Practical Problems in Internet Negotiation: Insights from a Company Lawyer

1. Practical problems arising in Internet negotiation. The view of a company lawyer Turin 6 June 2008 Giuseppe Catalano

2. An agreement between two “distant” parties • For an Italian lawyer an agreement entered into by means of two pcs linked on the net essentially arises two kinds of problems concerning the agreement itself and its form • From an Italian point of view, the agreement is entered into by two “distant” parties, as it normally happens with slower means (e.g., “normal” mail) • Cruciality of exchange proposal/acceptance  what about the legal qualification of an interactive catalogue (e-shop) on the webpages of the seller?

3. An e-shop under the Italian rules • One of the usual questions for an Italian lawyer: is the e-shop page an offer to the public (art. 1336 c.c.)… • …or is it an invitation to offer? • Practical difference is that in the first case the declaration of the purchaser “closes” the contract, while in the second case it is just a proposal • The binding effect on a “social plan” happens when the purchaser provides indication of the means of payment and gives the definitive “send”.

4. Knowledge and “knowability” • Art.1326 of the Italian civil code  the contract is entered into in the time and on the place where the (electronic message of) acceptance arrives to the offering party • Our system does not require the effective knowledge of the acceptance but just its possibility of knowledge • A declaration sent by e-mail will play its effects as it arrives to the addressee’s mailbox (see Art. 12 of the Regolamento sulla firma elettronica, Decree No. 513 of1997), independently from the effective reading by the latter

5. The new Italian regulation Italy has always been ready to regulate the world of “digital” contracts and related legal issues Article 15 of Law 15 March 1997, No.59, established validity and enforceability of acts, data and documents “made” by public administration and private citizens by way of electronic instruments, contracts entered into in the same forms and their transmission with electronic instruments Afterwards several new rules have been introduced by the Italian legislator in order to regulate the “digital” world In particular, Legislative Decree 7 March 2005, No. 82, named “Code of Digital Administration”, regulates digital documents as well as electronic signatures.

6. Rules introduced in the Consumer Code • Negotiations by means of pc’s and electronic webs are regulated by the Consumer Code entered into force with Legislative Decree 6 September 2005, No. 206 • In the Consumer Code it is also included the text of Legislative Decree No. 185 of 1999 which implemented Directive 1997/7/CE as well as the text of Leg. Decree No. 70 of 2003 which at its turn implemented Directive 2000/31/CE (the so-called “electronic commerce directive”)

7. Rules introduced in the Consumer Code (cont.) • Again, it is confirmed that contracts entered into by two persons linked by an electronic line are fully valid and enforceable in Italian law… • [some doubts arose some time ago for the use of telex and telefax…] • Electronic contracts are a species of a greater genus called “distance contracts”, regulated by Article 50 and seqq… • …and defined as the contracts entered into between a professional and a consumer under an organised distance sales or service-provision scheme run by the supplier, who … makes exclusive use of one or more means of distance communication 6

8. Net as a sample of means of distance communication… • In the Consumer Code, definition of means of communication makes reference to any kind of means which, without the (physical) presence of the supplier and the consumer in the same place at the same time, may be used for the conclusion of a contract between those parties • When I was a student, the typical example was the use of letters to enter into a “distance agreement” • Now, the example is the use of the electronic mail… and/or Internet • …which poses interesting questions on certain issues, e.g. on the possibility to revoke the acceptance with “faster” means. 7

9. … with certain consequences • A number of consequences arises from this qualification (see G. Pascuzzi, Il dirittodell’eradigitale, Bologna, 2006): • Iuspoenitendi a period of ten business days recognized to the consumer to withdraw from a contract without incurring in any penalty to be paid nor any reason to be provided (Article 64 of the Consumer Code) • Several pieces of information to be provided to the consumer (Article 52), among which: • The identity of the seller; • Main characteristics of goods and services on sale; • The existence itself of the right of withdrawal 8

10. … and certain other consequences • A number of other consequences arises too (Article 53): • A written confirmation to be provided to the consumer … • … or, at request of the latter, confirmation “in another durable medium available and accessible” … • Of the information in Article 52 … • …and other information, among which “the professional against whom the consumer may bring claims”… • … And “information about after-sales services and existing guarantees” 9

11. … and certain other consequences (cont.) • But… • Said provisions “shall not apply to services which are provided via some means of distance communication”, • With the only exception of the ability for the consumer to obtain the address of the professional to which complaints may be addressed 10

12. More care for the consumer Article 12 of Legislative Decree 70 is alive and kicking! The supplier shall also provide in a clear, understandable and inequivocabile way, before dispatch of the order by the addressee, the following information: the various technical phases to be followed for the entering into of the agreement; the way in which the entered-into agreement will be archived and the related way of access; the technical means which are available to the addressee in order to discover and amend any mistake in inserting data before dispatch of the order to the supplier; any code of conduct which it adheres to and how to access to it by electronic way; available languages other than Italian to enter into the contract; indication of ways of resolving disputes. 11

13. Unsolicited supply and competent venue • Another way of guaranteeing a “distant consumer” • Prohibition of supplying goods and services without receiving orders for said supplies • ... But only in cases involving requests for payment! • Consequently, no requests of payment for unsolicited supplies ... • ... and the impossibility to consider a lack of response as a consent • With a rule superseding the current rules of procedure, the competent venue shall be the place of domicile or residence of the consumer in Italy

14. A different approach to a different relation • Said rules apply in “B2C” relations... • What about “B2B”? 13

15. The Electronic (Informatico)Document Article 20 of Legislative Decree No. 82/2005 (as amended in 2006) refers to the electronic (informatico) document This document, made by anybody, or registration on electronic support and transmission with electronic means are valid pursuant to the law, if made pursuant to the code and to the technical rules. A recently-introduced paragraph tells that suitability of the electronic document to satisfy the requisite of the written form is “liberally valuable during a procedure”… … bearing in mind objective characteristics of quality, safety, integrity and impossibility to modify it. 14

16. A common approach • Legislation concerning “distant documents” focuses on the pre-contractual information to be provided to the consumers • It is an approach which becomes more and more usual in Italian legislation – see the law concerning commercial franchising • Means are not important themselves, but as an easier way to access to the consumer • But … exigencies in relations between professionals are not so different! 15

17. A common approach (cont.) • … in the sense that it is important to focus on how to pre-build the enforceability of an electronic documents… • Remaining issues are not a problem to be solved in a different way from any other document, e.g. powers of representing the company • The only issue is not to have any dispute on the legal enforceability • An order sent by electronic mail may be considered as a part of a larger legal context between parties… • A confirmation in a master agreement ?? 16

18. Thank you Giuseppe Catalano giuseppe.catalano@indesit.com 17