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Legal Issues. E-Commerce. Thomas Schwarz, S.J. 2006. Legal Issues. Legal rules govern formation, interpretation and enforcement of contract. E-commerce transactions ought to specify Governing Law (“the law of California”) Forum for resolving disputes. Legal Issues. Common Law - PowerPoint PPT Presentation
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Legal Issues
E-Commerce
Thomas Schwarz, S.J. 2006
Legal Issues
Legal rules govern formation, interpretation and enforcement of contract.
E-commerce transactions ought to specify Governing Law (“the law of
California”) Forum for resolving disputes
Legal Issues
Common Law Collection of legal principles
developed by common-law courts in reaction to cases before them.
Statutes (by legislative bodies). (US) Uniform Commercial Code
Legal Issues
Civil Law Statutory code replaces common law.
Legal Issues
In common and civil law systems, other items have legal significance Course of dealing over time Usage of trade Parties’ agreement on principles to
govern their relationship Trading Partner Agreements (TPA)
Legal Issues International / interstate character of E-
Commerce Promulgation of model laws and rules
UN Model Law on Electronic Commerce Directive on a Community Framework for
Electronic Signatures in Europe Federal E-Sign Law (US) Uniform Electronic Transactions Act (UETA) Uniform Computer Information Transaction Act
(UCITA) Advancement of legislation and regulation
in jurisdictions according to these model laws and rules.
Contracts
Contract needs Offer of specific terms; Acceptance of the offer; Adequate Consideration.
To be enforcable, contract needs to satisfy other requirements Statute of fraud
Contracts Offer and acceptance needs
Mutual assent, Sufficiently definite terms.
E-commerce problem: Does posting on a website constitute
sufficient assent? Can an inventory control program that
automatically reorders items give assent to a transaction on behalf of its owner?
Contracts Section 14 UETA:
Interaction of electronic agents or between electronic agent and individual can result in a valid contract.
UCITA “Contract might be formed by the
operations of the electronic agent.” “A person that uses an electronic agent is
bound by the operations of the electronic agent, even if no individual was aware of or reviewed the agent’s operation.”
Contracts
In the absence of statuary law: THE LAW ARGUES BY ANALOGY.
Similar problems were introduced with letter writing. Includes problems with “battle of the
form”
Contracts
Consideration Can be anything of value
Delivery of goods Delivery of services Payment Return promise
Novel methods of payment, delivery, … do not pose a legal problem per se.
Contracts
Statutes of Fraud Certain types of agreements are
unenforceable unless they satisfy the statute of fraud. Includes: the agreement … or
memorandum or note thereof shall be in writing and signed by the party to be charged therewith
Contracts Contracts subject to the statues on fraud:
Executor or administrator to answer for a duty of his / her decedent
Suretyship Contracts made upon consideration of
marriage Sale of interest in land Contracts that are not to be performed within
oen year from the making of them Contracts for the sale of goods for the price
of $500.00 or more
Contracts
In addition, many statutes require contracts to be in writing and signed.
E-commerce question: What is writing? What is a signature?
Contracts Current UCC (Uniform Code of Commerce):
Writing includes “printing, typewriting, or any other intentional reduction to tangible form”
Signed includes “any symbol executed or adopted by a party with present intention to authenticate the writing as that of the signer.”
The restatement of Contracts: Signature may be “any symbol made or adopted
with an intention, actual or apparent, to authenticate the writing as that of a signer.”
Contracts Office of the U. S. Comptroller General
(1991): Contracts formed using Electronic Data
Interchange technologies may constitute valid obligations of the government for purposes of 31 U.S.C. sec. 1501, so long as the technology used provides the same degree of assurance and certainty as traditional ‘paper and ink’ methods of contract formation.”
Contracts
Electronic Signatures in Global and National Commerce Act (E-Sign) 2000.
Contracts Performance
Once a valid contract is entered, both parties need to perform their obligations.
Compliance Failure to perform completely and strictly constitutes
breach of contract. Perfect tender rule: buyer can reject goods unless they
comply strictly with quality and quantity of the bargain.
UCC: Buyer who chooses to retain a shipment of goods that does not strictly conform in quantity or quality waives his/her right to revoke such acceptance unless “the non-conformity substantially impairs” the value of the goods to the buyer.
Contracts Enforcement
Goal of law is either Restitution (state before contract) or Expectation: to set the injured party into a state it
would have entered when the contract was fulfilled. Incidental / Consequential Damages
A breach committed in bad faith, willful and malicious conduct results in
Punitive damages. Parties can agree to limit exposure to liability
for damages by agreeing to clauses that liquidate or cap the amount of damages.
Contracts
Evidence See COEN 252
Other Legal Issues
Consumer Protection Law in general sees consumers as
less sophisticated and in need of a higher degree of protection.
A number of statues regarding e-commerce explicitly state that they do not preempt consumer protection laws.
Other Legal Issues Consumer Protection Proposals
Electronic disclosure is only permitted when the transaction is initiated and consummated electronically.
E-signature technologies need to reflect an actual intent to sign a document.
No shrink-wrap acceptance. Consumer should be given the opportunity to accept
or refuse disclosures. Consumer must be able to obtain paper copies. Disclosures must be delivered to the consumer’s
email address with a reply requested or retained on the website for the duration of the contract.
Other Legal Issues Consumer Protection Proposals
Electronic record must be accessible and retainable by the consumer. It must also be provided in a format that prevents alteration after it is sent, so it can be used to prove the terms of the record in a court of law.
Consumer’s failure to respond to the consent should trigger paper disclosures before it triggers default.
Other Legal Issues
Privacy Gramm-Leach-Bliley Financial
Modernization Act HIPAA COPPA
Other Legal Issues Personal Jurisdiction
US law: Defendant must have sufficient level of minimal contacts to be summoned in a certain jurisdiction.
EU law: Defendants must be domiciled to be summoned.
Negotiability Taxation Illegal Bargains
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