Contracts in the Electronic Communications Convention John D. Gregory 3 October 2008

E-Contracts and the Convention 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

E-Contracts and the 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

E-Contracts and the Convention 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

E-Contracts and the Convention 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)

E-Contracts and the 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

E-Contracts and the Convention 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 cc:tld – country code: top level domain)

E-Contracts and the Convention 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

E-Contracts and the Convention 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.

E-Contracts and the Convention 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)

E-Contracts and the Convention 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

E-Contracts and the Convention 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

E-Contracts and the Convention 13 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?

E-Contracts and the Convention 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?

E-Contracts and the Convention 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

E-Contracts and the Convention 16 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

E-Contracts and the Convention 17 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 vanish for e-commerce (where does that this debate?)

E-Contracts and the Convention 18 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

E-Contracts and the Convention 19 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)

E-Contracts and the Convention 20 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

E-Contracts and the Convention 21 Sources United Nations Convention on the Use of Electronic Communications in International Contracts + Guide to Enactment (UN 2005) – _Ebook.pdf _Ebook.pdf – _Ebook.pdf _Ebook.pdf A.H. Boss & W. Kilian, eds. The United Nations Convention [etc], Kluwer Law International, October 2008 (530 pp)