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MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Electronic Contracts
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
International contracts Jurisdiction Different laws Conflict of Laws International conventions
Vienna Sales Convention UNCITRAL Model Law on Electronic Commerce International Chamber of Commerce E-Terms
repository
This lecture deals only with Australian law
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Formation of Contract Legal capacity Intention to contract Offer Acceptance Consideration Certainty
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Vitiating Factors Misrepresentation Duress Undue Influence Unconscionable conduct Mistake Illegal or against public policy
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
eCommerce Issues Form of contract Time and place of offer and acceptance Incorporation of terms Capacity of software agents
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Form Many statues require:
Writing Signature Sealed and delivered (Deed) Witnesses etc
Section 8 Electronic Transactions Act A transaction is not invalid because it took
place wholly or partly by means of one or more electronic communications
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Time & Place of Offer & Acceptance An offer is a clear statement of the terms on
which a party promises to be bound if the other party accepts
A party can indicate acceptance in many ways A mere mental assent with nothing more will not
be acceptance Unless waived by the offeror, acceptance must
be communicated
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Time & Place of Offer & Acceptance Invitations to treat:
Advertisements Shop displays Catalogues
Objective test: Would a reasonable person think it was an
offer
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Time & Place of Offer & Acceptance Clicking “I accept” button
Is this the offer or acceptance? Depends whether seller can accept or reject
Electronic Auctions The bid is the offer Auctioneer can accept or reject But, there may be a collateral contract with
auctioneer that he will accept the bid
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Time & Place of Offer & Acceptance Offeror can specify method of acceptance Instantaneous communications
Contract is formed at place and time receipt of acceptance
Postal rule (non-instantaneous communications) Contract is formed at time & place that letter is posted Available where offeror indicates to offeree that the
offeree can use non-instantaneous communications
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Time & Place of Offer & Acceptance “instantaneous”
does not refer to speed of communication Can recipient immediately notify sender if he
does not receive whole or part of message Vienna Sales Convention
Applies to contracts involving signatory countries
Doesn’t apply to consumer goods or auctions Contract is formed when acceptance is
delivered to the offeror’s mailing address
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Time & Place of Offer & Acceptance Use of email
Is it instantaneous? Vienna Sales Convention
The acceptance is sent when it is put in the offeror’s mailbox
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Time & Place of Offer & Acceptance Online Shopping
Is online shopping instantaneous? Vienna Sales Convention
Offer is made when it is delivered to the seller’s URL
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Time & Place of Offer & Acceptance Section 14 Electronic Transactions Act
Dispatch occurs when it enters the first information system outside the control of the sender
Receipt occurs when it enters the information system designated by the recipient
If no information system designated then receipt occurs when it comes to the recipient’s attention
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Time & Place of Offer & Acceptance Section 14 Electronic Transactions Act
Dispatch occurs at the sender’s place of business
Receipt occurs at the recipient’s place of business
If more than one place of business then Place of business most closely related to
the transaction Otherwise, principal place of business
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Time & Place of Offer & Acceptance Section 14 Electronic Transactions Act
If no place of business Place of residence
Does not modify the postal rule
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Best Practice ModelStandard terms should include: Reference to fair business practices Identity of the business Contractual information (method of offer\
acceptance) Jurisdiction & applicable law Dispute resolution Protection of privacy Methods of payment Security and authentication
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Shrinkwrap Agreements Terms and conditions are not shown to
purchaser until after he has bought the box and opened it
Terms cannot be imposed after contract formed Purchaser must be given reasonable notice of
terms before contract formed
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Shrinkwrap Agreements (cont.) Are there 2 contracts?
One to buy the box One to licence the software
Recent cases have recognised practical importance of allowing terms to be made known after sale McRobertson Miller Airlines v Commissioner for State
Taxation (1975) 133 CLR 125 Hill v Gateway 2000 Inc.
Try and return clauses
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Clickwrap Agreements Best Practice
Provide notice regarding terms Place user accept option at end of all terms Require an affirmative act Record date & time of user acceptance Allow user to exit at any time Online user registration
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Electronic Agents Can a party’s intention be expressed by a
computer Can a computer act as an electronic agent Ostensible (apparent) authority of agents
Principal is bound where he puts agent in a position where he appears to have authority
Principal is not bound where it is clear to others that agent is acting outside ostensible authority
Applies, by analogy, to electronic agents
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Electronic Agents (cont.)Section 15 Electronic Transactions Act(1) For the purposes of a law of the Commonwealth, unless otherwise
agreed between the purported originator and the addressee of an electronic communication, the purported originator of the electronic communication is bound by that communication only if the communication was sent by the purported originator or with the authority of the purported originator.
(2) Subsection (1) is not intended to affect the operation of a law (whether written or unwritten) that makes provision for: a) conduct engaged in by a person within the scope of the
person's actual or apparent authority to be attributed to another person; or
b) a person to be bound by conduct engaged in by another person within the scope of the other person's actual or apparent authority.
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Signatures Functions
Identification Attribution Assent
Authentication = identification + attribution
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Signatures (cont.) Subsidiary functions
Legal requirements Goods worth more than a certain amount Guarantees Sale of land Bill of exchange Wills Certificates by Company directors
Focusing attention
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Signatures (cont.) Supplementary considerations
Message integrity Confidentiality
eCommerce Requirements Authentication Non-repudiation = authentication + message
integrity confidentiality
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Electronic Signatures3 possible legal scenarios
1. Minimalist Only recognise that electronic signatures
can be the same as written signatures
2. Prescriptive Specify details of technology to be used
3. Set broad criteria for electronic signature to be effective
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Electronic Signatures (cont.)Section 10 Electronic Transactions Act adopts minimalist approach Requires identification, attribution and assent Does not require signature to verify message
integrity Technology used must be “as reliable as [is]
appropriate”
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Electronic Signatures (cont.)Section 10 Electronic Transactions Act Recognises the need for different levels of
authentication Caters for technological advances Does not favour one technology Is consistent with international developments
(e.g. UNCITRAL) Only applies to Commonwealth law States are enacting parallel legislation
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