Unicitral La

The Proposed UNCITRAL Convention on Electronic Contracts
Author(s): John D. Gregory

Source: The Business Lawyer , November 2003, Vol. 59, No. 1 (November 2003), pp. 313-
343
Published by: American Bar Association
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The Proposed UNCITRAL Convention on Electronic
Contracts
By John D. Gregory*
Introduction
Electronic commerce was born of electronic data interchange (EDI)

of age with the popular use of the Internet.1 As businesses started doi
paper, lawyers began to wonder what would happen to their traditional
and practices based on paper. What of "getting it in writing?" What of
What of originals? How would courts deal with electronic evidence? F
electronic communications lend themselves readily to cross-border tra
and with the Internet it can be difficult to know where in the world a co
ing party is located. As a result, there was an early interest in specif
harmonizing the private law implications of using them.
The United Nations Commission on International Trade Law (UN
arguably the premier global source of commercial law reform, addre
tention to the topic in the early 1980s.3 It reviewed the legal response
states to electronic communications and urged them to adapt their le
regimes to the new practices. In particular it urged attention to ques
electronic evidence, which is understandable, since at the time electr
bases were more common than actual electronic transactions.
* General Counsel, Policy Branch, Ministry of the Attorney General (Ontario, Canada), and co-chair,
Global E-commerce Policy Subcommittee, Cyberspace Committee, ABA section of Business Law. The
views expressed here are not necessarily those of the Ministry or of any part of the ABA. Many of the
ideas were generated in international conference calls and ABA meetings; the author thanks the par-
ticipants for his education but does not hold them responsible for what he has made of it.
1 . Although businesspeople have been using technology for their communications forever, and the
telegram, telephone, telex and fax systems have raised questions of authentication and security, it is
arguable that EDI is different in kind because of the coding, speed and extent of the messages, and
the interactive capacities of the Internet is a further change in kind from previous technology. Nothing
in this Article turns on the degree of difference from one technology to the next.
2. For information about UNCITRAL, see http://www.uncitral.org (last visited Oct. 11, 2003).
3. See Legal Aspects oj Automatic Data Processing: Report oj the Secretary -General, UNCITRAL, 17th
Sess., U.N. Doc. A/CN.9/254 (1984), reprinted in [1984] 15 Y.B. UNCITRAL 328, U.N. Doc. A/CN.9/
SER.A/1984, available at http://www.uncitral.org/english/yearbooks/yb-1984-e/voll5-p328-331-e.pdf;
Legal Value oj Computer Records, UNCITRAL, 18th Sess., U.N. Doc. A/CN.9/265 (1985), available at
http://www.uncitral.org/english/workinggroups/wg_ec/ml-ec-bckdocs/acn9-265.pdf. For a history of
UNCITRAL's involvement in e-commerce in the context of parallel development in the United States,
see Amelia H. Boss, Electronic Commerce and the Symbiotic Relationship Between International and Do-
mestic Law Reform, 72 Tul. L. Rev. 1931, 1947-52 (1998).
313

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314 The Business Lawyer; Vol. 59, November 2003
Subsequently, in the early 1990s, it developed a coherent set of legal responses

to the principal questions posed by e-commerce, to remove barriers that tradi-
tional legal rules tended to pose to the new practices. The Model Law on Electronic
Commerce (MLEC),4 finally adopted in 1996, has been very influential around
the world in providing a legal basis for commercial use of electronic communi-
cations.5 Its basic principle is non-discrimination: electronic communications
(which it calls data messages) may not be denied legal effect solely because they
are electronic.6 (There may of course be other reasons to deny them legal effect,
but not just the medium of communications). It then sets out electronic "func-
tional equivalents" to traditional legal rules requiring paper, so that data messages
may have the same legal effect. For example, a legal requirement that information
be in writing may be satisfied if the electronic record is accessible so as to be
usable for subsequent reference.7 Other provisions of the MLEC will be mentioned
in the context of the proposed e-contract Convention in this Article.
Following the MLEC, it elaborated the Model Law on Electronic Signatures
(MLES),8 to pursue a couple of issues left in suspense by the earlier text. The
main question was how to tell if an electronic signature was "as reliable as appro-
priate in the circumstances," as required by the MLEC.9 The solution of the MLES
appears again for discussion in the proposed e-contract Convention discussed in
this Article.
After completion of the MLES, the Working Group on Electronic Commerce

had three items on its future work agenda.10 One was the legal status of electronic
4. U.N. GAOR UNCITRAL, 51st Sess., Supp. No. 17, Annex 1, U.N. Doc. A/51/17 (1996), avail-
able at http://www.uncitral.org/english/sessions/unc/unc-29/a51-17.htm. The text of the MLEC and
the very useful Guide to Enactment are online at: httpy/www.uncitral.org/english/texts/electcom/ml-
ecomm.htm (last visited Oct. 11, 2003).
5. In the United States, the Uniform Electronic Transactions Act (UETA) was adopted by the
National Conference of Commissioners on Uniform State Laws (NCCUSL) in 1999 and is in force in
most states. 7A pt. 1 U.L.A. 211 (2002), available at http://www.law.upenn.edu/bll/ulc/fnact99/1990s/
ueta99.htm. For a record of the discussions leading up to its adoption and a list of states that have
adopted it, with links to electronic versions of their legislation, see http://www.uetaonline.com (last
revised Apr. 2, 2001). The Electronic Signatures in Global and National Commerce Act (E-SIGN),
15 U.S.C. §7100-7131 (2000), available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.
cgi?dbname= 106_cong_public_law&docid = f:publ229. 106.pdf. E-SIGN was inspired by UETA
rather than by the MLEC directly.
6. UNCITRAL Model Law on Electronic Commerce, G.A. Res. 51/162, U.N. GAOR, Art. 5 (1996),
available at http://www.uncitral.org/english/texts/electcom/ml-ecomm.htm [hereinafter MLEC].
7. Id. at Art. 6.
8. G.A. Res. 56/80, U.N. GAOR, 56th Sess., Agenda Item 161, U.N. Doc. A/RES/56/80 (2002),
available at http://www.uncitral.org/stable/res5680-e.pdf. The text of the MLES and its Guide to En-
actment may be found on the UNCITRAL website: httpy/www.uncitral.org/english/texts/electcom/ml-
elecsie-e.pdf.
9. See MLEC, supra note 6, at Art. 7.
10. There was also an interest in working on online dispute resolution, but the idea has not been
pursued in the last couple of years. A history of UNCITRAL's recent deliberations appears at the outset
of the report of each meeting of the Working Group on Electronic Commerce. The most recent is in
the report of the May 2003 meeting, Report oj the Working Group IV (Electronic Commerce) on the Work
of its Forty-Eirst Session, UNCITRAL, 36th Sess., ff 1-15, U.N. Doc. A/CN.9/528 (2003), available at
http://www.uncitral.org/english/sessions/unc/unc-36/acn9-528-e.pdf [hereinafter May 2003 Meeting].
See infra note 24 for a list of the relevant reports. In general the relevant UNCITRAL documents

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The Proposed UNCITRAL Convention on Electronic Contracts 315
transport documents, such as bills of lading and other documents of title that
were themselves, on paper, tokens of value. The essential problem is that elec-
tronic documents can be perfectly copied, and tokens of value must be unique.
Ensuring uniqueness and transferability is a major challenge. The MLEC had made
provision for them, but the relevant articles had not been widely adopted even
by countries otherwise implementing the Model Law.11 The Secretariat of
UNCITRAL made a study of the issues, but the topic has not yet been taken up
in detail by the Working Group. The topic overlaps with a project of another
UNCITRAL Working Group, that dealing with transport law12 The Working
Group on Electronic Commerce thought it better just to provide expertise where
needed on e-commerce to the other Working Group.13
A second topic for future work was to bring an array of international instru-
ments - treaties and conventions - into line with current legal thinking, so they
could apply to electronic communications.14 Most had been drafted before elec-
tronic communications were developed, and their language or their concepts often
seem to require paper, even if on reflection no such restriction would be needed.
Some debate ensued whether it was possible to provide a central or global amend-
ment document, or whether all instruments would have to be individually
amended. The latter prospect led to the probability that many state members of
these Conventions would adopt the updated version of the instrument, while
other contracting states would not, leading to disharmony where harmony now
existed. After a theoretical review of the options15 and a practical, convention-by-
convention review,16 the Working Group decided that more relevant progress
referred to in this Article are accessible online: http://www.uncitral.org/english/workinggroups/wg_ec/

index.htm (last visited Oct. 11, 2003).
11. Canada is about the only country to enact Articles 16 and 17 oí the MLEC, and even there
several provinces did not follow the Uniform Electronic Commerce Act, see infra note 23 on that
point.
12. See Provisional Agenda, UNCITRAL, Working Group III (Transport Law), 11th Sess., fflj 2, 10,
U.N. Doc. A/CN.9/WG.I11/WP24 (2003), available at http://www.uncitral.org/english/workinggroups/
wg_37wp24.pdf.
13. Report of the Working Group on Electronic Commerce on its Thirty -Eighth Session, 34th Sess., ^ 92,
U.N. Doc. A/CN. 9/484 (2001), available at http://www.uncitral.org/english/sessions/unc/unc-34/acn-
484e.pdf.
14. The idea was proposed to UNCITRAL by The Centre for the Facilitation of Procedures and
Practices for Administration, Commerce, and Transport (CEFACT), a branch of the U.N.'s Economic
Commission for Europe. Recommendation to UNCITRAL Regarding Implementing Electronic Equivalents
to "Writing", "Signature" and "Document" in Conventions and Agreements Relating to International Trade,
U.N. Doc. TRADE/CEFACT/1999/CRP.7 at 2 (1999), available at httpy/www.unece.org/cefact/wg/lwg/
download/99cp7.pdf. It was considered by UNCITRAL at its 1999 meeting. U.N. GAOR UNCITRAL,
54th Sess., Supp. No. 17, 1(316, U.N. Doc. A/54/17 (1999), available at http://www.uncitral.org/
english/lpg-54-17.pdf.
15. See Legal Aspects of Electronic Commerce, UNCITRAL, Working Group IV (Electronic Com-
merce), 38th Sess., f 10, Annex fl 1-3, U.N. Doc. A/CN.9/WG.IVWR89 (2001), available at http://
www.uncitral.org/english/workinggroups/wg_ec/wp-89e.pdf [hereinafter WP.89]. The principal re-
searcher was Professor Geneviève Burdeau.
16. See Legal Aspects of Electronic Commerce, Legal Barriers to the Development of Electronic Commerce
in International Instruments Relating to International Trade, Working Group IV (Electronic Commerce),
39th Sess., 1 4, U.N. Doc. A/CN.9/WG.IV/WP.94 (2002), available at http://www.uncitral.org/english/
workinggroups/wg_ec/wp-94e.pdf [hereinafter WP.94].

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would be made by turning to the remaining item: electronic contracting.17 Indeed,

the Secretariat frequently found that the main requirement to update an existing
convention was to modernize its contracting provisions. As we will see, the Work-
ing Group has entertained ambitions of killing two birds with one stone on this
topic.18
The third topic identified for future work was a more formal instrument on
electronic contracts.19 The MLEC had expressly permitted such contracts, saying
that "an offer and the acceptance of an offer may be expressed by means of data
messages. Where a data message is used in the formation of a contract, that
contract shall not be denied validity or enforceability on the sole ground that a
data message was used for that purpose."20 The United Nations has recommended
that all member states adopt the MLEC. Regional versions are proposed for Latin
America21 and for the Commonwealth of Nations.22 Most of the legislation im-
plementing the MLEC had adopted that provision.23 As a consequence, devoting
17. See Report of the Working Group IV (Electronic Commerce) on the Work of its Fortieth Session,
UNCITRAL, Working Group IV (Electronic Commerce), 36th Sess., ffl 28-30, U.N. Doc. A/CN.9/527
(2002), available at http://www.uncitral.org/english/sessions/unc/unc-36/acn9-527-e.pdf. Note, how-
ever, that a number of governments and non-governmental organizations (NGOs) have expressed
interest in the updating of instruments project and have even asked UNCITRAL to review their in-
struments for updating. For example, see the comments of the International Civil Aviation Organi-
zation. Legal Earners to the Development of Electronic Commerce in International Instruments Relating to
International Trade, UNCITRAL, Working Group IV (Electronic Commerce), 40th Sess. at 6, U.N. Doc.
A/CN.9/WG.IV/WP.98 (2002), available at httpy/www.uncitral.org/english/workinggroups/wg.ec/
wp98-e.pdf [hereinafter WP.98]. Others, however, have preferred to do their own work, although
attempting for consistency with UNCITRAL approaches if possible. See, for example, the comments
of the World Intellectual Property Organization. Id. at 8. See also those of The Hague Conference on
Private International Law. Id. at Add. 5, f 2.
18. See infra note 186 and accompanying text.
19. The United States proposed a convention on electronic transactions as far back as 1998. Proposal
by the United States of America, UNCITRAL, Working Group IV (Electronic Commerce), 33rd Sess.,
U.N. Doc. A/CN.9/WG.IV/WP.77 (1998), available at http ://www. uncitral.org/english/workinggroups/
wg_ec/wp-77.htm; see also Legal Aspects of Electronic Commerce, Possible Future Work in the Field of
Electronic Contracting: An Analysis of the United Nations Convention on Contracts for the International Sale
of Goods, UNCITRAL, Working Group IV (Electronic Commerce), 38th Sess., U.N. Doc. A/CN.9/
WG.IV/WP.91 (2001), available at http://www.uncitral.org/english/workinggroups/wg_ec/wp-91e.pdf;
Report of the Working Group on Electronic Commerce on its Thirty-Eighth Session, 34th Sess., U.N. Doc.
A/CN. 9/484 (2001), available at httD://www.uncitral.org/en2lish/sessions/unc/unc-34/acn-484e.pdf.
20. UNCITRAL Model Law on Electronic Commerce, G.A. Res. 51/162, U.N. GAOR, Art. 11 (1996),
available at http://www.uncitral.org/english/texts/electcom/ml-ecomm.htm; see also Guide to Enactment
of the UNCITRAL Model Law on Electronic Commerce, fl[ 76-82 (1996) at http://www.uncitral.org/
english/texts . electcom/ml-ecomm . htm .
21. Inter-American Rules for Electronic Documents and Signatures, Sixth Inter- American Specialized
Conference on Private International Law (CIDIP-VI), 3d Sess., at 43, CIDIP-WRes.6/02, OEA/Ser.K/
XXI.6 (Feb. 27, 2002), available at http://www.oas.org/diVCIDIP-VI-Res6-02.htm.
22. Commonwealth Secretariat, LAW AND CYBERSPACE (2001), available at http://www.
thecommonwealth.org/dynamic/documents_asp/ViewADocument.asp?ID = 291&CatID = 87&PCID =
87.
23. See, e.g., UETA § 7(b), 7A pt. 1 U.L.A. 252 (2002); Electronic Transactions Act (ETA)- Aus-
tralia, No. 162 §8 (1999), available at http://scaleplus.law.gov.au/html/comact/10/6074/pdf/
162of99.pdf; Uniform Electronic Commerce Act (UECA) § 5, Proceedings of the Uniform Law Con-
ference of Canada, at http://www.ulcc.ca/en/poam2/index.cfm7sec = 1999&sub= 1999ia; Electronic
Transactions Act (ETA) - Singapore, Ch. 88 § 11 (1998), http://ascvldb4.asc.gov.sg/. Useful sources of
information on international developments in this field are the Internet Law and Policy Forum, at

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The Proposed UNC1TRAL Convention on Electronic Contracts 317
more time to this topic has generated some controversy.24 The present Article
examines in some detail the issues before the Working Group, its current direc-
tion, and possible solutions to some of the issues.25
The Need for A Convention on E-Contracts
In favor of preparing an e-contracts convention, it was said that a con

could contribute to the legislative arsenal of means of increasing legal c
or commercial predictability in electronic business transactions - along
MLEC and other instruments. Further, in some countries, conventi
higher than laws, so even a country that has adopted MLEC in legislation
subject to conventions that do not recognize e-commerce. Indeed, in so
tries, it is easier to adopt a convention than a national law, so having th
tion available may encourage wider adoption of the general rules.
The countries that have adopted the MLEC have done so inconsist
international transactions still face a patchwork of legal regimes. Only a
tion, it is said, can bring the appropriate degree of harmony across bor
rules of the MLEC were done as a model law at the time it was adopted
people were tentative about its solutions. Now they have proved valid an
able and deserve more legal force behind them.
http://www.ilpf.org; the McBride Baker Coles firm website, at http://www.mbc.com/eco

international. asp; and the Baker & McKenzie firm website, at http://www.bmck.com/ecom
24. The arguments on various aspects of the proposed convention are set out in part
uments of the UNCITRAL Secretariat and in reports of the Working Group. See May 2003
supra note 10, ffl[ 72-126; Legal Aspects of Electronic Commerce, Electronic Contracting: Provi
Draft Convention, UNCITRAL, Working Group IV (Electronic Commerce), 41st Sess., U
CN.9/WG.IV/WP100 (2003), available at http://www.uncitral.org/english/workinggroups/
wplOO-e.pdf [hereinafter WE 100] (the footnotes to the draft are quite helpful in explorin
sources, alternative wording, and policy considerations); Report of the Working Group IV
Commerce) on the Work of its Forty-First Session, UNCITRAL, 36th Sess., fl 26-151, U.N. D
528 (2003), available at http://www.uncitral.org/english/sessions/unc/unc-36/acn9-528-e.p
Aspects of Electronic Commerce, Electronic Contracting: Provisions for a Draft Convention,
Working Group IV (Electronic Commerce), 39th Sess., fflj 10-12, U.N. Doc. A/CN.9/W
(2002), available at http://www.uncitral.org/english/workinggroups/w^ec/wp-95e.pdf [
WP.95]; Report of the Working Group on Electronic Commerce on its Thirty-Ninth Session,
35th Sess., ffl 18-125, U.N. Doc. A/CN.9/509 (2002), available at http://www.uncitral.or
sessions/unc/unc-35/509e.pdf; Report of the Working Group on Electronic Commerce on its Th
Session, UNCITRAL, 34th Sess., 1J1Í 94-127, U.N. Doc. A/CN.9/484 (2001), available
www.uncitral.org/english/sessions/unc/unc-34/acn-484e.pdf; Legal Aspects of Electronic Comm
sible Future Work in the Field of Electronic Contracting: an Analysis of the United Nations Con
Contracts for the International Sale of Goods, UNCITRAL, Working Group on Electronic C
38th Sess., f 1, U.N. Doc. A/CN.9/WG.IV/WP91 (2001), available at http://www.uncitral.or
workinggroups/wg_ec/wp-91e.pdf [hereinafter WR91]. In the text reports of the meetings
enced by the date of the meeting rather than by their numbers. Other arguments have b
from the sources mentioned in the opening footnote, which are not available for specific c
the text working Papers will be referred to, for brevity, as WRXX rather than as A/CN.9/WG
25. Alter this Article was submitted tor publication, UNCITRAL published WP 103 with
of the convention. See infra note 34. Several provisions have been renumbered from WP. 10
this Article is based. Footnotes indicate the new numbers but the discussion does not reflect the
revised text.

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Although the U.N. Convention on Contracts for the International Sale of Goods
(CISG)26 does not require writing27 (unless the state member has so provided),28
it does not apply readily to all aspects of electronic contracting, so a special
convention could fill in the gaps or iron out the wrinkles. Moreover, MLEC and
CISG do not resolve some common issues in e-contracting, such as the effect of
errors, or whether a trading partner agreement will work.
Especially if the convention goes beyond mere formation of e-contracts, as now
seems very probable, it may influence the reading of the texts of other conven-
tions. One thinks of the instruments mentioned in WP94,29 in respect of which
the Secretariat's view was frequently that their operation could be modernized by
appropriate e-contracting language.
On the other hand, a number of arguments have been made against creating a
new convention. The primary one is that countries that want to promote, or just
remove legal barriers to, e-commerce can adopt the MLEC. If the convention says
the same thing as the MLEC, it is superfluous. If it says different things than the
MLEC, it is confusing. In any event we should have a single body of law that
applies to transactions in all media, paper and electronic. Having a convention
for e-contracts works against this principle. (A growing number of international
texts already focus on e-commerce, however, so there could be thought to be a
trend in this direction).
Some reservations have been expressed about re-opening the CISG. If that
happened, there is a risk that people will want to modify it as well, say by ex-
tending it to services. This could cause serious delay and also cause confusion
because some countries will in the future have the "old" CISG and some the "new."
Nevertheless, this has happened elsewhere, notably with the various conventions
on the carriage of goods by sea, and on limitation periods, and businesses and
their lawyers manage to figure it out.
If new topics need to be covered relating to e-contracts, a new Model Law could
be the better vehicle. The MLEC has been very successful in this field. In the
alternative, new topics could be the subject of opt-in private systems of rules, like
the various rule sets of the International Chamber of Commerce (ICC). The ICC
has put forward this argument itself.30 One may ask, however, whether adoption
of the supposed or proposed ICC rules might require a prior contract - on
26. The CISG was adopted in 1980 in Vienna. Convention on Contracts for the International Sale
of Goods, Final Act, U.N. Doc. A/CONE 97/18 (1980), reprinted in S. Treaty Doc. No. 9, 98th
Cong., 1st Sess., app. B (1980), available at http://www.uncitral.org/english/texts/sales/CISG.htm.
27. id. at Art. 11.
28. Id. at Art. 12.
29. See WP94, supra note 16.
30. Legal Aspects of Electronic Commerce, Electronic Contracting: Provisions for a Draft Convention,
Comments by the International Chamber of Commerce, UNCITRAL, Working Group IV (Electronic Com-
merce), 41st Sess., Annex 1, at 5, U.N. Doc. A/CN.9/WG.IV/WP101 (2003), available at http://www.
uncitral.org/english/workinggroups/wg.ec/wp-lOl-e.pdf [hereinafter WP 101] ; see also Legal Aspects of
Electronic Commerce, Electronic Contracting: Provisions for a Draft Convention, UNCITRAL, Working
Group IV (Electronic Commerce), 42nd Sess., U.N. Doc. A/CN.9/WG.IV/WP105 (2003), available at
http://www.uncitral.org/english/workinggroups/wg_ec/wg4-wpl05-e.pdf [hereinafter WP. 105] .

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paper - between the parties, or even a statutory base. It is admitted that courts
in some countries have adopted ICC rules or interpreted agreements between
parties consistently with them, when they are viewed as reasonable business
practices.
The decision so far in the Working Group has been to continue work on the
Convention. It is thought likely to help some countries influence all their laws,
and stimulate a closer harmonization on matters in the MLEC and some others,
as well as to influence other treaties. A statutory framework gives private agree-
ments on form greater certainty.
The Scope of An E-Contracts Convention

International Contracts
The CISG applies to transactions between parties located in differe

where (roughly stated) the countries are member states of the Conve
of them is, and a member state's law applies.31 The Working G
whether the e-contracting Convention should be similarly limited, o
ply to all e-contracts.32
In favor of applying it to all transactions, people have argued that
hard to know where parties are when they are dealing online, especia
that are deliverable online (or services performable online, if the con
to apply to services too). As a result, it will often not be possible to
a transaction as international rather than domestic, particularly at t
contract is made, which is when the parties may need to make dec
on what the applicable law is.
In any event, many countries need domestic rules for e-contract
sense that local and international rules for e-contracts should be t
pecially as the number of international transactions even by smaller
becoming significant.
In favor of restricting the text to international transactions, howe
that the goal is to develop an electronic parallel to CISG, which is
international transactions. Domestic sales law varies significantly fro
country, and a convention that purports to change domestic law ris
widely ratified. The broader the scope of the Convention, the more t
tries will be to avoid its application to or interference with domesti
other hand, one could work around this risk by allowing a reserva
ration on the point.33 Conversely, a country implementing an inter
vention could make its domestic law conform to the convention at the same time.
WP.100 applies the Convention to e-contracts where the parties are in different
states when the states are contracting states or the law of a contracting state applies
31. CISG, supra note 26, at Art. 1(1).

32. May 2003 Meeting, supra note 10 ffl[ 29-31.
33. Variant A of paragraph, Paragraph 3, Article 1 of the draft convention in WP.95 had that effect.
See WP.95, supra note 24, at Art. 1, f 3. Variant A was written to apply the convention to all contracts,
but Paragraph 3 allowed a declaration restricting application to international transactions. Id.

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(the same rule as the CISG).34 This appears to be the right decision: it is probably
too hard to influence domestic law. UNCITRAL can encourage ratifying states to
extend the Convention to their domestic law if they have no pre-existing provi-
sions. The Working Group may try to draft provisions so they will fit domestic
situations too. Further, the draft Convention also allows parties to opt into the
Convention,35 though the Secretariat asks if that is appropriate.36 The Convention
sets out rules for determining location, including the effect of declarations of
location.37 Finally, the Convention requires parties to disclose where they are,
which provides some evidence of the applicable law.38 We will look further at
these questions in dealing with the pertinent articles.
Consumer Transactions
Once it is decided what the general field will be - international contract

it is necessary to decide whether any international contracts will neverth
be covered. Perhaps the largest class of debatable contracts is those with
ers. CISG excludes sales for household or personal use, where the seller o
have known (from the character of goods or the character of buyer, for
that the sales were of this type.39 The Working Group has been trying
if its e-contract Convention should also exclude consumer transactions.
There are several ways that such an exclusion could work:
i) The Convention does not apply to sales for consumer goods (same rule as
CISG), where seller ought to be aware of consumer nature of transaction
(or whatever the eventual test is).40
ii) The Convention applies to all transactions, but attempts to provide some
measures of consumer protection (this is not, strictly speaking, an
exclusion).
iii) The Convention applies to all transactions, but yields to consumer protec-
tion laws, as is provided in MLEC and MLES.41
iv) The Convention applies to all transactions - but the Working Group would
study the full text when complete to see if any of the agreed provisions
34. See WE 100, supra note 24, at Art. 1(1); Legal Aspects of Electronic Commerce Electronic Con-
tracting: Provisions for a Draft Convention, UNCITRAL, 42d Sess., Annex, Art. 1(1), U.N. Doc. A/CN.9/
WG.IV/WR103 (2003), available at http://www.uncitral.org/english/workinggroups/wg_ec/wpl03-
e.pdf [hereinafter WP.103]. The desire for parallelism is noted in the Report of the March 2001
meeting. See Report of the Working Group on Electronic Commerce on its Thirty-Eighth Session, UNCITRAL,
34th Sess., f 31, U.N. Doc. A/CN.9/484 (2001), available at http://www.uncitral.org/english/sessions/
unc/unc-34/acn-484e.pdf.
35. WP100, supra note 24, at Art. 4; WP103, supra note 34, at Art. 4.
36. WP.100, supra note 24, at Art. 4 n.4. The May 2003 Working Group meeting deferred discus-
sion of this point until after considering the operative parts of the convention. See May 2003 Meeting,
suma note 10, 1Í 44.
37. See WP100. suvra note 24. at Art. 7: WP103. suma note 34. at Annex. Art. 7.
38. See WR100, supra note 24, at Art. 15; WP.103, supra note 34, at Annex, Art. 11.
39. CISG, supra note 26, at Art. 2(a).
40. WP.100, supra note 24, at Annex 1, Art. 2; WP.103, supra note 34, at Annex, Art. 2(a).
41. WR100, supra note 24, at Annex 1, Art. 2, Variant B(2); WP103, supra note 34, at Annex, Art.
3(a).

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have effects on consumers that should be dealt with, by exclusion, limita-

tion, reservation, or varied disposition.
In favor of including consumer transactions, people argue that it is too hard in

practice to know when one is dealing with a consumer, in electronic commerce,
so excluding them makes the law applicable to transactions too uncertain for the
merchant. (In other words, the "ought to have known" test of the CISG is not
realistic online). Moreover, consumers benefit from certainty in e-contracting too.
Most or all of the likely subjects of a convention - formation, time of delivery,
and so on - cause no harm to consumers. They need clear law in international
transactions as much as businesses.
If necessary, it is said, the Convention can take the approach of the Model Laws,
and yield to consumer protection rules otherwise applicable to the transaction,
to the extent necessary to protect consumers but not otherwise. The "hard part"
about consumer rules is limiting enforcement and other remedies, and the Con-
vention is unlikely to touch on these subjects.
Those who argue against including consumer transactions say that consumer
protection rules are too political and too locally varied to submit to harmonization.
In any event, UNCITRAL is dedicated to trade law and has little or no consumer
law expertise. (It must be said, however, that no one is asking it to draft consumer
protection law, in all the variants, just to extend its general benefits to consumers).
There is a fear that rules suitable for business-to-business ("B2B") transactions
will be watered down or otherwise made less desirable in order to accommodate
consumers.42 For example, the Convention may deal with click- through contracts,
and they raise consumer issues right at the formation stage, especially when they
are not negotiable. Thus there may turn out to be little room for non-controversial
inclusion of consumers. Trying to accommodate consumers will slow down adop-
tion of the Convention and impair its chances of being ratified once it is adopted,
because of the local politics of consumer protection. CISG does not apply to
consumer transactions, and the goal of the Working Group should be to keep
parallel to CISG, except as technology requires a variation from it.
The Working Group decided in its May 2003 meeting to defer the question,
i.e., not to exclude consumers but to revisit the question when the Convention
was complete to see if any accommodation or exclusion needed to be made.43
The principle was not to water down the Convention to make room for consumers
but to see if consumers would benefit rather that suffer from its global rules.44 In
any event the Convention would yield to more specific domestic rules intended
to protect consumers.
42. These themes are all at work in the submissions of the International Chamber of Commerce
(ICC) in WP.96. Legal Aspects of Electronic Commerce, Electronic Contracting: Provisions for a Draft
Convention, Comments by the International Chamber oj Commerce, UNCITRAL, Working Group on Elec-
tronic Commerce, 39th Sess. at 5, U.N. Doc. A/CN.9/WG.IV/WP.96 (2002), available at http://
www.uncitralorg/english/workinggroups/wg_ec/wp-96e.pdf [hereinafter WP96]. The submissions of
the ICC in 2003 (WE 101) do not address this issue. See WE 101, supra note 30.
43. See May 2003 Meeting, supra note 10, f 53.
44. Id.

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322 The Business Lawyer; Vol 59, November 2003
There has been little or no discussion at the Working Group on providing

special treatment for "mass market" contracts, i.e., contracts of adhesion for busi-
ness or consumer parties, where the buyer has no real opportunity to negotiate
terms.45 Some people had thought that this concept could be a "B2B" solution for
realities of the Internet market. It is not completely clear, however, that such
transactions would be easier to identify ahead of time than a transaction with a
consumer.
Virtual Goods/Digital Goods
The draft Convention makes only two express exclusions from its sc
sumer transactions, in one of two variants, and - in both variants -
granting limited intellectual property (IP) rights.46 This IP exclusion
standable, difficult and controversial. It is undoubtedly important.
The exclusion is understandable. The retention of some rights makes
action look less like a sale and more like a license, which in some cou
treated differently in law from a sale,47 so harmonizing the applicable ru
UNCITRAL Convention looks more challenging. Increasing numbers o
carry some sort of intellectual property implications. Some goods are mer
of IP, such as compact disks sold not for themselves but for the music
software they contain. One can think of these as "digital goods," tho
terminology in this whole field is not universal or stable. Usually it is t
owners who sell the goods themselves. In other cases, one finds IP em
goods sold for purposes not clearly related to it. One thinks of softw
enables the goods to work better or to have more functions, like com
cars. These "smart goods" are usually sold by merchants who may not
have rights to do anything with the IP but embed it. The existence o
introduces an additional party to the transaction, one who may not b
involved. In between digital goods and smart goods one may arguably f
puters themselves, which have valuable hardware but which are of lim
many purchasers except with operating systems and other bundled sof
makes their purchase attractive. Usually the IP is owned by someone o
the computer manufacturer or seller.
The purchasers of all these goods do not acquire with the purchase
to do anything with the intellectual property that comes with them,
it personally or in their business. That is not particularly surprising. A
of a book acquires the right to read the book and to lend it or resell it,
copy it or transform the content by translation, adaptation, and so on
45. The "mass market" concept was raised in the United States in the context of t
Computer Information Transactions Act (UCITA), adopted by NCCUSL in 1999 and
2002. UCITA § 102(45) (2002), available at http://www.law.upenn.edu/bll/ulc/ucita/2002f
46. WP.100, suma note 24, at Annex 1, Art. 2; WP.103, supra note 34, at Annex, Ar
47. The initial impetus for developing UCITA, supra note 45, was to accommodate this
although that statute is not yet widely adopted, and U.S. courts still sometimes treat
software or music as subject to Article 2 of the Uniform Commercial Code on Sales. See
Sys., Inc. v. Netscout Serv. Level Corp., 183 E Supp. 2d 328, 331-32 (D. Mass. 2002).

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are sold under the CISC In the digital age, however, the IP rights are expressed
to be more limited than those in books, so that the purchaser of software, for
example, often has the right to use it in only one computer and not a network.
Tax preparation software has been sold to create only a limited number of tax
returns. In other words, transaction documents contain more licensing terms.
The rights so expressed in IP are governed by the contracts, but they also
depend on the validity of the claims to the IP, which is a creation of national law.
The parties to international contracts may have different IP rights to the same
subject matter in their different countries. The trend to harmonizing IP rights
through conventions continues apace but has not reached uniformity Part of the
impetus to exclude these contracts from the UNCITRAL Convention may be to
avoid approving their use to extend IP rights beyond where IP law itself has taken
them. This is not much of a problem with books because global harmonization
has gone much further with them, having had more time to do so.
The area presents a number of technical difficulties, too. For one thing it is
sometimes hard to say when a good is being sold for its IP content and when the
IP content is intended to enhance the use of the good as a good. Vigorous but
inconclusive debates on this point have accompanied the development of the
Uniform Computer Information Transactions Act (UCITA) in the United States.48
For another, increasing numbers of products have some IP, sometimes for reasons
that appear more related to suppressing competition than to improve the func-
tioning of the products themselves.49 There may not always be an express reser-
vation of IP rights but the owners assert the rights as it serves their interests. So
knowing just what is excluded from the Convention will not be simple. It is hard
to argue that focusing on the product sold - digital goods, smart goods, "virtual
goods" - makes the application any easier than looking for a limited grant of IP,
as in the current draft.50
Excluding transactions that limit IP rights is controversial in part because it
risks excluding an ever-larger number of contracts that might benefit from the
Convention's rules. Further, many of those rules will go to procedural matters
like the formation of the contract or the communications necessary for its
48. For a selection of articles from the development period of UCITA, see online: http://www.
ucitaonline.com. For a skeptical view of severing embedded software from the goods themselves, see
Phillip Koopman & Cem Kaner, The Problem of Embedded Software in UCITA and Drafts of Revised
Article 2, UCC BULL. (Feb, Mar, Apr. 2001), available at http://www.badsoftware.com/embeddl.htm
and http ://www. badsof tware . com/embedd2 .pdf.
49. A recent example is the use of computer chips in ink cartridges for printers. Lexmark success-
fully sued under the Digital Millennium Copyright Act in the United States to block a competitor
from selling cartridges that work in Lexmark printers, based on the need of the competitor to make
a compatible chip, which is alleged to infringe Lexmark's intellectual property. Lexmark Int'l v. Static
Control Components, 253 F Supp. 2d 943, 974 (E.D. Ky. 2003).
50. The Working Group at its May 2003 meeting had intensive education and discussion on the
nature of this type of product and the advantages and disadvantages of their inclusion. See May 2003
Meeting, supra note 10, ffl[ 55-60; see also WP91, supra note 24, fl[ 20-29. It may be noted that this
discussion does not touch on rights in "data" as such; whether a contract purporting to sell data,
without reservation of any IP, is a sale of goods depends on other law. WP100, and now WP.103, are
drafted to apply to contracts without limiting their subject to goods or services, so data transfer
contracts would be covered. WP 100, supra note 24, at Art. 1 ; WP 103, supra note 34, at Annex, Art. 1 .

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administration. These may not be problematic even for contracts that have aspects
of licenses.
On the other hand, substantial numbers of these IP-reserving agreements arise
through online activities, like clicking icons on a screen. The IP provisions may
not be directly presented to the purchaser but available only through a hyperlink.
Some people are concerned that this kind of process should not be legitimated
by the Convention. It may be objected that the law generally recognizes standard-
form or non-negotiable contracts in many circumstances. Numbers of people are
concerned that contracts are being used to overextend IP protection, however, or
that they are otherwise simply unfair, and they do not want to see the Convention
make the contracts more readily enforceable.
A number of responses may be made to the skeptics, though. The first is that
the Convention provides only that contracts may be effectively formed online, in
that their electronic form does not in itself invalidate them.51 The usual laws of
contract will still apply, such as that the parties must have an opportunity to
review the terms, or - in some legal systems - that the terms must be brought to
the attention of the parties, before the agreement is formed. If the hyperlinked IP
provisions do not meet these tests, then the Convention will not make them
enforceable. The second is that the draft Convention does not affect the essential
validity of the transaction.52 If the transaction is unconscionable under the appli-
cable (domestic) law, the Convention will not save it. The third is that parties may
opt out of the Convention, or possibly vary its provisions.53 The Convention can
be drafted in broad terms, and those who do not choose to have it apply to
contracts involving IP can choose that it will not apply. One may debate the
likelihood of informed choice in such matters, though, especially for mass market
transactions or for sales to consumers, if they are to be covered.
On balance, the better solution seems to be not to exclude these transactions,
however defined, and to let the controversies be resolved under other law. In May
2003, the Working Group agreed to seek advice from the World Intellectual Prop-
erty Organization (WIPO) and the World Trade Organization (WTO) whether
including such contracts would risk prejudicing any established rules about in-
tellectual property54
Other Exclusions
It is generally acknowledged that a general enabling of electronic tran

may not be appropriate for some kinds of contract, or some kinds of p
some kinds of goods. Even the Model Laws allowed the states that imp
them to narrow the scope of their key provisions, without saying what
51. WP100, supra note 24, at Art. 8; WP.103, supra note 34, at Annex, Art. 13.
52. WP.100, supra note 24, at Art. 3(a); WE 103, supra note 34, at Annex, Art. 3(b). The
is found in CISG, supra note 26, at Art. 4(a).
53. WP.100, supra note 24, at Annex 1, Art. 4; WP.103, supra note 34, at Annex, Art. 4.
to vary, rather than to opt out, may be debated. See discussion infra note 73 and accomp
54. See May 2003 Meeting, supra note 10, ^ 58.

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excluded.55 WR 100 takes a similar approach, contemplating that each contracting

state may make a declaration excluding certain matters from the Convention for
its purposes.56 The provision is square-bracketed, meaning it has not attracted
much consensus to date. It is a bit difficult to see just how a patchwork of different
exclusions would work for actual transactions. If states A and B were both mem-
bers of the Convention, businesses would still have to figure out which law ap-
plied to see which variation of the Convention applied. This may be inevitable,
however: the same calculation has to be made for rules not covered in the Con-
vention, and to see if there are mandatory rules in either state that would override
the Convention.
It may be necessary to give contracting states the power to exclude matters that
it wants especially to hold to particular rules, but ideally these one-off exceptions
would be rare. It would be preferable to have a limited number of exclusions
spelled out for everybody in the Convention. Exclusion from the Convention does
not result in automatic invalidity, as we will see in the discussion of opting-out
below.
In this context, what might be excluded for all contracting states? CISG ex-
cludes service contracts, contracts for electricity, and contracts for ships, aircraft
and hovercraft.57 The Working Group is aiming to include services for e-contracts,
which will avoid the difficulty of contracts that have elements of service and
elements of goods in them. The other CISG exclusions seem directed to items
that involve too much public policy to be the subject of private law contracts,
though the pace of privatization of airlines and power distribution in the twenty-
five years since CISG was prepared may change that perspective.
It has been suggested that the Convention should not apply to certain financial
services or transactions by financial institutions, on the ground that these orga-
nizations are generally regulated closely already or that their goods are subject to
detailed legal regimes or system rules on e- trans fers.58 On the other hand, the
U.N. Bills and Notes Convention59 applies to some kinds of transactions by such
institutions. Some parts of the financial service industry may be more likely to
favor a convention than others. Some financial transactions are crucial to elec-
tronic commerce and it would seem unfortunate to exclude them. One could
leave it to the participants to exclude the Convention by contract if they do not
want it to apply, rather than having the Convention not apply on its terms. If the
exclusion were limited to participants in regulated markets, one might escape the
difficulty of defining financial institutions - but defining adequately regulated
55. MLEC, supra note 6, at Arts. 6(3), 7(3), and 8(4) 1996, available at http://www.uncitral.org/
english/texts/electcom/ml-ecomm.htm; MLES, Art. 6(5) (2002), available at http://www.uncitral.org/
english/texts/electcom/ml-elecsig-e.pdf.
56. WR100, supra note 24, at Annex 1, Art. 2, Variant A (c), Variant B (l)(b); WP103, supra note
34, at Annex, Art. 2(c).
57. CISG, supra note 26, at Arts. 2-3.
59. Convention on International Bills of Exchange and International Promissory Notes, Dec. 9,
1988, 28 I.L.M. 170 at Ch. 1, Art. 1, available at httpy/www.uncitral.org/english/texts/payments/
bills&notes.htm (last visited Oct. 11, 2003).

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markets might be no easier. Other markets governed by well-established system

rules or widely recognized practices might be excluded as well.
A frequent candidate for exclusion is transactions in land.60 While land is gen-
erally not "goods" under most legal regimes, the e-contract Convention does not
speak of goods or services but of contracts. One cannot depend on categorization
of the subject matter to produce an exclusion. Including real estate might facilitate
new e-commerce transactions, practices or markets. Land transfers are excluded
from many implementations of the MLEC,61 though not UETA in the United
States. The Convention in any event would not deal with any domestic registration
requirements, and would probably not deal with additional formalities of exe-
cution such as use of a notary. One might ask whether it is worth drafting as if
land transfers were included, under these circumstances. Is it worth trying to get
some commonality for contracts in an area where domestic law is so variable? It
might be useful to try to draw a line to include some kinds of financial instrument
that may rest on the security of real estate, even if transfers of the land itself were
excluded.
Other sources of potential exclusions are the European Union's Directive on
Electronic Signatures,62 the U.S. Electronic Signatures in Global and National
Commerce Act (E-Sign),63 UETA,64 and others.65 Some of these are suretyship
contracts, family law contracts, wills and trusts. Most of these are not commercial,
and those that are commercial need to comply with other form requirements that
could render the rules of a convention speculative at best. Some argue that they
might be excluded for evidentiary reasons, in that they require special proof of
execution that will not be provided for in the Convention. The Working Group
made no decisions on other exclusions in May 2003.66
On balance, one is inclined to advocate the fewest exceptions consistent with
the proper operation of otherwise regulated markets and with the protection of
parties for whom special form or registration requirements are created. In other
words, the Working Group may choose to exclude transactions from the Con-
vention if their presence in it would mislead parties to think that conforming to
the Convention would validate the transaction. Eor example, covering land
60. They are the only transactions mentioned expressly in WE 100 except for consumer transactions
and limited grants of IP rights. WP.100, supra note 24, at Annex 1, Art. 2, Variant B (l)(b); WP.103,
supra note 34, at Annex, Art. 2(c).
61. See, e.g., UECA § 2(3)(d) (1999), http://www.ulcc.ca/en/poam2/index.cfm7sec = 1999&sub= 1999ia
(last visited Oct. 11, 2003); Singapore's ETA § 4(l)(e) (1998), http://ascvldb4.asc.gov.sg/ (last visited Oct.
11, 2003); see also New South Wales Electronic Transactions Regulation, 2001 §4, at http://
www.austlii.edu.au/au/legis/nsw/consol_re^'etr2001347/s7.html (excluding § 23C of the Conveyancing Act
1919). Section 23C of the Conveyancing Act 1919 can be found online at http://www.austlii.edu.au/au/
Iegis/nsw/consol_act/cal919141/s23c.html.
62. E.U. Directive 1999/93/EC, 1999, O.J. (L13/12) 19.01.2000, at 0012-0020, available at http:/
/europa . eu . int/information.society/topics/ebusiness/ecommerce/Sepolicy.elaw/law.ecommerce/legal/
documents/1999_93/1999_93_en.pdf (last visited Oct. 11, 2003).
63. See supra note 5 and accompanying text.
65. See Annex II to WP.95 for a review of several countries' legislation on exclusions. WP95, supra
note 24, at Annex 2.
66. See May 2003 Meeting, supra note 10, % 64.

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transfers might distract attention from a need under domestic law to register the
transaction in order for it to be effective against third parties.
Limits on Legal Effect
The rules of the Convention will apply to electronic communications

UNCITRAL calls "data messages") used "in the context of" contracts
parties in different states.67 This language is not limited to the formatio
tracts; it could apply to modification or termination, as well as notices
communications under the contract. As we have just seen, certain contr
probably be excluded from its scope. In addition, the draft Convention
plates certain limits to its legal effect, even for the transactions it cover
3 and 4 are the relevant provisions.
Article 3 says that the Convention is "not concerned with" the validit
tracts (except that using electronic communications does not invalidat
the rights and obligations of parties arising out of the contracts, or the ef
the contracts may have on the ownership of rights created or transferr
contracts.68 Such alleged limits do not necessarily restrict the effects
substantive provisions later in the Convention. We have seen earlier how
short of validity may affect the coverage of contracts granting limited IP
WP.l 00 raised the prospect that the Convention might apply to tran
not just contracts, which in turn raises the question whether there is
commercial limit to its application. No such limit is found in the curren
Article 1(3) says that the Convention takes no regard of the "civil or co
character" of the parties.70 This seems intended to ensure that governm
be covered, at least for their contracts. But in some places, the delivery
ernment services to the public is based in part on transactions. This C
is not intended to apply so widely,71 and for this reason among others the
to transactions was dropped by the Working Group in May 2003. 72
Article 4 deals with an optional limit to the effect of the Conventio
choice of the parties to the transaction. It provides that parties may ex
application of the Convention or derogate from or vary the effect of a
provisions.73 This is much like Article 6 of CISG. Just as that article
varying Article 12, which deals with mandatory writing requirements, so t
67. WP.100, supra note 24, at Art. 1. For most of this discussion we will speak intercha
contracts or transactions, though the latter term has now been dropped from the conventi
note 71.
68. WP100, supra note 24, at Art. 3.
70. WR100, supra note 24, at Annex 1, Art. 1(3).
71. See, however, the proposed definition of "transaction" in Article 5(1), taken from the UETA and
mentioning governmental affairs. Id. at Art. 5(1). For a discussion of the law of electronic commerce
as it affects administrative law in several countries, see E-Government and its Implications For
Administrative Law (J-E.J. Prins ed., The Hague 2002). It is clear from this text that making room
for data messages in e-commerce does not necessarily empower governments to use them.
72. Mav 2003 Meeting, suvra note 10. f 38.
73. WP.100, supra note 24, at Annex 1, Art. 4(1); WP.103, supra note 34, at Annex, Art. 4.

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e-contracting Convention is open to exclusions from the right to vary. The Sec-
retariat notes Article 13(2) on error-correction methods and Article 15 on infor-
mation to be provided by contracting parties as potential mandatory rules.74
The opting-out question is a bit more complex with the e-contracting Conven-
tion than with CISG, however. For one thing, the notion of consent underlies the
whole Convention, because of Article 4(2): "[njothing in [the Convention] re-
quires a person to use or accept [information in electronic form] [data messages] ,
but a person's consent to do so may be inferred from the person's conduct."75 So
even if the Convention applies on its terms, for example because the states where
the parties are located have ratified it, the rules giving effect to e-contracts will
operate only if the parties agree to communicate electronically. They do not have
to opt out; they have to opt in, at least by their actions.
Moreover, Article 1 of the draft Convention allows the parties to choose to have
the Convention apply, even if it does not by the choice of law rules.76 This pro-
vision, which does not have a parallel in CISG, gives the Convention an unpre-
dictably, though possibly desirably, broad scope.
The right of the parties to opt out of the Convention or (possibly) any part of
it gives the Convention the character of a "safe harbor." One can get certain legal
effects by choosing and conforming with the Convention, but it is clearly contem-
plated that legal effects may be obtained under applicable law if one does not rely
on the Convention. This provides the maximum of party autonomy It provides
indeed a good deal more autonomy than did the MLEC, whose rules are echoed
in parts of the draft Convention.77 The MLEC did not allow the parties to adopt
their own standards for meeting legal requirements for writing, signatures or origi-
nal records.78
The breadth of the parties' right to choose helps reduce the impact of Conven-
tion articles that make people uncomfortable, because they could ignore these
articles and still hope for valid contracts. If one varies the terms, however, can it
be that the Convention will make the variant terms as legally enforceable as the
original terms? Variations will generally not be expressed as such, but will simply
use language inconsistent with the Convention.79 Perhaps the varied terms will
74. WP.100, supra note 24, at Annex 1, Art. 4, n.12. These provisions were debated but not
determined in May 2003, in part because the substantive rules were not reached. See May 2003
Meeting, supra note 10, % 75.
75. Adapted from the UECA § 6(1), Proceedings of the Uniform Law Conference of Canada, at
http://www.ulcc.ca/en/poam2/index.cfm7sec = 1999&sub = 1999ia. Similar principles are found in the
UETA and the Australian ETA, for example, among other statutes. See UETA § 5(b), 7A pt. 1 U.L.A.
247; Electronic Transactions Act, No. 162, § 9(l)(d) (Austl.), available at http://scaleplus.law.gov.au/
html/comact/10/6074/pdf/162of99.pdf. The MLEC Guide to Enactment, supra note 4, says this prin-
ciple applies in the MLEC as well, but it is implied rather than express in that text. MLEC, supra note
4,1143.
76. WP.100, supra note 24, at Annex 1, Art. l(c); WP103, supra note 34, at Annex, Art. l(c).
77. WP100, supra note 24, at Annex 1, arts. 10-12, 14; WP.103, supra note 34, at Annex, Arts. 8,
9, 10, 13.
78. MLEC, supra note 6, at Art. 4 (recognizing party autonomy only for provisions of Chapter III
of Part One of the Model Law).
79. This point is made in the Report of the May 2003 meeting. May 2003 Meeting, supra note 10,
11138.

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be effective only if they are available under the applicable national law. This is
especially likely to be true, indeed express, if the Convention applies to consumer
transactions.80
General Provisions of The Draft Convention
Because a primary purpose of the Convention is to provide a binding

of achieving the legal results of the MLEC, the draft relies on definition
in the MLEC. Four terms are added ("automated information system," "
"offeree" and "transaction") and variants are suggested for another ("pla
ness").81 The Secretariat has offered others for consideration.82
Signature
The definition proposed for "electronic signature" was taken from the
It is defined as data in, affixed to or associated with a data message which
be used to identify the person able to create the signature and indicate tha
son's approval of the information in the signed message.83 One may w
whether this definition adds anything to the general law of the nature of
nature, beyond what is needed to account for the electronic medium. It mi
dropped, even though it has previously been accepted by UNICTRAL in a
Law.
There is arguably a problem with the concept of identifying the signatory

definition as stated could prevent an "I agree" button, or an "OK" button,
being a signature. It may be preferable that a signature can be something th
be attributed to a person, without itself identifying the person. Consider
UETA's definition, by which an electronic signature is "an electronic sound
bol or process . . . executed or adopted by a person."84 Who the person is c
proved by any available means but is not necessarily shown by the signature
The definition says that the signature indicates the originator's "approv
the information.85 The term "approval" has caused much debate at UNCIT
over the years. Many have thought that it means only "consents to be asso
with the information," and does not mean "consents to be bound by the
mation." Under that interpretation, it could be said that there is not much d
ence intended in principle between approval and attribution. It is probabl
propriate to say something of the requisite mental state for a signature, th
80. One would expect a provision like that of Article 1 footnote * * of the MLEC stating that
in the convention overrides any rule of law intended to protect consumers. MLEC, supra note
Art. l,n.**.
81. See WP100, suvra note 24, at Annex 1, Art. 5(f).(e).(h). (1).
82. See id. at Art. 5, n.23 (considering providing additional definitions for signatory, Internet,
website and domain name).
83. Id. at Art. 5(i). The Secretariat says in WP.100 footnote 17 that the concept of signature may
be left to the general law. Id. at Art. 5, n.17.
84. UETA § 2(8), 7A pt. 1 U.L.A. 226.
85. See WP.100, supra note 24, at Annex 1, Art. 5 (i).

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not necessarily "approval." The UETA speaks of "intent to sign," thus incorporat-
ing but not changing the existing law on the effect of signatures.86 To make the
"I agree" button into a signature, one would have to show the intent to sign, not
just to approve the contract. An acceptance sufficient for a contact is not neces-
sarily a signature.
Place of Business
The MLEC and other UNCITRAL texts use the phrase "place of busines
out defining it. The term can be relevant both in determining when a co
international87 and in deciding where a message is sent from or receive
draft Convention proposes two variants of a definition. Variant A is "an
operations where a person carries out a non-transitory activity with hum
and goods or services."89 Variant B is "the place where a party pursues an
activity through a stable establishment for an indefinite period."90 Vari
quires that human means and goods or services be involved. A mac
server) would not suffice. Variant B speaks of "economic activity,"91 bu
likely to be presumed for A in this context. Variant B arguably require
a fixed physical address than A. Some members of the Working Gr
wanted to add a reference here to the place of incorporation.92
Variant A seems slightly more desirable. It would extend the Conven
more transitory activity that would nevertheless be international in s
Finding facts in support of either definition supports the application of
vention but may not support a finding of jurisdiction of courts or of a
of the law of that place. Taxability will be decided by others in any eve
The Working Group is not yet fully persuaded that a definition of
business is necessary at all. If the concept of "internationality" is retain
Convention, as appears likely, the Working Group will consider alternative
or criteria for when the Convention applies. This is discussed further in
tion with Article 7, below.
International Interpretation
Under Article 6, the Convention is to be interpreted according to

tional purposes "and to the need to promote uniformity in its applica
observance of good faith in international trade."93 Questions not e
solved in the text of the Convention are to be determined in accordance with its
principles, failing which one looks to the law applicable to the transaction. This
86. UETA § 2(8), 7A pt. 1 U.L.A. 226.

87. WR100, supra note 24, at Annex 1, Art. 7; WP.103, supra note 34, at Annex, Art. 7.
88. WR100, supra note 24, at Annex 1, Art. 11(5); WP.103, supra note 34, at Annex, Art. 10.
89. WP100, supra note 24, at Annex 1, Art. 5(0.
90. Id. at Art. 5(i), Variant B.
91. Id.
92. Id. at Art. 5, n.18 (listing some other complicating factors).
93. Id. at Art. 6(1).

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is a standard UNCITRAL provision, also present in the two Model Laws.94 It is

unlikely to be significantly amended.95
Location of The Parties
Article 7 is a key provision of the Convention, if the Convention ap

to international transactions. The primary rule is that the parties are
located where they say they are.96 This power to declare location is l
provision with two variants. Variant A is simply that the party doe
place of business at the declared location.97 Variant B adds that the d
made solely to trigger or to avoid application of the Convention.98
What is the effect on choice of law if a party makes an incorrect d
intentionally incorrect or negligently incorrect or just incorrect withou
Convention is silent on that question.99 The Convention does not ap
international character does not appear from the contract or dealin
mation exchanged between the parties.100 Because any party can op
Convention by saying so, it seems unlikely that anyone would make a
laration of location to achieve that result. Under one variant on scope
can opt into the Convention too - so the location provisions become
altogether. One might declare location falsely not to get the Convent
but to mislead the other party as to the otherwise applicable law, w
have seen, comes into play in several circumstances.102
The location of the technical equipment used for e-contracting, an
from which an information system can be accessed by others, do not
94. MLEC, supra note 6, at Art. 3 (1996); UNICITRAL Model Law on Electronic Sig
Res. 56/80, U.N. GAOR, Art. 4, available at http://www.uncitral.org/stable/res5680
CISG, supra note 26, at Art. 7. It also appears in conventions prepared by The Hague C
Private International Law. See, for example, The Hague Convention on the Law Applica
Rights in Respect of Securities Held with an Intermediary (2002), Art. 13, availab
www.hcch.net/eZconventions/text36e.html (last visited Oct. 11, 2003).
95. The last two Working Group meetings have discussed the final reference to the "r
international law" on technical grounds. See Report of the Working Group IV (Electronic
the Work of its Fortieth Session, UNCITRAL, Working Group IV (Electronic Commerc
UK 125-26, U.N. Doc. A/CN. 9/527 (2002), available at httpy/www.uncitral.org/english/
unc-36/acn9-527-e.pdf; May 2003 Meeting, supra note 10, f 89.
96. WP. 100 Article 15 requires the parties to state their location. WR 100, supra not
1, Art. 15(l)(b); WP.103, supra note 34, at Annex, Art. 1 1 (b) ; see also infra notes 160-
panying text. The cross-reference here to Article 15 has been dropped by the Work
May 2003 Meeting, supra note 10, ^ 85. The nationality of the parties has no bearing o
WP.100, supra note 24, at Annex 1, Art. 1(3); WP103, supra note 34, at Annex, Art.
97. WP100, supra note 24, at Annex 1, Art. 7(1).
98. WP.100 says that this must be "manifest and clear," but the Working Group wa
delete that phrase. See WP.100, supra note 24, ^ 86; WP.103, supra note 34, at Annex
99. WP.100, supra note 24, at Annex 1, Art. 7(1). Variant B of Article 7(1) will d
declaration of location only if the declaring party has an improper motive for the fal
Art. (7), Variant B.
100. Id. at Art. 1(2); WP.103, suvra note 34, at Annex, Art. 1(2).
101. WP 100, supra note 24, at Annex 1, Art. l(l)(c); WP.103, supra note 34, at Ann
102. A party could also affect the apparent application of the convention by declarin
its consumer status - if consumer transactions are excluded.

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a place of business, unless the entity has no other place of business. It may appear
undesirable for an entity to be considered to have its place of business in one
country for offline business and in a different country for its online activities. The
Working Group is trying to avoid such a result.103
The Working Group has discussed whether a country-specific domain name (cc-
tld) of an Internet address can be taken as an indication of, or evidence of, the
location of a party104 The original impression was in the negative, but that may
change where the domain name is restricted to those with some presence in the
country (such as xa) rather than being open to any purchaser (such as .tv).105 It
seems preferable to allow at least a presumption of location to parties with domain
names in countries with restrictive policies. The more help in determining location,
the better for the application of the Convention. It is arguable that almost any rea-
sonable arbitrary rule might be of value in itself, however provable or factual, be-
cause commercial parties often seek just about any reasonable rule that is certain.
The Use of Electronic Communications in International

Transactions
Basic Validity
The early provisions on e-contracting are not surprising. Article 8 provid

the use of electronic communications does not in itself invalidate a contract.1
rule is taken from the MLEC.107 The time of formation rules are the same a
CISG: the offer and acceptance are effective on receipt (here stated in terms
message "reaching" the other party).108 So there is no mailbox rule (as the
in the CISG). The Working Group has vigorously debated whether the time o
rule should be included, in part for fear of changing domestic rules on th
It has been left in for further discussion.109 Because the same rule is in the
seems the better argument is to have it in this Convention too, to maintain h
among paper and electronic contracts in international instruments. Any
tional rules may on occasion differ from some country's domestic law.
Intention to Offer
Under Article 9, a generally accessible offer is only an invitation to treat,

otherwise specified.110 This answers a common question about Internet s
103. WP100, supra note 24, at Annex, Art. 7, Variant B, n.28.

104. Id.
105. WP100 Article 7 paragraph 5 now says the domain name is irrelevant, but footnote 29 offers
the prospect of a change, at least for some countries. Id. at Art. 7, Variant B, n.29. No decision was
made on this point at the May 2003 meeting.
106. Id. at Art. 8(3); WP.103, supra note 34, at Annex, Art. 13(1).
107. MLEC, supra note 6, at Art. 11(1).
108. CISG, supra note 26, at Arts. 15(1), 18(2).
109. Report oj the working Group on Electronic Commerce on its Thirty -Ninth Session, UNCITRAL,
35th Sess., 1fl| 67-73, U.N. Doc. A/CN.9/509 (2002), available at http://www.uncitral.org/english/
sessions/unc/unc-35/509e.pdf; May 2003 Meeting, supra note 10, ffl 101-06.
110. Compare CISG, supra note 26, at Art. 14.

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may ask how accessible "generally accessible" has to be. The term is used in
contrast to "addressed to one or more specific persons."111 It seems unlikely that
one would have to show universal accessibility to qualify, rather than just an
opening to the public in general.
Paragraph (2) of Article 9 deals with automated systems,112 i.e., those in which
the contract can be concluded without human intervention at the machine end,
typically in a Web site. Two policy choices are given. Variant A presumes a contrary
intention to the general electronic message.113 A facility that offers an automated
transaction would be presumed to be an offer and the message of order - normally
"I agree" or "OK" - would bind the merchant as an acceptance. Variant B says the
language of offer through an automated system does not in itself show an intention
to be bound by an acceptance.114 Variant A seems preferable, to increase certainty
and efficiency of electronic transactions. It is easy enough for a merchant to ex-
press a contrary intention - not to be bound by its automated web site - if that
is desired.
The Working Group has expressed concern, however, that commercial practices
are not stable in this area.115 Some merchants expect one result and some the
other. Choosing either could disrupt expectations, but choosing neither prolongs
uncertainty. In May 2003 it decided to merge paragraphs (1) and (2) to make all
apparent offers into invitations to treat, subject to further reflection.
One may question how the purchaser knows that the transaction will be au-
tomated rather than depend on further active attention at the merchant's end.
Alternative wording in the draft speaks of an application "that appears to allow
for the contract to be concluded automatically."116
Article 10 says that in general, communications done pursuant to a contract
may be entered into by electronic means.117 It is the same as MLEC, but with
somewhat broader language. A square-bracketed paragraph allows contracting
states to exclude some communications from this article, without guidance as to
what might be excluded. The Working Group will attempt to create a list of
exclusions in future meetings.118 One may wonder if it is useful to allow contract-
ing states to exclude some kinds of communications or contracts from Article 10,
rather than from the Convention as a whole under earlier provisions.119 Does it
111. WP.100, suvra note 24, at Annex 1, Art. 9(1).

112. Id. at Art. 9(2).
113. Id. at Art. 9, Variant A.
114. Id. at Art. 9, Variant B.
115. Mav 2003 Meeting, suvra note 10. 1HÏ 116-18.
117. Id. at Art. 10. Article 8 deals solely with offer and acceptance. Article 10 deals with other
contractual communications. Its wording is to be revisited to extend clearly to pre-contractual com-
munications or communications in view of a contract where none is finally formed. Id. ; see also WP 103 ,
supra note 34, at Annex, Art. 8; May 2003 Meeting, supra note 10, ^ 125.
118. Id. at f 61.
119. This has been defended in the Working Group by noting specific types of potential exclusions,
such as special form requirements for default notices that might be properly covered under the con-
vention but not under this Article. Id. at ^ 130.

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make sense to allow exclusion for communications pursuant to contracts but not
in Article 8 for the making of contracts?
Time and Place of Sending and Receiving
Article 1 1 is more complex. It deals with the time and place of sendi
receiving messages.120 Variant A is the same as Article 15 of the MLEC,121
added provision about messages sent and received within the same infor
system122 like that in the UETA123 and the UECA.124 Variant B is much
and shorter: sending occurs when the message is out of the sender's cont
receipt occurs when the message is capable of being retrieved and proce
the addressee.125 Variant B does not mention the place of sending or rece
the time.126
The rules on sending seem acceptable. They do, however, raise the question
whether messages sent from the same place at the same time by the same sender
will be deemed at law to come from different places, depending on whether they
are sent electronically or by post or telephone. The rules on receipt are more
debatable, partly because many things can still go wrong in electronic transmis-
sions. It is arguable that the rule about time of receipt should only be a pre-
sumption, given the uncertainties of e-mail delivery
The Article 1 1 rule on receipt turns on whether a system has been designated
by the addressee, expressly or by use.127 It may be debated how one knows the
fact or the limits of a designation. It could certainly make a difference in domestic
law whether the sender or the addressee has designated the address for sending,
whether the contract is in a negotiated or standard form, and whether the address
has an individual rather than public or widespread designation. Under the
UNCITRAL rule in Article 11, it may be difficult to know how to de-designate a
designated address, especially if one has designated it by use (as contemplated by
the UETA).128 How does one know who has seen the designation? Quebec's rule
requires the address to be designated and active at the time the message is sent.129
It does not say how the sender is supposed to find out the status of the address
from time to time.
The draft Convention's rule about receipt where the addressee has not desig-
nated a system appears to be unfair: that a message is deemed received when the
120. WP100, supra note 24, at Annex 1, Art. 11.

121. MLEC, supra note 6, at Art. 15.
123. UETA 6 15(a)(3) cmt. 2, 7A pt. 1 U.L.A. 274, 276 (2002).
124. UECA § 23(1), Proceedings of the Uniform Law Conference of Canada, at httpy/www.ulcc.ca/
en/poam2/index.cfm?sec= 1999&sub= 1999ia.
126. Id. The language in WP.100 allowing the parties to choose a different rule has been dropped
as redundant, given the breadth of article 4. May 2003 Meeting, supra note 10, ^ 138.
127. WP.100, supra note 24, at Annex 1, Art. 11.
128. UETA § 15(b) cmt. 3, 7A pt. 1 U.L.A. 274, 276.
129. An Act to Establish a Legal Framework for Information Technology, 32 R.S.Q. § 31 (2001)
(Can.).

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message enters the undesignated system.130 The rule is in effect the same as for a
designated system - i.e., the message is received when it enters the system.131 The
UECA says that such a message is received when the addressee becomes aware
of its availability in the system.132 The UETA is silent on this point. The Working
Group, however, has heard arguments that the Canadian and Australian rules
requiring awareness make the rule too subjective and may prejudice the sender
who has no other address for communicating with the addressee.133 The Working
Group has proposed alternatives based on the reasonableness of the sender's or
addressee's conduct.134 The issue is expressly a matter of allocation of risks and
responsibilities, so this approach may prove fruitful.
The rule in Article 1 1 (and in MLEC) is different when one sends a message to
one system when the addressee has designated a different one: the message is
deemed received when retrieved, which allows the addressee to avoid "receiving"
a message known to be in the system.135 Thus, the rule may be too strict. The
UETA is silent on that point as well, but the Comment to Article 15 says that
receipt in such a case would be determined under "the otherwise applicable sub-
stantive law."136 The UECA and the Australian ETA do not address this case.
Arguably, an awareness rule would be appropriate here as well.
The Working Group would do well to consider providing more detail about
receipt, such as requiring the message to be accessible, or in a format or language
comprehensible to the addressee, or processible by the addressee's equipment.137
The issues are very much at play in the Working Group. Notwithstanding these
issues, one might conclude that any reasonable arbitrary rule would be better for
transactional practice than no rule. Article ll's provisions have the merit of fa-
miliarity to those who know MLEC, even if some countries have adapted it fairly
dramatically138
It would be useful to spell out in an explanatory text how one designates a
system, how one de-designates it, how one might prove or disprove receipt in a
system, and other related questions. One might also give some guidance regarding
the problem of genuine designation, rather than designation by contract of adhesion
(which is not just a consumer protection issue). If one were tempted by the alter-
native rule found in Quebec - that the sender has to know that the address
130. WR100, supra note 24, at Annex 1, Art. 11(2); WP.103, supra note 34, at Annex, Art.
10(22)(c).
131. WP.100, supra note 24, at Annex 1, Art. 11(2); WR103, supra note 34, at Annex, Art.
10(22)(c).
132. Compare UECA § 23(2)(b), Proceedings of the Uniform Law Conference of Canada, at http:/
/www.ulcc.ca/en/poam2/index.cfm?sec= 1999&sub= 1999ia, with Electronic Transactions Act, No.
162, § 14(4) (Austl.), available at http://scaleplus.law.gov.au/html/comact/10/6074/pdf/162of99.pdf.
134. id. at f 146.
135. WR100, supra note 24, at Annex 1, Art. 11; MLEC, supra note 6, at Art. 15(2)(l)(ii).
136. UETA S 15, cmt. 3, 7A pt. 1 U.L.A. 275-76.
137. WP.100, supra note 24, at Annex 1, Art. 11, Variant A, n.40 (quoting the UETA and UECA,
on this point among others). Variant B of Article 11 uses language detailing receipt, but omits the
designation concept entirely. See id. at Art. 11, Variant B.
138. Article 11 does not deal with the legal effect of receipt. That is the subject of Article 9. See
supra note 110.

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is active - how is this to be done? Perhaps the sender must test the address first,
while the current rule in Article 1 1 would suggest getting an acknowledgement
to be sure of receipt. It may be noted that Variant B to Article 1 1 gives no pro-
tection at all against the unexpected message139 and is probably undesirable for
that alone.
Automated Transactions
Article 12 makes contracts involving an automated program on on

both sides acceptable at law even without human review. The langua
much like that of the UETA on the same point.140 The U.N. Secretari
that this does not change the legal result, and that the person in who
automated program makes the contract is bound by that action.141
inevitable, even if such automated programs may at some point devi
express intentions of their owners.142
Article 12 says a contract "may be formed" by automated systems.14
to argue that on particular facts, a contract has not been formed. F
some local laws require that particular provisions be brought especi
attention of potential contracting parties, or be especially prominent
An automated mechanism might not seek out or notice such provis
event, proving that they were sufficiently conspicuous could be very
this could be grounds for an attack on the contract, the Conventio
attempt to avoid such laws. One can leave to jurisprudence the task
out the details of display requirements. They probably become less im
the Convention does not apply to consumer transactions or yields t
protection rules.
Article 13 provides two variants on rules for correcting errors in
transactions.144 Variant A requires a person offering goods or servic
available the means for others to identify and correct errors befor
contract.145 These means must be "appropriate, effective and accessi
idea is taken from the EU E-Commerce Directive,147 influenced by t
139. WP.100, supra note 24, at Annex 1, Art. 12, Variant B (stating that the messag
received when it is capable of being retrieved rather than when it is actually retrieved
140. UETA 8 14(1) cmt. 3, 7A pt. 1 U.L.A. 272, 273.
141. WP100, supra note 24, at Annex 1, Art. 12, n.43.
142. For a fuller discussion of the automated artificially intelligent machine, see Ian Kerr, Spirits in
the Material World: Intelligent Agents as Intermediaries in Electronic Commerce, 22 Dalhousie L.J. 190
(1999).
143. WP.100, supra note 24, at Art. 12; WP.103, supra note 34, at Art. 14.
145. Id. at Art. 13, Variant A(l).
146. Id.
147. Council Directive 2000/3 I/EC, Art. 11(2), 2000 O.J. (L 178) 1 Qun. 8, 2000), av
at http://europa.eu.int/ISPO/ecommerce/legal/documents/2000_31ec/2000_3 lec_en.pdf (last
Oct. 11,2003).
148. See UETA § 10, 7A pt. 1 U.L.A. 263 (2002).

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which does not however make the identification and correction of errors a free-
standing obligation.149
This obligation appears to be too broad. It applies to the party offering goods
or services through an automated system, but does not contemplate that a party
buying them may also use an automated system. If so, a contract is formed before
either party is aware of the error. The original idea for this came from the UETA.
It aimed to remedy a problem that arises particularly in automated transactions -
that a human being may make a simple mistake (e.g. a "single keystroke error")
and have no way of notifying the other side, i.e. a robot or computer program,
that the mistake has been made. The provision is not intended to replace the
general law of mistake but to deal with that one issue.150 The UETA and UECA
therefore limit the remedy to human beings that deal with machines. Because the
issue is human error, the rule there applies to any communication by a human,
whether on his or her own behalf or on behalf of a corporate employer.
Variant A of Article 13 permits the parties to opt out of this obligation.151 It
seems odd that a person dealing with an automated program should be able to
agree that there will be no error-correction technique available before contracting.
The U.N. Secretariat raises the issue that this opting-out may be implied rather
than express - e.g., someone who proceeds to contract without finding an error-
correction mechanism may be held to have impliedly consented to its absence!152
That provides little relief to the error-prone human.
After that gap, Variant A specifies the characteristics of the means of error
correction: appropriate, effective and accessible.153 One could ask whether "ac-
cessible" means the same as in its other uses in the Convention or something else.
Common law would probably apply a "reasonable user" standard, but other legal
systems might not. The ease of opting out, however, makes this level of analysis
rather superfluous. Presumably, the consent to the absence of an error-correcting
mechanism prevents the legal remedies of paragraph 2 from applying to the trans-
action.154 There is no apparent reason to allow opting-out, because the risk pre-
sented by the rule is so readily overcome by an error-correction mechanism. The
standards for this mechanism are achievable with certainty.
Variant B is closer to the UETA155 and the UECA.156 It does not require the
person establishing the automated system to provide an error-correction mecha-
nism, but it allows the person dealing with that system to avoid the consequences
of an error on the same terms as in Variant A.157 Both variants' square-bracket
conditions are concerned about returning the goods received as a result of the
149. See id.

150. Id. at 8 10(3), 7A pt. 1 U.L.A. 263.
151. WP100, supra note 24, at Annex 1, Art. 13, Variant A(l).
152. id. at Art. 13, Variant A(l), n.44.
153. Id. at Art. 13, Variant A(l).
154. Id. at Art. 13, Variant A(2).
155. UETA § 10, 7A pt. 1 U.L.A. 263.
156. UECA § 22, Proceedings of the Uniform Law Conference of Canada, at http://www.ulcc.ca/
en/poam2/index.cfm?sec= 1999&sub= 1999ia.
157. WP.100, supra note 24, at Annex 1, Art. 13, Variant B(l).

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error and not benefiting from the error.158 The provisions may be important to
automated vendors. The purported vendor would want to be sure that the ap-
parent purchaser has not derived any benefit from the contract, especially where
the goods sold are digital and may readily and undetectably be copied or used
before being "return [ed]" or "destroy [ed]" by the purchaser.159 Although this may
be difficult to demonstrate, it is a question of proof rather than of the Tightness
of the rule, and questions of proof will always vary with the facts. Vendors who
are worried about this question can readily avoid it by providing an error-
correction mechanism as part of its automated offer. The equivalent provision
seems to work in the UETA and UECA, or at least has not yet created litigation.
Form Requirements
Article 14 deals with form requirements and how to satisfy them electroni-
cally.160 The first paragraph repeats the rule of CISG that the Convention does not
require a contract or related language to be evidenced by writing or to be in any
other particular form.161 The second paragraph says that if any other rule of law
requires the contract to be in writing, that requirement is satisfied by an electronic
message whose information is accessible so as to be usable for subsequent refer-
ence162 - i.e., the test of the MLEC.163
The third paragraph deals with signing requirements.164 Variant A is essentially
Article 7 of the MLEC. Variant B is essentially Article 6(1) of the MLES. Both
variants have an "appropriate reliability" test that the United States and Canada
have not adopted in their laws implementing the MLEC.165 Paragraphs (4) and
(5) are the same as paragraphs 6(3) and (4) of MLES, as to what makes a signature
reliable. Paragraph (4) is essentially the "advanced electronic signature" test of the
EU Directive on Electronic Signatures,166 or the "secure electronic signature" test
of the Illinois Electronic Commerce and Security Act,167 or of the Canadian Per-
sonal Information Protection and Electronic Documents Act.168 Paragraph 5 says
that one may prove the reliability of the signature by other means, or show its
non-reliability in any event.169
158. Id. at Art. 13.

159. Id. at Art. 13, Variant B(2)(a).
160. Id. at Art. 14.
161. Id. at Art. 14(1); CISG, supra note 26, at Art. 11.
162. WE 100. suvra note 24, at Annex 1. Art. 14(2).
163. MLEC, supra note 6, at Art. 6(1).
164. WE 100, supra note 24, at Annex 1, Art. 14(3).
165. UETA § 7, 7A pt. 1 U.L.A. 252 (2002); UECA § 10, Proceedings of the Uniform Law Confer-
ence of Canada, at http://www.ulcc.ca/en/poam2/index.cfm7sec = 1999&sub = 1999ia.
166. E.U. Directive 1999/93/EC, 1999, O.J. (L13/12) 19.01.2000, at Art. 2(2), at http://europa.eu.
int/information_society/topics/ebusiness/ecommerce/8epolicy_elaw/law_ecommerce/legal/documents/
1999_93A999_93_en.pdf.
167. 5 III. Comp. Stat. Ann. 175/10-110 (West Supp. 2003).
168. Personal Information Protection and Electronic Documents Act, ch. 5, 1999-2000 S.C., §§ 31,
48 (2000) (Can.).

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Given that these reliability rules are in the MLEC and MLES, it may be hard to
eliminate them in this Convention. If they are in the Convention, however, coun-
tries that opt against an extra reliability test for electronic signatures may not
adopt it. That may not matter much if those countries have implemented the
MLEC. The Convention seems really designed for countries that have not adopted
the MLEC.
It may be possible for parties to agree to vary the signature provisions of the
Convention to remove the reliability rule. While that is a legal possibility, it may
be asking too much of commercial parties that they should know enough to make
such a variation expressly or by spelling out a different signing process that suits
their needs. It is also awkward to extend the private right to vary the Convention,
under Article 4, to varying it provision-by-provision or almost concept-by-
concept, saying as it were, "all but the reliability of signature rule." Arguably, it
would be better if the Convention expressly permitted contracting states to opt
out of the reliability test by a declaration. Because common law jurisdictions have
generally found the reliability test unnecessary, there should be a way to eliminate
it. People from other countries, however, may choose not to recognize e-signatures
from countries without the reliability test.
Provision of Information
Under Article 15, parties dealing through information systems have t

information on their names and incorporation details, if any, their loca
address, and a method for contacting them, including an e-mail address.
information must be "easily, directly and permanently accessible" to p
cessing the information system.171 The information is to be provided in
advertising, either in the text or by reference, as well as on transactiona
Contrary to the rule on transactional sites, the advertising does not h
generally accessible to the public for the rule to apply.173 The language i
by that of the EU E-Commerce Directive of 2000, 174 in turn inspired b
Distance Selling Directive of 1997.175 The whole article is square-brack
cause it deals with content, not form of contracts.
One may ask whether this is appropriate information to require for e
contracting by anyone at any time. Note that the information on locati
tended to support the Article 7 rules on when a contract is internationa
purpose of the Convention.176 Some of the categories of mandatory inf
may be more acceptable than others in this light.
170. WP100, supra note 24, at Annex 1, Art. 15(l)(a)-(c); WP.103, supra note 34, at A
171. Id. at Art. 15(2).
172. Id. at Art. 15(1).
173. WP.100, supra note 24, at Annex, 1, n.55.
174. Council Directive 2000/3 I/EC, Art. 5(1), 2000 O.J. (L 178) 1, available at http://eur
ISPO/ecommerce/legaydocuments/2000_31ec/2000 3 lee en.pdf (last visited Oct. 11,20
175. Directive 1997/7/EC, Art. 4(1), 1997 O.J. (L 144), available at http://www.spam
docs/97-7-ec.pdf (last visited Oct. 11, 2003).

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The Article 15 rules apply when the information system is "generally accessible
to the public."177 Presumably, a web site protected by password would provide
similar information to anyone to whom it issued a password. The information is
also to be "permanently accessible" to parties accessing the information system.178
"Permanently" probably means "at all material times," or "without interruption for
the period during which it is likely to be relevant."
The draft Convention does not, in its present form, say what the effect is on a
contract if a merchant fails to comply, or complies poorly, with the requirements.
This omission is fairly standard with UNCITRAL texts, leaving such matters to
local law, but it may be a deficiency.
Article 16 continues in the same vein, requiring more information. A party
making goods or services available through an information system that is generally
accessible to the public (i.e. the same party as in Article 15) must make the
electronic messages containing the contract terms (one or more messages in total)
available to the other party for a reasonable period "in a way that allows for ...
their storage and reproduction."179 The message is not considered capable of
being stored or reproduced if the originator inhibits printing or storage of the
message.180
This is a substantive rule of law, though it relates to contract formation and the
ability of the purchaser to prove the terms of the contract. This too is taken from
the EU E-Commerce Directive.181 The language in Article 16 regarding capability
of storage is taken from the UETA, as is the provision about inhibiting printing
or storage.182 As with the UETA, Article 16 does not state the level of capability
(i.e., capability of an expert, a reasonable person, the particular purchaser, or a
decided non-expert).
It may be thought that UNCITRAL should not be concerning itself with the
fairness of the transaction or of the communications and ability to communicate
the messages leading to the contract. On the other hand, it is hard to resist a
provision such as the present one on principle.
In these days of increasing sensitivity to IP issues, one might have to ask if the
law of copyright would inhibit the purchaser from storing or reproducing the
content that constitutes the contract terms. It is, however, arguable that the vendor
must give an implied license for this; though if doubt persists, the Convention
could require or constitute an express license. The customer has to be able to
reproduce the content to the extent necessary to carry out the contract and to
prove it if there is a dispute. It is hard to imagine a reasonable argument against
such a limited license. No copyright argument seems to have been made against
the similar provisions in UETA.
177. Id. at Art. 15(2).

178. Id.
179. Id. at Art. 16; WR103, supra note 34, at Art. 15.
180. WP.100, supra note 24, at Art. 16.
181. Council Directive 2000/31/EC, Art. 10, 2000 O.J. (L 178) 1, available at http://europa.eu.int/
ISPO/ecommerce/legal/documents/2000_31ec/2000_31ec_en.pdf (last visited Oct. 11, 2003).
182. UETA § 8, 7A pt. 1 U.L.A. 254-55 (2002).

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Again, the draft Convention is silent on the legal effect on a contract if a mer-
chant fails to comply, or poorly complies, with the requirements. It may be easier
to argue that the contract is invalidated or made unenforceable on the part of the
merchant, than it would be to argue for a failure under Article 15 on disclosing
the merchant's name and location.
In short, the provisions of the draft Convention on required information seem
basically acceptable. The rules aim to ensure that the terms are available to the
buyer after the contract is made. The draft does not address whether a contract
can be made on terms not disclosed until the offer has been accepted, either by
shrinkwrap or by click-through process. Failure to comply with Article 16 may,
at the option of the party not obliged to provide the information, invalidate the
contract or make it unenforceable by the merchant, but if the purchaser accepts
the goods or services, they must be paid for according to the contract.
Impact on Other International Conventions
The introduction to this Article noted that one future task of the Work
was to seek ways of having existing international conventions operate w
tronic communications. The U.N. Secretariat devoted a couple of workin
to the subject,183 and the Working Group has discussed the issue.184 A
number of the issues presented by many conventions involve the accep
electronic contracting.185 A new article in the draft Convention, Artic
with the impact of this Convention on other conventions to which the c
state is a party.186
Article Y provides that the terms of this Convention will apply to co
cations under other conventions.187 Variant A lists five conventions: C
tations in Sales, Liability of Operators of Transport Terminals, Independ
antees and Stand-by Letters of Credit, and Assignment of Receivables.1
B covers "any international agreements or conventions on private comm
to which the contracting state is a party189 Paragraph (2) allows a contract
to exclude transactions that would fall within some of those conventions.190
UNCITRAL has heard from The Hague Conference on Private International
Law, pointing out that it is working on the impact of electronic communications
on five of its civil procedure conventions.191 If Variant B of Article Y were to apply
183. See generally WP.98, supra note 15; WP94, supra note 16; see also WP98, supra note 17, at 6.
184. Notably in the October 2002 meeting. See Report of the Working Group IV (Electronic Commerce)
on the Work oj its Fortieth Session, UNCITRAL, Working Group on Electronic Commerce, 36th Sess.,
fU 24-71, U.N. Doc. A/CN. 9/527 (2002), available at httpy/www.uncitral.org/english/sessions/unc/
unc-367acn9-527-e.pdf.
185. See e.g., WR94, supra note 16, ffll 20, 27, 40, 134.
186. WP.100, supra note 24, at Annex 1, Art. Y.
187. Id. at Art. Y(l).
188. Id. at Art. Y, Variant A. See http ://www. uncitral.org/english/texts/index. htm for the texts of
these conventions (last visited Oct. 11, 2003).
189. WR100, supra note 24, at Annex 1, Art. Y.
190. Id. at Art. Y, Variant B(2).
191. WR 98, supra note 17, at Add.5.

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the e-contracting Convention to those conventions, it may be undesirably broad.

Likewise, the International Road Transport Union (IRTU)192 has pointed out prob-
lems in applying the e-contracting Convention193 to its convention on the contract
for the international carriage of goods by road (the "CMR Convention").194 It may
be inappropriate to have that Convention covered by the e-contracting Conven-
tion, as Variant B would do.195
It seems risky for UNCITRAL to suggest that its e-contracts Convention should
apply to conventions sponsored by anyone else, without the consent of the spon-
soring body. Consent may be available, however. As noted earlier, the International
Civil Aviation Organization (ICAO) has expressed an interest in having
UNCITRAL look at its conventions,196 as did the World Customs Organization.197
They may be candidates for treatment under Article Y.
Additional Provision: Incorporation By Reference
The draft Convention intends to elevate the MLEC and parts of the
status of a convention. It has been suggested that198 the Working Grou
go one small step further in this direction by developing MLEC Article 5b
deals with the effect of incorporation by reference.199 It would be wort
out the status of hyperlinks as part of electronic contracts. The followi
captures the idea:
(i) Hyperlinked records shall not be considered a part of an electronic

unless they have been incorporated expressly into the contract, o
context clearly indicates an intent to incorporate.
(ii) Citations to a hyperlinked record appearing within a contract sh
considered a part of the contract, unless expressly excluded or the
clearly indicates an intent to exclude.
(iii) Records appearing on an online screen which are not clearly p
contract are presumed not to be part of the contract, unless exp
included in a clear and conspicuous manner.
Conclusion
UNCITRAL is well-embarked on preparing a convention on electroni

or transactions. The draft includes much of the MLEC and additiona
192. Id. at Add.6.

193. WR95, supra note 24, Iffl 1-2.
194. Id. at 112.
195. WP100, supra note 24, at Annex 1, Art. Y, Variant B.
196. WP. 98, supra note 17.
197. Id.
1 98. By a commentator in private correspondence, not yet by a delegate to a meeting ot the Working
Group.
199. MLEC, supra note 6, at Art. 5bis. Article 5bis, added in 1998, reads: "[information shall not
be denied legal effect, validity or enforceability solely on the grounds that it is not contained in the
data message purporting to give rise to such legal effect, but is merely referred to in that data message."
Id.

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often found in or inspired by American uniform law.200 Some improvements could

be made in the text,201 but much of it will be acceptable. A serious question for
legislators in North America or the European Union, and several other places
around the world, is whether it will be helpful to ratify the Convention. The new
text will add little to their existing laws.202
Two arguments can be suggested in favor of adoption by countries who have
already removed barriers to e-commerce. First, participating in a convention may
help adapt to e-contracts some of the other conventions to which the state may
be a member, under Article Y in some form. Second, ratification will promote
general adoption by countries who need it more, and may even smooth legal
relations between parties in adopting states, though the Convention does not
require reciprocity
Further, the discussions in the Working Group refine our understanding of the
MLEC, which underlies our law. The Convention will reflect that deeper under-
standing and, thus, add something of value to our law, while encouraging our use
of electronic contracts in international trade.
200. Some of them have been adopted from the Canadian uniform statute. See supra note 23.
201. A new draft prepared for the Working Group's meeting scheduled for November 2003. See
WP.103, supra note 34.
202. For the United States, requiring the statement of location would be a novelty. The requirement
is part of consumer law on Internet sales in Canada, though not for business-to-business transactions.
See Consumer Connection, Internet Sales Contract Harmonization Template (2001), at http://strategis.
ic.gc.ca/SSG/caO1642e.html (last visited Oct. 11, 2003).

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The Proposed UNCITRAL Convention on Electronic Contracts

Author(s): John D. Gregory

Stable URL: https://www.jstor.org/stable/40688198

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Electronic commerce was born of electronic data interchange (EDI)

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Subsequently, in the early 1990s, it developed a coherent set of legal responses

After completion of the MLES, the Working Group on Electronic Commerce

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referred to in this Article are accessible online: http://www.uncitral.org/english/workinggroups/wg_ec/

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would be made by turning to the remaining item: electronic contracting.17 Indeed,

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The Need for A Convention on E-Contracts

In favor of preparing an e-contracts convention, it was said that a con

http://www.ilpf.org; the McBride Baker Coles firm website, at http://www.mbc.com/eco

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The Scope of An E-Contracts Convention

The CISG applies to transactions between parties located in differe

31. CISG, supra note 26, at Art. 1(1).

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Once it is decided what the general field will be - international contract

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have effects on consumers that should be dealt with, by exclusion, limita-

In favor of including consumer transactions, people argue that it is too hard in

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There has been little or no discussion at the Working Group on providing

Virtual Goods/Digital Goods

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It is generally acknowledged that a general enabling of electronic tran

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excluded.55 WR 100 takes a similar approach, contemplating that each contracting

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markets might be no easier. Other markets governed by well-established system

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Limits on Legal Effect

The rules of the Convention will apply to electronic communications

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General Provisions of The Draft Convention

Because a primary purpose of the Convention is to provide a binding

There is arguably a problem with the concept of identifying the signatory

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Under Article 6, the Convention is to be interpreted according to

86. UETA § 2(8), 7A pt. 1 U.L.A. 226.

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is a standard UNCITRAL provision, also present in the two Model Laws.94 It is

Location of The Parties

Article 7 is a key provision of the Convention, if the Convention ap

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The Use of Electronic Communications in International

The early provisions on e-contracting are not surprising. Article 8 provid

Under Article 9, a generally accessible offer is only an invitation to treat,

103. WP100, supra note 24, at Annex, Art. 7, Variant B, n.28.

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111. WP.100, suvra note 24, at Annex 1, Art. 9(1).

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Time and Place of Sending and Receiving

120. WP100, supra note 24, at Annex 1, Art. 11.

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Article 12 makes contracts involving an automated program on on