Contracts in the Electronic Communications Convention

1
Contracts in the Electronic Communications
Convention

• John D. Gregory
• 3 October 2008

2
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

3
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

4
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

5
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)

6
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

7
Whats 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
  cctld country code top level domain)

8
Whats the difference?

• 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 partys place
  of business

9
Whats the difference?

• 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.

10
Whats the difference?

• 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)

11
Whats the difference?

• 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

12
Whats the difference?

• 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

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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?

14
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?

15
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 partys intention re the
  information
• Method must be as reliable as appropriate in the
  circumstances, or proved to have fulfilled these
  functions

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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

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Form Requirements - Writing

• The Conventions 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 vanishes for e-commerce (where
  does that lead this debate?)

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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

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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)

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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

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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)