Online Business Transactions and The applicability of Traditional English contract law rules

By Jens Werner

This article is about the E-contract which relating to the applicability of English contract. Moreover, Werner tries to examine the most important legal rules, for instance, the role of postal rule, the appropriate jurisdiction, the choice of law and the applicability cyber world.

Werner states that E-contract has two methods: the e-mail contracts and the web-click-contracts. “The e-mail contract is the digital equivalent of letters which sender inserts an address and send it to recipient’s inbox.” whereas, the web-click-contracts Werner compares the web-click-contract with a purchase in a supermarket.

About the legal requirements as to form, Werner points out “digital signature” and “encryption” in online contracts could be regarded as “signature”. According to, The Electronic Communications Act 2000 shows. S.8 (2) (c) provides that secondary legislation may be made that facilitates the use of electronic communication for purposes concerning a person’s signature or the requirement of a deed. However, E-contracts have another question about a digital document can fulfill the requirement to be in writing. With the enactment of the Electronic Communications Act 2000, this is not a problem anymore. In this Act, the government has taken a “functional approach” which takes into account the purposes and functions of the traditional paper-based requirements and analyses whether a digital document can fulfill the same requirements.

With regarding to the formation of contract, Werner mentions the difference between offers and invitation to treat. He explains “the offer could be defined as a statement of willingness to contract on specific terms, made with the intention that if accepted, these terms should be binding upon the parties”. Whereas the invitation to treat, Werner gives us the example of the display of goods for sale in shops constitutes is another type of an invitation to treat, because the shopkeeper do not have his freedom to decide whether or not to contract with a particular customer. Moreover, the invitation to treat can be applied for webvertisements as well.

Furthermore, Werner makes reference to e-tailer Argos offered by mistake a Sony TV for £ 3.00 instead of £ 299.99.23 People who spotted the bargain placed numerous orders for TVs which would constitute an acceptance (and thus conclude a contract) if the webvertisement of Argos could be regarded as a genuine offer. Like most e-tailers, Argos sends out confirmation mails automatically and immediately after the order has been placed. At least at this stage, a contract is formed because the confirmation would constitute the acceptance.

Werner criticizes when the E-contract will meet the moment of formation. Generally, acceptance becomes effective when it is communicated to the offeror. However, there is an important exception to this rule, i.e. the postal rule. Werner continues to have another question about e-mail could be applied to the postal rule. However, it can be said that the postal rule does not cover the e-mail contracts according to these following reason.

Firstly, the service provider is not a third party; it is more similar to network providers for example, BT or DEUTSCHE TELEKOM which cannot be sued if the telephone line goes dead during a telephone conversation. On the other hand, e-mail is almost instantaneous. Moving to Click-wrap contracts and the postal rule, it can be said that the postal rule does not apply to click-wrap contract because the postal rules have to relate with a trusted third party. However, a trusted third party is not involved in click-wrap acceptances, but click-wrap contracts are instantaneous. Consequently, regarding the electronic contracting; both e-mail and click-wrap acceptances are instantaneous, the postal rule does not apply in any case. Therefore the general rule that a contract is made when the acceptance is received by the offeror prevails in electronic contracting.

About the jurisdiction of the e-contracts, Werner mentions about the Brussels Convention on Jurisdiction in 1968. In terms of business transactions, the defendant’s domicile is the most important factor. Except in cases where the on-line contract contains a contrary jurisdiction, companies can only be sued in the courts of their state (art.2). Art.13 and 14 provide that “consumers can only be sued in their domicile but can choose to sue either there or in the seller’s domicile”.

Werner gives us the information about the choice of law. In this field the Rome Convention on the law applicable to contractual obligations of 1980 becomes the important instrument in the European Union. It characterizes between contracts with and those without an express choice of law clause.

For contracts express the choice of law. Werner cites the business transaction and the consumer contract. For business transactions, art.1 states that “the parties are free to choose the law applicable”. This choice can be made expressly or be implied from the circumstances (art.3 (1)). In accordance with the consumer contract, Werner refers to Art.5 (2) which express that “if the contract was preceded by an advertisement (website) the consumer can rely upon their (national) mandatory consumer protection laws”. Werner continues to give an example of the e-tailer and consumer. It can be explained that e-tailers would find themselves unknowingly bound by foreign law so that an e-tailers could ask consumers to indicate their country of residence which gives him the possibility to reject unwanted law which can be affected on transaction .Moreover; consumers who live in European Union could constitute and infringement of competition law.

Nevertheless, there are also situations where there is no expressed or implied choice of law. In business transactions, “the law of the country with the closest connection to the contract shall be applicable” (art.4). Accordingly, the law of the country where the supplier has his principal place of business will usually be applied in business transactions. However, in consumer contracts art.5 (3) states that "the applicable law is that of the consumer’s place of residence”.

2. As a result of World Wide Web introduction, commercial transactions can be made via the internet. There are two methods of electronic contracting: the e-mail contract and the web-click contract.

Legal requirements as to form

As for traditional contract law, the law sometimes requires a particular form to make a contract enforceable. With regard to online contract, the most problematic area is the requirement of signature. Digital signature includes both the scanned digital image of person’s signature and the encryption.

When contract is needed to be in writing, another legal issue arises whether a digital document can fulfill the requirement of writing. According to the Interpretation Act 1978, some stated that digital documents are not visible while others provided more generous interpretation that digital documents could be included in the meaning of writing. Nevertheless, this is no longer a problem since the Electronic Communication Act 2000 introduced a “functional approach” which the government must analysis whether digital document can fulfill the same functions as the traditional paper-based requirements. In this respect, electronic documents show the same level of security as paper-based documents.

The UNCITRAL Model Law on Electronic Commerce also strengthens the equivalence between electronic and traditional documents since it is stated in Art 5 that an electronic document should not be discriminated just because it is in electronic format. Moreover, Art 6 creates specific equality for electronic documents which have to fulfill the requirement of writing on the only notion that the information can be reproduced and read.

Offer and invitation to treat

Under English traditional contract law, a clear offer and acceptance are required in order to form a contract. At this stage, it is very important to distinguish between a

genuine offer and an invitation to treat. In respect of online contract, the question is now whether a webvertisement is an offer or an invitation to treat. Since webvertisements are similar to advertisements in newspaper and shop display which the seller is at his liberty to decide whether or not to contract with particular customer, it thus constitutes invitation to treat. Moreover, if it were regarded as offer, the advertiser might find himself obliged to sell more goods than he actually owned. Argos case is one of the examples demonstrated the crucial impact of this distinction where Argos advertised by mistake a Sony TV for £3.00 instead of £299.99.

Moment when the contract is actually made

In paper-based contract, the acceptance becomes effective when it is communicated to the offeror except for the non-instantaneous communication. Under these circumstances, the postal rule which states that acceptance becomes effective when sent rather than when received is applied. The applicability of postal rule depends on whether there is a trusted third party involved and whether the communication is instantaneous.

E-mail/Click-wrap contract and the postal rule

Since the service provider is not a third party and the almost instantaneous nature of an e-mail, the postal rule does not apply. The acceptance of an e-mail contract become effective at the moment it arrives at the host computer of the offeror (as an agent) which has authority to accept it. Also, e-mail should become effective when they reach the offeror’s place of business within office hours.

Similarly, since the trusted third party is not involved in click-wrap contract and they are instantaneous, the postal rule does not apply.

Jurisdiction

The uncertainty of jurisdiction of cross-border contractual disputes was minimised by the introduction of Brussel Convention on Jurisdiction in 1968. In terms of business transactions, the defendant’s domicile is the most significant factor. Thus, in online contract, companies can be sued only in court of their state unless agree otherwise.

Choice of law

Under the Rome Convention on the law applicable to Contractual Obligations of 1980, parties are free to choose the applicable law whether expressly or impliedly. If there is no such choice, the applicable law would be the law of the country with the closest connection to the contract. Thus, the law of country where the supplier has his place of business will normally be applied.

However, in consumer contract, if the contract was concluded by an advertisement, e.g. website, the consumer can rely upon his national mandatory law of consumer protection. Consequently, an e-tailor would ask his potential consumers to signify their country of residence in order to know which foreign law might be an applicable law to his contract.

3. Legal requirement as to form

The law sometimes requires a particular form to make the contract enforceable. Digital signature and digital document use to be a controversial issue with regard to a written document signed by both parties as a contract. It is defined in the Interpretation Act. 1978 that Writing means the modes of representing or reproducing words in as visible form such as typing, photography but digital document are not.

Under the principle by the UNCITRAL Model Law on Electronic, The United Nations (UN) emphasized on the growth of electronic transaction; therefore, electronic documents have been fulfilled the requirement of being in writing meaning.

Formation of a contract

To form the contract, an offer could be defined as a statement of willingness to contract on specific terms, made with the intention and these term would be blinding when another party accepts.

On the other side, an invitation to treat is different. It is a mere declaration of willingness to enter into negotiations. A person who makes an invitation to treat does not intend to be bound but it would be an offer. Still, advertisements in newspapers are a controversial issue whether it is an offer or an invitation to treat. Partidge v Crittendon case interpreted them that it is an invitation to treat because when the customer accepts the advertisement, the shopkeepers have a freedom in choosing the customers whether they would like to form a contract or not.

Moment of formation occurs when an acceptance is communicated to the offeror. For the postal rule, an acceptance becomes effective when sent rather than received. In the other way, such rule does not relate to fax and telex because an acceptance becomes effective at the time it is received by the recipient.

As for e-mail communication, The question arise whether the acceptance should be effective when it is received by the offeror’s electric host computer or when they arrive at the offeror’s place of business. The Crown court, R v Pontybridd Juvenile Magistrate Court, interprets that the acceptance become effective when it reach the offeror’s place of business within office hours.

Moving onto click-wrap contracts, this method invents a self-checking machine which allows the receiving computer to check if the information sent are complete or failure.

All in all, both e-mail and click-wrap contracting do not apply with postal rule since their acceptance are instantaneous.

Jurisdiction and Choice of law

JurisdictionIt is explained that cross-border contractual disputes one has to determine where the contract has made and the type of contract; a consumer or a non-consumer contact.

Brussels Convention on Jurisdiction states that consumers can only be sued in their domicile but can choose to sue either there or in the seller’s domicile.

Choice of lawUnder Rome Convention 1980, it states for business transaction that the parties are free to choose the law applicable. Consequently, it would connect to the law of the habitual residence of the people who effect the characteristic performance or the law of the country where the supplier has his principle place of business will usually be applied in business transaction.

In the contrary, consumer contracts give a benefit to the customer in which the applicable law is that of the consumer’s place of residence and an e-tailer is unknowingly bound by foreign law.

4. It is generally accepted that after the introduction of WWW, companies can reach their consumers so at their business as at home.

An electronic binding agreement can be achieved either by e- mail contract or by web- click contract. The former is the digital form of a letter. On the other hand, through the latter, the supplier advertises his products and the consumer can order them by clicking the “I accept” button.

At this point, it would be useful to consider the legal requirements of a contract which are related to its form. A challenging matter of an online contract is the electronic signature since, according to the Electronic Communications Act 2000, it is not recognised.

Furthermore, another problematic issue of the electronic contracts is the legal requirement of a document to be in writing. Although English courts argue that the database of a computer contain enough information, the present requirement has not been satisfied. However, the government through the above Act concluded that electronic documents provide security equivalent to the paper- based documents. Additionally, the United Nations through the UNCITRAL Model Law on Electronic Commerce accepted that the requirement in question can be fulfilled in the case of the digital documents.

Moving on, while discussing the formation of the electronic contracts, it would be helpful to determine whether a webadvertisement is an offer or an invitation to treat. It had been concluded that it is an invitation to treat, since while visiting a website the consumers can examine, sample and finally buy the product.

However, in Argos case, it had been argued that an order would be equivalent to an acceptance if the webadvertisement could be considered to be an offer. What is more, bad faith can be taken for granted when the products are considerably underpriced.

Moreover, while analysing the validity of the electronic contracts, another important issue is the subject matter of the postal rule. On the one hand, e-mails are comparable to telex, fax and telephone, rather than to postal system. Nevertheless, the former may differ from the latter. The crucial issue that may arise is when the e-mails become effective. Taking into consideration the doctrine of agency, it could be concluded that e-mails have an effect when they “reach offeror’s business within office hours”.

On the other hand, in the case of click wrap contracts, through checksum, the receiving computer can check whether the entire information had been sent or not. As a result, since the server can identify the breakdown in a communication, the postal rule is not applicable.

To conclude, it would be useful to mention the jurisdiction and the choice of the applicable law. Bearing in mind the related case law, it can be argued that since the residence of the defendant is an essential aspect, so the companies as the consumers can be sued in the court of their state. Nonetheless, the latter can choose to sue either to their or to the seller’s domicile. Last but not least, in an attempt to choose the applicable law, the European Union takes into consideration the Rome Convention, especially articles 3-5.

To sum up, as it has been examined above, in order to understand the online business transactions, so the formalities and the formation of the contracts and the postal rule as the jurisdiction and the appropriate law should be analysed.

5. The Internet World Wide Web is one of the most important issues for commercial transaction. There are two potential methods of electronics contracting which has become a big issue in the commercial world as followed:

1. The e-mail contractE-mail has been defined that it is the digital document which is equivalent of a letter. The way to use it is the sender just types it out; interest an e-mail address and send it to the recipient. 2.The web-click contract

It works as the digital equivalent of a purchase in a supermarket. That is, the consumer orders the product which has been offered by the supplier. In order to select the product, the customer just put a tick in a box. Then submit the order by click “Buy” or “I agree” or something similar in the box. It is done automatically.

An example of legal document form contracts

In Law of property (Miscellaneous Provisions) Act 1989, SS.52, 54(2) indicate that a lease for more than three years can only be enforced if they made it in written document which was sign by both parties, then sealed and delivered to the person who would like to acquire property. However, online contract, the legal requirement is only a signature; digital signature or the scanned digital image of a person’s signature. It means “electronic signature” (The electronic communication act 2000 in section 8). To concern with electronic contracting, a digital document can be required to be in writing in order to make the document to be more complement. “writing” is defined in the Interpretation Act 1978 as following “ including typing , printing , lithography, Photography and other Photography and other modes of representing or reproducing words in a visible form”

3. Formation of a contract The definition of an offer would be a statement of willingness to contract on specific terms and these terms should be binding upon the parties. An offer; the offeror must be binding by the contractual for his offers to treat. By contrast, an invitations to treat include the display of good; the advertisement of a price or an auction. An invitation to treat is not binding. The inviter can change his or her mind whether to do a contract with the invitee or not.

4. Moment of formation The principle rule of law, acceptance becomes effective when it is communicated to the offeror. Nevertheless, it is different from the postal rule; the acceptance becomes effective when it is sent to the offeree. Nonetheless, e-mail becomes effective when they reach the offer or place of business within office hours.

5. Click-wrap contracts and the postal rule Click-wrap are instantaneous, whereas the postal rule agreed that a contract is made when the acceptance is received by the offered prevails in electronic contracting.6. Conclusion E-business and online contracting are concerned in electronic contracting. Formalities in contracts, the point of formation of contract and the role of postal rule are the important areas which should be concerned.

6. This article is about the E-contract which relating to the applicability of English contract. Moreover, Werner tries to examine the most important legal rules, for instance, the role of postal rule, the appropriate jurisdiction, the choice of law and the applicability cyber world.

Werner states that E-contract has two methods: the e-mail contracts and the web-click-contracts. “The e-mail contract is the digital equivalent of letters which sender inserts an address and send it to recipient’s inbox.” whereas, the web-click-contracts Werner compares the web-click-contract with a purchase in a supermarket.

About the legal requirements as to form, Werner points out “digital signature” and “encryption” in online contracts could be regarded as “signature”. According to, The Electronic Communications Act 2000 shows. S.8 (2) (c) provides that secondary legislation may be made that facilitates the use of electronic communication for

purposes concerning a person’s signature or the requirement of a deed. However, E-contracts have another question about a digital document can fulfill the requirement to be in writing. With the enactment of the Electronic Communications Act 2000, this is not a problem anymore. In this Act, the government has taken a “functional approach” which takes into account the purposes and functions of the traditional paper-based requirements and analyses whether a digital document can fulfill the same requirements.

With regarding to the formation of contract, Werner mentions the difference between offers and invitation to treat. He explains “the offer could be defined as a statement of willingness to contract on specific terms, made with the intention that if accepted, these terms should be binding upon the parties”. Whereas the invitation to treat, Werner gives us the example of the display of goods for sale in shops constitutes is another type of an invitation to treat, because the shopkeeper do not have his freedom to decide whether or not to contract with a particular customer. Moreover, the invitation to treat can be applied for webvertisements as well.

Furthermore, Werner makes reference to e-tailer Argos offered by mistake a Sony TV for £ 3.00 instead of £ 299.99.23 People who spotted the bargain placed numerous orders for TVs which would constitute an acceptance (and thus conclude a contract) if the webvertisement of Argos could be regarded as a genuine offer. Like most e-tailers, Argos sends out confirmation mails automatically and immediately after the order has been placed. At least at this stage, a contract is formed because the confirmation would constitute the acceptance.

Werner criticizes when the E-contract will meet the moment of formation. Generally, acceptance becomes effective when it is communicated to the offeror. However, there is an important exception to this rule, i.e. the postal rule. Werner continues to have another question about e-mail could be applied to the postal rule. However, it can be said that the postal rule does not cover the e-mail contracts according to these following reason.

Firstly, the service provider is not a third party; it is more similar to network providers for example, BT or DEUTSCHE TELEKOM which cannot be sued if the telephone line goes dead during a telephone conversation. On the other hand, e-mail is almost instantaneous. Moving to Click-wrap contracts and the postal rule, it can be said that the postal rule does not apply to click-wrap contract because the postal rules have to relate with a trusted third party. However, a trusted third party is not involved in click-wrap acceptances, but click-wrap contracts are instantaneous. Consequently, regarding the electronic contracting; both e-mail and click-wrap acceptances are instantaneous, the postal rule does not apply in any case. Therefore the general rule that a contract is made when the acceptance is received by the offeror prevails in electronic contracting.

About the jurisdiction of the e-contracts, Werner mentions about the Brussels Convention on Jurisdiction in 1968. In terms of business transactions, the defendant’s domicile is the most important factor. Except in cases where the on-line contract contains a contrary jurisdiction, companies can only be sued in the courts of their state (art.2). Art.13 and 14 provide that “consumers can only be sued in their domicile but can choose to sue either there or in the seller’s domicile”.

Werner gives us the information about the choice of law. In this field the

Rome Convention on the law applicable to contractual obligations of 1980 becomes the important instrument in the European Union. It characterizes between contracts with and those without an express choice of law clause.

For contracts express the choice of law. Werner cites the business transaction and the consumer contract. For business transactions, art.1 states that “the parties are free to choose the law applicable”. This choice can be made expressly or be implied from the circumstances (art.3 (1)). In accordance with the consumer contract, Werner refers to Art.5 (2) which express that “if the contract was preceded by an advertisement (website) the consumer can rely upon their (national) mandatory consumer protection laws”. Werner continues to give an example of the e-tailer and consumer. It can be explained that e-tailers would find themselves unknowingly bound by foreign law so that an e-tailers could ask consumers to indicate their country of residence which gives him the possibility to reject unwanted law which can be affected on transaction .Moreover; consumers who live in European Union could constitute and infringement of competition law.

Nevertheless, there are also situations where there is no expressed or implied choice of law. In business transactions, “the law of the country with the closest connection to the contract shall be applicable” (art.4). Accordingly, the law of the country where the supplier has his principal place of business will usually be applied in business transactions. However, in consumer contracts art.5 (3) states that "the applicable law is that of the consumer’s place of residence”.

7. There are basically two methods of contracting online, the formation of email contracts and web click contracts, both of which raise legal issues.

Email is described as the electronic equivalent of a letter but does it satisfy certain characteristics that are required when forming a contract. For example some contracts require a signature, too solutions have been found to this in electronic documents, a scan of the signatories original signature or encryption. In 1999 it was discussed that electronic documents cannot fulfil the requirement of a document needing to be in writing. Writing in the Interpretation Act 1978 said that it needed to be in a ‘visible form’ and electronic means was seen as not being visible, this view was altered by the Electronic Communications Act 2000 which took a more functional approach.

The UNCITRAL Model Law has taken a more embracing view of electronic transactions saying that a document cannot be discriminated against because of it being in an electronic format (Article 5) and Article 6 said that electronic documents can fulfil the requirement of being in writing.

The next area of discussion is under web click contracts and whether a ‘webvertisement’ is an offer or invitation to treat. They have been found to be invitations to treat as they bear closer resemblance to shop displays, and this allows for errors such as that in the Argos case.

Application of the postal rule in electronic contracting is also discussed. The postal rule has been found not to cover contracts by email as the more immediate method of communication is seen to have closer comparisons to fax or telex. In terms of click wrap contracts and the postal rule as there is no trusted third party involved and they are instantaneous the postal rule also does not apply. However there is no discussion of the more recent growth in passing bank details to a third party for verification.

Jurisdiction is also complicated, Brussels convention found the defendants jurisdiction to be key when no choice of jurisdiction is made. Businesses are free to choice a jurisdiction but consumer protection is more restrictive, where there is an advertisement it is the consumers law which takes precendence.

8. Many people think that business is on the verge of becoming solely electronic through the use of EDI, but the laws insistence on paper documentation is slowly this process down. A bill of lading has an important function, it bears the title to goods while in transit, so one would think that an electronic version passed securely through a network like SWIFT would be better than the paper system at the moment. But the function of Bills of Lading is seen as difficult to incorporate into a paperless system, particularly their function as negotiable instruments.

The first issue is whether an electronic data message can be evidenced as an electronic document, a database has been held to be a document, but the best evidence rule may find a data message to be hearsay evidence where the original document has been misplaced.

In Australia a bill of lading may need to be in paper form as they have a requirement that it be signed. In English law electronic documents do not satisfy the meaning of writing as they do not take a visible form. The UNCITRAL model law proposes to give electronic documents the same legal status as writing. The requirement of a signature on a bill of lading seems to have been restricted by the courts to a ‘manual signature.’ The paper does not go into whether electronic signatures would be acceptable on a Bill of Lading but hints that encryption is only a key to where the document has come from and may not be enough to satisfy the legal requirement of a signature.

As mentioned earlier negotiable title is seen as the key function of a bill of lading, and there is difficulty in seeing how a negotiable title can be dealt with by electronic means. UNCITRAL at the time of the article had not finished a study into the best way to deal with this problem.

The CMI rules are a form of soft law that provide a solution to requirement of paper and a signature, and use encryption to pass the bill electronically between parties.

The article concludes that international efforts to produce electronic bills of lading still have a long way to go which is not due to a lack of provisions but more a lack of confidence in the methods.

9. Commercial transactions these days are not only face to face transactions, but also the transactions via the Internet. Therefore the commercial contract can be occurred by electronic means as well. There are two means of electronic contracting; the email contracts and the web-click contracts.

In general, there is no form requirement for contracts. However some contracts are required by law to be in specific forms otherwise the contract will not be enforceable for example a lease agreement for more than three years. Online contracts are required to have a signature. Such signature includes “digital signature” which covers the scanned digital image of a person’s signature and the advanced form requiring the use of encryption.

Moreover certain contracts are required to be in writing for example bills of exchange, contracts for the sale and so on. Digital documents, then, had been in questions whether it could fulfil the requirement to be in writing. Nonetheless, it can be

concluded by the Electronic Communication Act 2000 and Article 5 and 6 of the UNCITRAL Model Law on Electronic Commerce that a digital document can fulfil the requirements of being in writing.

Formation of a contract under English law requires a meeting of the minds which are a clear and unambiguous offer and a corresponding acceptance of the two contracting parties. An offer, however, is different from an invitation to treat. A webvertisement is distinguished as an invitation to treat.

Moment of contracting formation for email communication is equated to fax, telex and telephone which acceptance of a contractual offer becomes effective once it was received by the recipient. Thus emails (electronic message) is deemed to be effective when they reach the offeror’s place of business within office hours such as an electronic message became effective when it arrived on a Friday (during business hours) although it was not read until the following Monday. This is contrary to communication by post which acceptance becomes effective when it was sent. Concerning with formation of click-wrap contracts, the postal rule does not apply as well. As result, email and click-wrap acceptances are instantaneous which is contrary to the postal rule.

According to the Brussels Convention on Jurisdiction in 1968, jurisdiction of the court to hear cross-border contractual disputes is divided into two types; business transactions and online contracts. Jurisdiction of the former is the defendant’s domicile. Jurisdiction of the latter is divided into two cases; companies can only be prosecuted in the courts of their state and, consumers can only be sued in their domicile but can choose to sue either there or in the seller’s domicile.

In connection with choice of law clause, the European Union shall apply the Rome Convention on the law applicable to contractual obligation of 1980 in which specifies differently between contracts with and without an express choice of law clause.

In case of express choice of law clause, the parties are free to choose the applicable law either making expressly or implied for business transactions. In consumer contracts, if the contract was preceded by an advertisement (website), the consumer can rely on their (national) mandatory consumer protection laws.

For no expressed or implied choice of law, in business transactions, the law of the country with the closest connection to the contract shall be applicable such as the law of the country where the supplier has his principal place of business will usually be applied in business transactions. In consumer contracts, the applicable law is that of the consumer’s place of residence.