1. Legal Issues E-Commerce  Thomas Schwarz, S.J. 2006

2. Legal Issues Legal rules govern formation, interpretation and enforcement of contract. E-commerce transactions ought to specify Governing Law (“the law of California”) Forum for resolving disputes

3. Legal Issues Common Law Collection of legal principles developed by common-law courts in reaction to cases before them. Statutes (by legislative bodies). (US) Uniform Commercial Code

4. Legal Issues Civil Law Statutory code replaces common law.

5. Legal Issues In common and civil law systems, other items have legal significance Course of dealing over time Usage of trade Parties’ agreement on principles to govern their relationship Trading Partner Agreements (TPA)

6. Legal Issues International / interstate character of E- Commerce Promulgation of model laws and rules UN Model Law on Electronic Commerce Directive on a Community Framework for Electronic Signatures in Europe Federal E-Sign Law (US) Uniform Electronic Transactions Act (UETA) Uniform Computer Information Transaction Act (UCITA) Advancement of legislation and regulation in jurisdictions according to these model laws and rules.

7. Contracts Contract needs Offer of specific terms; Acceptance of the offer; Adequate Consideration. To be enforceable, contract needs to satisfy other requirements Statute of fraud

8. Contracts Offer and acceptance needs Mutual assent, Sufficiently definite terms. E-commerce problem: Does posting on a website constitute sufficient assent? Can an inventory control program that automatically reorders items give assent to a transaction on behalf of its owner?

9. Contracts Section 14 UETA: Interaction of electronic agents or between electronic agent and individual can result in a valid contract. UCITA “Contract might be formed by the operations of the electronic agent.” “A person that uses an electronic agent is bound by the operations of the electronic agent, even if no individual was aware of or reviewed the agent’s operation.”

10. Contracts In the absence of statuary law: THE LAW ARGUES BY ANALOGY. Similar problems were introduced with letter writing. Includes problems with “battle of the form”

11. Contracts Consideration Can be anything of value Delivery of goods Delivery of services Payment Return promise Novel methods of payment, delivery, … do not pose a legal problem per se.

12. Contracts Statutes of Fraud Certain types of agreements are unenforceable unless they satisfy the statute of fraud. Includes: the agreement … or memorandum or note thereof shall be in writing and signed by the party to be charged therewith

13. Contracts Contracts subject to the statues on fraud: Executor or administrator to answer for a duty of his / her decedent Surety-ship Contracts made upon consideration of marriage Sale of interest in land Contracts that are not to be performed within oen year from the making of them Contracts for the sale of goods for the price of $500.00 or more

14. Contracts In addition, many statutes require contracts to be in writing and signed. E-commerce question: What is writing? What is a signature?

15. Contracts Current UCC (Uniform Code of Commerce): Writing includes “printing, typewriting, or any other intentional reduction to tangible form” Signed includes “any symbol executed or adopted by a party with present intention to authenticate the writing as that of the signer.” The restatement of Contracts: Signature may be “any symbol made or adopted with an intention, actual or apparent, to authenticate the writing as that of a signer.”

16. Contracts Office of the U. S. Comptroller General (1991): Contracts formed using Electronic Data Interchange technologies may constitute valid obligations of the government for purposes of 31 U.S.C. sec. 1501, so long as the technology used provides the same degree of assurance and certainty as traditional ‘paper and ink’ methods of contract formation.”

17. Contracts Electronic Signatures in Global and National Commerce Act (E-Sign) 2000.

18. Contracts Performance Once a valid contract is entered, both parties need to perform their obligations. Compliance Failure to perform completely and strictly constitutes breach of contract. Perfect tender rule: buyer can reject goods unless they comply strictly with quality and quantity of the bargain. UCC: Buyer who chooses to retain a shipment of goods that does not strictly conform in quantity or quality waives his/her right to revoke such acceptance unless “the non- conformity substantially impairs” the value of the goods to the buyer.

19. Contracts Enforcement Goal of law is either Restitution (state before contract) or Expectation: to set the injured party into a state it would have entered when the contract was fulfilled. Incidental / Consequential Damages A breach committed in bad faith, willful and malicious conduct results in Punitive damages. Parties can agree to limit exposure to liability for damages by agreeing to clauses that liquidate or cap the amount of damages.

20. Contracts Evidence See COEN 252

21. Other Legal Issues Consumer Protection Law in general sees consumers as less sophisticated and in need of a higher degree of protection. A number of statues regarding e- commerce explicitly state that they do not preempt consumer protection laws.

22. Other Legal Issues Consumer Protection Proposals Electronic disclosure is only permitted when the transaction is initiated and consummated electronically. E-signature technologies need to reflect an actual intent to sign a document. No shrink-wrap acceptance. Consumer should be given the opportunity to accept or refuse disclosures. Consumer must be able to obtain paper copies. Disclosures must be delivered to the consumer’s email address with a reply requested or retained on the website for the duration of the contract.

23. Other Legal Issues Consumer Protection Proposals Electronic record must be accessible and retainable by the consumer. It must also be provided in a format that prevents alteration after it is sent, so it can be used to prove the terms of the record in a court of law. Consumer’s failure to respond to the consent should trigger paper disclosures before it triggers default.

24. Other Legal Issues Privacy Gramm-Leach-Bliley Financial Modernization Act HIPAA COPPA

25. Other Legal Issues Personal Jurisdiction US law: Defendant must have sufficient level of minimal contacts to be summoned in a certain jurisdiction. EU law: Defendants must be domiciled to be summoned. Negotiability Taxation Illegal Bargains