted theme could allow and will incorporate as far as

possible, all important aspects of the field under study. Two main reasons compel the
11
researcher to adopt this restrictive scope; first, the increasing prominence of cyber

contract in transactions today, and second, narrowing the framework thus allows us to

appraise as fully as possible all the material aspects of the law of contract in Tanzania.

The main chapters will advance a common theme based on the basic objectives

mentioned above. The Law of Contract Act was enacted by the colonial government in

Tanganyika (Tanzania) and still applies in contractual matters today. For this reason it is

essential for the chapters of this work to base on the objectives given above.

1.8 Research Methodology

The methodology in this study was mainly qualitative. While several pieces of literature

on the law of contract were read and analysed, most data were obtained through

interviews and study of the official records notably on legislation and policies on

electronic contract. The study therefore involves both library and empirical research

using questionnaire method. The questionnaire methods were adopted to enable the

citizens and stakeholders interviewed to assume an adequate role in the study. This

assisted the researcher in shaping, verifying and analysing the results of the study.

1.8.1 Library Research

Library research was mainly carried out at the SAUT library, Dar es Salaam University

libraries, High Court (Commercial Division) library and Tanganyika library. In these

libraries several relevant pieces of literature on the laws of contract, in particular,

electronic contract in Tanzania were read and analysed. Review through internet sources

12
formed part of library research. This assisted the researcher in obtaining recent data for

this study from different scholars and experts in contract matters.

1.8.2 Field Research

The Law Reform Commission of Tanzania was visited to access relevant materials. The

Commission provided the researcher with relevant proposals that have been tabled

before the Ministry of Constitutional and Legal Affairs for reforms. The same ministry

was also visited to find the steps that have been taken against advancements in

technology.

Courts of laws were also visited. Court decisions both reported and unreported were read

and evaluated. The courts visited included the High Court (Land Division) and the High

Court (Commercial Division) Dar es Salaam registries. In the course of our research,

several interviews were conducted using mainly semi-structured questions. Respondents

included citizens, court judicial officials, advocates, government officials responsible for

law reforms and non-governmental officials dealing with contract matters and other

experts on contract laws.

13
 CHAPTER TWO: THE EMERGING JURISPRUDENCE OF CYBER

CONTRACTS

2.1 Introduction

The emergence and evolution of ecommerce has proved to be a highly successful and

profitable venture of companies of different sizes and origins. With the global potential

of ecommerce growing, Tanzania stands to gain considerably from sustainable

ecommerce activities (including e-contract) and solutions considering that a number of

products and services available in Tanzania remain unique to the country and the

effective facilitation of cross-border trading could substantially stimulate local

Tanzanian economies. However, evidence on the ground shows that the hype and

promise of ecommerce has not been realized at the rate which policy documents and

government claim.23 E-contract is expected to be one of the key weapons in effecting

ecommerce. If e-contract is properly used it offers huge potential to empower people in

commercial activities and make it viable and independent.

With the recent advancement in the areas of computer technology, telecommunications

technology, software and information technology have resulted in changing standard of

living of people in an unimaginable way. The communication is no more restricted due

to the constraints of geography and time. Information is transmitted and received widely

23
See Oreku. G. S, et al, (2009), “State of Tanzania E-Readiness and Ecommerce in Information
Technology for Development”, Vol 14 (4) 302-311, published online 25 June 2009 in Wiley Inter Science
(www.interscience.wiley.com) accessed on 25 October 2010.
14
and more rapidly than ever before. And this is where ecommerce offers the flexibility to

business environment in terms of place, time, space, distance and payment. Ecommerce

is associated with the buying and selling of information, products and services via

computer networks. It is a means of transacting business electronically, usually, over the

internet. It is the tool that leads to enterprise integration. With the growth of ecommerce,

there is a rapid advancement in the use of e-contracts. But deployment of e-contracts

poses a lot of challenges in terms of concepts, logic and implementation. Although the

use of ICT has caused tremendous changes in the legal and operational landscape of

many businesses worldwide,24 there is dearth of materials regarding e-contract and their

overall impact on businesses in Tanzania.25

In this chapter we have discussed the scope, nature and legality and various other issues

related to e-contracts.

24
See Shaw M J, (2000), “Electronic Commerce: State of the Art” in Shaw et al (Eds.) Handbook on
Electronic Commerce, Springer-Verlag -Berlin, Germany See also Kassim, S R, (2000), „Internet usage
for Commercial Purposes in Tanzania’- MBA Dissertation, University of Dar-es-salaam , See C Majuva,
(2000), „Development Dynamics and Future Prospect of Electronic Commerce for Developing Countries:
A case of Tanzania‟-MBA Dissertation, University of Dar-es-Salaam. See also 'Legal Aspect of Electronic
Commerce: Work by the United Nations Commission on International Trade Law (UNCITRAL)' (LMM
(99) 7. A Paper prepared for the Commonwealth Secretariat by UNCITRAL, and produced in 1999-
Meeting of Commonwealth Law Ministers and senior officials, Port Spain, Trinidad and Tobago, 3-7
May1999-Memoranda vol.2 at 281.
25
See Magille, J K, (2006) “Impact of Ecommerce on Taxation,” A Presentation to Stakeholders Forum on
Impact of Ecommerce on Taxation organised by the Tanzania Revenue Authority and–held on 6th July
2006. Available at http://www.tanzaniagateway.org/docs/eCommerceImpactonTaxation_July2006.pdf
(as accessed on 29/ July 2007).
15
 2.2 The Development of Electronic Commerce visa-a vi Cyber contracts

Cyber law has been defined as the law which describes the legal issues related to use of

inter-networked information technology (the intersection of technology and law). It is

less a distinct field of law in the way that property or contract law is, as it is a domain

covering many areas of law and regulations. Cyber law is the law governing computers

and the Internet. Trading electronically differs from traditional commerce in that

traditional trading was developed in a paper-based society, while ecommerce takes place

in an anonymous, borderless Internet world. All the rules that were developed for trading

in a real environment are inappropriate for this virtual environment. Cyber law

encompasses issues like use of electronic and digital signatures, computer crime,

intellectual property, data protection and privacy, electronic authentication, liability and

dispute resolution.26

Electronic commerce (also known as ecommerce) consists of the buying and selling

of products or services over electronic systems such as the Internet and other computer

networks. The amount of trade conducted electronically has grown extraordinarily with

widespread Internet usage. The use of commerce is conducted in this way, spurring and

drawing on innovations in transfer, supply, Internet marketing, online transaction

processing, electronic data interchange(EDI), inventory management systems, and

automated data collection systems. Modern ecommerce typically uses the World Wide
26
Angeline Vere, (2009), “Legal and Regulatory Frameworks for the Knowledge Economy” Economic
Commission for Africa First Session of the Committee on Development Information, Science and
Technology (CODIST-I).
16
Web at least at some point in the transaction's lifecycle, although it can encompass a

wider range of technologies such as e-mail.27

A large percentage of ecommerce is conducted entirely electronically for virtual items

such as access to premium content on a website, but most ecommerce involves the

transportation of physical items in some way. Online retailers are sometimes known

as e-retailers and online retail is sometimes known as e-tail. Almost all big retailers have

ecommerce presence on the World Wide Web.28

Electronic commerce that is conducted between businesses is referred to as business-to-

business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or

limited to specific, pre-qualified participants (private electronic market). Ecommerce

that is conducted between businesses and consumers, on the other hand, is referred to

as business-to-consumer or B2C. This is the type of ecommerce conducted by

companies such as Amazon.com.29

Online shopping is a form of ecommerce where the buyer is directly online to the seller's

computer usually via the internet. There is no intermediary service. The sale and

purchase transaction is completed electronically and interactively in real-time such as

27
Kessler, M, (2003), “More shoppers Proceed to Checkout online.” Retrieved on January 29 th 2011 at
http://en.wikipedia.org/wiki/Electronic_commerce.
28
Nissanoff, Daniel, (2006), “FutureShop: How the New Auction Culture Will Revolutionize the Way We
Buy, Sell and Get the Things We Really Want”, Penguin Press, pp. 246 accessed on 29th January, 2011 on
http://en.wikipedia.org/wiki/Electronic_commerce.
29
Miller, Roger, (2002), the Legal and Ecommerce Environment Today, Thomson Learning pp, 741.
17
Amazon.com for new books. If an intermediary is present, then the sale and purchase

transaction is called electronic commerce such as eBay.com.30

Electronic commerce is generally considered to be the sales aspect of e-business. It also

consists of the exchange of data to facilitate the financing and payment aspects of the

business transactions. Originally, ecommerce was identified as the facilitation of

commercial transactions electronically, using technology such as Electronic Data

Interchange (EDI) and Electronic Funds Transfer (EFT). These were both introduced in

the late 1970s, allowing businesses to send commercial documents like purchase orders

or invoices electronically. The growth and acceptance of credit cards, automated teller

machines (ATM) and telephone banking in the 1980s were also forms of ecommerce.

Another form of electronic commerce was the airline reservation system typified by

Sabre in the USA and Travicom in the UK. From the 1990s onwards, electronic

commerce would additionally include enterprise resource planning systems (ERP), data

mining and data warehousing.

In 1990, Tim Berners-Lee31 invented the Worldwide Web browser and transformed an

academic telecommunication network into a worldwide everyman everyday

30
Seybold, Pat, (2001), Customers.com Crown Business Books, accessed from
http://en.wikipedia.org/wiki/Electronic_commerce on 29th January 2011.
31
Tim Berners-Lee writes the first web browser, Worldwide Web, using a NeXT computer in 1990.
18
communication system called internet/www. Commercial enterprise on the Internet was

strictly prohibited until 1991.32

Although the Internet became popular worldwide around 1994 when the first internet

online shopping started, it took about five years to introduce security protocols allowing

continual connection to the Internet. By the end of 2000, many European and American

business companies offered their services through the World Wide Web. Since then

people began to associate a word ecommerce with the ability of purchasing various

goods through the Internet using secure protocols and electronic payment services.33

Although ecommerce is considered a novel way of doing business, 34 its earliest

development can be noted from the 1930s. According to Brinson et al,35 the “Request

and Reply” system introduced by the American Airlines in 1930s represents the earliest

form of ecommerce. This system had an inventory control at a central point for

telephoning in changes with replies to requests received via teletype.36

Currently, ecommerce may be seen as a unique phenomenon. This is because it has

moved from the old closed proprietary business-to-business networks to more open

32
See Kevin Kelly: We Are the Web Wired magazine, Issue 13.08, August 2005.
33
See Davidson, Allan, op cit.
34
See UNCTAD Report, Building Confidence: Ecommerce and Development (2000)
UNCTAD/SDTE/MISC.11.
35
See D J Brinson et al., Analysing Ecommerce &Internet Law, Prentice Hall PRT, Upper Saddle River,
NJ (2001).
36
Ibid, at 131.

19
networks, such as the Internet. The unique advantage of the Internet lies in its ability to

provide universal connection from any location world-wide and its accessibility from

any Internet-linked computer.37 Consequently, due to its global inter-connectivity, it has

been preferred as a more suitable medium to handle the complex web of commercial

activities transacted on a global scale by numerous corporate entities as well as

individuals.38 Indeed, in certain commercial sectors, like banking, the current use of

online banking (Sim banking) and the use of mobile phones to transact banking

business, presents a completely new phenomenon.

Ecommerce development is an evolutionary process. It progresses in phases namely:

presence, interaction and transaction, integration and transformation and an on-going

evolutionary stage.39 The first stage relates to a situation where a company focuses on

establishing an online presence, for instance, by opening up an e-mail address. At this

stage, the company relies on the services provided by the ISPs to communicate with its

clients. Communications at this stage are mainly through e-mails.

37
See O Henry, (2000) “Internet banking, ecommerce and related supervisory challenges”. A paper
presented during the XVIII Annual Conference of the Caribbean Group of Banking Supervisors, Curacao,
Cayman‟s Islands. Available
http://www.cimoney.com.ky/uploadedFiles/Media_Centre/Speeches/20000705.pdf (accessed last on
3/1/2011).
38
See European Union Report, A European Initiative in Electronic Commerce, Communication to the
European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions
(COM (97) 157) (1997) 2. Available at http://www.cordis.lu/esprit/src/ecomcom.htm (as accessed on
2/1/2011).
39
W Valerie, (2004) “The Electronic Formation of Contracts and the Common Law,” Mailbox Rule' 56
Baylor Law Review 175.

20
In the second stage, a company becomes more e-enabled and may create a transactional

ecommerce site as part of its development cycle.40 In this way it makes its online

presence more presentable and can interact with customers. This stage is next followed

by greater integration of its business whereby its Web front–end [is integrated] with its

back-end systems.41 Its transaction interface may, for instance, be linked to its inventory

management systems to create a hands-off approach.42 However, it may go further to the

extraneous spheres where the firm becomes fully connected with partners, suppliers, and

customers in all its operations to create the so-called flow-through approach.43

The final stage involves continuing transformation, whereby, a firm evolves a new path

as a result of changes in technology, detaching itself from the old business models, and

embracing new and innovative ways to serve its clientele.44 The figure below (as

adopted from Duncan)45 exemplifies an ecommerce roadmap.

40
Op cit at 98.
41
Ibid.
42
Ibid.
43
Ibid at 99.
44
Ibid.
45
Available at http://srdc.msstate.edu/ecommerce/events/01conf/duncan_beth.ppt (as accessed in
23/03/2011). See also F R Kamuzora, Ecommerce for Development: etourism as a Case Show, Mzumbe
Book Project (2006) at 43.

21
 E-Commerce Roadmap

.com
Level 5

 End-to-end
 Fulfillment

Level 4  Workflow  Seamless

Integrated connectivity to back-
 Online orders, payments end system(s)
 Order tracking, queries  Minimize/eliminate
 Funds transfer manual input on
Level 3 Transactional transactions.
 Registration
 B2B automated
 Forms
processes
 Secure transaction processing
 E-mail
Level 2  Online payment
Interactive
 Advertising
authorization
 Marketing
 Authentication and validation
 Information

Level 1 Static  Web site connectivity to database

application(s) and email accounts
 No company web site
 Web site
 Can access other sites
 Content development &
Access
updates

Legend
No
 Internet access through ISP  - Functions at Level

Capability  Email accounts  - Requirements to achieve next level

22
And thus, ecommerce came in with e-contract because most commercial transactions are

contracts involving a service provider, a seller and a buyer or user. And as thus, one

cannot speak of e-contract in isolation because e-contract is an engine of ecommerce.

2.3 Efforts Towards E-legislation in Africa

2.3.1 A General Overview

The current status of cyber legislation in Africa shows that although an increasing

number of African countries have embarked on designing and formulating information

and communication (ICT) policies, the majority are still in the early stage of cyber

legislation development and enactment. Of the over fifty countries in Africa, only about

five countries have moved ahead of other African countries and have enacted cyber

legislation to guide the area of electronic activities.46

Tunisia was ranked top of African countries on deployment of ICT in its economy and in

development of an enabling environment and infrastructure. It enacted the Electronic

Commerce Law in 2000, covering the areas of application of electronic commerce, tax

filing, e-banking, etc. Tunisia has made remarkable progress in e-payment. It developed

46
Angeline Vere, (2009), op cit.
23
an e-payment system called e- Dinar, which allows Internet sales and purchases and an

Internet banking system called CCPNet, which allows e-banking activations.47

Egypt passed a law No. 15/2004 on E-Signature and established the Information

Technology Industry Development Authority (ITIDA). The law permits electronic

signatures and facilitates government and business use of electronic documents. In 2006,

Egypt started consultations for development of the cyber crime law.48

Another northern Africa country that has made a step further to ecommerce and e-

legislation is Morocco that has established an Interministerial Committee for

Development and Promotion of Electronic Commerce.49 Thus, ecommerce in Morocco

is something that has received both legal and political attention.

In South Africa, a discussion paper on Ecommerce of July 1999 served as a starting

point for the eventual promulgation of the Electronic Communication and Transactions

Act No. 25/2002. The overall objective of the Act is to enable and facilitate e-

transactions by providing for its enforceability and building public confidence in such

electronic activities. The Act also provides for appointment of cyber inspectors, whose

47
See Distr.: General E/ECA/CODIST/1/15 UNITED NATIONS ECONOMIC AND SOCIAL
COUNCIL; ECONOMIC COMMISSION FOR AFRICA First Session of the Committee on Development
Information, Science and Technology (CODIST-I), 2009, retrieved from en.wikipedia.org/wiki/Cyber law.
48
Angeline Vere, op cit.
49
Ibid.

24
duties include investigation of cryptographic activities, authentication of service

providers and inspection of websites.50

Mauritius has enacted the Electronic Transaction Act 2000 and The Information

Technology (Miscellaneous Provisions) Act of 1998. These provide the legal framework

for validation of electronic transactions and for appointment of the Controller of

Certification Authorities. They also facilitate the use of digital signatures and provide

legal recognition and regulation of electronic records.51

Although only five countries have cyber-specific laws, most African countries have

outlined the need to develop cyber legislation in their National Information and

Communication Infrastructure e-strategy plans and objectives. Included in this category

are countries like Burundi, Cameroon, Chad, Democratic Republic of the Congo, the

Gambia, Liberia, Malawi, the Niger, Nigeria, Mozambique and Swaziland. Other

African countries have made significant progress in the preparation and drafting of

legislation on electronic commerce, though most of the draft bills have yet to be passed

into law. These include: Kenya, which has already initiated the process for enacting

cyber legislation. The Kenya Communications (Amendment) Bill, published in August

of 2008, provides for regulation of telecoms, posts, broadcasting, electronic transactions

50
Angeline Vere, op cit.
51
Ibid at Pp 3-4.

25
and domain names. In the same month, the bill went through the first reading in the

Parliament.52

The Government of Tanzania through the Law Reform Commission has circulated a

discussion paper on the introduction of legal framework for electronic commerce. The

discussion paper came as a result of a study which highlighted lack of relevant

legislation for electronic transactions. Two areas have been highlighted in the discussion

paper namely contracts and consumer protection. Generally the legal system in Tanzania

is mainly based on Common law. Regulatory steps to secure electronic transactions such

as digital signatures, electronic evidence, reforms to contract law, dispute settlement and

others have not yet been promulgated. In terms of contracts, the Tanzanian laws do not

yet recognize electronic contracts. Laws on consumer protection, sales and supply of

goods in Tanzania protect consumers on off-line business only which hardly apply to the

online business when it comes to the matter of distance contracts. The laws do not

protect consumers against any risks involved in distance selling and buying business

because when these laws were passed the online or distance contracts were not in

practice in Tanzania. It is further noted that Tanzanian laws neither cover on-line

contracts nor recognize cyber space; the laws provide that, the contract must be in

52
See Distr.: General E/ECA/CODIST/1/15, op cit.

26
writing and duly signed or authenticated before a witness a requirement hardly

applicable in cyber space.53

In Tanzania the process commenced in 2006 with the submission of a proposal for the

enactment of cyber laws by the Tanzania Law Reform Commission to the Ministry of

Justice and Constitutional Affairs. It proposed separate bills on cyber crimes, regulation

of electronic transactions and communications, privacy and data protection and the

amendment of the Evidence Act (1967). The second development was the creation of a

merged Tanzania Regulatory Authority (TCRA) to oversee postal and electronic

communication industries on the mainland.54 The Commission for Human Rights and

the Good Governance Act (16/2007) provides for the admissibility of electronic

evidence. However, this is not adequate and the bills proposed by the Tanzania Law

Reform Commission still need to be enacted.55

53
See Cyber Security in Tanzania- Country Report, retrieved from www.google.com on 20th June, 2010.
54
The Tanzania Communications Regulatory Authority (TCRA), established by the TCRA Act no. 12 of
2003 is an independent Authority for the Postal, Broadcasting and Electronic communications industries
in the United Republic of Tanzania. It merged the former Tanzania Communications Commission and the
Tanzania Broadcasting Commission. Its role includes licensing and regulating the Postal services,
broadcasting services and Electronic Communications sectors in the United Republic of Tanzania. TCRA
became operational on 1st November, 2003 and has effectively taken over the functions of the two defunct
commissions. Specifically the Authority is responsible for enhancing the welfare of Tanzanians through:
Promotion of effective competition and economic efficiency‟ Protecting the interests of consumers,
Promoting the availability of regulated services, Licensing and enforcing licence conditions of
broadcasting, postal and Telecommunications operators , Establishing standards for regulated goods and
services , Regulating rates and charges (tariffs), Managing the radio frequency spectrum, Monitoring the
performance of the regulated sectors and Monitoring the implementation of ICT applications. Visit
http://www.tcra.go.tz/about/profile.php as retrieved on 19th June 2011.
55
See the Law Reform Commission of Tanzania Report on Ecommerce and Cyber Crime, 2006.tinued f
27
Uganda has drafted electronic bills- the E-transaction Bill, the Computer Misuse Bill and

The Electronic Signature Bill. These were approved by the Cabinet on 16 January 2008,

and went to Parliament for debate. The bills are in conformity with the proposed East

African Community (EAC) draft framework on cyber laws.56

In Ghana the government set up a national ICT Policy and Development Committee in

August 2008, to spearhead the development of cyber laws. Ghana has also drafted the

Telecommunication Bill, the Electronic Transactions Bill and the National Information

Technology Agency Bill.57

At the regional level concerted efforts have been made to develop harmonized legal

frameworks for electronic commerce. Several initiatives take place under different

regional integrations in Africa.

2.3.2 The Southern African Development Community (SADC)

In 2001, the SADC Committee of Ministers established the e-readiness task force to

prepare a comprehensive study of the e-readiness status in SADC countries and come up

with a plan of action. The results of the study indicated that only South Africa and

Mauritius in Southern Africa had established legislation covering the broad range of

issues associated with ecommerce. As a result, SADC and the USAID-funded dot-GOV

Southern African ICT and Policy Reform Support ("SIPRS") Project collaborated to

56
Angeline Vere, op cit.
57
Ibid.

28
develop the SADC Model Ecommerce Law, to harmonize the legal framework for

ecommerce. The draft version was tabled at the SADC Workshop on Harmonization of

Ecommerce Laws, held in Johannesburg, South Africa, on 24 November 2003. The

model addressed core ecommerce issues such as cyber crime, intellectual property

rights, and privacy concerns. The model was built on existing legislation in the region,

and from the Model Law on ecommerce formulated by the United Nations Commission

for International Trade Law (UNCITRAL).58

2.3.3 The East African Community (EAC)

With the adoption of the framework by the EAC Council of Ministers, the five partner

States - Burundi, Kenya, Rwanda, Tanzania and Uganda - have committed themselves to

enacting cyber laws that will be effective across the region. The creation of an enabling

legal and regulatory environment was identified in the e-government program initiated

by the EAC secretariat in 2005 as a prerequisite to the implementation of e-government

and ecommerce strategies at national and regional levels. The adoption of harmonized

cyber laws is in turn considered a crucial element in implementing e-government

services effectively and increasing trade and investment in the region. E-government and

ecommerce strategies need strong legislative back-up on such matters as data security,

58
Angeline Vere, op cit.

29
network security, information systems, electronic transactions, and the prevention of

cybercrime.59

The framework provides guidelines for the enactment and enforcement of harmonized

cyber laws in the region. It covers electronic transactions, electronic signatures and

authentication, data protection and privacy, consumer protection, and computer crime.

Policymakers of developing countries are increasingly aware of the need to adapt and

harmonize their legislation to take into account the Internet economy and the potential of

ecommerce for boosting domestic and cross-border business and investment.

2.4 Understanding Cyber Contract

Traditional concept of contract provides the foundation to all types of valid and

enforceable contracts. By definition, all agreements are contracts if they are made by

free consent of the parties competent to contract, for a lawful consideration and with a

lawful object.60

From the above definition we find that a contract essentially consists of two elements

namely an agreement and a legal obligation. An agreement is defined to mean every

promise and every set of promises, forming the consideration for each other. 61 An

agreement is thus a result of an offer and acceptance. From this definition, it implies that

there must be two or more persons for an agreement to exist because no one person can

59
See the Law Reform Commission of Tanzania Report on Ecommerce and Cyber Crime, 2006.
60
See section 10 of the Law of Contact Act, CAP 345 RE 2002.
61
Visit http://en.wikipedia.org/wiki/Electronic_commerce. Also see Davidson Allan, op cit.
30
enter into an agreement with himself, and secondly, both parties to an agreement must

agree about the same subject-matter of the agreement in the same sense and at the same

time i.e. consensus ad idem. For an agreement to become a contract it must give rise to

legal obligations, i.e. a duty enforceable by law. If an agreement is incapable of creating

legal obligation, it is not a contract.62

It is contended that contract formality does not merely because an electronic medium

was used. A contract that can be entered orally can of course be entered by use of email

and other forms of e-communications. This is not new. It can be traced back to 1880‟s

when the telegraph was first in commercial use. However, the perception of the 1990‟s

was that commercial parties were uncertain of the use of e-media where formal

requirements such as writing, signature, production and retention were concerned.63

An e-contract is an agreement created and signed in electronic form. No paper or other

hard copies are used. For example, you write a contract on your computer and email it to

a business associate and the business associate emails it back with an electronic

signature indicating acceptance.64 Therefore, e-contract is a contract modelled, specified,

executed and deployed by a software system. E-contracts are conceptually very similar

to traditional (paper based) commercial contracts. Vendors present their products, prices

and terms to prospective buyers. Buyers consider their options, negotiate prices and
62
See Kuchhal, M. C, (2005), Mercantile Law, 7th Edn at Pp 7-119.
63
See Davidson, Alan, op cit, at Pp 20-28.
64
Tubrazy, S.J, (2008),”E- Contracts in Cyber Space” retrieved from http://www.cybercontracts.mht on
16th January, 2011.
31
terms (where possible), place orders and make payments. Then, the vendors deliver the

purchased product. Nevertheless, because of the ways in which it differs from traditional

contracts, e-contracts raise some new and interesting technical and legal challenges.65

An e-contract can also be in the form of a „Click to Agree‟ contract commonly used with

downloaded software. The user clicks an „I Agree‟ button on a page containing the terms

of the software license before the transaction can be completed.66

2.4.1 Salient Features of Cyber Contract

An electronic contract has a twofold structure. Thought of electronically, the contract is

a sequence of numbers and code saved to some electronic or magnetic medium.

Alternatively, the contract becomes perceptible through a transformation of the numeric

code when broadcast to a computer output device such as a printer or screen. The

English legal doctrines of offer, acceptance and consideration when coupled with an

intention to create legally binding relations define the necessary conditions for the

creation of a contract. There is no necessity for the most part that any contract be

concluded in writing. The question as to whether contracts performed electronically are

legalistically equivalent to writing comes more to a question of evidential weight and the

application of the parole evidence rule.

65
Tamrakar, V, et al, (2010), “E-Contracts and its Legality”, retrieved on 18th January, 2011 from
www.asianlaws.org.
66
Rodney, R, (2001), Guide to Cyber Laws, 1st edn.
32
The question would remain as to a determination of whether the electronic

communications contain the final agreement between the parties. Where some, though

not all, of the terms are agreed in the electronic communication, a partial integration will

result in the allowing of extrinsic evidence.

2.4.2 Email and Cyber contracts

There are a number of contractual issues associated with email. There are for example,

numerous debates over the applicability of the postal rule. When sending an e-mail,

there are several potential moments of acceptance. The first moment occurs when the e-

mail departs the sender‟s outbox controlled by the sender. In Internet-based e-mail

transactions, the e-mail cannot be recall once it has left the sender's outbox. This is a

situation analogous to the postal rule. The next is the instance of receipt of the e-mail in

the recipient‟s inbox. At this point, the e-mail is accessible to the recipient. The next

possible instance that could potentially be the moment of acceptance is when the

recipient collects the email from the mail server into the client's mail inbox. At this

point, the recipient has received the e-mail. Finally, there is an argument for defining the

moment of acceptance as the point when the recipient has opened or read the e-mail.67

E-mail is the digital equivalent of a letter sent through the post. All normal functions of

postal mail transpire through email. This includes not only the ability to send

67
Munir, A. B, (2006) “Electronic Commerce Bill,” Malayan Law Journal.
33
advertisements or invitations to treat68 but also equally offers and acceptances. It must

be remembered that the question of whether the mailbox rule applies to e-mail is one

that the courts have not yet answered. Its applicability seems to depend on whether e-

mail is deemed to be more like instantaneous communication than like traditional mail

services. Unlike real time chat e-mail, however, is probably not instantaneous in the

sense of this rule. E-mail maybe fast but it is not instantaneous. Failed, delivery,

rerouting, damage in delivery or simply delayed all arise with e-mail.69 For this reason,

e-mail, may be argued to resemble most the postal letter delivery rule.

2.4.3 Types of Cyber Contracts

2.4.3.1 Cyber Contracts in the form of Electronic Data Interchange (EDI)

This form of contracts involves electronic transfer of agreed standard-structured

information from one computer to another.70 This form of e-contract developed in 1970s

with the development of the computing industry to replace the paper based contracts.71In

EDI we find transaction data interchange characterised with general trading documents

like invoices, purchase orders and customs declarations and specific types of
68
See the case of Partridge v Crittenden, 1968.
69
However, not all direct communications are free from failure-key words unheard as a lorry passes by;
re-routing –as one person repeats a message not heard properly by another person; etc.
70
See C Glatt, (1998), “Comparative Issues in the formation of Electronic Contracts”, 6 (1), International
Journal of Law and Information Technology 34-68, at 37. See also article 2 of the UNCITRAL Model
Law on Electronic Commerce available at http://www.un.or.at/uncitral/english/texts/electronic/ml-ec.htm
as accessed on 10th September, 2010.
71
See Heinrich, G, (1995) “Harmonised Global Interchange‟- UNCITRAL‟s Draft Model Law for
Electronic Commerce Data Interchange” 3 Web JCLI, Part I retrieved from
http://webjcli.ncl.ac.uk/articles3.html on 12th Feb. 2011.
34
communications like electronic fund transfers. EDI is also characterised by technical

data interchange like computer-aided-design or computer-aided-manufacturing

(CAD/CAM) applications.72 The EDI is typically carried out with an underlying prior

agreement known as trading partner‟s agreement. This system of contracting follows the

foundation lied down in paper based contract system that requires consent of parties to a

contract, i.e., consensus ad idem, intention to create legal relations and lawful

consideration.73 With recent advancement in internets, the EDI are being formed via

internets too.74 Therefore, in EDI concluded via internet, legal questions as to the terms,

consent, time and place of contract may arise, and create legal challenges particularly to

countries that do not have electronic legislations like of the African countries including

Tanzania, Uganda, Kenya, Rwanda, Burundi, to mention but example

2.4.3.2 Email-Based Contracts

Email system has now been the most attractive means of communication among users

and it is currently a means of creating effective and binding legal relations.75 However,

emails are technologically based on client server, where a sender‟s server sends a

72
See Saxby, (1990), Encyclopaedia of Information Technology Law.
73
See Zainol. Z. A, (1999), “Electronic Data Interchange and Formation of Contract” retrieved from
http://webjcli.ncl.ac.uk/articles3.html on 12th Feb. 2011.
74
See Milosovic. Z, et al, „Electronic Commerce on the Internet: What is still missing‟? Available at
http://www.isoc.org/HMP/PAPER/096/html/paper.html accessed on 1st August 2007.
75
E-contract is currently one of the factors that influence e-commerce all over the world, a person in
Tanzania can easily order a vehicle from Japan and effect payment without seeing the other party in
person, exchange of emails creates binding agreements, booking a conference room in London via email
by a person in Kenya amounts to a legal agreement.
35
message to the receiver‟s mail server and in that course of communication the electronic

mail travels through a number of servers before reaching the recipient and may even be

stored in a server before sending it.76 This may create legal questions especially on

certainty of the terms of the contract.

2.4.3.3 Web-Based Contract

Web – based contracts were well discussed in the case of Steven v. Fidelity & Casualty

Company of New York.77 It was stated that these are standard form contracts which may

also be referred to as contracts of adhesion.78 These may take any of the following

forms:-

76
See Edward, L, et al, (1997), Law and Internet: Regulating Cyber Space, Hart Publishing Oxford, at
4.
77
58 Cal. 2d 862, 882 no. 10 of 1962 available on http://online.ceb.com/calcases/C2/58C2D862.HTM ,
also visit http://wapedia.mobile/en/contractlaw as accessed on 29th January, 2011.
78
A standard form contract (sometimes referred to as an adhesion contract or boilerplate contract) is
a contract between two parties that does not allow for negotiation, i.e. take it or leave it. It is often a
contract that is entered into between unequal bargaining partners, such as when an individual customer is
given a contract by the salesperson of a multinational corporation. The customer is in no position
to renegotiate the standard terms of the contract and the company's representative usually does not have
the authority to do so. While adhesions contracts, in and of them, are not illegal per se, there exists a very
real possibility for Unconscionability. Standard form contracting reduces transaction costs substantially
by precluding the need for buyers and sellers of goods and services to negotiate the many details of a sale
contract each time the product is sold. On the other hand, there is the potential for inefficient, and even
unjust, terms to be accepted by signatories to these contracts. Such terms might be seen as unjust if they
allow the seller to avoid all liability or unilaterally modify terms or terminate the contract.
Unconscionability (also known as unconscientiously dealings) is a term used in contract to describe a
defence against the enforcement of a contract based on the presence of terms that are excessively unfair to
one party. Typically, such a contract is held to be unenforceable because the consideration offered is
lacking or is so obviously inadequate that to enforce the contract would be unfair to the party seeking to
escape the contract.
36
 (a) Click-Wrap Agreement

A click wrap agreement (also known as a "click through" agreement or click wrap

license) is a common type of agreement (often used in connection with software

licenses). Such forms of agreement are mostly found on the Internet, as part of the

installation process of many software packages, or in other circumstances where

agreement is sought using electronic media. The name "click wrap" came from the use

of "shrink wrap contracts" commonly used in boxed software purchases, which "contain

a notice that by tearing open the shrink-wrap, the user assents to the software terms

enclosed within."79

Click-wrap is the electronic equivalent of the shrink-wrap method which allows users to

read the terms of the agreement before accepting them. The click-wrap method was

presented to the court in ProCD v. Zeidenberg80 where Zeidenberg purchased a CD-

ROM, created by ProCD, which contained a compilation of a telephone directory

database. Upon purchase of this CD-ROM, Zeidenberg installed the software onto his

computer then created a website which offered to visitors the information contained on

the CD-ROM at a price less than what ProCD charged for the software.

Prior to his purchase of the software, Zeidenberg might not have been aware of any

prohibited use or dissemination of the product without consent by ProCD. However,

79
See Richard G, (1996), “Computer software law and legislation in United States”, retrieved on 29th
January2011http://www.murdoch.edu.au/elaw/issues/v9n3/kunkel93_text.html#Shrinkwrap%20License%
20Cases_T .
80
86 F.3d 1447 (7th Cir. 1996), visit https://elaw.murdoch.edu.au/index.php/elawmurdoch/issue.
37
upon preparing to install the software onto his computer, the software license appeared

on his computer screen and would not allow him to continue with the installation

without indicating acceptance by clicking his assent in a dialog box.81

The content and form of click wrap agreements vary widely. Most click wrap

agreements require the end-user to manifest his or her assent by clicking an "ok" or

"agree" button on a dialog box or pop-up window. A user indicates rejection by clicking

cancel or closing the window. Upon rejection, the user can no longer use or purchase

the product or service. Classically, such a take-it-or-leave-it contract was described as a

contract of adhesion, which is a contract that lacks bargaining aspect, forcing one party

to be favoured over the other.82

The terms of service or license do not always appear on the same webpage or window,

but are always accessible before acceptance, such as through a hyperlink embedded in

the product's webpage or a pop-up screen prior to installation. In order to be deemed to

have accepted the terms of service, the purchaser must be put on notice that certain

terms of service may apply. If the terms of service are not visible and/or accessible,

81
Visit http: //en-wikipedia.org/wiki/click wrap. The court held that Zeidenberg did accept the offer and
the terms contained within the license by clicking through the dialog box. Zeidenberg had the opportunity
to read the terms of the license prior to clicking the acceptance box. The court further stated that
Zeidenberg could have rejected the terms of the contract and returned the software.
82
ProCD v. Zeidenberg, op cit.
38
courts have found the notice requirement to be lacking and as such, the purchaser may

not be bound to the terms of the agreement.83

In Register.com, Inc. v. Verio, Inc.84, Register.com alleged that Verio had breached the

terms of use of Register.com's database. Verio responded that the terms were not

binding since users could access the database with or without expressing consent to the

terms. The court ruled in favour of Register.com, holding that contractual relationships

could be formed whether or not users are required to express assent prior to using a

product or service.

Specht v Netscape Communications Corp85 perhaps gave the clearest definition of a

click wrap license. It was contended that a click wrap license presents the user with a

message on his computer screen requiring that the user manifest his or her assent to the

terms of the license agreement by clicking on an icon. The product cannot be obtained or

used unless and until the icon is clicked. For example, the terms may appear in the

following words; “do you accept all the terms of the preceding license agreement? If so,

click on the Yes button. If you select No, Setup will close.” Below this text are three

buttons or icons: one labelled "Back" and used to return to an earlier step of

the download preparation; the next labelled "No," which if clicked, terminates the

download; and the last labelled "Yes," which if clicked, allows the download to proceed.

83
ProCD v. Zeidenberg, op cit.
84
356 F.3d 393 (2d Cir. 2004).
85
150 F.Supp.2d 585 (S.D.N.Y. 2001), 306 F.3d 17 (2d Cir. 2002).
39
Unless the user clicks "Yes," indicating his or her assent to the license agreement, the

user cannot obtain the software. This complies with the concept of consensus ad idem.

(b) Shrink Wrap Agreement

Shrink wrap contracts are license agreements or other terms and conditions of a

(putatively) contractual nature which can only be read and accepted by the consumer

after opening the product. The term describes the shrink-wrap plastic wrapping used to

coat software boxes, though these contracts are not limited to the software

industry. Web-wrap, click-wrap and browse-wrap are related terms which refer to

license agreements in software which is downloaded or used over the internet.86 The

term "shrink wrap agreement" refers to the purchase agreements that are attached to

shipped products, usually bound by shrink wrap (plastic wrapping) that contain terms

and conditions. Shrink wrap agreements can include the following terms: licenses, rights

of use, fees and payments, forum clauses, warranties and limitations of liability.87

The controversy around shrink wrap agreements is the fact that the terms of the

agreement cannot be read until the consumer has paid and accepted the package, and has

opened the product by taking off the shrink wrap, which then states that opening will

constitute acceptance of the terms.88

86
Visit http://en.wikipedia.org/wiki/Shrink_wrap_contract as was retrieved on 29th January 2011.
87
http://www.murdoch.edu.au/elaw/issues/v9n3/kunkel93_text.html#Shrinkwrap%20License%20Cases_T.
88
Ibid.
40
Currently, the status of shrink wrap agreements is unclear. Courts have been split as to

whether a consumer consents to the terms in a shrink wrap agreement since he pays for

the product and goes so far as to open the package, but does not have actual knowledge

of what the terms are until he opens the package to read them. In the US two lines of

cases have dealt with the status of shrink wrap agreements. One line of cases

follows ProCD v. Zeidenberg89 which held such contracts enforceable e.g. Brower v.

Gateway.90 The other line follows Klocek v. Gateway, Inc.91, which found the contracts

at hand unenforceable, e.g., Specht v. Netscape Communications Corp.92 In this second

line of cases, no comment was made on shrink wrap contracts as a whole. These

decisions are split on the question of consent, with the former holding that only objective

manifestation of consent is required while the latter requires at least the possibility of

subjective consent.

When software is purchased, it is usually shrink wrapped and the terms and conditions

are made available either inside the container or, during the process of downloading it is

accompanied by an End User License Agreement (EULA). EULA is a software license

89
ProCD v. Zeidenberg, op cit.
90
(2000), 246 AD 2d 246, 676 NYS 2d 56.
91
104 F. Supp. 2d 1332 - Dist. Court, D. Kansas 2000.
92
Op cit.
41
which also acts as a contract between the producer and the user of the computer software

to specify the limits of use granted by the owner.93

Recent court decisions have challenged the use of EULAs within shrink wrapped

software, and multiple complaints have forced some software companies and retailers to

accept returns of opened software, or to provide EULAs on their websites for consumers

to read before purchasing.94

(c) Browse-Wrap Agreement

A browse-wrap license is part of a website and users of the site assent to the contract

when visiting it. This differs from other types of web contracts such as shrink-wrap

licenses and click wrap agreement. Examples below explain the nature of browse-wrap

agreements and how they are considered by courts.

In Specht v. Netscape,95 the court looked at the enforceability of a browse-wrap contract

entered into on the Netscape website.96 Users of the site were urged to download free

software available on the site by clicking on a tinted button labelled "download". Only if

a user scrolled down the page to the next screen did he come upon an invitation to

review the full terms of the program's license agreement, available by hyperlink. The

plaintiffs, who had not seen the agreement, downloaded the software and were later sued

93
Doctorow, Cory, (2007), “Shrink-wrap Licenses: An Epidemic of Lawsuits Waiting to Happen”,
retrieved on http://en.wikipedia.org/wiki/Shrink_wrap_contract.
94
Visit http://www.legalmatch.com/law-library/article/shrink-wrap-agreements.html.
95
Specht v. Netscape Communications Corp. 306 F.3d 17 (2nd Cir.2002).
96
Ibid.
42
for violation of federal privacy and computer fraud statutes arising from the use of the

software. The Second Circuit then noted that an essential ingredient to contract

formation is the mutual manifestation of assent. The court found that a consumer's

clicking on a download button does not communicate assent to contractual terms if the

offer did not make clear to the consumer that clicking on the download button would

signify assent to those terms. Because the plaintiffs were not put on notice of these terms

they were not bound by them.

In Ticketmaster Corp. v. Tickets.com, Inc,97 the court looked at a breach of

contract claim where the terms and conditions were situated at the bottom of the home

page in small print. The court ruled for the defendant in this case but did allow

Ticketmaster to re-plead if there were facts showing that the defendant had knowledge

of the terms and impliedly agreed to them.

In 2005, the Illinois Appellate Court ruled in favour of a browse-wrap agreement

in Hubbert. .v. Dell Corp.98 In this case consumers of Dell products were exposed to a

conspicuous hyperlink over a series of pages. The court found that this repeated

exposure and visual effect would put at reasonable person on notice of the terms and

conditions.

A browse-wrap agreement can be formed by use of a web page or a hyperlink or small

disclaimer on the page. It may only be enforced if the browsing user assents to it. For
97
2000 U.S. Dist. Lexis 4553 (C.D. Ca., March 27, 2000).
98
359 Ill.App.3d 976, 835 N.E.2d 113 (5th Dist. 2005).
43
assent to occur the browse-wrap agreement should be conspicuous, state that there is an

agreement, and provide where it can be located. Courts examine the enforceability of

browse-wrap agreements on a case-by-case basis, and there are no bright-line rules on

whether a given agreement is sufficiently conspicuous. However, based on Specht, some

practitioners believe that the icon for the terms of use agreement be placed in the upper

left-hand quadrant of the homepage and that all visitors be channelled through the

homepage. The reason for this suggestion is that the court will take judicial notice of the

fact that all Internet pages open from the upper left-hand quadrant, thus the defendant

must overcome the presumption that the icon was viewed. Without this presumption, the

plaintiff has the burden of proving the defendant did see the icon.

It is worth to remember that a browse wrap clause purports to bind the user of a website

to a contract created by the user's mere browsing of the website. It is often unlikely that

the user even viewed the browse wrap clause, much less assented to it. The browse wrap

clause assumes the user's knowledge of and consent to the browse wrap contract.

Examples of browse wrap clauses include-

 Multi-map.com99

Tele Atlas Conditions of Use

By accessing this web site you accept this Agreement

99
Found in URL:http://www.multimap.com/tacondit.htm.
44
This is a legal agreement between you, the end user, and multimedia mapping ltd

(provider). By accessing this web site, you are agreeing to be bound by the terms of this

agreement. If you do not agree with these terms, do not access this web site.

 AstronomyDaily.com100

Acceptance of the terms of the usage agreement

The Web Site is offered to you, the User, conditioned on your acceptance without

modification of the terms, conditions, and notices contained herein. Your use of this

Web site constitutes an implicit agreement to be bound by all of the terms of this

Usage Agreement.

2.5 The Theoretical Basis for Contractual Liability

2.5.1 Introduction

To understand the reasons for existence of contracts and contractual liability it is

necessary to examine the contract theory and the explanations they provide. In these

theories we examine the reasons to enforce a promise and what may justify the

enforcement of an agreement if the parties had made a reciprocal bargain or the

promisee had suffered a detriment in reliance on the promise.

100
Found in URL: http://www.astronomydaily.com/usage.html as accessed on 31st January 2011.
45
 2.5.2 The Promissory Theory

Promissory theories are rights based theories derived from Kantian 101 principles.

According to these theories, a promise is the communication of an intention to undertake

an obligation. The obligation is created by the act of making the promise itself and not

by reliance on the promise by the promisee. A promise creates an obligation because it is

intrinsically valuable. There are a number of possible explanations as to why promises

are valuable. For example, by making a promise, the promisor creates an expectation

that the promise will be kept. The promisee‟s expectation is founded on the premise of

mutual trust. It is a social convention that it is morally wrong to create the expectation

and then breach the promise.102

Alternatively, a promise creates an exclusive relationship between the promisor and the

promisee and, where the promise is kept, a relationship of trust and respect develops.

The encouragement of such relationships is a good thing. The obligation created by the

promise imposes a duty on the promisor to carry out the promise. If the promisor

breaches the promise, the promisee suffers harm by virtue of the breach. If promissory

theory is the foundation of contract law, it is necessary to identify the role of

consideration in that context. If the role of consideration is to provide a reason to enforce

101
Immanuel Kant (1724-1804), German philosopher, considered by many the most influential thinker of
modern times. The keystone of Kant's philosophy, sometimes called critical philosophy, is contained in his
Critique of Pure Reason (1781), in which he examined the bases of human knowledge and created an
individual epistemology.
102
Stephen A. Smith, (2004), Contract Theory, (Oxford University Press, 222.
46
or to decline to enforce a promise, then it would be difficult to reconcile promissory

theories with consideration. 103

There are a number of reasons that, in terms of the realist explanation of consideration,

have been invoked as a reason to enforce promises. These include reliance on the

promise, or a prior moral obligation to perform the act promised. In terms of the

promissory theories, the reason for enforcement comes from the fact that the promise

was made, and no additional reasons are required to justify enforcement. The reasons

invoked for not enforcing a promise include duress, unconscionable bargains, illegality,

and a lack of intention to be legally bound. It can be argued that promises made under

duress, in unconscionable circumstances, or involving illegality, are not promises that

have any intrinsic value, and are not worthy of recognition. 104 It can also be argued that

if a promise is made without any intention on the part of the parties that it will be

binding, then no expectation is created, and therefore a lack of such an intention would

suggest that any words spoken constituted a statement of intention and not a promise.105

If these reasons for not enforcing a promise required some legal mechanism to identify

them, consideration in the realist sense might have a role to play. But in the modern law

of contract, all of these reasons for not enforcing a promise are recognised independently

of the doctrine of consideration. If there are no additional reasons for the enforcement of

See David Sim, (2009), “Contract, Consideration and Consistency” Department of Accountancy and
103

Business Law, Working paper series no. 3 July 2009.

104
See Stephen A. Smith, op cit.
105
See Lon L. Fuller, Consideration and Form, (1941) 41 Colum L .Rev 799 at 800-801.

47
a contract beyond the intrinsic value of the promise itself, then consideration becomes

superfluous in terms of promissory theory.106

The proposition that only promises made as part of a mutual exchange or bargain should

be enforced is also inconsistent with promissory theories. According to these theories, a

promise is intrinsically valuable. This value is not diminished by the lack of a reciprocal

promise. Therefore, consideration as an indicator of a bargain has no role to play in

terms of the promissory theories. A requirement that certain formalities be carried out by

the parties to an agreement to render the promise enforceable is not essential in terms of

promissory theory. But it is not inconsistent with promissory theory. The obligation is

still created by the promise. The requirement of formalities provides evidence that the

promise was in fact made and that the promisor did not make the promise on impulse or

without deliberation. If the promise is made using a legally recognised formality, this

provides evidence that the parties intended the promise to be legally binding. A

formality requirement plays a procedural role independent of the conceptual basis of

promissory theory.107

Conceptually consideration has a role only in terms of promissory theory if its function

is to provide evidence that a promise was made after proper deliberation and with the

intent that it should be legally binding.

106
Stephen A. Smith, op cit.
107
Ibid.

48
For example in Carlill v. Carbolic Smoke Ball Company108it was observed that unless an

acceptance of an offer is communicated the minds of the contracting parties remain

apart, and that no consensus ad idem exists between the parties. And, consensus ad idem

presupposes willingness or freedom of the parties to agree. Freedom of contract is thus

one of the pillars of contract, and it is contended to be the matter of the parties and not

the law and once parties enter into a contract voluntarily, nobody, not even the state

should dare to interfere with it.109

Though the principle is that parties to a contract must be at consensus ad idem, it does

not however mean that subjectively their intents coincide, at times there may be no

consensus ad idem properly construed.110 An agreement is not a mental state but an act

and it is an inference from conduct. Therefore some other external acts are of essence in

determining the consensus ad idem as between the parties, i.e., the basis of contract is

not the subjective intent of the parties alone but their objective and apparently

manifested intend.111 Such external acts will be sufficient to create liability on a

defaulting party even if he might have a completely different intent about the contract.112

Courts of law have been taking a more objective approach to formation of contract as

opposed to subjective inquiry. For instance, in Gurney Consulting Engineers v. Pearson

108
[1893]1QB256.
109
See Nditi, N.N.N, op cit, at P 3.
110
See Holmes, O. W, (1897), the Path of the Law, 10 Harvard Law Review 457.
111
See Boulder Consolidated Ltd v Tangaere [1980] 1 NZLR 560, 567 (CA).
112
See Storer v Manchester City Council [1974] 1 WLR 1403 at 1408.
49
Pension Property Fund Ltd113 the court stated that generally English law adopts an

objective theory of contract formation, i.e., the governing criterion is the reasonable

expectations of honest or reasonable man.

2.5.3 The Reliance Theory

Reliance theory is based upon the premise that contractual obligations are designed to

ensure that where one party makes a promise to another which induces that other party

to rely on the promise to his detriment, then the promisor should compensate the

promisee for losses suffered as a result of that reliance.114 If the function of

consideration is to provide a reason for the promise; consideration cannot be relevant if

reliance is the basis of liability. A reason for enforcing a promise may include an act of

reliance, but it may also include many other reasons that have nothing to do with

reliance. On this understanding of the function of consideration, the concept is overly

broad. If on the other hand consideration is an indicator of a bargain, consideration is not

broad enough. While the existence of an exchange may in some circumstances be

consistent with reliance, in others there may be no reliance at all. For example where

two parties exchange mutual promises, it may be said that they have struck a bargain.

But there will be no reliance until one of the parties acts to their detriment on the

promise made by the other party.115 The existence of an exchange does not necessarily

113
[2004] APP.L.R 09/02.
114
See W Howarth, (1984), “The Meaning of Objectivity in Contract” 100LQR256.
115
See W Howarth, Op cit.
50
indicate acts of reliance. As with the promissory theories, a requirement of certain

formalities is not essential to reliance theories, but neither is it inconsistent. The

obligation is created by the promisee‟s act of reliance. But evidence corroborating the

existence of the promise, or of proper deliberation by the promisor, or of the intention of

the parties to be bound, serves a useful procedural purpose that does not impinge on the

underlying theory. Consideration as an indicator of an exchange or as a reason for the

promise has no role in reliance theories. But as a formal requirement, it performs a

useful function that is not inconsistent with the theoretical basis of liability.116

2.5.4 Transfer Theories

Transfer theories postulate that a contract is a transfer of rights. No new rights are

created by the agreement of the parties as there are in promissory and reliance theories.

A contract transfers existing rights held by one party to the other. In the case of an

executory contract, what is transferred is the right to the performance of a future act by

the other party.117

The idea that existing rights of the parties are transferred from one party to another by

virtue of their agreement is central to transfer theories. The very fact that they have

agreed is sufficient, and it follows that no other reasons for enforcing the right

transferred is necessary. As with the promissory theories, reasons not to enforce an

116
See Adam & Brownsword, (2004), Understanding Contract Law, 4th ed, Sweet and Maxwell, at 48.

See Peter Benson, (2001), “The Unity of Contract Law” in Peter Benson Ed. The Theory of Contract
117

Law; New Essays (Cambridge University Press) 152.

51
agreement, such as duress or illegality for example, are dealt with in the modern law of

contract by rules independent of the doctrine of consideration. Consideration, in the

sense of a reason for the enforcement of a promise, is unnecessary in terms of transfer

theories.118

However, the relevance of consideration as the indicator of a bargain in transfer theory is

not so clear. If the focus of transfer theories is the agreement of the parties, it is difficult

to see why an exchange or bargain is an essential feature of the formation of a contract.

M may agree to pass ownership of a chattel to F, and she may agree to accept ownership.

There is no exchange, but in terms of transfer theory, it might be supposed that a right to

receive ownership has been transferred to F, even although she has given nothing in

return. However Professor Benson119 proposes that there can be no contractual transfer

without consideration. This is based on the premise that, by necessary implication, the

doctrine of offer and acceptance requires that each party acts in order to obtain a return

act from the other party. Gratuitous promises are one sided promises in which one party

is not required to give anything in return for the promise. It follows that a gratuitous

promise is not actionable. The purpose of consideration is to distinguish exchange

promises that can transfer rights and gratuitous promises which cannot. On this view,

See David McLauchlan, (1999), “A Contract Contradictions” 30 (1), Victoria University of Wellington
118

Law Review 175.

119
Peter Benson, op cit.

52
consideration as an indicator of exchange will be a necessary element of the formation

of contract.120

As with the promissory and reliance theories, the requirement for certain formalities as a

requirement for contract formation is not essential to transfer theories, but neither is it

inconsistent. If an exchange is not conceptually an essential element of offer and

acceptance, the transfer of rights arises solely from the agreement of the parties and no

other requirements are needed. But, the formality function could satisfy a procedural

need for evidence corroborating the existence of the promise, or of proper deliberation

by the promisor, or of the intention of the parties to be bound. But even if an exchange is

essential to a transfer of rights, as Professor Benson suggests, that does not preclude

consideration performing the role of a formality requirement as well.121

2.5.5 Utilitarian Theories

In terms of utilitarian economic efficiency theory, the role of contract is to promote

efficient behaviour that maximises welfare in society. Efficiency theory is based on the

fundamental assumption that mutual exchanges are beneficial to both parties and

See Gillies L, (2007), “Choice of Law Rules for Electronic Consumer Contracts: Replacement of the
120

Rome Convention by the Rome I Regulation,” Journal of Private Law, 89-112 at 96.
121
See Edward L, et al, (1997), Law and the Internet: Regulating Cyberspace, Hart Publishing,
Oxford, at 4.

53
therefore maximises welfare. A gratuitous or donative promise on the other hand is

beneficial in economic terms to only one party and does not maximise welfare.122

By enforcing agreements to exchange, and not enforcing donative or gratuitous

agreements, the law of contract provides an incentive to enter into the former. It follows

that the law of contract requires a mechanism to distinguish between gratuitous and

donative agreements and agreements to exchange.123 Consideration as an indicator of an

exchange or bargain provides that mechanism. Efficiency theory does not imply the need

for any additional limitations on contract formation such as other reasons for enforcing

the agreement. While a requirement for formalities is not inconsistent with the theory, it

does not preclude consideration of having more than one function. Consideration as a

formality could be an additional, but subsidiary function in terms of the economic

efficiency theory. In any event, the fundamental assumption of economic efficiency

theory makes the identification of an exchange essential to the formation of contract.124

There are other utilitarian theories that have been proposed in an effort to explain

phenomenon of contract. Rather than the maximisation of the economic welfare, these

theories promote respectively distributive justice, the valuable relationships that arise

from people making and keeping agreements, and the autonomy of the individual. On

122
Popkin, Richard H. "Jeremy Bentham." Microsoft® Student 2009 [DVD] Redmond, WA: Microsoft
Corporation, 2008.
123
See S.J. Stoljar, (1975), A History of Contract at Common Law (Australian National University Press,
Canberra) at 9-11; see also David Ibbetson , (2001), A Historical Introduction to the Law of Obligations
(Oxford University Press, at 80.
124
Popkin, Richard H. "Jeremy Bentham, op cit.

54
the face of it there appears to be no need in these theories for a distinction between

gratuitous or donative promises on the one hand and exchanges on the other.125 The

promotion of distributive justice, valuable relationships and the autonomy of the

individual may equally be served by encouraging donative promises as much as

reciprocal promises. But these theories as yet are not fully developed, and it would be

premature to come to a definite conclusion on the point.126

2.5.6 Conclusion

It is our view that the above theories are relevant to the discussions regarding cyber

contracts in the recent technological era visa-a-vi the traditional systems of contracting.

One can easily justify the status of a particular transaction if it amounts to a contract or

not. And courts of law can raise the foundation for the judgement in cyber contracts

especially in countries which are yet behind with the technological advance and the

laws.

125
David Ibbetson, (2001), A Historical Introduction to the Law of Obligations, (Oxford University Press,
at 83.
126
Ibid.

55
 2.6 Historical Perspective of the Contract Formation and the Law of

Contract in Tanzania

2.6.1 Introduction

Law is generally linked to history of a particular society. A law traces back to history

and it has its roots from its past oracles.127 In this part we trace the history of the law of

contract before and after the coming of the colonialists in Tanzania so as to make a link

with its development to date.

2.6.2 The Law of Contract and its History in Tanzania

As it has been pointed out in the previous chapter the people of Tanganyika (Tanzania)

used customary law and customary forms of contracting to effect contractual

transactions.128 The coming of the colonial powers in Tanganyika especially in 1919129

had much influence on the then existing legal system and the laws in particular. The

British rule in Tanganyika established their legal systems and the laws in order to

support their form of governance i.e. indirect rule approach.130

127
See Holmes, O. W, (1897), The Path of the Law, op cit.
128
See chapter one of this work at Pp 2 for more clarifications on customary forms of contracting before
and after the coming of colonial rule in Tanganyika.
129
After WWI when Tanganyika became a Mandate Territory under British rule, the colonial rule
established several laws that favoured their interests in Tanganyika.
130
See R W Hodgin, (1975), Law of Contract in East Africa, at Pp 1.
56
The British rule in East Africa (Tanganyika, Uganda and Kenya) introduced the Indian

Law of Contract Act.131 But the intention was for the Act to cover non-natives‟

contractual arrangements.132 This Act was codified from the English common law

relating to contracts in the 19th century to be applied in the Indian colony. This Act had

initially incorporated the Sale of Goods Act133 but these provisions were repealed in

India in 1930 by the Indian Sale of Goods Act which was a replica of the English Sale

of Goods Act.134 However, the context of customary law in East Africa may be regarded

in some aspects as part of the law of contract.135

In Tanganyika after independence in 1961 the Judicature and Application of Laws

Ordinance (JALO)136 was introduced with the provisions on the laws that were to be

applied in independent Tanganyika. Thus, the Indian Law of Contract Act, 1872 applied

131
1872.
132
See section 13 (4) of the Tanganyika Order in Council, 1920, see also Nditi, N. N. N, op cit, at Pp 15.
133
See sections 76-123.
134
1893, the Sale of Goods Act of India was as well introduced in East Africa.
135
See Nditi. N. N. N, op cit, Pp 5-14, see also section 2(3) of the Law of Contract Act which provides:
Nothing in this Act, other than section 23, shall affect any customary; and in relation to any matter in
which the law applicable is customary law, the provisions of the said section 23 shall be in addition to any
relevant rule of customary and the references to a law in the said section 23 shall be deemed to be
references to the Acts of Tanzania.
136
From the JALO which is now CAP 358 R.E 2002, under section 2 (3) various common law principles
and doctrines of equity may be sources of contract law and courts of law have been resorting to them, see
also Hussein Bachoo v. Clove Growers Association of Zanzibar [1957] E. A 193, Nyali Ltd v. A.G [1955]
1 ALL ER 646 and Tanzania Air Services Ltd v. Minister for Labour, the Commissioner for Labour and
A.G [1996] TLR 217 HC at 222.
57
in Tanganyika until 1961 when Tanganyika re-enacted the said Act but with minor

changes.137

The Judicature and Application of Laws Act138 allows common law principles, doctrines

of equity and statutes of general application that were effective in England on the 22nd

July 1920 to have force in Tanzania provided the circumstances permitted and subject

to such qualifications as local circumstances rendered necessary.

The impact of the JALO to the law of contract in Tanzania is that the common law

principles and the doctrine of equity developed in England before 22nd July, 1920 form

part of the sources of contract law. However, the common law principles developed by

courts of law in England are only persuasive to the courts of Tanzania.139

2.6.3 Contract Formation in Tanzania

2.6.3.1 Introduction

From contractual relations emerged common principles that are guiding contract

formation. These principles may either validate or invalidate the formed contract. The

requirements include but not limited to capacity to contract, the purpose of the contract

137
The changes included giving it a different name i.e. the Law of Contract Act, CAP 433 which is now
CAP 345 R.E 2002 and the Act remained unchanged to date. For sale of goods, the Sale of Goods Act,
1931 is the governing law to date.
138
Op cit.
139
See the case of Juwata v Kiuta, Civil Appeal No. 29 of 1987 (unreported) the court approved Govindji
Mulji Dodhia v National & Grindlays Bank Ltd & Another (1970) E.A 195 the court may depart from its
own decision and it was maintained that the foreign cases are only of persuasive value, this was cemented
also cemented in the cases of Mayers v. Akira Ranch Ltd (1972) EA 347, Dodd v. Nanda (1971) EA 58
and Jirvaj v Dervaj (1968) EA 263.
58
must be lawful, the form of the contract must be legal, the parties must intend to create a

legal relationship; and that the parties must consent to contract.

It may often be necessary to decide when a contract is concluded. This may affect such

matters as:- the terms which govern the contract, the price (for example if the contract

provides that the price shall be the market price current at the date of conclusion of this

contract) and the place where the contract is concluded, which may have a bearing on

such questions as which law governs the contract.

A contract in Tanzania is defined under section 2 (1) (h)140 as an agreement that is

legally enforceable. Such an agreement may be oral or written and may be unilateral or

bilateral. But some laws restrict some contracts to be in writing or follow certain

prescribed forms.141 And the practice in Tanzania is that some contracts must comply

with certain requirements to be legally enforceable.142

Where formal requirements are mandatory issues in a contract (e.g. written, signed, and

registered), the parties are not contractually bound until the requirements are met. 143 In

Pandit v. Sekawa 144 the plaintiff brought a suit for recovery of professional fees from the

defendant having represented him in a particular court action. It was proved that there

140
CAP 345 R.E 2002.
141
For example the Hire Purchase Contracts, as per section 6 of the Hire Purchase Act no 22 of 1966.
142
See section 64 (1) of the Land Act, 1999, and form No. 38 for disposition of the right of occupancy,
section 36-40 of the Land Act, 1999.
143
See the decisions in Spottiswoode Ballantyre & CO. Ltd v. Doreen Appliance Ltd (1947) 2 KB 32 at 35
and Keppel v. Wheeler (1927) 1 KB 577 at 584.
144
1964 (2) A.L.R Comm.25.
59
existed no written contract as the law required it to be. It was held that having not

invoked the agreement into written form as the law required, there was no enforceable

and binding contract between the parties.

Hodgin in his book145 contends that where a contract requires to be evidenced in writing

does not necessarily mean it to be in a special written form. A signed note by the party to

be charged may suffice. This is a reflection of section 6 (1) of the Sale of Goods Act.146

The section provides:-

A contract for the sale of any goods of the value of two hundred shillings

or more shall not be enforceable by action unless the buyer accepts

part of the goods so sold, and actually receives, the goods, or gives

something in earnest to bind the contract or in part payment, or unless

some note or memorandum in writing of the contract is made and signed

by the party to be charged or by his agent in that behalf.

The contract may be in writing as is required by the law but failure to indicate the

principal parties to that contract may render it unenforceable. In Leslie and Anderson

(Nairobi) Ltd v. Kassam Jivraj & Co. Ltd147 a contract of sale was in writing and dully

signed by an agent but failed to identify the principal. The court was of the view that

145
Hodgin. R. W, (1975), Law of Contract in East Africa, at 1.
146
CAP 214 R.E 2002.
147
17 EACA 84.
60
failure to identify the principal is contrary to the requirements of section 6 (1) of the Sale

of Goods Act.148

Generally, freedom of the parties to a contract, competence and lawful consideration are

paramount requirements in contract formation. But in electronic era, the classical view

of freedom of contract is hardly identified. In Tanzania, section 10 of the Law of

Contract Act149 freedom to contract is a paramount aspect in contracting process. This

requirement intends to uphold the concept of consensus ad idem in contracting and that

there shall be no forced mind because there will as a result be liability without consent.

But as discussed in this study, meeting of minds in cyber contracts is something intricate

because some cyber contracts binds a party even before being fully aware of the terms of

the contract and also due to anonymity of the parties as opposed to the conventional

face-to-face agreements.

A contract is only concluded when an offer is unequivocally and unconditionally

accepted. The rules of offer and acceptance may be familiar but their application is often

difficult.

2.6.3.2 Offer and Acceptance

Any statement may be an offer if, objectively interpreted, it does not contain an

equivocal indication of willingness to be legally bound if its terms are accepted. A

148
Op cit.
149
Op cit.
61
statement is construed as an offer if it contains the essential terms of the contract,

expressed in reasonably certain terms. But this requirement is easily identified: for

instance, under contract for sale of goods the only requirements are probably

identification of the (type and quantity of) goods, the price and delivery date, and even

silence on these matters may not be fatal if other terms have been agreed. Whether any

particular statement amounts to an offer, therefore, depends on the facts of the particular

case but the normal effect of some common business practices has been considered in

case law to be discussed below. Further, the relatively limited requirements for a valid

offer mean that even a relatively informal statement such as telephone or email request

for delivery of goods may be construed as an offer.150

An acceptance of an offer must unconditionally assent to all the terms of the offer. A

response which introduces new terms or qualifies any of the terms of the offer is not an

acceptance but a counter-offer which rejects the original offer. Such a counter -offer will

only produce a contract if it is accepted.

In contract law, the general rule is that acceptance is ineffective until communicated to

the offeror. The only exceptions are that the offeror may waive the need for

communication and where acceptance is sent by post, it is effective on posting.

150
See Bradgate R, et al, (2009), Commercial Law; Legal Practice Courses Guide, at P11.
62
Communications sent by telephone, fax, telex or computer message are not effective

until received.151

Difficulties arise as to the time at which the message is received. Case law suggests that

the time when such a message becomes effective depends on a number of factors

including normal business practices, the expectations of the parties and the court‟s

assessment of which of them should bear the risk.152

The time at which an acceptance sent by email becomes effective is arguable. It has been

suggested that since an intermediary is involved, as with ordinary mail, the postal rule

could be applied. Conversely, it has also been argued that since the transmission is

almost instantaneous and there are ways for a sender to find out whether or not an email

message is delivered, the general rule should apply. 153

These arguments are strong but it is likely that if and when the question arises for

consideration a court will resort to a number of factors, so that there may be no hard and

fast rule.

The most important feature of a contract is that one party makes an offer for an

arrangement that another accepts. This can be called a concurrence of wills or consensus

ad idem (meeting of the minds) of two or more parties.154 However, the concept is

151
See Bradgate R, op cit, at P 12.
152
See Brinkibon Ltd v Stahag Stahl GmbH [1983], 2 AC 34.
153
See Bradgate R, et al, op cit.
154
See section 13 of the Law of Contract Act, op cit.
63
somewhat contested. The obvious objection is that a court cannot read minds and their

existence, the agreement is judged objectively; with only limited room for questioning

subjective intention as it was developed in the case of Smith v. Hughes.155 This is a

famous English contract law case. In it, Blackburn J set out his classic statement of the

objective interpretation of people's conduct when entering into a contract. Rejecting that

one should merely look to what people subjectively intended, he said:-

If, whatever a man's real intention may be, he so conducts himself that a

reasonable man would believe that he was assenting to the terms

proposed by the other party, and that other party upon that belief enters

into the contract with him, the man thus conducting himself would be

equally bound as if he had intended to agree to the other party's terms.156

But I have more difficulty about the second point raised in the case. I apprehend that if

one of the parties intends to make a contract on one set of terms, and the other intends to

make a contract on another set of terms, or, as it is sometimes expressed, if the parties

are not, ad idem, there is no contract, unless the circumstances are such as to preclude

one of the parties from denying that he has agreed to the terms of the other. The rule of

law is that stated in Freeman v Cooke.157 If, whatever a man's real intention may be, he

155
See the case of Smith v Hughes, (1871) LR 6 QB 597 (Queen's Bench Division).
156
Consensus ad idem is among the controversial requirements in forming a contract not only in paper
based contracts but also in cyber contract, and the concept becomes even more serious in cyber contract as
it is so difficult to understand the mind of a person emailing you a message via internet, however, the
same contract principle laid down in the above case may as well apply to cyber contract cases.
157
Freeman v. Cooke (1848) 2 Exch 554; 6 Dow & L 187; [1843-60] All ER Rep 185.
64
so conducts himself that a reasonable man would believe that he was assenting to the

terms proposed by the other party, and that other party upon that belief enters into the

contract with him, the man thus conducting himself would be equally bound as if he had

intended to agree to the other party's terms.158

It has now been a principle that where a party creates a belief in another's mind, and

causes the other to act upon that belief, he will not in subsequent court proceedings be

heard to deny that belief, a party who negligently of culpably stands by and allows

another to contract on the faith of a fact which he can contradict, cannot afterwards

dispute that fact in an action against the party who he has himself assisted in

deceiving.159

In some cases, contractual obligations are only imposed upon one party upon acceptance

by performance of a condition. The case of Carlill v. Carbolic Smoke Ball Company160

is an example of such contractual obligations. Obligations are only imposed upon one

party upon acceptance by performance of a condition. This is an English contract law

decision by the Court of Appeal.

The case concerned a flu remedy called carbolic smoke ball. The manufacturer

advertised that buyers who found it did not work would be rewarded £100, a

considerable amount of money at the time. The company was found to have been bound

158
See the wordings of Blackburn J in Smith v. Hughes, op cit.
159
This principle was also developed in Freeman v. Cooke, op cit.
160
[1892] EWCA Civ 1.
65
by its advertisement, which it construed as creating a contract. The Court of Appeal held

the essential elements of a contract were all present, including offer and

acceptance, consideration and an intention to create legal relations.

Offer and acceptance do not always need to be expressed orally or in writing.161 An

implied contract is one in which some of the terms are not expressed in words. This can

take two forms. A contract which is implied in fact is one in which the circumstances

imply that parties have reached an agreement even though they have not done so

expressly. For example, by going to a doctor for a check up, a patient agrees that he will

pay a fair price for the service. If one refuses to pay after being examined, the patient has

breached a contract implied in fact. A contract which is implied in law is also called a

quasi-contract, because it is not in fact a contract; rather, it is a means for the courts to

remedy situations in which one party would be unjustly enriched if that party is not

required to compensate the other.

For example, a plumber accidentally installs a sprinkler system in the lawn of the wrong

house. The owner of the house had learned the previous day that his neighbour was

getting new sprinklers. That morning, he sees the plumber installing them in his lawn.

Pleased at the mistake, he says nothing, and then refuses to pay when the plumber

delivers the bill. Will the man be held liable for payment? Yes, if it could be proved that

the man knew that the sprinklers were being installed mistakenly; in such a situation, the

161
[1892] EWCA Civ 1.
66
court would make him pay on the f basis of a quasi-contract.162 If that knowledge could

not be proved, he would not be liable. Such a claim is also referred to as quantum

meruit.163

In Tanzania a contract is an agreement which is legally enforceable.164Such an

agreement may be oral or written, bilateral or unilateral. The Law of Contract Act165in

Tanzania provides that when one person signifies to another his willingness to do or to

See Friedan, Jonathan, et al, (2006), „E-Commerce: Legal Issues of the Online Retailer in Virginia‟,
162

Richmond Journal of Law & Technology 13 (2)

163 Quantum meruit is a Latin phrase meaning "what one has earned". In the context of contract law, it
means something along the lines of "reasonable value of services". In the United States, the elements of
quantum meruit are determined by state common law. For example, to state a claim for unjust enrichment
in New York, a plaintiff must allege that (1) defendant was enriched; (2) the enrichment was at plaintiff's
expense; and (3) the circumstances were such that equity and good conscience require defendants to make
restitution. Quantum meruit is the measure of damages where an express contract is mutually modified by
the implied agreement of the parties, or not completed. While there is often confusion between the concept
of quantum meruit and that of "unjust enrichment" of one party at the expense of another, the two
concepts are distinct.
The concept of quantum meruit applies to the following situations:
a) When a person hires another to do work for him, and the contract is either not
completed or is otherwise rendered un-performable, the person performing may sue for
the value of the improvements made or the services rendered to the defendant. The law
implies a promise from the employer to the workman that he will pay him for his
services, as much as he may deserve or merit.
The measure of value set forth in a contract may be submitted to the court as evidence of
the value of the improvements or services, but the court is NOT required to use the
contract's terms when calculating a quantum meruit award. (This is because the values
set forth in the contract are rebuttable, meaning the one who ultimately may have to pay
the award can contest the value of services set in the contract.)
b) When there is an express contract for a stipulated amount and mode of compensation for
services, the plaintiff cannot abandon the contract and resort to an action for a quantum
meruit on an implied assumption. However, if there is a total failure of consideration,
the plaintiff has a right to elect to repudiate the contract and may then seek
compensation on a quantum meruit basis.
c) Quantum meruit will also work where there is a breached contract.
164
See section 2 (1) (h) of the Law of Contract Act, op cit.
165
Op cit.
67
abstain from doing anything with a view to obtaining the assent of the other to such act

or abstinence, he is said to make a proposal.166 When the person to whom the proposal is

made signifies his assent thereto, the proposal is said to be accepted, and a proposal,

when accepted, becomes a promise.167

Every promise and every set of promises, forming the consideration for each other, is an

agreement168 and an agreement enforceable by law is a contract.169 The elements for a

binding contract in Tanzania can be deduced from sections 10, 13 and 14 of the Law of

Contract Act.170 These sections are classical for the concepts of consensus ad idem and

free consent. In Tanzania, two or more persons are said to consent when they agree

upon the same thing in the same sense.171

From the above provisions, it can be said that consensus ad idem is an important element

in contract formation in Tanzania. Nditi, N.N, in his book172contends that consent is an

essential ingredient to make an agreement a contract; absence of consent will make an

agreement void. Where parties are at cross purposes there is absence of consent; there is

no consensus ad idem and therefore the agreement is void. This finds a support in Star

166
See section 2 (1) (a) of the Law of Contract Act, op cit.
167
Section 2 (1) ( b), ibid.
168
Section 2 (1) (e), ibid.
169
See section 2 (1) (h).
170
Op cit.
171
See section 13 of the Law of Contract Act, op cit.
172
General Principles of Contract Law in East Africa, op cit, at 174.
68
Services CO. Ltd v. Tanzania Railways Corporation173 where the high court was of the

view that existence of a valid contract presupposes that the contracting parties were ad

idem as to the terms of the contract and that each of them willingly accepted those terms

of the contract.

2.6.3.3 Invitation to Treat

In Tanzania an invitation to treat only indicates the willingness of the inviting party to

enter into negotiations with the focus to contract. Some modes including displaying

goods on the open show rooms for sale174advertising them using various methods175 or

call for tenders.176 Invitation to tender is said to be normally no more than an offer to

receive bids, although circumstances in it may give rise to a binding contract.177

This was illustrated in the case of Spencer v Harding178, where the defendants offered to

sell by tender their stock and the court held that they had not undertaken to sell to the

person who made the highest tender, but were inviting offers which they could then

accept or reject as they saw appropriate. In certain circumstances though, an invitation

for tenders may be an offer. The clearest example of this was seen in Harvela

173
(1989) 1 HC.
174
See the case of Fisher v Bell [1961] QB 394 and Pharmaceutical Society of Great Britain v Boots Cash
Chemists (Southern) Ltd [1953] 1 ALL E.R 482.
175
See Partridge v Crittendem [1968] 2 ALL E.R 421 But in Carlill v Carbonic Smoke Ball Co. op cit,
poses a caution as some advertisements may constitute an offer that if accepted forms a binding contract.
176
See the case of Spencer & others v Harding & others (1869-70) L.R 5C.P 561.
177
See the case of Blackpool & Fylde Aero Club Ltd v Black Borough Council [1990] 1 WLR 119.
178
(7 185610) LR 5 CP.
69
Investments Ltd v Royal Trust of Canada (CI) Ltd179, where the defendants had made it

clear that they were going to accept the highest tender; the court held that this was an

offer which was accepted by the person who made the highest tender and that the

defendants were in breach of contract by not doing so.

The question as whether a website should be treated as creating a binding offer or a mere

invitation to treat constitutes one of the controversial issues in ecommerce.180 The

structure of the website will normally determine as to whether it is an invitation to treat

or an offer.181 The legal position as regards tender advertisements was laid as to be not

an offer but an invitation to treat.182 It is practically the role of the relevant government

department to accept or reject a certain quoted price.

Let‟s examine the following hypothetical case in illustrating the concept of invitation to

treat: A shopkeeper has a laptop for sale at TShs 50000/=. He puts it in the window with

a large sign advertising the price. A customer sees it in the shop window and offers to

buy it. The shopkeeper does not have to sell the laptop if he does not want to. At that

stage there is no contract. The shopkeeper is making an 'invitation to treat: - an invitation

to the customer to make him an offer. So the customer cannot insist on buying the laptop

179
[1986] AC 207.
180
See Polanski, P. P, [2007], “International Electronic Contracting in the Newest UN Convention”, 2 (3)
Journal of International Commercial Law and Technology, 112-120 at 116.
See Polanski, P. P, „Customary Law of the Internet: in such for a Supernatural Cyberspace Law‟, IT &
181

Law Series, 13 Laiden Netherlands (2007) at 26.

182
GBL & Associates Ltd v Director of Wildlife Ministry of Lands, Natural Resources and Tourism and 2
others [1989] TLR 195 (HC).
70
at the advertised price. If the shopkeeper has put an unusually low price on it -

deliberately or by mistake - he can refuse to do a deal with the customer. He does not

have to sell you a laptop for TShs 50000/=.

However, if the shopkeeper accepts your order electronically then there may be a valid

contract. A customer who gave the shopkeeper his credit card number received what was

called a Unique Order Code. That may be proof of a contract, although the shopkeeper

said all items were subject to availability. And it is also possible for the courts to declare

a contract void if the seller has made a genuine mistake.183

In Australia there is a provision that transpose the common law notion of an invitation to

treat into an electronic environment to confirm that a trader who advertises goods or

services on the internet, or through other generally accessible communication systems or

open networks, is considered to be only inviting those who access the site to make

offers, unless there is a clear indication by the trader of an intention to be bound.184

Determining whether a particular representation is an offer or an invitation to treat will

impact when a contract is formed. Sometimes, what may appear to be an offer is actually

183
In developed countries like Wales and England, there are developed legislations like the Consumer
Protection Act of 1987 that makes it a criminal offence to give consumers a misleading price indication.
Shopkeepers in England and Wales can be fined up to £5000 in the magistrates' courts each time a
consumer is misled. It's a defence for the shopkeeper to show he acted diligently and took all reasonable
steps to avoid giving the consumer a misleading indication. But a company could not just claim it was a
mistake. The fact that the shopkeeper displayed its prices on the Internet should make no difference. The
Consumer Protection Act covers giving misleading price indications by any means whatever.
184
Visit http://www.langes.com.au/australian_regulatory_compliance/2011/02/11/electronic-transactions-
amendment-bill/ retrieved on 17th March 2011, the amendments are directed to the Electronic Transactions
Act, 2000.
71
only the precursor to an offer, otherwise known as an invitation to treat. Whereas an

offer is a proposed set of terms which are capable of being accepted, an invitation to

treat is a call for the other party to make an offer and enter into negotiations. 185 An

invitation to treat cannot become binding through acceptance. The display of goods for

sale, either in a shop window or on the shelves in a store, is ordinarily considered to be

an invitation to treat.186 When we impose these distinctions upon the world of the

Internet, it has been suggested that the courts should look to the interactive and/or

automated nature of a particular website. Advertisements on a non-interactive website

are akin to conventional advertisement, where the implied intention of the trader is to

commence negotiations.187

However, if a website is interactive or automated, the advertisements on such a site may

be considered to be an offer. One of the reasons for treating goods on display as an

invitation to treat is that the storekeeper has to be able to negotiate and be able to turn

down an offer when stock runs out. It would follow that the treatment of interactive

websites should therefore depend on the nature of the product and whether there is an

infinite supply. Interactive websites will also often include a click wrap agreement

(clearly being positioned as an offer), but the argument is that the agreement and the

185
See Ticketmaster Corp. v. Tickets.com Inc. 2000 United States Dist. LEXIS 12987 (C.D. 2000); aff.d
248.F.2d 1173 (9th Cir. 2001).
186
Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401.
187
S. Christensen (2001), “Formation of Contract by Email. Is it Just the Same as the Post‟?” 3
Queensland University of Technology Law & Justice Journal, Available at
http://www.austlii.edu.au/au/journals/ QUTLJJ/2001/3.html (last viewed: March 9, 2011).
72
advertisement fuses into one combined offer.188It has been suggested that in the absence

of any decided cases on the issue, the terms and conditions displayed on a website

should specify whether an invitation to treat or an offer is being made.189

2.6.3.4 Consideration

Commercial contracts usually involve some form of exchange-generally of goods or

services. It is required in law that a person can only enforce an undertaking as a contract

if he provided consideration for it and this rarely causes difficulties in relation to

formation of commercial contract. It is required in law that a person can only enforce an

undertaking as a contract if he provided consideration for it, and this rarely causes

difficulties in relation to formation of commercial contracts.190 It is contended that a

person wishing to enforce an undertaking must provide consideration at the same time as

or after the undertaking is given. But this has a practical consequence because no new

terms can be introduced after a contract has been concluded.191 The legal detriment and

bargain principles come together in consideration and create an exchange relationship,

where both parties agree to exchange something that the other wishes to have.192The

purpose of consideration is to ensure that there is a present bargain, that the promises of
188
C. Gringras, (1997), The Laws of the Internet (London: Butterworths, 17.18.
189
B. Fitzgerald, et al, (2007), Internet and Ecommerce law, Thomson Law book Co, p 489.
190
See Bradgate R, et al, op cit, at P10.
191
Ibid.
192
Consideration consists of a legal detriment and a bargain. A legal detriment is a promise to do
something or refrain from doing something that you have the legal right to do or actually doing or
refraining from doing something that you doesn‟t have to do. A bargain is something the promisor (the
party making promise or offer) wants, usually being one of the legal detriments.
73
the parties are reciprocally induced. The classic theory of consideration required that a

promise be of detriment to the promissor or benefit to the promisee.

2.6.3.5 The Mode of Communicating Offer and

Acceptance

Offer may be oral or written, except for few types of contracts that need to be in a

particular form as covered above. An offer is required to be final, firm and unambiguous

expression of the party willingly intending to be bound by the terms.193 And if the offer

is held to be otherwise, it cannot be said to be an offer but an invitation to treat, it is

required to be sufficiently clear and definite. Clarity is a determinant factor as to what

obligations the parties are expected to assume in the contract.194 But it has been a

common practice that where the parties are in a long standing business relationship they

may be exempted from this rule.

2.6.3.6 Conclusion

An agreement will not constitute a legally binding contract unless it is sufficiently

certain to be enforced. If terms are incomplete or uncertain it may be decided that the
parties have not yet reached a concluded agreement or that they do not intend the
agreement to be legally binding. It is not advisable to prepare a contract in vague or
incomplete terms; however, many business contracts use vague language deliberately.

193
See section 2 (1) of CAP 345 R.E 2002.
194
See Alfi E. A Ltd v Themi Industries and Distributors Agency Ltd [1984] TLR 256 it was held that price
is a fundamental matter in an agreement of sale such as the one under consideration, and as there was C
no agreed price there was no agreement; in terms of s. 29 of the Law of Contract Ordinance, Cap. 433, the
agreement is void for uncertainty.
74
CHAPTER THREE: LEGAL ISSUES ON CYBER CONTRACTS IN TANZANIA

3.1 Introduction

The power and importance of contracts can hardly be overstated. Contracts constitute the

legal foundation upon which business is transacted around the globe. A contract can be

as informal as buying your morning coffee or as complex as a heavily negotiated multi-

party, multinational corporate acquisition. It is also near to impossible to overstate the

impact of the rise of the Internet and electronic commerce. The number of people online

has surpassed 1.3 billion people, and of those, more than 85% have used the Internet to

make a purchase.195

3.2 Construction of cyber contract

3.2.1 Offer and Acceptance in Cyber Contract

Internet contracts unlike other commercial transactions may not be paper documents

executed by the parties. The formation takes place online but goods or services are

delivered or performed through other channels; sometimes both the formation and the

performance take place entirely online (software download, access to databases).196

195
Statistics drawn from Internet World Stats at http://www.internetworldstats.com/stats.htm (last viewed:
March 9, 2008) and Nielsen Online, December 2007 as referenced on http://www.itfacts.biz/ Posting dated
February 2, 2008 Department: Ecommerce (last viewed: March 9, 2008).
196
See Salzano, G (2010), „Internet Contracts: Formation of Online Contracts in the Italian Legislation
and Case Law.

75
An offer transmitted through the Internet generally is published on a web site as offer to

the public or invitation to treat sent by e-mail to specific recipients. Generally a contract

is formed when the acceptance is communicated to the offeror. Any change made by the

offeree terminates the original offer and results in a counter-offer. For online contracts

the acceptance is communicated when it is sent to the electronic address of the

offeror.197 The order and the acknowledgement of receipt are deemed to be received

when the parties to whom they are addressed are able to access them.198

To form an online contract through web sites the acceptance must reach the server

containing the web site and in case the contract is through e-mail the acceptance must

reach the server containing the e-mail box.199

It is a common ground that an offeror is at liberty to prescribe to the offeree the mode of

communicating an acceptance.200However, an authority does exist for the view that an

offer by telegram is evidence of desire for a prompt reply, so that an acceptance by post

may be treated nugatory. This was confirmed in Quenerdaine v. Cole.201 In an American

case of Lucas v. Western Telegraph Co202 it was stated that where the offer was sent by

197
See Article 14 Presidential Decree 445/2000 of Italy.
198
See Article 13 Legislative Decree no. 70/2003, ibid.
199
Ibid.
200
See Cheshire, et al, (1996), Sweet and Maxwell, 13th Ed.
201
(1883) 32 Weekly Rep. 185.
202
(1906) 131 Iowa, 669, 109 N. W 191.

76
email and offeree replied by telegram, that acceptance would be of no effect until

received by the offeror since the offeror had not authorized such mode. From the above

contention, it may be unreasonable to respond an offer communicated via e-mail using

the post.

3.2.2 E-Contract Terms

Contractual terms may comprise express terms, such as those embodied in a standard

form pre-printed contract (or its electronic equivalent click wrap agreement); implied

terms, which are incorporated on the basis of the circumstances, e.g. advertisements that

are deemed to constitute an offer, or part of an offer, or terms that are incorporated by

consumer protection legislation; and finally terms that are incorporated by reference to

another document.203

In the paper based world of contracts, courts have generally upheld the practice of

incorporating terms by reference where the party relying upon such terms has notified

the other party of the terms and such terms are reasonably accessible to the other

party.204The online world is particularly well-suited to the practice of incorporating

terms by reference as it is quick and easy to insert hyperlinks into text.205The Supreme

Court of Canada recently contemplated the validity of introducing terms via hyperlink in

203
See John S. Foster (2000), “Electronic Contracts and Digital Signatures” retrieved at
http://www.austlii.edu.au/au/journals/.
204
Orpwood, R, (2008), “Electronic Contracts: Where We.ve Come From, Where We Are, and Where
We Should Be Going” International In-house Counsel Journal Vol. 1, No. 455.466.
205
Visit http://www.michaelgeist.ca/content/view/2141/135/.

77
the case of Dell Computer Corp. v. Union des consommateurs.206 In upholding the

validity of this practice the court emphasized that the terms and conditions must be

reasonably accessible and was of the opinion that a hyperlinked document meets that

standard.207

3.2.3 Signing in Cyber Contract

The first step is to create a digital image of your signature - there are multiple ways of

doing that:-

(a) If you have an iPhone, iPod Touch or any touch sensitive mobile device, use an

app like "Fountain Pen" or "Sketch Pad" to draw your signature using your

fingers and then transfer the image to your computer.

(b) If you don‟t have access to a touch phone or a scanner, put your signatures on a

white piece of paper and take a photograph of that paper using your digital

camera or even the camera of your mobile phone and you transfer it to your

computer.

(c) Alternatively, you can use any graphics software (like MS Paint), an online

image editor (like Splash Up) or even Google Docs (see video) to draw your

signature with the mouse pointer. However, the Google Docs is the simplest

option since it creates a transparent stamp of your signature.

206
2007 SCC 34.
207
www.karimsyah.com/imagescontent/article/20050922170958.pdf.

78
 (d) Go to Live Signature, draw your signature on the screen and click the "Create

Signature" button to download your signature as an image.

(e) Now that you have the written signature in image form, the next step involves

putting that e-sign image into the document.

If the contract or agreement is in Microsoft Word or any other common editable format,

things are pretty easy. Open the document in any Word processing software (or Google

Docs) and insert the signature image inline. Save the document as PDF and email it back

to the client.

3.3 Internet Jurisdiction

Imposing the traditional common law principles of jurisdiction to the borderless world

of Internet transactions has proved to be extremely challenging for the courts and has

resulted in the application of a myriad of different tests and principles. It has been the

subject of much scholarly debate, as one author comments:

As long as the laws of each jurisdiction differ in material ways from that

of others, questions will continue to arise in interpretation and

enforcement where there is any cross border element of an electronic

transaction.208

208
Visit www.karimsyah.com, op cit

79
One of the overarching principles courts in both Canada and the U.S. have looked at on

questions of jurisdiction is that of reasonableness with regard to the circumstances.209 In

Canada, the courts have framed this as a substantial connection test210 whereby

connecting factors such as the location of the content provider, the host server, the

intermediaries and the end user, are considered in the overall analysis.211

In the U.S., the reasonableness requirement is captured in the minimum contact or

purposeful availment test. The principle being that a defendant cannot be brought before

a court of a particular state unless that person has minimum contacts . . . such that

maintenance of the suit does not offend traditional notions of fair play and substantial

justice...212

In Sayeedi v. Walser 213 a U.S. trial court refused to exercise jurisdiction over an eBay

transaction between two individuals on the basis that one sale without more, does not

constitute sufficient purposeful availment to satisfy the minimum contacts necessary to

justify summoning across state lines, to a New York court, the seller of an allegedly non-

conforming good.

209
Geist, M, (2001), “Is There a There There? Towards Greater Certainty for Internet Jurisdiction”,
Berkeley Technology Law Journal 1345.1406 available at http://aix1.uottawa.ca/~geist/geistjurisdictionus.
210
See Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077.
211
See Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet
Providers, [2004] 2 S.C.R. 427, 2004 SCC 45.
212
See International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).
213
2007 NY Slip Op 27081.

80
More recently, courts have looked towards effects or targeting tests214 determining

jurisdiction on the basis of the actual impact of the action in the locality. 215The principle

was set out in the pre Internet case of Calder v. Jones216 that the fact that the action had

an effect in the other jurisdiction was factored into the equation in order to determine

whether jurisdiction existed in that forum. Under this effects test, jurisdiction is

determined by analyzing the effects intentionally caused within the forum by a party‟s

online conduct outside the forum.217

A way that governments consciously attempt to avoid problems of diversity of

jurisdiction is to harmonize the law applicable across jurisdictions, so that it will not

matter whose law applies or what forum will apply it.218

3.4 International Position in Cyber Jurisdiction

Adopting unified legislative standards is an important means by which governments can

increase legal certainty and commercial predictability for parties contracting in an

electronic environment. The past ten to fifteen years have seen some considerable

214
See Information Corporation v. American Infometrics (D. Md. April 2001); Panavision International v.
Toeppen (1998), 141 F.3d 1316 (9th Cir); Easthaven Ltd. v. Nutrisystem.com Inc.(2001) 55 OR 3d 334
(Ontario Superior Court of Justice).
215
Mary Paterson, (2004), „Following the Right Lead: Gutnick and the Dance of Internet Jurisdiction‟,
Can Law Journal &. Tech. 49.
216
465 U.S. 783 (1984).
217
Julia Alpert Gladstone, Determining Jurisdiction in Cyberspace:The .Zippo. Test or the EffectTest?
Bryant College, Smithfield, Rhode Island, USA available at http://www.informingscience.org/
proceedings/IS2003Proceedings/docs/029Glads.pdf (last viewed: March 9, 2008).
218
See Gregory J. D, (2005), Internet Jurisdiction: Where Are We Now? Presentation to the Toronto
Computer Lawyers, available at www.tclg.org/meetings/2005_nov.ppt (last viewed: March 9, 2011).
81
accomplishments in terms of developing such standards at both international and

regional levels.

In 1996, the United Nations Commission on International Trade Law (UNCITRAL)

adopted the Model Law on Electronic Commerce, which was followed by the Model

Law on Electronic Signatures in 2001 and the Convention on the Use of Electronic

Communications in International Contract in 2005.

The goal of the UN Initiatives has been to provide national legislatures with a set of

internationally recognized rules to remove legal obstacles and create a more certain legal

environment for electronic commerce.219The UN Initiatives adopt a functional

equivalence approach by setting out principles so that electronic communications are

given technological neutrality. For example, when there is a legal requirement to present

information in writing, this will be satisfied by an electronic document if the information

contained in the document is accessible so as to be usable for subsequent

reference.220The UN Initiatives also provide electronic standards to meet signature

requirements, originality requirements, time and place of communications, and the use

of automated systems for contract formation.221

219
M Smith, (2000) “Facilitating Electronic Commerce through The Development of Laws to Recognize
Electronic Documents and Transactions”, Available at http://dsp-psd.pwgsc.gc.ca/Collection-
R/LoPBdP/BP/prb0012-e.htm (last viewed: March 9, 2011).
220
See Article 6 of the UNCITRAL Model Law on Electronic Commerce (1996) available at:
http://www.jus.uio.no/lm/un.electronic.commerce.model.law.1996/doc.html.
221
Chapter 8 of UNCTAD Information Economy Report 2006: The development perspective; Laws and
Contracts in an Ecommerce Environment (2006) available at: http://r0.unctad.org/ecommerce/
ecommerce_en/ier06_en.htm (last viewed: March 9, 2010).
82
The UNCITRAL Model Laws then formed the basis upon which Canada, the U.S, and

other countries drafted their own electronic commerce legislation or model law

templates. In Canada, the Uniform Law Conference of Canada adopted the Uniform

Electronic Commerce Act (UECA), which provinces then used as a model for their own

ecommerce statutes.222 In the United States the Uniform Electronic Transaction Act

(UETA) became the model for similar state laws. The U.S. federal government also

enacted the Electronic Signatures in Global and National Commerce Act (known as .E-

SIGN.) in 2000. E-SIGN was designed to provide for an equivalency of electronic

signatures and electronic records to their ink and paper counterparts. The European

Union (EU) adopted the Directive on Electronic Commerce in May 2000, which gave

member states 18 months to implement it into their national laws.223

We argue that Tanzania should adopt the harmonized system to afford the changes

brought by technology to her legal environment.

3.5 Conclusion

An appropriate legal and regulatory environment ensures that there are set rules and

regulations which allow the ICT sector to be more competitive, thus allowing the

economy to grow. It has been noted that there is a core relationship between the level of

attainment of a knowledge economy and the inflow of financial investments. Countries

222
See Electronic Commerce Act (Ontario), 2000, S.O. 2000, c. 17.
223
Visit http://r0.unctad.org/ecommerce/ op cit.

83
that have advanced economies such as Australia, Germany, Japan, United Kingdom and

the United States of America have all embraced ecommerce activities as a way of life

and have enacted cyber legislation to regulate ecommerce activities. African countries

(including Tanzania) aspire to attract financial investment to boost economic growth and

should therefore embrace this trend towards creation of a knowledge economy.

I would suggest that relatively speaking Africa is less disadvantaged in the mobile phone

and related communications than it is on many other economic indicia. This dissertation

gives some space to African and especially Southern African initiatives to engage with

the digital revolution and ecommerce. More focus on those aspects would have been

desirable.

3.6 Examining Possible Legal Challenges

The key legal challenges associated with e-contracting are as follows:-

i) Contract formation: this may be associated with the demand for consensus ad

idem on one side and the possibility to ascertain whether a web merchant is

making a valid offer or merely inviting others to make offers.224 A number of

questions including as to when ownership or risk pass to the other party in

the contract, when the contract may be said to have been formed, or

performed may be raised. On the other hand the challenge is whether or not

See Pacini. C, et al, (2002), “To Agree or not to agree: Legal Issues in Online Contracting”, Business
224

Horizon 43-52 at 43.

84
 the Law of Contract Act225 provides for all these aspects under cyber

contracts.

ii) When the contract is formed or become effective: in paper based contracts as

was stated in the case of Entores v Miles Far East Corporation226 acceptance

of an offer becomes effective when sent by the offeree using an authorized

mode of communication.227 In web-based contracts, especially browse wrap

agreements, deciding when acceptance has taken place may be difficult.

iii) Changes to the contract and errors: the use of emails in contracting process

has given rise to several legal issues: for instance, who must be responsible

for an error in the course of e-contracting.

iv) Authentication and attribution issues: Separation is an obvious question since

the electronic environment makes a possible face to face encounter

redundant. The other party may be a minor, unauthorised or even an

impostor. 228

v) Message integrity and non-repudiation: the problem may arise as to whether

the message sent and that received match and that the other part cannot deny

the content of a transaction.

225
Op cit.
226
[1955] 2 Q B 327 (CA).
227
See Pacini, et al, (2002), op cit.
228
See Wilson S, (1998), „Current Issues in the rollout of a national authentication framework‟;
information industry outlook conference.
85
 vi) Protection of consumers engaging in online transaction: The extent to which

consumers are protected in an online transaction gives rise to a challenge.

In view of the legal challenges stated above, this chapter argues that the inability to

accommodate the current technology innovations within the existing legal framework

greatly undermines the prospects for successful e-contracts in Tanzania.

3.6.1 The Legal Requirement for Consensus ad idem in Contract and

Contracts formed by e-agents

As pointed out earlier, consensus ad idem229is a fundamental concept in the law of

contract. Where parties are at cross purposes there is absence of consent; there is no

consensus ad idem and the agreement is void.230 Thus, enforceable rights or obligations

to parties in a contract only arise when a mutually binding contract is concluded, i.e.,

when the minds of the parties to a contract meet. But in some cases courts may find

existence of enforceable agreements in the absence of consensus ad idem basing on

some factors like reasonable reliance.231

It may be difficult to ascertain consent of the parties in an online environment and for

web-based agreements, especially the shrink-wrap and browse-wrap agreements where

229
See section 13 of the Law of Contract Act, op cit that an agreement upon the same thing in the same
sense results into consent to contract.
230
See Nditi. N. N. N, Op cit, at Pp 174.
231
See Smith v. Hughes, op cit.
86
the possibility of negotiation is excluded.232 If the court is to construe sections 10 and 13

of the Law of Contract Act233as insisting on consensus ad idem, it may be intricate to

enforce such agreements.

From the provisions of sections 10 and 13 above, consensus ad idem is construed to be

an integral part in contract formation. With regard to cyber contract, however, one of the

questions is whether e-agents can validly consent as is required under these provisions.

As per section 2 (1) (a), (b) and (c) of the Law of Contract Act234parties to a contract,

promisor and promisee are referred to as persons.235 The question may be raised as to

whether the term person as is construed under that provision includes e-agents.236

The word person is defined to mean any word or expression descriptive of a person and

includes a public body, company, or association or body of persons, corporate or

232
See Kaustuv. M. D, (2002), „Forum-Selection Clauses in Consumer Clickwrap and Browsewrap
Agreements and the Reasonably Communicated Test‟ 77 (2) Washington Law Review, 481 at 499-500.
233
Op cit.
234
Op cit.
235
The provisions reads:- (a) when one person signifies to another his willingness to do or to abstain from
doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to
make a proposal; (b) when the person to whom the proposal is made signifies his assent thereto, the
proposal is said to be accepted, and a proposal, when accepted, becomes a promise; (c) the person making
the proposal is called the "promisor", and the person accepting the proposal is called the "promise."
236
E-Agent: A semiautonomous computer program capable of executing specific tasks, including database
searches and retrievals. The Uniform Electronic Transactions Act (“UETA”) provides, in part, that e-
agents may enter into binding agreements on behalf of their principals; and if the e-agent does not provide
the third party with an opportunity to prevent errors at the time of the transaction, the third party may
avoid the transaction without liability. The Uniform Computer Information Transactions Act (“UCITA”)
provides that any individual or company using an e-agent is bound by the e-agent‟s actions, even if the
individual or company was unaware of or did not review the e-agent‟s operations or the results of the e-
agent‟s operations. However, UCITA also empowers courts to “grant appropriate relief if the operations
resulted from fraud, electronic mistake, or the like.”

87
unincorporated.237As such the term person in Tanzania does not include a machine like a

robot or an e-agent, even if the definition includes animate beings and inanimate things;

inanimate things are expressly mentioned under section 4 of the Interpretation of Laws

Act.238 Consequently, a contract formed by an e-agent in Tanzania seems to be outside

the ambit of section 2 (1) (a) and (b) of the Law of Contract Act. 239 The Law of Contract

Act240 seems to be deficient in view of the above assertion. This calls for reform in the

light of current trends of technology.

It is contended that as e-agents act autonomously, they are mere passive tools of a

merchant to facilitate his trade unless there exists a human intervention to form

necessary intent to be bound by the contract. The action which leads to conclusion of a

contract through autonomous e-agents does not usually arise from a conscious and

positive decision of such users, but it arises automatically from the experience and

cognitive process of their agents.241 So it is difficult to assess the intention of the users to

be bound by a contract they never knew.

237
See CAP 1 [R.E 2002].
238
See Weitzenboek. E. M, (2001), „Electronic Agents and Formation of Contracts‟, International
Journal of Law and Information Technology, 204-234 at P. 43 contending that those who the parliament
has not conferred juridical life cannot be considered persons in the eyes of law.
239
Op cit.
240
Op cit.
241
See Dahiyat. E. R, (2007), “Intelligent Agents and Contracts: Is a Conceptual Rethink Imperative?” 15
Journal of Artificial Intelligence Law 375-390 at 383.

88
 3.6.2 Authentication, Attribution and Repudiation of Online Contract

Rules governing use of signature in commercial and legal context have developed over a

course of time.242 A signature involves writing or other affixing, a person‟s name or a

mark to present his name... with intention of authenticating a document as being of or as

binding on the person whose name or mark is so written or affixed...243 In Tanzania the

law defines the term "sign" in these words...

With its grammatical variations and cognate expressions, includes

with reference to a person who is unable to write his name,

"mark", with its grammatical variations and cognate

expressions.244

This definition seems to cover only those who are unable to write and thus creates

uncertainty as to whether those who are able to write are also covered. However, in

practice it is clear that a transaction required to be in writing will be authenticated by

affixing a personal signature or other means of authentication on the relevant piece of

paper.245

242
See McCullough. A, (1998), „Electronic Signatures: Understand the Past to Develop the Future‟,
University of New South Wales Law Journal 452.
243
Straud‟s Judicial Dictionary, 2nd Vol. 4 at Pp 2783.
244
See section 4 of the Interpretation of Laws Act, op cit.
245
See Mollel. A, et al, (2007), Electronic Transactions and the Law of Evidence in Tanzania,
Peramiho Printing Press.

89
The requirements of signature varies according to the context, nature and subject matter

of transaction, the communication media used and the normal practices in a market

governing a particular industry.246Thus, unless a signature is a legal requirement in a

statute, it may not be necessary to evidence a particular transaction.

To avoid such disputes, some statutes concerning disposition of land247or the hire

purchase have requirements which must be met including written contracts signed by the

parties. Further more in the Law of Contract Act248 section 25 (1) requires a contract

with no consideration to be in writing and be signed and registered. Section 6 (1) of the

Sale of Goods Act249requires a contract of sale of any goods of the value of two hundred

shillings to be in writing and be signed by the party to be charged or by his agent in that

behalf for it to be enforceable.

The requirement for signature serves a number of purposes including the followings:-

Firstly, where a party genuinely signs a particular document, it becomes good evidence

that the signer authenticates that he/she endorsed that particular document.250 Secondly,

the act of signing a document is of ceremonial purpose calling the signer to the attention

246
Winn. J K, (2001), “The Emperor‟s New Clothes: The Shocking Truth About Digital Signatures and
Internet Commerce” , Idaho Law Review, 353-388 at 367.
247
See the Land Act, op cit.
248
Op cit.
249
Op cit.
250
See R v. Moore; Ex parte Myers, (1884) 10 VLR 322 where it was stated that the object of all Statutes
which require a particular document to be signed by a particular person is to authenticate the genuineness
of the document.

90
of all attendant legal significances or consequences that may follow his act. It is an

authorisation that things should be in the way they appear to be. In a commercial

transaction it brings a sense of clarity or finality of the deal.251

The development of technology has necessitated a search for the law of electronic

signatures. The use of electronic or digital signatures has created a concern taking into

account possibilities of fraud and the vulnerability of online environment to impostors

and hackers.252However, attributing an electronic message for an offer or acceptance of

e-contract to the person who purports to send it is a critical issue.253 Parties to a contract

do not need to have face to face encounter in order to sign and exchange papers as the

traditional system assumes. But it is difficult to identify the other signor to the contract.

In the recent system of contracting, a party engaging in a contract need to be assured that

online data message received is truly attributable to or bears the true authority of the

other whom he wishes to deal with. In absence of such assurance creates fear that the

other party may repudiate the transaction and the whole scenario may cast a shadow on

the entire system. In Tanzania the law is somewhat silent on the mechanisms to these

challenges, thus, we need a law to address them as to bring certainty in electronic

251
See Jacobs v. Batavia & General Plantation Trust [1924] 1 Ch. 287 and Cheleta Coffee Plantations
Ltd v. Mehlsen [1966] E.A 203.
252
See Samelson A, et al, (2003), „The E-Sign Law: What does it mean for Government Contracting
Practices?, Journal of Contract Management 35-43 at 36.
253
See Ismail, et al, (2006), „Evaluation of Legal Risks for Ecommerce in Construction‟ Journal of
Professional Issues in Engineering Education & Practice, 355-360 at 358.

91
transactions. In the Law of Evidence Act254section 69 provides for proof of signature

and handwriting of persons alleged to have signed or to have written a particular

disputed document. Moreover, in the Law of Evidence Act255 the best evidence rule still

applies. This rule requires proof of documents to be made by primary evidence which

means production of an original document in court for inspection.256

3.6.3 The Issue of Consent and Enforceability of Browse-Wrap

Agreement

Browse-wrap agreements involve licence and use agreements which bind a web user to

the terms and conditions of the website upon browsing the website. They create a

contract without first requiring the user to consent the terms and conditions governing

the website. The user may therefore not be reasonably notified of the terms because

these agreements lack an outright requirement of assent before users proceed with

contract.

Both Canadian and U.S. courts have been somewhat less than consistent in their

enforcement of browse wrap agreements. The primary issue in these cases has been

whether the requisite consent can be implied by the conduct of the browser. In general,

the courts have looked at the sufficiency of notice and whether consent is reasonable to

254
CAP 6 [R.E 2002].
255
Ibid.
256
See sections 64 (1) and 66 of the Law of Evidence Act, op cit.

92
imply on the basis of conduct.257 Kanitz v. Rogers Cable Inc.258 is a Canadian case

dealing with the unilateral amendment of an online service agreement. The customers of

the telecommunication company, Rogers, had agreed to a click wrap agreement which

included a term allowing Rogers to change or amend the agreement at any time,

providing that any such amendment would be posted on the Rogers website. Rogers

subsequently amended the agreement to include the provision that all disputes would be

settled by arbitration. The court in Kanitz concluded that the notice of the amendment

was made in accordance with the terms of the agreement, and that the effect of the

amending provision was to place an obligation on the user to check the website from

time to time. The court accepted the proposition that the service subscribers continued

use of the service after the posting of the notice and the amendments constituted the

requisite consent and acceptance of the unilateral amendment.

In 2005, a Quebec court in Aspencer1.com Inc. v. Paysystems Corporation259 came to

the opposite conclusion where the home page of Paysystems Corporation included a

statement that: Your continued use of MyPaysystems Services is subject to the current

version of the MyPaysystems Agreement. This Agreement was last updated December

18 2003. Please click here to review.

257
Morgan, C, (2005), “I Click, You Click, We all Click. But Do We Have a Contract? A Case Comment
on A spencer1.com v. Paysystems,” Canadian Journal of Law and Technology 109.118 Available at:
http://cjlt.dal.ca/vol4_no2/pdfarticles/morgan.pdf retrieved on 14 th December 2010.
258
(2002), 58.O.R. (3d) 299 (Ont. Sup. Ct.).
259
[2005]. JQ no 1573.

93
The court found that the plaintiff‟s continued use of the website could not be interpreted

as acceptance of the amendment to the agreement requiring arbitration.

In the United States, the court in Register.com v. Verio Inc.260 upheld the enforceability

of the terms and conditions of a WHO IS database search web service, which stated “by

submitting this query, you agree to abide by these terms.” The court noted that the terms

of use in this case were clearly posted on Register.com website, and that the defendants

conduct in performing a search inquiry constituted agreement to the terms.

In Specht v. Netscape Communications Corp.261 the issue was similar to that in Kanitz as

the court had to consider the enforceability of an arbitration clause in Netscape‟s end-

user licence agreement. At issue was whether or not the terms of the licence posted on

Netscape‟s website were binding on a user who downloaded the software. Users were

asked to review and agree to the terms of the agreement (available via a hypertext link)

prior to downloading and using the software; however, they could proceed to download

the software without providing their express agreement. The court denied the

enforceability of the arbitration clause and stated:

We agree...that a reasonably prudent Internet user in

circumstances such as these would not have known or learned of

the existence of the licence terms before responding to the

defendant‟s invitation to download the free software and that the

260
126 F. Supp. 2d 238 (S.D.N.Y. 2000); aff.d 2004 WL 103400 (2nd Cir. 2004).
261
206 F.3d 17 (S.D. N.Y. 2001); aff.d 306 F.3d 17 (2nd Cir. 2002).
94
 defendants therefore did not provide reasonable notice of the

licence terms.

The court concluded that the bare act of downloading did not unambiguously manifest

assent, therefore the terms were held to be unenforceable.262

The above cases clearly illustrate the challenges that computer technologies have posed

to the existing laws in several jurisdictions. As it is clearly illustrated in the cases above,

a browse-wrap agreement offends the traditional principles of contract law because it

strays too far from the basic contractual principles of notice and assent. These cases may

be used to persuade courts of law in Tanzania in case they are encountered by similar

issues.

3.6.4 The Issue of Consent and Enforceability of Shrink-wrap

Agreement

Shrink-wrap agreements and other web-based contracts are akin to the standard form

contracts or contracts of adhesion. Contracts of adhesion have been dealt with in courts

of laws of Tanzania mainly in the so called ticket cases.263 The legal principle set out in

these cases is that unfair terms or terms relied upon to defend a fundamental breach will

262
See also Ticketmaster Corp. v. Tickets.com Inc. 2000 United States Dist. LEXIS 12987 (C.D. 2000);
aff.d.
248. F.2d 1173 (9th Cir. 2001).
263
See Nditi. N. N. N, Op Cit, and Cooper Motors Corp. Ltd v. Arusha International Conference Centre
[1991] TLR 165 (CA), Star Service Station Co. Ltd v. Tanzania Railways Corporation [1989] TLR 1
(HC).

95
not bind the adhering party,264similarly terms that are contrary to public policy do not

bind.265

One problem with shrink-wrap agreement is that one party is denied an opportunity to

analyse the terms and conditions of the contract until the contract has been formed and

the product has been opened. The question may be raised as whether shrink-wrap

agreement may be enforced in courts of laws in Tanzania. The courts of law may wish to

adopt and accept the contention that shrink-wrap agreements are akin to the so called

ticket cases, and so the best response comes from case laws.

In U.S.A266 case laws developed principles that later were harmonized in the Uniform

Electronic Transactions Act, 1999 and Electronic Signature in Global and National

Commerce Act, 2000 each providing that a contract cannot be denied enforceability

solely because it is signed electronically or is in electronic form.

If it can be demonstrated that the contract was unconscionable due to the inequality of

bargaining power or economic duress and that consent was obtained on the basis of

undue influence,267 such a contract is voidable.268 The burden of proving that the

contract is fair will rest on the party with dominant position.269

264
See Star Service Station Co. Ltd v. Tanzania Railways Corporation [1989] TLR 1 (HC).
265
See section 23 (1) and (2) of the Law of Contract Act, Op Cit.
266
United States of America.
267
See section 19 (1), (2) and (3) of the Law of Contract Act, op cit, see also Nditi. N. N. N, op cit, at 150-
153.

96
Some scholars argue that shrink wrap agreements are enforceable in some

jurisdictions270but in Tanzania it depends on the discretion of the court and as such there

is a need to enact a clear provision of law on such contracts.271

3.6.5 The Issues of Time and Place of Contract: Examining the

Theoretical Basis

The aspect of time is normally an important aspect in contract and specifically in e-

contracts. Time resolves questions regarding competence acceptance, i.e., when the

parties‟ mutual rights and obligations become effective or when title or risk passes from

268
See section 19 (1) of the Law of Contract Act, op cit and Slus Brothers (E.A) V. Mathias & Towari
Kitomari [1980] TLR 294.
269
See section 16 (3) of the Law of Contract Act, op cit.

Pistorius. T, (1993), “The Enforceability of Shrink-wrap Agreements in South Africa”, 5 South African
270

Mercantile Law Journal, 1-19.

271
However, the courts of law in Tanzania may as well borrow English contractual principles namely; non
est factum and contra proferentum. Non est factum – is a Latin maxim for “it is not my deed” – is a
doctrine in contract law that allows a signing party to escape performance of the agreement. A claim of
non est factum means that the signature on the contract was signed by mistake, without knowledge of its
meaning, but was not done so negligently. A successful plea would make the contract void ab initio. Non
est factum is however, difficult to claim as it does not allow for negligence on the part of the signatory,
and for a professional like a lawyer the defense becomes even more difficult. Contra proferentum is a
doctrine of contractual interpretation which provides that an ambiguous term will be construed against the
party that imposed its inclusion in the contract – or, more accurately, against (the interests of) the party
who imposed it. The interpretation will therefore favor the party that did not insist on its inclusion. The
rule applies only if, and to the extent that, the clause was included at the unilateral insistence of one party
without having been subject to negotiation by the counter-party. Additionally, the rule applies only if a
court determines the term to be ambiguous, which often forms the substance of a contractual dispute. The
reasoning behind this rule is to encourage the drafter of a contract to be as clear and explicit as possible
and to take into account as many foreseeable situations as it can.

97
one party to another in a contract. 272It also helps in choice of law that should govern the

contract especially in a contract involving parties based in different jurisdictions.273

Suppose one party accepts an offer to buy made by another party to him and

communicates his acceptance by e-mail. The question may arise as to the time when the

contract was formed. In view of this anomaly it becomes necessary to examine whether

the existing theories and rules governing communications of offer and acceptance can

apply to cyber contract.

The theories to be discussed include expedition, information and reception theories.

(a) The expedition theory

The expedition theory applies where the contracting parties relied on postal mode in the

course of communicating the acceptance to the offeror. This may be in response to the

mode used to communicate the offer itself or otherwise in response to what the offeror

had prescribed. This theory and its rule governing acceptance by using the post were

developed in 1818 in Adams v. Lindsell.274 In this case the court was called upon to

resolve when exactly a contract was formed where parties used postal mode of

communication. Chitty275 on Contracts prescribes four possibilities under which

272
Visit http://www.ictjournal.washington.edu/Vol3/a012Kierkegaard.html.
273
See Khan-Freud, O, (1970), “Book Review” The American Journal of Comparative Law, 429-441 at
435.
274
(1818) 1B & Ald.681, See also the American case of Mactier’s Adm’rs v. Frith, 6 Wend. 103
(N.Y.1830).
275
See Chitty on Contracts, (2004), General Principles of Contract, 29ed, Sweet &Maxwell London at
145.
98
acceptance sent by post could take effect. These are when it is actually communicated to

the offeror, when it arrives at his address, when it would in the ordinary course of post

have reached him, and when it is posted. However, in English law, according to the

expedition theory as discussed in Adams v. Lindsell, the general rule is that, in the

absence of a prescribed mode of acceptance and where parties are not in intent and

purposes in each other's presence the contract is formed when the letter of acceptance is

posted in due course.276 The term posted means, for that purpose, the letter is put in the

post office's control and hence out of the offeree's control. 277 In such a situation the

contract is formed when posting took place.278

In Bryne v Van Tienhoven279 it was stated where the offer was made by post and thus

within the contemplation of the parties that acceptance should be in the same way, mere

sending of the letter of acceptance to the post and leaving it there for further

transmission will create a binding contract on the parties even if it never reached the

offeror. Consequently, on the basis of the postal rule as espoused by the expedition

theory, if the offeror chose to rely on the post the contract would become binding as

276
See Cheshire, et al, (1996), Law of Contract, 13th Ed, at 53-54. See also Nditi, N. N. N, op cit at 40-
41.
277
Ibid.
278
See Lord Denning's observations in Entroes Ltd v Miles Far East Corp. [1955] 2QB327 at 332.
279
(1880) 5C.P.D 334 at 348.

99
soon as a letter of acceptance, correctly addressed and adequately stamped was

posted.280

Although under this rule the offeree seems to enjoy an advantageous position over the

offeror in the contract formation process,281 on the other hand the rule seems to deny her

the chance to revoke her acceptance by a speedier means, say, by telephone.282

In Tanzania the law seems to set down different rules on postal communication from the

Common Law position. The Law of Contract Act 283covers the rules regarding

completion of communication of offer and its acceptance. Although under Common

Law the general rule is that a contract is made immediately when the letter of acceptance

correctly addressed and adequately stamped is posted,284 section 4 of the Law of

Contract Act provides for a different rule which, as Nditi. N. N. N285 contends, does not

correspond with the posting rule.286 According to the section, where an offeree posts his

letter of acceptance and it becomes out of his power the offeror is bound but not the

offeree.287 It is submitted that this means a contract has been concluded in as far as the

280
See Nditi. N. N. N, op cit, at 42.
281
Visit http://www.jiclt.com/index.php/JICLT/article/viewFile/33/20.
282
See Nditi. N. N. N, op cit, at 42.
283
Cap 345 [R.E. 2002] under section 4.
284
See Busoga Millers & Industries Ltd v Purshottam Patel 22EACA 348.
285
Op cit.
286
See Nditi. N. N.N, op cit, at 42.
287
Cap.345 [R.E. 2002].Section 4(1)-(3) provides: Communication, when complete
100
proposer is concerned but an acceptor is not bound until his acceptance comes to the

knowledge of the proposer.288 Consequently, in Tanzania, unlike under the English

law289 the offeree can revoke his acceptance by a faster means before it is communicated

to the offeree.290 Under English law there is no authority on whether a posted acceptance

can be revoked by, say e-mail, telex or telephone which reaches the offeror before, or at

the same time, as the acceptance.291 Under English law, it is submitted a revocation by a

speedier means will have no effect; the reason being once a contract has been concluded

by the posting of the acceptance it cannot be dissolved by the act of one party.292

As section 4(1) (b) shows the communication of acceptance is complete as against the

offeree when it comes to the knowledge of the offeror. In the same way, revocation of an

acceptance does not become effective until the offeror knows about it.293 Furthermore,

(1) The communication of a proposal is complete when it comes to the knowledge of the person to whom
it is made

(2) The communication of an acceptance is complete–(a)as against the proposer, when it is put in a course
of transmission to him, so as to be out of the power of the acceptor;(b)as against the acceptor, when it
comes to the knowledge of the proposer (3) The communication of a revocation is complete–(a) as
against the person who makes it, when it is put into a course of transmission to the person to whom it
is made, so as to be out of the power of the person who makes it; (b) as against the person to whom it
is made, when it comes to his knowledge.
288
See Nditi. N. N. N, op cit, at 42-43.
289
See Chitty on Contract, op cit, at 150.
290
See section 4 (2) (b) and also Nditi, N. N. N, op cit, at 43.
291
See Chitty on Contract, op cit, at 150.
292
See Ibid at 150 citing Wenkheim v Arndt (N.Z.) 1 J.R. 73 (1873), Morrison v Thoelke, 155 So.2d889
(1963) and A to Z Bazaars (Pty) Ltd v Minister of Agriculture (1974) (4) SA 392 (c).
293
See section 5(2) of the Law of Contract Act Cap.345 [R.E.2002].

101
once the offeree revokes her offer she cannot recall her revocation.294 The offeror will

only be bound after knowledge of the revocation, and this must be before he knows of

the acceptance.295 From the foregoing discussion, it becomes apparent that section 4(2)

of the Law of Contract Act in Tanzania marks a departure from the English Common

Law as far as the offeree is concerned.296

(b) The Information Theory

This theory applies where parties are physically before each other (inter praesentes) or

where they are apart (inter absentes) but are engaged in an instantaneous

communication, such as telephone conversations or an almost instantaneous

communication such as use of fax or telex. Acceptance under this theory is governed by

the general rule which is to the effect that a contract will be formed when acceptance is

brought to the attention (knowledge) of the offeror. Since this rule requires 'knowledge

of the acceptance' on the part of the offeror, one must read/learn or hear or take

knowledge of the acceptance for a contract to be formed.297

294
See Section 4(3) (a) of the Law of Contract Act, op cit.
295
See Section 4(3) (b), ibid, This approach is similar to that envisaged in Article 16 (1) of the United
Nations Convention on Contracts for the International Sale of Goods, op cit. But Tanzania is not a party
to this Convention.
296
See also Nditi. N. N. N, op cit, at 43.
297
Ibid and See also Chitty on Contract, op cit, at 143.

102
In JSC Zestafoni Nikoladze Ferroalloy Plant v Ronly Holdings Ltd298 it was held that a

fax is a form of instantaneous communication since if a message has not been received,

the sender is informed by his machine. In this case the court went further stating that

most machines also indicate to the sender whether the message has been effectively as

distinct from only partly received. However, the court was quick to observe that even so

that rule is not universal since no universal rule can cover all such cases but rather they

must be resolved by reference to the intentions of the parties, by sound business practice

and in some cases by a judgment where the risks should lie.

(c) The Reception Theory

The reception theory responds to the question: what will be the position if the letter of

acceptance was delivered to the offeror's office but was not read by the offeror. Will

there be a contract or not. Unlike the information theory where the offeror must be

seized with the knowledge by reading or hearing the exact words of the offeree in order

for the contract to be formed, under the reception theory conclusion of a contract by

parties while at distance will be formed the moment the offeree receives the acceptance

even if he has not read it. The United Nations Convention on Contracts for the

International Sale of Goods (CISG), for example, applies the reception theory with

regard to when an offer becomes effective. Article 15(1) of this Convention provides

298
[2004] 1 C.L.C. 1146.

103
that an offer becomes effective when it reaches the offeree.299 Similarly, Article 18 (2)

echoes the reception rule by stating that an acceptance of an offer becomes effective at

the moment the indication of assent reaches the offeror.300

3.7 Judicial Activism Towards E-Contract in Tanzania

Tanzania is one of the common law countries that abide by common law principles in its

legal system. Precedent is one of the common law principles that applies in Tanzania.

The court may use previously decided cases either as authoritative or persuasive from

the court of record within the country or from any other common law country.301

Previous decisions from courts of record in Tanzania may provide authority for recent

cases. For example some decisions show that courts of laws in Tanzania are willingly

adhering to technological advancements as against contractual environment existing to

enhance commerce and trade.

National Bank of Commerce v. Milo Construction Co. Ltd and two others302 involved a

claim on recovery of amount of money alleged to have arisen out of an overdraft facility.

299
Article 15(2) of the Convention further provides that an offer, even if it is irrevocable, may be
withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.
300
See also Article 24 which provides that an offer, declaration of acceptance or any other indication of
intention reaches the addressee when it is made orally to him or delivered by any other means to him
personally, to his place of business or mailing address or, if he does not have a place of business or
mailing address, to his habitual residence.
301
See NYAMAKA. D. M, (2009), “The Legal and Practical Aspects of Automated Teller Machines
(ATMs) in Tanzania” LL.B Dissertation, RUCO, at Pp 22-25.
302
Commercial Case No 293 of 2002 (unreported).

104
The plaintiff was alleged to have defaulted on repayment of the said facility in which

two statements were tendered in court. One was the processed easy bank computer

program and the other was processed inflexible banking computer program. The court

found discrepancies between the two statements as some entries were not reflected in

one of the statements. The plaintiff did not adduce sufficient explanation on the

discrepancies. The court therefore found that the plaintiff failed to prove the exact

amount the first defendant borrowed from the plaintiff. Thus, computer printouts were

admitted as evidence in this case and this can serve as precedent in subsequent cases

especially in e-contracts where the Law of Contract Act is silent on a particular e-

contract aspect.303

In R v. Masquid Ali304 it was stated that the law is bound these days to take cognizance

of the fact that mechanical means replace human efforts. For example instead of a party

to contract signing by writing in the document to complete the contract, he may use e-

signature to complete the transaction.305

In Tanzania Cotton Marketing Board v. Corgecot Cotton Company SA306 the court

stated that while it is an undisputed fact that under Rule 4 of the Arbitration Rules of

1957, the award is to be forwarded to the Registrar of the High Court by registered post,

303
See also NYAMAKA, D.M, (2009), op cit.
304
(1966) 1 Q B 688.
305
See NYAMAKA.D.M, Op cit.
306
[1997], TLR 165 CA.

105
the words “registered post” should be interpreted widely enough to take into account the

current development in communication technology that has taken place. This case is of

significance because it encourages recognition of modern technologies like e-signatures,

e-contract terms etc.

The Commercial Division of the High Court of Tanzania adopted the reasoning

developed in Tanzania Cotton Marketing Board v. Corgecot Cotton Company SA307 in

the case of Trust Bank Tanzania v. Le Marsh Enterprises Ltd and Others.308 The court

underscored the need for the judiciary to be ready to adopt changes caused by the

technological revolution engulfing the world, and proceeded to extend the definition of

banker‟s books to include evidence emanating from computers subject to sections 78

and 79 of the Evidence Act.309

3.8 Conclusion

It is argued in this study that courts of law should apply the same line of arguments

developed in the above cases and activate legal reforms to e-contracts. This duty if

properly done by courts of laws will make Parliament not to rush into changes but to

have sufficient opportunity to review the existing environment and examine the

reforms required.

307
Op cit.
308
The case of 2000 decided by Nsenkela, J (as he then was).
309
Op cit

106
 CHAPTER FOUR: CONCLUSION AND RECOMMENDATIONS

4.1 Conclusion

From the study it is found firstly that, the globe ecommerce transactions are increasing

annually310and unless a country (like Tanzania whose legal environment is behind the

forces of technology) creates a requisite enabling legal environment in time it will miss

the opportunities which ecommerce avails to participants in the globe market.

Secondly, since internet has become a channel of doing business 311belated legal

responses will create uncertainty and expose participants to unnecessary risks.312 It is

vital for the existing legal environment to respond positively to the needs of technology.

It is predicted that countries that do not take time now to create appropriate

infrastructures including legal environments, that supports internet will find their

economies plummeting in a matter of years.313

We generally conclude that, when we consider how the law of contract has evolved over

time to keep pace with modern economic realities, it is important that we don‟t take

previous legal developments, such as the objective theory of acceptance, for granted.

Previous sound principles may need to be re-evaluated and adapted to ensure that we are

310
Visithttp://www.metric2.com/blog/2006/10/26/online_consumer_spending_to_hit_170_billion_in_200.
htm last retrieved on 23rd July 2010.
311
See Tuma ES, et al, “Contracting over the Internet in Texas” 52(2) Baylor Law Review 381-415 at 385.
312
See Sizwe S, (2008), Electronic Contracts in South Africa –A Comparative Analysis: Journal of
Information, Law and Technology at 2.
313
See Merwe, et al, (2000), Internet Contracts in Buys R (eds) Cyber Law @SA Van Schaik, at 156.
107
upholding the fundamental goals of contract law. While the Internet and electronic

environment has posed challenges to traditional contracts law, these developments can

also be viewed as an opportunity to improve the law and get closer to fundamental

contracting principles, such as consensus ad idem.

In the light of our findings, it is therefore demonstrated that the existing regulatory

framework in Tanzania only provides general contractual principles that hardly fit the

aspects of cyber contract. Our hypothesis has therefore, been borne out.

4.2 Recommendations

Since e-contracts and consumers have concerns with regard to adequacy of the existing

rules in allocating risks that arise out of utilisation of the new media, reforming the

existing laws is the best option for the time being in order to move with the current

changes and realities of technology. For ecommerce to flourish there is a need for laws

that sufficiently and openly encourage technological innovation (including e-contracts)

and instil confidence in both the business community and the public.

We further recommend that Parliament and executive agencies with power to enact laws

and rules should be able to effect the changes in time because definite articulation of a

legal position through a written code is a more preferable approach. Indeed, in the High

Court of Tanzania314 it has been observed that it is better for Parliament to create rules

that govern the new technology environment rather than waiting for courts to develop
314
In Trust Bank Ltd v Le-Marsh Enterprises Ltd, Joseph Magari and Macharia, High Court of Tanzania,
Case no. 4 of 2000 (unreported).
108
them. More problems may be created if we attempt to extend the existing laws to cover

new scenario created by technology.

It is our recommendation that the Law Reform Commission of Tanzania and the

Ministry of Justice and Constitutional affairs present drafted bills315 supporting legal

reforms in electronic transactions to Parliament for necessary action. Such legislation

would be most welcome and indeed are much needed in this country.

Generally most African Countries lack cyber laws and harmonized policies and laws

within the African context. We suggest that in order to prevent unauthorized access and

misuse of computer systems and to building confidence on the use of ICT, cyber security

must become a major concern for governments due to the danger that such threats pose.

Protection requires more effort and active global cooperation from all stakeholders.

To courts of law, we recommend that construction of cyber contracts be linked to

contractual principles that can afford such technological advancement.316

315
Op cit.
316
See Trust Bank Tanzania v. Le Marsh Enterprises Ltd and Others [2000], (High Court Commercial
Division), (Unreported) by Nsekela J (As he then was).

109
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