contracts in the electronic communications convention john d. gregory 3 october 2008

Contracts in the Electronic Communications Convention

John D. Gregory3 October 2008

E-Contracts and the Convention2

Are e-contracts different?

Short answer: No– Consent– Certainty of parties– Certainty of subject matter– Certainty or calculability of price– Consideration (in common law)

Long answer: well, there are a few things …– So we have a Convention


Are international e-contracts different?

Short answer: no– See previous slide

Longer answer:– Subject to different legal systems– Conflicts dealt with by PIL principles and

conventions– E-Communications Convention does not create a

separate law of international contracts– Limits to UNCITRAL: international trade

BUT would be good to have same principles at home


Purpose of the Convention

• Remove barriers to the use of electronic communications in contracts

• In forming contracts• In performing contracts

• Make the Model Law on Electronic Commerce (1996) more uniformly implemented

• Facilitate the use of e-communications for contracts under other conventions, notably the Convention on the International Sale of Goods


Contracts in the Convention

Generally speaking, the Convention does not affect contract law.– UNCITRAL did not want to create parallel,

separate legal regimes for e-contracts– Mostly the law applicable to international

(electronic) contracts is the domestic law applicable under conflict of laws principles

– International sales contracts may be subject to the Convention on the International Sale of Goods (Vienna Sales Convention)


Contracts in the Convention

The few contract-law exceptions:– Article 6 – location of the parties– Article 9 – form requirements– Article 10 – time and place of sending and receiving

contract-related messages– Article 11 – invitations to receive offers to contract– Article 12 – automated transactions– Article 14 – effect of data input errors

All of these focus on the ways that electronic contracts are different from other contracts


What’s the difference?

Location of the parties– Where is anyone in cyberspace?– Not so hard to tell for hard goods or personal services– Harder to tell for virtual goods and immaterial services

Article 6 provides:– Basics are same as CISG– Rule about server (irrelevant)– Rule about domain names (no presumption from cc:tld

– country code: top level domain)



Sending and receiving messages– Common use of intermediaries makes question of time and

place harder than for paper communications– Mobile communications makes place harder

Article 10 provides:– Sent when leaves information system in control of sender– Received when capable of being retrieved at designated

address Different rule if sent to non-designated address

– Presumed capable of being retrieved when it reaches the address (much debate on this point)

– Presumed sent from and received at party’s place of business



Status of a website: offer or invitation?– CISG art 14(1): a proposal of business to the public at large

is an invitation to submit offers, and not itself an offer So a response to it does not form a contract

– A proposal to one or specific people is an offer. Article 11 provides:

– Proposal to the public is an invitation to submit offers– Otherwise an “offer” to the world could result in

unpredictable and even unlimited contracts when ‘accepted’ Rule applies even to interactive sites that can resemble

bargaining Sometimes an ‘offer’ can result in delivery of virtual goods or

services. That is evidence of automated acceptance.



Contract law requires a meeting of the minds– Many electronic contracts are formed by machines– The typical website-based contract has no active human

mind on the vendor side.– Some e-contracts are made by software on both sides– EDI contracts may be entirely automated

E.g. triggered by recording of inventory reaching a critical level Article 12 provides:

– A contract involving an automated messaging system at one or both ends is not invalid solely because of the lack of human intervention at the time it was made.

– The provision papers over rather than resolves the problem of doctrine (but it works)



Input errors– National laws deal with many kinds of mistake, not always

consistently Balance between certainty and fairness to both parties

– Online: may make typographical (input) error in dealing with automated system (computer) that is not programmed to recognize ‘oops!’.

Article 14 provides:– Input error by human being dealing with machine may be

withdrawn if: Machine has no error-correcting mechanism Notification of error is given without delay Person making the error does not benefit from it.

– Other mistakes are still governed by applicable law



Electronic contracts are electronic …– SO they are not on paper– They are not by word of mouth– Sometimes contracts have to be in writing– Sometimes contracts have to be signed– Sometimes people need an original

These form requirements are not unique to contracts The Convention resolves them for contracts

– As laws of broader application (including the UN Model Law on Electronic Commerce) resolved them for all e-commerce


Form Requirements

Non-discrimination rule (article 8)– A media-neutrality rule– Security subrule: consent = power to reject

Technological neutrality (passim) Convention: definition or function? (article 9)

– Functional equivalence: how can the electronic document serve the same legal function as the form of document presumed by the rule of law?

Q: ceremonial/formal function: what is equivalent?


Form Requirements - Original

Some contracts have to be presented or maintained as “original” documents.

– Originality is largely meaningless for electronic documents

Article 9 provides: OK if reliable insurance of appropriate level of integrity during relevant lifetime, and information capable of being displayed as required

– Integrity = not altered except metadata

Question: is integrity the only reason for an original?


Form Requirements - Signature

Some contracts have to be signed The common law does not require signatures to be

in any particular form– So electronic signature is good without legislation

Civil Code of Quebec does not require signatures to be in any particular form

– But they have to be the usual mark of the signer Article 9 provides: a method must identify the party

and indicate the party’s intention re the information– Method must be as reliable as appropriate in the

circumstances, or proved to have fulfilled these functions


Form Requirements - Writing

Some contracts have to be in ‘writing’– General (but not inevitable) assumption is that words on a

computer screen are not writing, though they use the usual symbols of written language (alphabet, numerals)

Article 9 provides: OK if “the information … is accessible so as to be usable for subsequent reference”

– “the information” implies integrity – not just some of the information, or some other information

– Memory function, shareability function– No durability rule – retention is a separate concept


Form Requirements - Writing

The Convention’s test (accessible so as to be usable for subsequent reference) is the law in the US, in common-law Canada, and several other places (and other conventions)

– No case law (but = US uniform standard: retrievable in perceivable form)

Q: does it work in Quebec? A: (Gautrais) no – CCQ and LFITA focus on integrity of info

over life cycle of document, not compatible with ECC test– (Gregory) but – Convention test must include integrity

Subsequent reference implies while relevant = life cycle Integrity is an evidence concept. cf Caprioli: distinction

between ad probationem and ad validitatem tests vanish for e-commerce (where does that this debate?)


Impact on other conventions

Many commercial conventions date from before the days of electronic communications

Article 20 provides: ECC applies to any contract to which listed conventions apply

– Includes CISG, New York Convention on Foreign Arbitral Awards, etc

– Applies to any other convention to which an ECC member state is a party, unless opts out

– Complex interplay of 20 and 21 to allay concerns Novel public law solution: local interpretation rules


Ratification of the Convention

18 signatures, including Russia, China, Singapore (a leading e-com law country)

No ratifications Developed countries: ratify as model, not from need U.S. – ABA supports ratification

– Delay caused by federalism issue not merits E.U. – delay not based on merits (?) Canada – Uniform Law Conference reports

– Common law pro; civil law (Gautrais/Proulx) con– Suspense …– Convention allows piecemeal ratification (article 18)


Conclusions

Electronic contracts are just a little different from ‘normal’ contracts

The differences arise from the medium and not the message

The Convention gets the differences right, proposes workable solutions (abroad – and at home?)

Key point of controversy: functional equivalence of writing (subsequent reference vs (?) integrity)

– Few contracts need to be in writing– Resolve without abandoning technology neutrality


Sources

United Nations Convention on the Use of Electronic Communications in International Contracts + Guide to Enactment (UN 2005)

– http://www.uncitral.org/pdf/english/texts/electcom/06-57452_Ebook.pdf

– http://www.uncitral.org/pdf/french/texts/electcom/06-57453_Ebook.pdf

A.H. Boss & W. Kilian, eds. The United Nations Convention [etc], Kluwer Law International, October 2008 (530 pp)

contracts in the electronic communications convention john d. gregory 3 october 2008

Documents

parties article

contract law

home slide

previous slide

place harder article

level domain slide

partys place of business

international trade