Electronic Contracts Modernization

Question: Discuss about theElectronic Contractsfor Modernization. Answer: Introduction With the advent of modernization, contract by electronic means such as emails or online transaction have become very common. There are commercial in nature and form an agreement between the parties that is concluding and binding. Contract through emails have observed a recent judicial trend which indicate that it is necessary to maintain caution while dealing with negotiations that are made through the way of emails. Another aspect that is highlighted in the cases which involve contract through email are that the language to be used should be clear and decisive so that there is clear evidence of what is purported to be achieved by the person, whether he wishes to be bound by the contract or not.[1] The case of Vantage Systems[2] provide with the judicial trend which accepted the formation of electronic contract by the method of emails. It was held in the Stellard Pty Ltd Anor v North Queensland Fuel Pty Ltd[3] case that when the agreement has been concluded electronically between th e parties, a contract would only be a formality. Other than contract through emails there is also an emergence of business through activities which take place online. The impact that internet has had on the success of any business in the current time is huge. Thus, it is not possible to avoid it as in various transactions it has become a mode of conducting the business. The increase in e-commerce or electronic commerce is the main reason behind the increase in contracts which are electronically formed. It is essential to understand that only because the transaction takes place online does not mean that there would be any change that would be made in contract law.[4] An electronic contract requires fulfillment of all the essential requirement which is required to form a contract that is valid, which is that there should be an offer and acceptance, a consideration that is attached to to it and legal intention to form a relationship that is binding and the legal capacity of both the parties that are contracting.[5] There are three mai n categories under which the online transactions may be classified primarily, the being the browse wrap, click through agreement and shrink wrap. The different steps particular to each of these contract are required to be followed to complete the formation of the contract. It is however, an established fact that internet has become an important aspect in the transactions that take place on day to day basis. Keeping this fact in purview the Electronic Transactions Act 1999 (Cth.) has been enacted by the Commonwealth Parliament.[6] The purpose which this legislation aims to fulfill is that there is foundation which is laid down for a legislative framework that exists nationwide for the e-commerce transactions. The law of contract, despite this legislation would still be applicable on such contracts. Though electronic contracts have certain advantages however aspects such as certainty and reliability are missing as compared to physical contracts which are signed by actual persons contract.[7] It is thus important for the individual who is receiving an electronic to ensure that the individual who has sent such a message can be relied upon. The necessity of verification should not arise. Further, issues are there with respect to security as well and electronic contracts generate large amount of data which may be misused. It is indicated through the offer in a contract the willingness which the person has for the formation of the contract which is within the purview of specific conditions and terms. No restriction has been placed on the number of type of people to which such offer can be made by the offeror. It is upon the offeror to decide whether the offer is to be made to one person, group of people or to the world at larged. The display of goods on a website is not an offer but only an invitation to treat. This is similar to the display of products in any other store. An offer will commence only when there is an action by the customer which occurs only after the website has been visited by the customer, the seller is not the one who makes the offer seller.[8] Simply because the goods have been displayed on the website it does not form an offer, hence it is essential that a communication is made by the customer for purchasing the products. Once there has been communication of the offer for purchase is made within the website will there be an offer. It is then upon the vendor to either accept this offer without any conditions and unequivocally or reject it. A communication of the same needs to be made, once the offer has been accepted there would be a binding contract. The UNCITRAL adopted the Model Law on 12th June 1996 in its 650th meeting, this was in turn adopted by the General Assembly on December 16th 1996 in its 8th Plenary Meeting vide its 51/162 resolution.[9] The Modern Law recognizes under Article 11 electronic contract. It is stated under this article that unless it has been otherwise agreed, the offer and acceptance of a contract can be conveyed electronically. Where an electronic contract has been formed the enforceability or validity of the same is not to be denied on the basis that it was by electronic means that such conveyance had been done. In an environment where online transactions take place the offer can be made through various modes, it can be either through a website or through emails. There is an offer and an acceptance which is easily identifiable in all the agreements which are to form eventually a contract. There, however, might be situation where the differentiation is not possible between an acceptance and an offer. In circumstances like there is a possibility that identification is not a possibility with certainty to whom, the offer had been made by and to whom such an offer had been made to be accepted. Although if an agreement is there and the parties had reached to the conclusion of such agreement, it is presumed that such a contract is a valid contract. Thus in e-contracts where sometimes it is difficult to determine the offeror and offeree it is important that the intention of the parties should be made clear. The terms of the contract are also required to be properly defined. The case of Smith v. Hughes[10] which was a landmark common law case Blackburn J. had explained that whatever is the individuals real intention, if the conduct had been such by the person that it would lead any reasonable man to believe in the terms that were being proposed and the same is asserted to another party and the party based on the belief that such terms are true enters into the contract, it would be then held that the individual has led the other party to the contract believe that they would be bound by such terms. It would then be opined that such party who has led to the other party believe that he would be bound by such terms would be bound by the terms as if he had agreed to them. There is difference that exists between an invitation to treat and an offer which can be converted to a valid and binding contract. If there an invitation to treat, it is treat which is given to make an offer, the negotiations are opened once such an offer has been made. It is an invitation which is given to the parties so that they may be able to make responses for negotiations and bargaining, these are covered under an invitation to treat. An invitation to treat is nothing but an advertisement however, on the other had an offer is made with an intention of entering into a contract that is legally valid. An offer cannot be revoked once accepted, however, it is not so with an invitation to treat, an invitation to treat only invites an offer and then it is upon the individual to either accept or reject such an offer. It was stated in the case of Spencer v. Harding[11] that there cannot be an acceptance for an invitation to treat. When the advertisement is made for the sale of products the same principle would apply. In the case of Partridge v. Crittenden[12] Lord Parker had stated that it is only an invitation to treat which is intended by an advertisement and nothing more than that. Further, in the case of Pharmaceutical Society (GB) v Boots Cash Chemists (Southern) Ltd[13] it had been opined by Somervell LJ that an arrangement which entails self-service is nothing but a convenience which is given to the people who are shopping to choose the products they want to buy, or substitute one product with another. It is not an offer that is made for purchasing the goods, the offer is made by the person who wants to buy when he takes the products to the cash counter, it is then upon the cashier to either accept or reject such an offer. When it comes to electronic contract the displays of goods on the website are nothing but an invitation to treat they should not be treated as an offer. It considered the a sellers presence online is nothing but an invitation to treat, it is not an offer which is being m ade, this is very similar to the principle that had been laid down in the Pharmaceutical Case.[14] Therefore, a mistake can be easily withdrawn by the seller online since this is not an offer but an invitation to treat. It is only an offer which cannot be revoked after the same has been accepted, however this is not the case with invitation to treat hence there would be no case that would lie against the online seller. The case of Argos Distributors where they had wrongly displayed the price of the television and there were several pieces that had been ordered across UK as well as Europe. However, the retailer refused to fulfill the orders and stated that the amount had been mentioned incorrectly on the television. Since the advertisement had been put up by the distributors of Argos it was considered to be only an advertisement and since advertisement was only an invitation to treat and not an offer the same could not be revoked. Therefore Argos Distributors could refuse to fulfill such orders. However, as had happened in the Kodak case, there may be a situation which arises that when the merchant the display of services and goods on the website it leads to there being an offer in a manner which lead to the contracts facilitation. The website of Argos was interactive in nature and there was no confirmation that had been sent to the consumers regarding the confirmation of the offer. With Kodak this was not the case, the offer had been accepted by them and hence the could not revoke it.[15] The main issue that arises with stores online is that unlike the traditional stores which are there the transaction online commence automatically. Hence, the merchant does not get the chance to rectify the mistake making the likelihood of there being a mistake higher. It is usually at the time when the order has been shipped that the mistake is obvious therefore being after the point when the contract has already been performed. It is however when it is directly with the vendor offline when the transaction the mistake is detected at the time of the check most of the times thus making it much simpler to rectify the same.[16] It has been discussed and deliberated in various decisions of the courts and literatures that is available and is also indicated by the legislations that are there that contract formation through electronic means still face various issues. There are various legal uncertainties that are attached to it. These include uncertainties with respect to where the contract has been formed or the precise time at which the formation of contract has taken place.[17] There are other issues as well which arise with respect to electronic contracts, for examples guarantees that are electronic, if there is a statutory requirement that states that the guarantee has to be written or signed specifically by the person concerned what would then be the status of such electronic guarantee. Though it has been stated in the case of Parker v Clark[18] that an email note would be considered as a document that has been written personally by the person himself. However, this principle itself is not without vices. References Argy, P, N Martin and M.S. Jaques, "The Effective Formation Of Contracts By Electronic Means" [2001]New South Wales Society for Computers and the Law Journal Carter, J. W,Contract Law I(LexisNexis Butterworths, 2015) Carter, J. W,Contract Law II(LexisNexis Butterworths, 2015) Cheshire, G. C et al,Cheshire, Fifoot, And Furmston's Law Of Contract(Butterworths/LexisNexis, 2001) Daskalopulu, A., Maibaum, T. (2001). Towards electronic contract performance. In Database and Expert Systems Applications, 2001. Proceedings. 12th International Workshop on (pp. 771-777). IEEE. E-Commerce(Continuing Professional Education Dept. of the College of Law, 2000) E-Commerce(CLE Dept of College of Law, 2000) Hultmark, Christina,Internet Marketplaces(Oxford University Press, 2002) Syed, Mahbubur Rahman and Mahesh S Raisinghani,Electronic Commerce(Idea Group Pub., 2000) UNCITRAL Model Law On Electronic Commerce, With Guide To Enactment, 1996(United Nations, 1997) Wang, Faye Fangfei,Law Of Electronic Commercial Transactions(Routledge, 2010) Parker v Clark[1960] 1 WLR 286 Partridge v Crittenden[1968] 1 WLR 1204 Pharmaceutical Society (GB) v Boots Cash Chemists (Southern) Ltd[1953] EWCA Civ 6 Smith v Hughes[1871] LR 6 QB 597 Spencer v Harding[1870] LR 5 CP 561 Stellard Pty Ltd v North Queensland Fuel Pty Ltd[2015] QSC 119 Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd[2015] WASCA 21 Electronic Signatures(2016) Austlii.edu.au https://austlii.edu.au/~alan/electronic-signatures.html