Electronic Commerce

What is 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

Elements of an Enforceable Contract

• Offer• Acceptance• Consideration• Intention to create legal relations• Legal Capacity

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

Formation of Contract

• By Email• By Click Wrap

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”

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?

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

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

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.

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

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

E-Commerce Best Practice

• Fed Govt best practice guidelines:• http://www.ecommerce.treasury.gov.

au• Not force of law, but merely

guidelines. Includes

Consumer Protection

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)

Policy Framework

• Australia has a policy framework for consumer e-commerce issues.

• ContractETAs mirroring UNCITRAL provisions

• PaymentEFT Code of Conduct

• ConductIIA Codes of Practice

Consumer Credit Code

• Uniform Consumer Credit Code applies to consumer credit transactions, mirror legislation is in every state.

• http://www.creditcode.gov.au

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

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

EFT Code of Conduct

• Electronic Funds Transfer Code of Conduct

• Voluntary, but popular and widely adopted

• Covers ‘electronic transfers of value’• See ASIC website

Smart Card Code

• Asia Pacific Smart Card Forum Code of Conduct

• Published 1997• Has compliance logo

Telecommunications Codes

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

IIA Code of Conduct

• Internet Industry Association has a number of codes

• Relevant to consumer protection is the Content Regulation Code

ADMA Code

• Australian Direct Marketing Association Industry Code of Practice (2000)

• Contains short section on electronic commerce

Cth Model Code

• Repeats the text of OECD Guidelines on Ecommerce

• A “Virtual Code”

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