Content

2. Content • Introduction • Cyberspace Contracting • Formation of contract • Types of contract • E-contract • E-Signature • E-licensing • Digital signature Information Technology Law

3. Terms of contract • The UK Unfair Terms in Consumer Contracts Regulation 1999 • Withdrawal from a contract Information Technology Law

4. Introduction • Foundation on which commercial law rests. • Q: whether cyberspace can fit into the tangible physical infrastructure or which the laws of contract existing today have been built? • Contracts Act 1950 (Act 136) - the governing legislation relating to contracts in Malaysia Information Technology Law

5. Terminology • "Offer" ("proposal") = when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence This person is called the "promisor" ("offeror") • When the person to whom the proposal is made “promisee” (“offeree”)] signifies his assent thereto, the proposal is said to be accepted, and the proposal when accepted constitute a promise. Information Technology Law

6. Terminology • Every promise and every set of promises forming the consideration for each other is an "agreement", and every agreement enforceable by law is therefore a "contract" • 3 most fundamental requirements of a cyber contract: • Offer • Acceptance • Consideration • Other: intention to create legal relation Information Technology Law

7. Offer • Offer vs Invitation to Treat • Carlill v Carbolic Smoke Ball Co – distinction between offers and advertisements (not being intended to create any obligations) • Eg. price list and catalogue - an attempt to induce offers, and not an offer itself (Spencer v Harding). • Price tag on articles on display in a shop (Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) Ltd) Information Technology Law

8. Thus… • Goods advertised over a particular web-site with the prices for each of them placed beside them - merely advertising their wares and not an offer [Webber v Jolly Hotels (US case)] • Web-site offers on-line shopping facilities - "virtual shopping basket". • Q: can an offer be made to the world at large, especially where specific instructions are given as to the manner of acceptance? Information Technology Law

9. Acceptance • Acceptance: An offeree who receives an offer must "signify his assent thereto" in order for that offer to be converted into an agreement • Qualifications of valid acceptance: • "absolute and unqualified“ • "must be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted". (*can be inferred from the words or conduct of the offeree). Information Technology Law

10. Acceptance • Acceptance vs. counter offer • Assent must be conclusive and unreserved, otherwise it is a counter offer. • Counter offer is a new offer, have an effect of destroying the original offer (Hyde v Wrench) • Battle of Forms • Electronic data interchange (EDI) – normally conducted between trading partners who have negotiated a trading arrangement. Parties contact each other via computers and carry out human entered instructions and orders • Open system -business communicate with each other via www Information Technology Law

11. Clickwrap Agreements • Online consumer after browsing a particular web site for goods may decide to enter into a purchase • Terms and conditions of the purchase – deemed read if you "sign" the contract by click “I accept” button [L'Estrange v Graucob - one deemed to have read the contact when you signed the contract] • Web-site disclaimers • Issue in click wrap agreement is how to ensure that the conditions to the contract were clearly brought to the attention of the online consumer before the conclusion of the contract Information Technology Law

12. Communication of Offer & Acceptance • An offer is considered as having been made when it comes to the knowledge of the recipient [s.4(1)] • An acceptance is complete as against the offeror when it is put in a course of transmission to him, so as to be put out of power of the offeree [s.4(2)(a)] • An offer is accepted as against the offeree when the acceptance comes to the knowledge of the offeror [s 4(2)(b)] Information Technology Law

13. Communication of Offer & Acceptance Postal rule - acceptance by post or telegram General rule: acceptance must be communicated before the promise can take effect Exception: notification of acceptance by post or telegram Adams v Lindsell Facts: 2/9/1817: Doffered to sell to P by a letter a certain quantity of wool, and added "receiving your answer in course of posy If the letter had been properly directed, an answer might be received by 7th

14. Communication of Offer & Acceptance 5th: P received and posted their acceptance but was not received by D until 9th, 8th: D sold to another. P sued for breach.

15. E-mails (Electronic Mail) Most common form of communications over the internet Complex process of sending an e-mail –servers (local and outside) Q:whether an e-mail is considered as being instantaneous ? Entores Ltd v Miles Far East Corporation Brinkibon v Stahag Stahl und StahlwarenhandelGmbH Courts held that communications via telex were instantaneous and therefore postal rules did not apply

16. Communication of Revocation of Offer & Acceptance • Communication of revocation is complete as against the person who makes it when the revocation is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it [s.4(3)(a)] • Communication of a revocation is complete as against the person to whom it is made when the revocation comes to his knowledge [s.4(3)(b)] • The provisions in s.4(2)(a) & s.4(3)(a) supports the "postal rule" propounded in Adams v Lindsell for delayed communications Information Technology Law

17. Contracting parties • Capacity of parties: s.10 - competent person & s.11 - age of majority. • Authentication process - digital signature • Capacity of minors • S.69 - necessity agreement Electronic agents • Thornton v Shoe Lane Parking Ltd – a machine can act as agents for contracting parties Information Technology Law

18. Uniform Computer Information Transactions Act • A model state law that provides uniform and comprehensive rules for contracts involving: • computer information transactions • software licenses • information licenses Information Technology Law

19. Uniform Computer Information Transactions Act (continued) • The UCITA covers the following aspects of licensing information rights: • Formation of a contract • Authenticating the record • Attribution procedure • Performance • Warranties • Breach of license agreements • Limitations of remedies Information Technology Law

20. Electronic Mail • E-mail is a widely used application for communication over the Internet. • Electronic writing • Unique identifying address • Allows for instantaneous communication around the world Information Technology Law

21. E-Contracts • E-mail is sometimes the method used to negotiate and agree on contract terms and to send and agree to the final contract. • Assuming that all of the elements to establish a contract are present, an e-mail contract is valid and enforceable. Information Technology Law

22. E-Contracts Writing Requirements • Electronic Signature in Global and National Commerce Act • Electronic contracts meet the writing requirements of the Statute of Frauds. • Electronically signed contracts cannot be denied effect because they are in electronic form and are stored and delivered electronically. Information Technology Law

23. E-Signatures • Electronic Signature in Global and National Commerce Act • Recognizes electronic signatures • Same force and effect as pen-inscribed signature on paper • Allows for verification of digital signatures Information Technology Law

24. E-Licensing • The Uniform Computer Information Transactions Act (UCITA) governs the creation, performance, and enforcement of computer information transactions. • Some states have adopted UCITA. • Other states are applying state law and equity principles. Information Technology Law

25. Licensing • Intellectual property and information rights are valuable assets of individuals and businesses. • License – a contract that transfers limited rights in intellectual property and informational rights. Information Technology Law

26. Licensing (continued) • Licensor – The owner of intellectual property or informational rights who transfers rights in the property or information to the licensee. • Licensee – The party who is granted limited rights in or access to intellectual property or informational rights owned by the licensor. Information Technology Law

27. Exclusive License • A license that grants the licensee exclusive rights to use informational rights for a specified duration. Information Technology Law

28. Licensing Agreement Licensor License transfer of rights in intellectual property or information) Licensee Information Technology Law

29. Licensing Agreement (continued) • Detailed and comprehensive written agreement between the licensor and licensee. • It sets forth the express terms of their agreement. Information Technology Law

30. Breach of Licensing Agreements • The parties to a contract for the licensing of information owe a duty to perform the obligations stated in the contract. • If a party fails to perform as required, there is a breach of the contract. Information Technology Law

31. Breach of Licensing Agreements (continued) • Licensee’s refusal of defective tender • Licensee’s revocation of acceptance • Adequate assurance of performance Information Technology Law

32. Remedies • The UCITA provides various remedies that injured parties can obtain against breaching parties. • Cancellation • Licensor’s damages • Licensor’s right to cure • Licensee’s damages • Specific performance Information Technology Law

33. Limitations of Remedies • The UCITA provides that the parties to an agreement may limit the remedies available for breach of the contract. • Limitation of remedies in licenses subject to the UCITA are enforceable unless they are unconscionable. Information Technology Law

34. Digital Signature • The number of transactions require a signature in order to be legally effective. • Clearly, however a traditional manuscript signature is not feasible where the parties communicate trough the internet. Digital communication technology requires methods of signature which are very different from the manuscript signature. Information Technology Law

35. Digital Signature (cont) There are two possibilities of signatures: • The incorporation of a scanned image of a manuscript signature into a word processing file, followed by the sending of that of that document as an e-mail attachment. • The signature of an electronic document by means of a mathematical process.This ‘electronic document’ is a set of number or code which represents text or other information. This is what we call digital signature. Information Technology Law

36. What is a digital signature for? 1.For identification • Signature shown the identity of the signatory • That the signatory intended the signature to be his signature • That the signatory approves of and adopt the contents of the document. Information Technology Law

37. 2.For security and privacy purposes. • The sender of the message will be ensured that the recipient is intended person and nobody can read the message or change it. • For privacy purposes-whereby many pele do not want others to read the message • The integrity and privacy of information protected Information Technology Law

38. 3.For Legality • The enforce the signatory’s legal obligations, the recipient of the document needs to prove that the signatory has signed the document • The signature can prove that the signatory approves and adopt the document and it can create legal obligation on him Information Technology Law

39. Therefore, in order to encourage electronic transactions and curb forgeries and computer-generated fraud, digital signature Act has been legislated in a number of country including Malaysia • The law provides the legal infrastructure and make digital signature effective and it gives a recognition to digital signature. Information Technology Law

40. Term of Contracts • Business to consumer transaction • Business to business transaction • Contract is defined as "an agreement enforceable by law" which is legally binding between the parties. • No provisions which deal specifically with contents of contract in Contracts Act 1950. • Contractual terms: express or implied • Conditions or warranties. Information Technology Law

41. Incorporating terms and conditions intocontracts made over the internet • Q: how to present the terms and conditions to the users, where the users must be given the opportunity to read and agree to these terms and conditions? • Giving user opportunity to find the terms • Well marked and prominent link to terms and conditions • Giving user opportunity to read terms and conditions before he can go on to accept or make an offer and to ensure that he cannot proceed without acknowledging that he has read the terms Information Technology Law

42. Validity of terms of an online contract • Terms unseen - bound? • ProCD v Zeidenberg (US): shrinkwrap licence contract - so long as the person purchasing the software had noticed at the time of purchasing, that such purchase was subject to certain terms of contract that were contained on the inside of the carton containing the software, such person was bound by the terms of the unseen contract. Information Technology Law

43. Clickwrap agreement • Hotmail Corporation v Van Money Pie Inc • Validity of clickwrap contract - by clicking the "I agree" button after being presented with an opportunity to view the terms of service on the page where the details of the contract are listed, the parties bind themselves to a contract under the terms contained in that webpage. Information Technology Law

44. Presenting terms and conditions of theonline contract to customer/user • See the selected web sites of selected • Malaysian companies and their legal implications • Asiatravelmart Sdn Bhd - www.asiatravelmart.com • Malayan Banking Berhad - Online Banking at www.mavbank2u.com • Compaq Computer Corporation - www.compaq.com.my • Dell Computer Corporation (Malaysia) – www.dell.com.my Information Technology Law

45. The UK Unfair Terms in Consumer Contracts Regulations 1999 • Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999 No 2083) provide that a term which has not been individually negotiated in a consumer contract is unfair (and hence non-binding on the consumer) if, contrary to the requirement of good faith, it causes a significant imbalance in the rights and obligations of the parties to the detriment of the consumer. • Under the Regulations, the Office of Fair Trading (OFT) has an obligation to consider any complaint made to it about the fairness of any contract term drawn up for general use. OFT may seek assurances and, if necessary, injunctions against those using terms which it considers to be unfair. Certain other named bodies are also empowered to seek injunctions against unfair terms. Information Technology Law

46. DISTANCE CONTRACTS • A contract concluded by a means of communication and if there is no personal contact between the trader and the consumer, is a long distance contract. In particular, this means a purchase made by the use of telephone, radio, computer, facsimile, or television or the delivery of addressed or unaddressed printed matter, including a catalogue or a standard letter, to a consumer, or press advertising with an order form. Information Technology Law

47. What should one know when making a purchase? • the following information (as a minimum) must be made available to the consumer before entering into distance contracts: • the name and address of the supplier; • the main characteristics of the goods or services; • the price of the goods or services, including taxes and other components of the price and the amount thereof; • the amount of the postal charges, transport costs, and taxes which are not included in the price; Information Technology Law

48. the procedure for payment for the goods or services, the circumstances relating to delivery of the goods or provision of the services, and the performance of the contract; • the consumer's rights of withdrawal according to the law. Information Technology Law

49. Withdrawal from contract • A consumer may withdraw from a distance contract within fourteen days. In the case of goods, the term shall commence as of the day on which the consumer receives the goods, and in the case of services, the term shall commence as of the date of entry into the contract. The consumer is not required to provide any justification whatsoever when returning the goods. Information Technology Law

50. If the trader has failed to inform the consumer of his right of withdrawal (for example this information was not presented in ordering terms), the consumer may return the ordered item to the trader within 3 months as of the date on which the consumer receives the goods. Information Technology Law