laws of ecommerce presentation

8/8/2019 Laws of Ecommerce Presentation

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Ecommerce

ECOMMERCE LAW


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INTRODUC TIO NClinton 1997 in the Presidential Direc tive on Electronic

Commerce:y The invention of the steam engine two centuries ago and the

subsequent harnessing of electricity for communications ushered inan industrial revolution that fundamentally altered the way we work,brought the world's people closer together in time and space, changedthe way we organize our economies, and brought us greater prosperity

y Today, we are on the verge of another revolution. Inventions like the

integrated circuit, the computer, fiber optic cable, and the Internetare changing the way we work, learn, and communicate with eachother.


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INTRODUC TIO Ny As the Internet empowers citizens and democratizes societies, it is also

changing the way business is conducted: entrepreneurs are able to start newbusinesses more easily by accessing the Internet's worldwide network of customers; world trade involving computer software, entertainment

products, information services, professional consulting, financial services,education businesses, medical diagnostics, advertising, and technical servicis increasing rapidly as the Internet dramatically lowers costs and

facilitates new types of commercial transactions.y A

ccording to several estimates, commerce on the Internet will total tens of billions of dollars by the turn of the century and could expand rapidly after that, helping fuel economic growth well into the 21st century .


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INTRODUC TIO Ny Prediction more than fulfilled in the ensuing yearsy W ith greater mob ility, also greater dangersy Integration of wor ld econom iesy The present wor ld econom ic cr isisy Focus of this talk: ecommerce law

y Perce ived legal uncer taintiesy UNCITRAL harmo nisation eff or tsy UNCITRAL Model Lawy UN Convention f or Electronic Comm unications in

Inter national Contracts (UNECE)


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Practical Ex ample

Consumer

Serb ia

Web trader

South Af rica

Ser ver India

VISA Serb iaVisa South Af r ica


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Types of ec o mmercey Electronic Data Interc hange (EDI)

y Earliest f orms of electronic trade 80s and 90sy Business to businessy

Closed comm unitiesy Recurr ing transactionsy Just-in time manufacturing and distri butiony UNECE WP 4

y Standardisationy Standard Interc hange agreeme nt

y Most legal issues reso lved by the IAy Remains an impor tant par t of ecommerce


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Types of ec o mmercey Inter net Ecommerce

y Has over taken EDIy Business to businessy

Business to consumersy Individual transactions

y Exchanges of emailsy Comb inations with emails and other f orms of comm unicationsy

Webs ite tradingy Webs ite invitingemailenquiries/o ff ersy Automated tradingsites such as Amazon. comy Inter net banking


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Legal Issues Arising y Unease with businesspeople a bout the legality andeff ectiveness of

ecommerce transactionsy Guide to Enactment of the Model Law, UNCITRAL:

The use of moder n means of comm unication such as electronic mail andelectronic data interchange (EDI) f or the conduct of inter national trade transactions has been increasingrapidly and is expected to develop fur ther as technical suppor ts such as inf orm ation highways and the INTERNET become more widely accessi ble. However, the comm unication of legallysignificant inf orm ation in the f orm of paper less messages may be hindered by legalobstacles to the use of such messages, or byuncer tainty as to their legaleff ect or validity.


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Legal Issues Arising y Validity of the agreementy Offer and acceptance

y Does the adver tisement f or goods or services on a website

constitute and off er that is open to acceptance by the wor ld atlarge or is it mere ly an invitation to do business, especially if the buyer can negotiate a deal by simply interacting with the website?

y Au tomated contracts and agencyy Is it possi ble to conclude a bindingcontract where either or

both par ties use an 'electronic agent


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Legal Issues Arising y Time and place of contracting

y When and where does the contract come into existence?y Formalities

y

Wr itingy Signaturey Third par ty authentication

y Incorporation of standard termsy

How do webtraders make sure that their standard terms andconditions will f orm par t of the agreeme nt


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Legal Issues Arising y Ju risdiction

y Where the transaction transcends inter national boundar ies, whichcour ts will have jur isdiction over any dispute

y The cour ts where seller is situated?y The cour ts where buyer is situated?y

Cour ts where server is situated in the case of automated transactions?y A pplicable lawy Which legal system will apply to any dispute?y Rules of pr ivate inter national law

y Ev idential q u estionsy

Admissi bilityy Originalityy Storage


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U NC ITRAL Mod el Lawy Response to these legal questions and uncer tainties

y National initiativesy Regional initiatives: European Directive on Electronic

Commerce (2000/3 1/ec)y UN Comm ission f or Inter nationalTrade Law

y Model Law on Electronic Commerce (1996)y Suggested text f or adoptiony Flexi bility adaptation to national law

y Model Law on Electronic Signature (2001)y UN Convention on Electronic Comm unications in Inter national

Contracts (2005)


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U NC ITRAL Mod el LawLegislation impleme nting the model law

y Australia (1999), Brunei Darussalam (2000), China (2004),Colomb ia* (1999), Dom inican Repu blic* (2002), Ecuador* (2002),France (2000), Guatemala (2008), India* (2000), Ireland (2000),

Jordan (2001), Maur itius (2000), Mexico (2000), New Zealand(2002), Pakistan (2002), Panama* (2001), Philippines (2000),Repu blic of Korea (1999), Singapore (1998), Slovenia (2000), S ou thA frica* (2002) , Sr i Lanka (2006), Thailand (2002), United Ara b Emirates (2006), Venezuela (2001) and Viet Nam (2005)

y Cer tain terr itor ies of the UKy 48 States of the United States of Amer icay Some Canadian Provinces


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U NC ITRAL Mod el Law e-signaturesy Legislation based on ML on e-signatures

China (2004), Guatemala (2008), Mexico (2003), Thailand(2001), United Ara b Emirates (2006), Viet Nam (2005),CostaRica (2005)


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S peci f ic IssuesS o luti o ns pr ov id e d b y the ML


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B asic principlesy Remo valof legal uncer taintyy Technological neutrality andFunctional Equivalence

y Diff erent practical solutions to obtain the same legal resultsy Electronic transactions should not legally be treated diff erently

f rom transactions using traditional me thods of comm unicationy Ena bling legislation ensur ing validity and legal cer taintyy Remo valof obstacles, whether real or perce ivedy Special solutions needed f or situations that do not occur with

traditional modes of comm unication aut omatedtransactions

y Freedom of contract


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Legal vali d ity of electr o nic messagesy A rticle 2: Definitions

y (a)"Data message" means information generated, sent,recei ved or stored by electronic, optical or similarmeans incl u ding, b u t not limited to, electronic datainterchange ( EDI), electronic mail, telegram, telex ortelecopy

y (f) " Information system" means a system forgenerating, sending, recei v ing, storing or otherwise

processing data messages.


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Legal vali d ity of electr o nic messagesy Pr inciple of f reedom of contract or par ty autonomyy In most legal systems par ties have a great deal of f reedom to

structure their contractual re lationships accor ding to their own n

eed

sand with

out

out

sid

eint

erf ere

nce

A rticle 4. Variation by agreement(1) A s between parties in vol ved in generating, sending,

recei v ing, storing or otherwise processing datamessages, and except as otherwise pro v ided, thepro v isions of chapter III may be varied by agreement.


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Legal vali d ity of electr o nic messagesy A rticle 5. Legal recognition of data messages

Information shall not be denied legal effect, validityor enforceability solely on the gro u nds that it is inthe form of a data message.

y Most legal systems require no specific f orm f or the validityof comm unications or conclusion of contractsy Oral contractsy Form alities requireme nts the exceptiony

Commerc ial agreeme nts: y RussianFederationy USA Statute of Frauds C ontracts over $500 in value


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Co ntract fo rmati o n an d v ali d ityy In most legalsystems the f orm ation of contract is analysed into a

construction of off er and acceptancey Consensus between the par ties reached where the off er and

acceptance mirror each other

A rticle 11. Formation and validity of contracts(1) In the context of contract formation, u nless otherwise

agreed by the parties, an offer and the acceptance of anoffer may be expressed by means of data messages.Where a data message is u sed in the formation of acontract, that contract shall not be denied validity orenforceability on the sole gro u nd that a data messagewas u sed for that p u rpose.


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W e b tra d ers site: Off er?y Issue not reso lved in the UN Model Law l ocal law to

determ iney No provision in SA ECT Act, because commo n law

pro

vision

sad

equat

ey Off er ings on website not to be regarded as an off er, but simply

an invitation to do business.y Response by customer to the website to be considered an off er

which can be accepted or re jectedy Approach f ollowed in most legal systems , but there are

exceptions Turkish law


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W e b tra d ers site: Off er?y UN ECE ApproachA rticle 11 Inv itations to make offersA proposal to conclude a contract made through one or more

electronic comm unications which is not addressed to oneor more specific parties , but is generally accessible to par ties making use of inf orm ation systems , includingproposals that make use of interactive applications f or the placeme nt of orders through such inf orm ation systems , is to

be considered as an in v itation to make offers , unless it clearly indicates the intention of the par ty making the proposal to be bound in case of acceptance.


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W e b tra d ers site: C ertaint yy Practical prob lems in the past:

y UK example: correc t special off er; website overr un with ordersy Hong Kong example: automated website; incorrec t pricing;

cer tain unscrupulous buyers placing huge ordersy Web trader can determ ine the conditions on which contracts

be concluded on the websitey Standard term stipulating website constitutes only an invitation

to do business; contract only concluded when order acknowledged and payment confirme d

y Escape clauses providing f or:y Insufficient stocky Mistakes on the website


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Co ntract fo rmati o n an d v ali d ityA rticle 12. Recognition by parties of data messages(1) A s between the originator and the addressee of a

data message, a declaration of will or other

statement shall not be denied legal effect,v

alidityor enforceability solely on the gro u nds that it is inthe form of a data message.

Reiterates the pr inciple stated inAr ticle 5


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Co ntract fo rmati o n an d v ali d ityA ttrib u tion of messagesArticle 13. Attri bution of datamessages (1) A data message is that of the or iginator if it was sent by the

or iginator itself . (2) As between the or iginator and the addressee , a data message is

deeme d to be that of the or iginator if it was sent: (a) by a person who had the author ity to act on behalf of the

or iginator in respect of that datamessage; or

( b)

b

y an inf orm

ation

system

pro

gramme

d b

y,or

on

behalf

of, th

e or iginator to operate automatically, unless it is proved that the

that the inf orm ation system did not proper ly execute suchprogramm ing.


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Time an d place of co ntracty Impor tance of esta blishing time and place

y Form al validity at the place of conclusiony Factor in determ ining applica ble legalsystem su bstantive

validityy Factor in determ ining jurisdictiony Directly applica ble legislation such as consumer pro tection

legislationy Lia bility f or payment of interes ty Determ ination of time limits f or

y Term ination of time f or acceptance, options or reso lutive conditionsy W ithdrawalof off ersy Perf orm ance


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Time an d place of co ntracty Diff erent theore tical and practical approaches to determ ine

where and when a contract comes into existence:y General rule and direc t f orms of comm unication

y Information theory

:wh

en and wh

ereth

e off

eror rece

ives

notice of the acceptance and takes actual notice of that facty Exception used in cases of indirec t means of comm unication

y Reception theory : when and where the off eror rece ives notice of the acceptance, but no need f or su b jective knowledge

y Despatch or postal theory : when and where the off eree despatches the acceptance


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Practical Ex ample: Time an d Place

Consumer

Serb ia

Web trader

South

Af rica

Ser ver India

VISA Serb iaVisa South Af r ica


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TimeA rticle 15. Time and place of dispatch and receipt of data messages(1) Unless otherwise agreed between the or iginator and the addressee, the dispatch of a

data message occurs when it enters an information system o u tside the controlof the originator or of the person who sent the data message on behalf of the or iginator.

(2) Unless otherwise agreed between the or iginator and the addressee, the time of receipt

of a datamessage is determ ined as f ollows: (a) if the addressee has designated an information system f or the purpose of rece ivingdata messages, rece ipt occurs:

(i) at the time when the data message enters the designated information system ; or (ii) if the data message is sent to an inf orm ation system of the addressee that is not the

designated information system , at the time when the data message is retrie ved bythe addressee;

( b) if the addressee has not designated an inf orm ation system , receipt occ u rs when thedata message enters an information system of the addressee .

(3) Paragraph (2) applies notwithstanding that the place where the inf orm ation system is located may be diff erent f rom the place where the data message is deeme d to be rece ivedunder paragraph (4).


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PlaceA rticle 15. Time and place of dispatch and receipt of data

messages(4) Unless otherwise agreed between the or iginator and the addressee, a

data message is deeme d to be dispatched at the place where the or iginator has its place of b u siness , and is deeme d to be rece ivedat the place where the addressee has its place of business. For the purposes of this paragraph:

(a) if the or iginator or the addressee has more than one place of business, the place of business is that which has the closestrelationship to the u nderlying transaction or, where there is

no under lying transaction, the pr incipal place of business; ( b) if the or iginator or the addressee does not have a place of business,

ref erence is to be made to its habit u al residence .


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F o rmalitiesy Nee d f or f orm alities: Wr iting

y Legalcer taintyy Parol evidence rule in commo n law countriesy O b jective evidencey Consumer pro tection

y Nee d f or f orm alities: Signaturey Attri butiony Identificationy

Authenticationy Consenty Attestation


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F o rmalities: W riting A rticle 6. Writing(1) W here the law requires inf orm ation to be in wr iting, that

requireme nt is me t by a datamessage if the inf orm ationcontained there in is accessible so as to be u sable forsu bseq u ent reference .

(2) Paragraph (1) applies whether the requireme nt there in is inthe f orm of an obligation or whether the law simplypro v ides conseq u ences f or the inf orm ation not being in

writing

. (3) The provisions of this ar ticle do not apply to the f ollowing:

[...].


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F o rmalities: S ignatureA rticle 7. S ignat u re(1) Where the law requires a signature of a person, that requireme nt

is me t in re lation to a datamessage if : (a) a me thod is used to identify that person and to indicate that

person's appro val of the inf orm ation contained in the datamessage; and

( b) that me thod is as reliable as was appropriate for thep u rpose f or which the data message was generated or comm unicated, in the light of all the circumstances, including anyre levant agreeme nt.

(2) Paragraph (1) applies whether the requireme nt there in is in the f orm of anobligation or whether the law simply provides consequences f or the a bsence of a signature.

(3) The provisions of this ar ticle do not apply to the f ollowing: [...].


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F o rmalities: S ignature EC T ActS A ECT A ct: 13 S ignat u re(1) Where the signature of a person is req u ired by law and such law does not specify the

type of signature, that requireme nt in relation to a datamessage is me t only if anad vanced electronic signat u re is used.

(2) Su b ject to su bsection (1), an electronic signature is not without legal f orce and eff ectmere ly on the grounds that it is in electronic f orm .

(3) Where an electronic signature is req u ired by the parties to an electronic transactionand the parties ha ve not agreed on the type of electronic signature to be used, thatrequireme nt is me t in re lation to a datamessage if-(a) a me thod is used to identify the person and to indicate the person'sappro val of the inf orm ation comm unicated; and( b) havingregard to all the relevant circumstances at the time the me thod was used,the me thod was as reliable as was appropriate for the p u rposes f or which the inf orm ation was comm unicated.

(4) Where an advanced electronic signature has been used, such signature is regarded as being a validelectronic signature and to have been applied proper ly, unless the contraryis proved.


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F o rmalities: Thir d part y attestati o nS A ECT A ct18 Notarisation, acknowledgement and certification(1) Where a law requires a signature, stateme nt or document to be

notarised, acknowledged, verified or made u nder oa th,that requireme nt is me t if the ad vanced electronic signat u reof the person a u thorised to perf orm those acts is attached to,incorporated in or logically associated with the electronic signature or data message.

(2) Where a law requires or perm its a person to provide a certifiedcopy of a document and the document exists in electronic f orm ,

that requireme nt is me t if the person provides a print-o u tcertified to be a tr u e reprod u ction of the document or inf orm ation.


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O ther fo rmal requirements19 Other req u irements...

(3) Where a seal is req u ired by law to be affixed to a documentand such law does not prescr i be the me thod or f orm by whichsuch document may be sealed by electronic means, thatrequireme nt is me t if the document indicates that it is required to be under seal and it includes the advanced electronic signature of the person by whom it is required to be sealed.

(4) Where any lawrequires or perm its a person to send adoc u ment or inf orm ation by registered or certified post or similar service, that requireme nt is me t if anelectronic copy of the document or inf orm ation is sent to the South Af rican Post Office Limited, is registered by the said Post Office and sent by that PostOffice to the electronic address provided by the sender.


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Aut o mate d co ntracts: F o rmati o ny Theore tical prob lems caused by automated contracts and

electronic agentsy Construing consent

y Off er and acceptancey Meeting of minds where there is no human inter vention?

y Reliance and similar doctr inesy Reasona ble inf erence to be drawn f rom the stateme nt made by

the other par tyy

Webs ite constitutes a stateme nty Abandonment of r ight to rece ive notice of acceptancey Estoppel or similar doctr ines


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Aut o mate d Co ntracts: M istakey Mistakes can occur in two ways:

y Hong Kong example: mistake on the websitey O bvious mistake (Hong Kong example) g oods usually priced $1,000

shown as $10.00y Non-obvious mistake g oods pr iced at $219 whereas it should have been

$291y Mistaken response by the customer

y Placingorder twice because the website was slowy Hitting the wrong key placingorder f or 100 items instead of 10

y No solution f or this problem in the UNCITRAL Model Lawy Amer ican and South Af rican solutions


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Aut o mate d Co ntracts: M istakeS A ECT A ct20 Au tomated transactionsIn an automated transaction-

(a) an agreeme nt may be f orme d where an electronic agentperf orms an action required by law f or agreeme nt f orm ation;( b) an agreeme nt may be f orme d where all par ties to atransaction or either one of them uses an electronic agent;(c) a party u sing an electronic agent to f orm an agreeme ntis, su b ject to paragraph (d), pres u med to be bo u nd by the terms of that agreeme nt irrespecti ve of whether that personre v iewed the actions of the electronic agent or the terms of the agreeme nt;


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Aut o mate d Transacti o ns20 Au tomated transactions ( S A ECT A ct)

(d) A par ty interacting with anelectronic agent to f orm an agreeme nt is notbo u nd by the terms of the agreeme nt u nless those terms were capable of being re v iewed by a natural person representing that par ty pr ior to agreeme nt f orm ation.(e) no agree ment is f orme d where a nat u ral person interacts directlywith the electronic agent of another person and has made a materialerror dur ing the creation of a datamessage and-

(i) the electronic agent did not provide that person with anopport u nity to pre vent or correct the error ;

(ii) that person notifies the other person of the error as soon as practica ble after that person has learned of it;

(iii) that person takes reasonable st eps, including steps that conf orm to the other person's instructions to return any perf orm ance rece ived, or, if instructed to do so, to destroy that perf orm ance; and

(iv) that person has not u sed or recei ved any material benefit orvalu e f rom any perf orm ance rece ived f rom the other person.


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Aut o mate d Transacti o ns U NECEA rticle 14 Error in electronic comm u nications1. W here a nat u ral person makes an inp u t error in an electronic

comm unication exchanged with the au tomated message system of another par ty and the automated message system does not provide the person with anopport u nity to correct the error , that person, or

the

party

on wh

ose be

half that perso

n was

acting, has the right towithdraw the por tion of the electronic comm unication in which the

input error was made if : (a) The person, or the par ty on whose behalf that person was acting,

notifies the other par ty of the error as soon as possi ble after havinglearned of the error and indicates that he or she made an error in the elec

tro

nic comm

unicati

on

;and( b) The person, or the par ty on whose behalf that person was acting, has

not u sed or recei ved any material benefit or valu e f rom the goods or services, if any, rece ived f rom the other par ty.


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Aut o mate d A gents: Practical stepsy Web trader can take the f ollowing steps to pro tect itself f rom

consequences of mistake when making use of automatedsystems:y Ensure that customer assents to standard conditionsy Standard conditions to make provision f or mistakes on the

websitey P ro v iding a s u mmary of the transaction to the

cu stomer after the c u stomer has placed its order,

req u iring confirmation that the order is correcty Examples: airline tickets; amazon.com; banking transactions


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Inc o rp o rati o n of stan d ar d termsy Use of standard terms in trade generallyy Restr ictions in many countr ies validity will depend on the

applica ble legal systemy

Incor poration by ref erence clickwrap

M L A rticle 5 bis. Incorporation by referenceInf orm ation shall not be denied legal eff ect, validityor

enf orce a bility solely on the grounds that it is not contained inthe data message purpor ting to give r ise to such legal eff ect, but is mere ly ref erre d to in that datamessage.


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Inc o rp o rati o n of stan d ar d termsS A ECT A ct11 Legal recognition of data messages(3) Inf orm ation incorporated into an agreeme nt and that is not in the

pu blic domain is regarded as having been incorporated into a datamessage if such inf orm ation is-(a) ref erre d to in a way in which a reasonable personwo u ld ha ve noticed the ref erence there to and incorporationthereo f ; and( b) accessible in a form in which it may be read, storedand retrie ved by the other par ty, whether electronicallyor as acomputer printout as long as such inf orm ation is reasona blycapa ble of being reduced to electronic f orm by the par tyincorporating it.


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Applica b le legal s ystemy Determ ined by the rules of pr ivate inter national lawof the

legal system where the litigation is taking placey Serb ian cour t will apply Serb ian PIL rules

y Most systems reco gnises par ty autonomy th e par ties candeterm ine which legal system will apply by agreeme nt

y Practically, the webtrader can determ ine this in its standardterms of agreeme nt.y Restrictions imposed by national legislation, directly applica ble

legislation and consumer pro tection legislation


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J uris d icti o ny Jur isdiction is the power of a cour t to adjudicate upon,

determ ine and dispose of matter invested in it by lawy The law that determ ines jur isdiction is the domes tic national

law of the cour t or cour ts where procee dings may potentially be initiated.

y Plaintiff / Claimants choice y Traditional grounds of jur isdiction:

y

Su bmission p rior agreeme nt or at the time of litigationy Residence and the def endant/res pondenty Where the cause of action arose


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J uris d icti o ny Extended grounds of jur isdiction

y Attachment of goodsy Presence in the cour ts area of jurisdictiony Ownership of land

y European the Consumer Contracts Regulation of 1999y Contracts with consumers in its area of jurisdiction


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Internati o nal Co ntractsVienna Convention f or the Inter national Sale of Goo ds 1980

(CISG)A rticle 13For the purposes of this Convention writing includes telegram and

telex .UNECE Article 9. Form requirements2. Where the law requires that a comm unication or a contract should

bein w

riting,

orp

rovid

es co

nse

quen

cesf or

the

a bse

nce

of awriting, that req u irement is met by an electronic

comm u nication if the inf orm ation contained there in is accessi ble so as to be usa ble f or su bsequent ref erence.


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H arm o nisati o n: U NECEObjects of the Con ventiony N oting that the increased use of electronic communications improvesthe

efficiency of commerc ial activities, enhances trade connections andallows new access oppor tunities f or previously remo te par ties andmarkets, thus playing a fundamental ro le in promo ting trade andeconom ic development, both domes tically and inter nationally,

y C onsidering that problems created by uncertainty as to the legal valueof the use of electronic comm unications in inter national contracts constitute anobstacle to inter national trade,

y C onvinced that the adoption of uniform rules to remove obstacles tothe use of electronic comm unications in inter national contracts, including

obstacles that might result f rom the operation of existing inter nationaltrade law instruments, would enhance legalcer tainty andcommerc ialpredicta bility f or inter national contracts and help States gain access to moder n trade routes,


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Co nclusi o ny Harmo nisation to be welcome dy Acceptance of the Model Law by a significant number of

countr iesy F

uture

of th

e UNE

CE

uncer

tain as

yet i

mp

ortant t

ogetharmo nised approach to electronic comm unications in a

number of inter national conventions

laws of ecommerce presentation

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