Electronic Commerce Law Electronic Commerce Law
Module 3: Electronic ContractsThailand August - September 2006 2006 Alan Davidson | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Overview This module provide a basis for understanding the nature and role of Electronic Contracts and the law and regulations applicable. The information disseminated will be provided on the assumption that we are familiar with the traditional aspects and elements of the law of contracts. There are several aspects to be considered that are peculiar to electronic contracts.
Specific Learning Objectives At the end of these modules, you should be able to: Describe the major types of
aspects that are peculiar to the electronic contract.
Shrinkwrap, Clickwrap and Browsewrap Contracts Shrinkwrap Shrinkwrap contracts derive their name from the clear plastic wrapping that enclosed many software packages. The package included a notice that by opening the shrinkwrap the purchaser agreed to the terms and conditions enclosed. Such contracts typically included provisions such as an arbitration clause, a choice of law and forum clause, disclaimers and limitations of warranties and limitation of remedies. In Step-Saver Data Sys Inc v Wyse Tech 939 F 2d 91 (3d Cir 1991) t he court held that the terms of the shrinkwrap license were not enforceable because Step-Saver had not assented to them. However later in ProCD Inc v Zeidenberg 86 F 3d 1447 (7th Cir 1996) the appeal court noted that it would be impossible to print the entire contract on the exterior of the box. The court found "notice on the outside, terms on the inside, and a right to return the software for refund if the terms are unacceptable . . . may be a means of doing business valuable to buyers and sellers alike". The implications extend to mass marketing, the distribution of software and are similar to the purchase of tickets of concert, air travel and sporting events where the purchaser pays in advance and receives the tickets with the terms included. If the terms and conditions are oppressive, the contract is more likely to be struck down as being Unconscionable. However, generally, enforcement depends upon whether suitable notice of the terms and conditions have been given to the purchaser or whether the purchaser has the right of rejection, a term referred to as adhesion. Clickwrap A clickwrap contact is formed on the Internet. The name is derived from Shrinkwrap. However, with a clickwrap contact, the user, for example, assents by clicking a button marked "I Agree" or "I Accept". The clickwrap contract has the advantage that the user can be given the opportunity to read the terms and conditions before assenting. The vendor can dictate the number of steps for the user to pass through before reaching the assent stage. In the typical situation the vendor uses an interactive web page, which may ultimately require personal and credit card details. The contract need no paper nor a signature. Assent is given in one of two principal methods. First, is "type and click" where the user must type, for example "I agree" and the click a send button. Second, is to click a single button. The former demonstrate a clear intention. The first decision on the enforceability of clickwrap contracts was Hotmail Corp v Van$ Money Pie Inc 47 USPQ 2d 1020 (1998). To obtain a free email account the user must "agree" to Hotmail's terms and conditions. Assent occurs by clicking the appropriate button. In breach of the terms the defendant sent spam mail with pornographic materials, and altered the return address to make it appear that it came from a different source. The court in granting a injunction held that the defendant was bound by the terms and conditions by clicking the button "I Agree". In Steven J Caspi v Microsoft Network 323 NJ Super 118 (1999) the terms of the agreement appeared in a scrollable window next to two blocks containing the words "I Agree" and "I Disagree". The user could not use Microsoft Network without selecting the affirmative choice. The Appellate Court held that this created an enforceable contract. See also I.Lan Systems Inc v Netscout Service Level Corp (D Mass 2002). I. Lan Sys. v. Netscout Serv. Level Corp., 183 F. Supp. 2d 328, 336 (D. Mass., 2002) (upholding a clickwrap agreement on two grounds: first, clickwrap is simply "Money now, terms later" contract formation; second, the court found that the "additional terms" of the clickwrap license was not material under UCC (§207(2)(b)). In Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d. Cir., 2004), the described the key to a clickwrap agreement was that acceptance or rejection must occur before being given access. Essentially, under a clickwrap arrangement, potential licensees are presented with the proposed license terms and forced to expressly and unambiguously manifest either assent or rejection prior to being given access to the product. The court held that the click-wrap dynamic did not exist where users were presented with the license simultaneously with the end product. Browsewrap The term browsewrap refers the position where a user may, for example, proceed to download software, without giving unambiguous consent to the terms and conditions. For example, the vendor may merely place a link on the download page with the words "terms of download". In Specht v. Netscape Communications Corp (SDNY 2001) Specht downloaded Netscape's SmartDownload software. Specht claimed that as a result private information was wrongfully and surreptitiously transmitted to Netscape. Netscape sought to compel arbitration arguing the applicability of the online agreement. To download the software, users simply click the button marked "Download". The only reference to the terms and conditions appeared if the user scrolled down the page. The user would then see the words "please review and agree to the terms of the Netscape SmartDownload license agreement before downloading and using the software". Next to this was a link which, if clicked, opened a web page containing the terms, including the arbitration clause. The court held that Specht was not bound by the terms. The fact that users were not required to give a positive assent before proceeding was critical to the court's reasoning. The court doubted whether such browsewrap agreement were enforceable. Australia The approach in Australia is yet be firmly determined. However the position is reminiscent of Lord Denning's "red hand" passage in Thorton v Shoe Lane Parking Station Ltd [1971] 2 QB 163, 170 where the clause did not exempt the defendants from liability since they had not taken reasonable steps to bring it to the attention of Thorton. The web site should expressly indicate that terms and conditions will apply. The user should not be able to proceed without reading or being given the clear opportunity to read the terms and conditions. It would be prudent to include a mechanism which requires the user to actually scroll through the terms before the user could assent.
Electronic Contracts Read Quirk 57-80 Browse Akindemowo 36-63 Formation of Electronic Contracts (Overview of Issues) Read M. Sax article on
International Electronic Trade: Carrying Out Consumer and Commercial
Transactions on the Internet, pages 11-18 at Browse publications of Gilbert
Tobin (Click publications - then Communication and
Technology) Read: sections 13 and 14 Electronic Transactions Act (Cth) 1999 http://scaleplus.law.gov.au/html/pasteact/3/3328/top.htm Read articles 13
and 14 UNCITRAL Model Law on Electronic
Commerce
Read the portion on property
rights and contracts in R.Merges article at Consider the application of the common law principles and legislation of capacity to internet contracts made on an anonymous basis. See Section 5, Sale of Goods Act 1896 (Qld) at http://www.austlii.edu.au/au/legis/qld/consol_act/soga1896128/s5.html Browse an article on models’
egg auctions at Browse articles on internet sale of
children Reference - sections 3-7 of the Surrogacy Contracts Act 1993 (Tas) at http://www.austlii.edu.au/au/legis/tas/consol_act/sca1993243/index.html | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity
Commencement Cth, 1st stage - 24 March 2000 – 2nd stage 1 July 2001; NSW - 7 December 2001; Vic - 1 September 2000; Qld - 1 November 2002; SA - 7 December 2002; Tas - 1 June 2001; WA - 2 May 2003 ACT - 1 July 2001; NT - 13 June 2001; Thailand - 120 days after 2 December 2544 (1 March 2002)
Notes: (A) In 2002 NSW added Part 2A - Court Administration - Case Management System
(B) Transfer of Land (Electronic Transactions) Act 2004 (Vic) which provides: "The main purposes of this Act are: (a) to amend the Transfer of Land Act 1958— (i) to provide for the lodgement and registration of electronic instruments; and (ii) to empower the Registrar to require verification of identity before registering an instrument under that Act; and (b) to amend section 126 of the Instruments Act 1958 to remove any doubt as to the application of the Electronic Transactions (Victoria) Act 2000 to that section.
Thailand
The purpose of this Act is basically to supplement the law that required formalised transactions to be in writing. According to this Act, where any transaction is required by law to be in writing, that requirement is met by electronically-transmitted information (or data message, as used in the Model Law) if the information contained therein is accessible so as to be usable for subsequent reference. Where the law requires any document or information to be presented or retained in its original form, that requirement is met by a data message if:
In any legal proceedings, no laws on evidence shall be applied to deny the admissibility of a data message as evidence, simply because it was made electronically. Information in the form of a data message shall be given due evidentiary weight. In assessing the evidentiary weight of a data message, regard shall be given to the reliability of the manner in which (i) the data message was generated or communicated, (ii) the integrity of the information was maintained, (iii) its originator was identified and (iv) any other relevant factors. The Act will also set up a regulatory body called the "Electronic Transactions Board". The Board will have the authority to designate certain businesses, including the certification authority business, to be under its control. The Act also sets up the principles and reliable methods for promoting public confidence in the integrity and reliability of electronic commerce, and for fostering the development of electronic commerce through the use of electronic signatures to lend authenticity and integrity to correspondence in any electronic medium. Where the person is required to sign with an electronic signature in an electronic record, that requirement is met, if:
The electronic signature shall not be limited or denied by law simply because it was made electronically. The Act also establishes the principles upon which the certification authorities will rely when issuing a Certification of Authenticity for electronic signatures. The introduction of the Act will hopefully resolve many of the inadequacies which affect the traditional laws presently used to deal with the contractual questions concerning the online and Internet environment.
Operation of E-Contracts Statute of Frauds and the Requirement of Writing Read pertinent portion on
Statute of Frauds and Digital signatures
Validity of electronic transactions The Electronic Transaction Acts provide that a transaction is not invalid because it took place wholly or partly by means of one or more electronic communications.[1] This general rule is subject to other provisions of the Act dealing with the validity of transactions. The regulations may also exclude the general rule in relation to specified transactions and specified laws. Writing Where a law requires a person to give information in writing, that requirement is taken to have been met if the person gives the information by means of an electronic communication.[2] Generally, for information given by means of an electronic communication to be acceptable, it must be reasonable to expect that the information will continue to be accessible for future reference, and the recipient of the information must consent to being given the information by means of an electronic communication. Signatures A person who is required by law to give a signature may instead use an alternative means of authenticating their identity in relation to an electronic communication of information.[3] Generally, for an alternative means of authentication to be acceptable, the means used must identify the person and indicate their approval of the information being communicated, must be as reliable as is appropriate for the purposes for which the information is communicated, and the recipient must consent to the use of this means. Production of documents A person who is required or permitted by law to produce a document in hard copy may instead produce the document in electronic form.[4] For an electronic document to be acceptable, the method of its generation must provide a reliable means of ensuring that the integrity of the information is maintained. It must also be reasonable to expect that the information contained in the electronic document will continue to be accessible for future reference. Additionally, the recipient must consent to the provision of an electronic document. Retention of information and documents The requirement to record information in writing, to retain a document in hard copy or to retain information the subject of an electronic communication may be met by recording or retaining the information in electronic form.[5] To be acceptable it must be reasonable to expect that the information will continue to be accessible for future reference and the method for storing the information must comply with any requirements of the regulations under the Act as to the kind of data storage device on which the information is to be stored. In the case of a document that is required to be retained, additional information as to the origin and destination of the communication, and as to the time that the electronic communication was sent and received, are to be retained and the method for retaining information must provide a reliable means of assuring that the integrity of the information is maintained. Time and place of dispatch and receipt of electronic communications An electronic communication is taken to have been dispatched by the sender when it first enters an information system outside the control of the originator. An electronic communication is taken to have been received by the addressee when it enters an information system designated by the addressee for that purpose. If no such system is designated, the electronic communication is taken to have been received when it comes to the attention of the addressee. This principle is a partial application of the postal acceptance rule. This rule is an exception to the general rule that there is no contract until the acceptance has been communicated to the offeror. Where the post is the contemplated mode for communication, acceptance of an offer occurs when the letter of acceptance is placed in the postal system: Adams v Lindsell (1818) 1 B & Ald 681; 106 ER 250. This is so whether the letter is delivered, delayed or even lost. The postal acceptance rule does not apply to telexes, facsimiles and instantaneous communications. However, this 19th century rule has found favour with 21st century electronic commerce. It remains unclear whether the words “comes to the attention of the addressee” means when the addressee has read the communication or has received a notice such as, “you have mail”. An electronic communication is taken to have been dispatched at the place where the originator has its place of business and to have been received at the place where the addressee has its place of business.[6] The parties can agree to exclude or modify these default rules. In line with the UNCITRAL principle of technological neutrality, generic expressions take the place of the expression “electronic mail”, so that the Acts have broader application, for example facsimiles and SMS messages. In SZAEG & Ors v Minister for Immigration [2003] FMCA 258, the court applied the federal Act to Australia Post's facsimile service, finding that the sender's document was dispatched when "handed" to an employee of Australia Post.Attribution of electronic communications A person is not bound by an electronic communication unless the communication was sent by, or with the authority of, that person.[7] Such authority may be given ostensibly or impliedly in accordance with agency principles. Importantly, the parties may agree to exclude this provision in advance. This section of the Acts differs from the UNCITRAL Model Law, which contains a rebuttable presumption that the purported originator is in fact the originator. The Acts provide that the purported originator is only bound by a communication if the communication was sent by them or with their authority. The decision to reject the UNCITRAL model follows a recommendation made by the Electronic Commerce Expert Group (ECEG). The ECEG argued that the UNCITRAL proposal favoured electronic commerce over paper-based communication. It noted that the use of signatures on paper for commerce at a distance (by mail or facsimile) involves the risk of forged or unauthorised signatures but there is no general legislative rule that entitles the addressee to presume that the signature is genuine. If the UNCITRAL proposal was accepted, addressees of electronically signed data messages would be better placed than those that received manually signed paper-based messages. As with receipt and dispatch, a contrary agreement between the parties can supplant this presumption under the Act. However, the law of agency is preserved.[8] Practice The Commonwealth Electronic Transactions Act 1999 applies only “for the purposes of a law of the Commonwealth”. In enacting this legislation, the federal government relied upon the corporations power, the trade and commerce power and the territories power: Constitution, ss 51(xx), 51(i), 122. The State and Territory legislatures are not limited by such constitutional restrictions. [1] Cth, Electronic Transactions Act, s 8; NSW, s 7; Vic, s 7; Qld, s 8; SA, s 7; WA, s 7; Tas, s 5; ACT, s 7; NT, s 7. [2] Cth, Electronic Transactions Act, s 9; NSW, s 8; Vic, s 8; Qld, ss 9-13; SA, s 8; WA, s 8; Tas, s 6; ACT, s 8; NT, s 8. [3] Cth, Electronic Transactions Act, s 10; NSW, s 9; Vic, s 9; Qld, ss 14-15; SA, s 9; WA, s 9; Tas, s 7; ACT, s 9; NT, s 9. [4] Cth, Electronic Transactions Act, s 11; NSW, s 10; Vic, s 10; Qld, ss 16-18; SA, s 10; WA, s 10; Tas, s 8; ACT, s 10; NT, s 10. [5] Cth, Electronic Transactions Act, s 12; NSW, s 11; Vic, s 11; Qld, ss 19-21; SA, s 11; WA, s 11; Tas, s 9; ACT, s 11; NT, s 11. [6] Cth, Electronic Transactions Act, s 13; NSW, s 12; Vic, s 12; Qld, ss 22-25; SA, s 13; WA, s 13; Tas, s 11; ACT, s 13; NT, s 13. [7] Cth, Electronic Transactions Act, s 15; NSW, s 14; Vic, s 14; Qld, s 26; SA, s 14; WA, s 14; Tas, s 12; ACT, s 14; NT, s 14. [8] Cth, Electronic Transactions Act, s 15(2); NSW, s 14(2); Vic, s 14(2); Qld, s 26(2); SA, s 14(2); WA, s 14(2); Tas, s 12(2); ACT, s 14(2); NT, s 14(2).
UNCITRAL Model Law Article 9. Admissibility and evidential weight of data messages (1) In any legal proceedings, nothing in the application of the rules of evidence shall apply so as to deny the admissibility of a data message in evidence: (a) on the sole ground that it is a data message; or,(2) Information in the form of a data message shall be given due evidential weight. In assessing the evidential weight of a data message, regard shall be had to the reliability of the manner in which the data message was generated, stored or communicated, to the reliability of the manner in which the integrity of the information was maintained, to the manner in which its originator was identified, and to any other relevant factor. See section 48 Evidence Act 1995 (Cth) Proof of contents of
documents (b) tendering a document that: (i) is or purports to be a copy of the document in question; and (ii) has
been produced, or purports to have been produced, by a device that
reproduces the contents of documents; (d) if the document in question is an article or thing on or in which information is stored in such a way that it cannot be used by the court unless a device is used to retrieve, produce or collate it - tendering a document that wasor purports to have been produced by use of the device; ... (2) Subsection (1) applies to a document in question whether the
document in question is available to the party or not.
(4) A party may adduce evidence of the contents of a document in question that is not available to the party, or the existence and contents of which are not in issue in the proceeding, by: (a) tendering a document that is a copy of, or an extract from or summary of, the document in question; or (b) adducing oral evidence of the contents of the document in question."
Some Commercial Contracts that are required by Australian law to be in writing in order to be valid and effective: Bill of exchange, see section 8, Bills of Exchange Act 1909 (Cth) at http://www.austlii.edu.au/au/legis/cth/consol_act/boea1909148/s8.html Promissory note, see section
89, Bills of Exchange Act 1909 (Cth) at:
Cheque, see section 10,
Cheques Act 1986 (Cth) at Assignment of Copyright, section 196(3), Copyright Act (Cth) 1968 at http://www.austlii.edu.au/au/legis/cth/consol_act/ca1968133/s196.html Marine Insurance Contract,
sectiosn 27-28, Marine Insurance Act 1909 (Cth)
at Some Commercial Contracts that need to be in writing in order to be enforceable in Australian courts: Contracts for Sale of Goods at a certain amount. Contract for Sale of
Land and section 54A, Conveyancing Act 1919 (NSW)
Electronic Transactions Act 1999 (Cth) http://scaleplus.law.gov.au/html/pasteact/3/3328/top.htm Browse the Explanatory
memoranda Read "Davidson", overview the
Electronic Transaction Acts http://www.uq.edu.au/davidson/cyberlaw/june2001.html http://www.uq.edu.au/davidson/cyberlaw/july2001.html
Finlayson and Migration Agents Registration Authority [2005] AATA 1127 (16 November 2005)Member - RG Kenny "The application form foreshadowed that the information concerning the CPD points would be provided by 16 May 2005. They were so provided by electronic means and this was acknowledged by MARA. Sections 8 and 9 of the Electronic Transactions Act 1999 (Cth) make provision for notification by those means." (Para 19) International Legal Framework for Electronic Commerce UNCITRAL Model Law for Electronic Commerce
Read articles: 6 (Requirement of Writing) 7 (Signature) 8 (Original Copy) 9 (Admissibility and evidential weight of data messages) 10 (Retention of data messages) 11(Formation and validity of contracts) 12 (Recognition by parties of data messages) 13( Attribution of data messages) 14(Acknowledgement of receipt) 15 (Time and place of dispatch and receipt of data messages)
UNIDROIT Principles of International Commercial Contracts On Contractual Terms and Clauses Reference - article on
Ascendancy of freedom to Contract Browse: Gilbert & Tobin’s
article on cyberjurisdiction, particularly the portion on "Contracts" (Click publications and then Communications and
Technology) Browse B. Slutsky’s article on
Jurisdiction over Internet Commerce (note go to firm profile then
articles) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cases
Faulks v Cameron [2004] NTSC 61 McGuren v Simpson [2004] NSWSC 35 (Does this case state that the law would be the same without the ETA?) SZAEG v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FMCA 258 Ford & Anor v La Forrest & Ors [2001] QSC 261 (First Queensland case on the Electronic Transactions Act) "Further an acceptance by e-mail is capable of creating legal relations." Affirmed in Ford v. La Forrest [2001] QCA 455
Why is this exception necessary? What is wrong with the application of section 14.
Consent Examined
Australia, US, Ireland, New Zealand (not Thailand)
ILICH & ANOR and BAYSTAR CORPORATION PTY LTD [2004] WASTR 25 (5 July 2004) Submission to Referee - "Consent' includes consent that can be reasonably inferred from the conduct of the person concerned. Section 8(1) ETA is not definitive in relation to when consent must exist. Paragraph 8(1)(a) ETA specifically refers to 'at the time the information was given' in relation to the expectation the communication was reasonably accessible but this would appear not to qualify paragraph 8(1)(b) ETA. However, both the 'giving' of the information and the 'consent' are expressed in the present tense, which may well indicate a legislative intention that, at the time the information was given, consent must exist. In other words, subsequent words or conduct are, strictly, irrelevant." Referee stated: "However, in the present case, other than a subsequent submission that Baystar did consent to the by-law, there is no evidence whatever in the Minutes of the 2004 EGM or in any of the other papers provided to me that such prior consent was given. On that basis, the resolution was of no effect. The Respondent has made much of the technical requirements that the Applicants should have complied with in serving on the Strata Company their written notice of their dissenting vote. If there is any validity in those submissions, the same tests must be applied in relation to the "consent in writing" required from Baystar before the s 42(8) by-law was voted on." AD comments - the Referee should have held that in the absence of consent, the ETA did not apply. He should then apply common law considerations. The ETA does not provide that in the absence of consent it shall not be "writing", merely that if there is consent it is acceptable.
The Convention on the Use of Electronic Communications in International Contracts
http://www.uncitral.org/uncitral/en/uncitral_texts/electronic_commerce/2005Convention.html
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Activity
Sample of Electronic
Contract Sample Internet Commercial Contract (Web site creation)
with useful Commentary Revision Sections 6 (Distinctions between an Agreement to Sell and a Contract of Sale), 7 (legal capacity), 8 (Modes of Contract of Sale), 16 (When condition is treated as warranty), 17 (Implied undertaking as to title), 18 (Sale by description), 19 (Implied condition as to quality or fitness), 20 (Sale by sample), 21(Ascertainment of Goods), 22 & 23 (Rules for ascertaining when title to property passes to the buyer), 37 (Buyer’s right to examine the goods), 38 (Buyer’s acceptance of goods), 39-40 (Rules when buyer rejects the goods), 52 (Damages for wrongful non-acceptance), 42 (Unpaid seller’s rights), 43 (Seller’s lien), 45 (Loss of seller’s lien), 46 (Right of stoppage in transitu), 50 (Effect of exercise of lien or good’s stoppage in transitu), 53 (Damages for non-delivery), 54 (Remedies for breach of warranty), 57 (Exclusion of implied terms and conditions), 62 & 64 (Rules on Consumer Sales) of the NSW Sale of Goods Act at http://www.austlii.edu.au/au/legis/nsw/consol_act/soga1923128/index.html
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alan
Davidson a.davidson@law.uq.edu.au 2006 (4) Please report discontinued links to Alan Davidson | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||