The exponential growth in the World Wide Web in the last decade and a half, the developments in Internet shopping and the general adaptation to online contracting by commercial parties and the consumer alike, arguably may be the most fundamental change to commercial activities in centuries.
The very real difficulty with e-commerce is that parties can come to agreements without regard to national frontiers or distance; so can the parties simply forget about law and have a fine old time trading together? Clearly that would never work, because there would no legal way in which the parties could either enforce the contract or settle disputes.
Consequently, all the major trading countries of the world have had to wrestle with the problem of applying legal systems to e-commerce, but there are still very wide differences in the approaches taken under different national legal systems.
A distinction that should be raised is between the use of websites and the use of simple communication between the parties by electronic means, such as e-mails. Most of the controlling legislation in this area is aimed at the former, by reference to ‘information society services’ (ISS’s) which covers most of the business activity being carried out by the use of websites.
Although the internet is supra-national, every contract requires an applicable law before it can be legally analysed. If the applicable jurisdiction is to be the UK, the law of offer and acceptance in contract, works in exactly the same way in e-commerce. Thus the important features of a contract in relation to e-commerce will be:
Offer or invitation to treat?
If the matter is transacted by e-mail, this is decided by whether the communication is an expression to contract on specified terms, made with the intention that it becomes binding as soon as it is accepted by the person to whom it is addressed. If it is anything less than this it is seen as an invitation to treat not an offer.
With a website, the details displayed by the supplier are much more likely to have been designed as an invitation to treat. Therefore the customer is required to make the offer, usually establishing their identity and receiving payment assurance, before the seller will enter into the contract by acceptance.
In exchanges by e-mail, acceptance occurs when the offeree does the last act that is seen as contemplated by the parties; if that is acceptance by letter, the last act is posting the letter; if it is during a course of e-mails, the last act is the sending of the acceptance message
In relation to a website it is seen that acceptance may take place at the earliest time at which the customer can access the supplier’s acknowledgment of the order/offer, regardless of whether the customer actually does so.
Incorporation of terms
In general the same rules are likely to be applied to the incorporation of terms as in other contractual circumstances, including the court’s jurisdiction to decide about the ‘battle of forms’ where standard-form contract terms are involved.
Most commercial transactions do not require formal execution by signature as a matter of law, but there are circumstances in which a signature may be required, either by the terms of the contract, or by common law or by statute. Some statutory requirements for a ‘signature’ and ‘writing’ can, it seems, be met by e-mail exchanges as was in the case of Mehta v J Pereira Fernandes SA  although on the facts of the case an e-mail address not contained in the body of the message did not comprise a ‘signature’ for the purpose of the Statute of Frauds 1677 s.4.
The security aspects of many online contractual arrangements and negotiations can be of extreme importance, and the problem may become even greater where bank details or the availability of a person’s electronic signature are concerned.
In relation to jurisdiction in an e-commerce contract, primacy is given to the choice of law of the parties, subject only to the interposition of mandatory rules of law.
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