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Electronic Commerce

Electronic Commerce. What is it? What regulates it?. What is a contract?. A legally binding agreement between two or more people or organisations Terms of a contract may be expressed in writing or orally, implied by conduct, industry custom, and law or by a combination of these things.

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Electronic Commerce

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  1. Electronic Commerce What is it? What regulates it?

  2. What is a contract? • A legally binding agreement between two or more people or organisations • Terms of a contract may be expressed in writing or orally, implied by conduct, industry custom, and law or by a combination of these things

  3. Elements of an Enforceable Contract • Offer • Acceptance • Consideration • Intention to create legal relations • Legal Capacity

  4. Standard Elements • Most contracts contain: • Identification of the parties • Description of subject matter • Price, delivery, payment • Warranties, liabilities, dispute resolution • How orders are placed • Record keeping, audit trails • Security, format, authentication of messages • When and where messages sent/received • Responsibility for lost/garbled messages • Law governing the transaction

  5. Formation of Contract • By Email • By Click Wrap

  6. Invitation to Treat • Pre-Internet doctrine • See, eg, Fisher v. Bell [1961] 1 QB 394 per Lord Parker:“the display of an article with a price on it in a shop window is merely an invitation to treat”

  7. Mistake • Also pre-Internet • Common, mutual and unilateral varieties. • If a seller makes a mistake (unilateral mistake) a court may set aside the contract. • Key question - did the buyer know/ought to have known of the mistake?

  8. Applications to E-commerce • Kodak • Argus • Amazon.co.uk • All three companies advertised products at a mistaken price. Kodak eventualy honoured ‘contracts’ whereas the others didn’t

  9. Case-Study: Kodak • Early 2002, Kodak.co.uk advertised a digital camera for £100 (normally £329) • Denied contracts had been formed: • Standard terms on site • Defence of mistake • Was only invitation to treat • Buckled under pressure and honoured contracts

  10. Case-Study: Argos • Late 99, Argos.co.uk offered a Sony TV Set for £3. By the time mistake discovered, £1 million of orders had been made, one person ordering 1700 sets alone. • Did not honour contracts.

  11. Case Study: Amazon • Early 2003, Amazon.co.uk offered a HP iPaq H1910 for £7.32 (not £287) • At midday, pulled entire store • Amazon referred people who had ordered to Conditions of Use governing contract formation

  12. Electronic Contracts

  13. Electronic Transactions Acts (ETAs) • Cth Electronic Transactions Act 1999 • Affects operation of all Cth laws • NSW Electronic Transactions Act 2000 • Affects operation of all laws in force in NSW (written or not), except Cth laws - broader effect • Other States/Territories similar • Based on UNCITRAL Model Law 1996 (UN Commission on International Trade Law)

  14. Principles • 2 Principles guided 1998 Expert Group report • Functional equivalence • electronic transactions treated same as paper-based • Technological neutrality • no discrimination favouring any particular technologies • Eg No special provision for PKI-based signatures • Sneddon: a ‘facultative’ law, making electronic transactions as legally effective as others • Contrast more ambitious legislation • EC Directive on electronic signatures (1999) • Hong Kong Electronic Transactions Ordinance

  15. Electronic contracts at common law • Most contracts do not require writing • But ETAs are particularly helpful where they do • No general rule requiring signatures • but party enforcing otherwise has evidentiary burden that the other party was aware of terms and agreed to them • Many forms of ‘signature’ have been accepted • intention to agree and authenticate needed • Many possible disputes (eg ‘click-wrap’)

  16. Effect of Acts • (ET/ EC = electronic transaction / communication) • validity of ETs generally (Cth s8, NSW s7); • electronic satisfaction of legal requirements: • for writing(Cth s9, NSW s8), • for signatures (Cth s10, NSW s9), • for production of documents (Cth s11, NSW s10) • for retention of documents (Cth s12, NSW s11); • when/where ECs are deemed to be dispatched and received (Cth s14, NSW s13); • to whom ECs shall be attributed (Cth s15, NSW s14).

  17. Cth Agencies • Transactions not with Cth agencies - other party must consent to form of communication • Cth govt entities must accept ET • But may specify the form of communication • No similar special provision re NSW agencies

  18. Storage of electronic records • ETA allows electronic records to be kept • Records must be kept under: • Proceeds of Crime Act 1987 (Cth) • Income Tax Assessment Act 1936 (Cth) • EFT Code of Conduct

  19. E-Commerce Best Practice • Fed Govt best practice guidelines: • http://www.ecommerce.treasury.gov.au • Not force of law, but merely guidelines. Includes

  20. Consumer Protection

  21. Trust and Confidence • How do sites enhance the trust of their customers? • Money back guarantees (eg Amex, Powells) • Seal/Tick programmes (ie IIA’s Family Friendly ISP seal) • Provide information (eg Amex, NineMSN)

  22. Policy Framework • Australia has a policy framework for consumer e-commerce issues. • ContractETAs mirroring UNCITRAL provisions • PaymentEFT Code of Conduct • ConductIIA Codes of Practice

  23. Consumer Credit Code • Uniform Consumer Credit Code applies to consumer credit transactions, mirror legislation is in every state. • http://www.creditcode.gov.au

  24. Trade Practices Act • TPA 1974 (Cth), applies generally to coporations not individuals • Will: • Imply terms and conditions into transactions • Prohibit unconscionable conduct and contracts • Prohibit misleading or deceptive conduct

  25. Australian Codes of Conduct • EFT Code of Conduct • Smart Card Code of Conduct • Telecommunications Codes • Internet Industry Association Code • ADMA Code of Practice • Federal Govt’s Model Code

  26. EFT Code of Conduct • Electronic Funds Transfer Code of Conduct • Voluntary, but popular and widely adopted • Covers ‘electronic transfers of value’ • See ASIC website

  27. Smart Card Code • Asia Pacific Smart Card Forum Code of Conduct • Published 1997 • Has compliance logo

  28. Telecommunications Codes • Australian Communications Industry Forum developing codes under the Telecommunications Act 1975 (Cth)

  29. IIA Code of Conduct • Internet Industry Association has a number of codes • Relevant to consumer protection is the Content Regulation Code

  30. ADMA Code • Australian Direct Marketing Association Industry Code of Practice (2000) • Contains short section on electronic commerce

  31. Cth Model Code • Repeats the text of OECD Guidelines on Ecommerce • A “Virtual Code”

  32. International Regimes • EU Directive “on the protection of individuals with regard to the processing of personal data and on the free movement of that data” • OECD Guidelines on Consumer Protection in Electronic Commerce

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