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
didnt

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 IIAs Family
Friendly ISP seal)
Provide information (eg Amex, NineMSN)

Policy Framework
Australia has a policy framework for
consumer e-commerce issues.
Contract
ETAs mirroring UNCITRAL provisions
Payment
EFT Code of Conduct
Conduct
IIA 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 Govts 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