Contracts in the Electronic Communications Convention

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

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. What’s 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. What’s 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 party’s place of business E-Contracts and the Convention

9. What’s 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. What’s 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. What’s 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. What’s 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 party’s 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 Convention’s 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 vanishes for e-commerce (where does that lead 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) • http://www.uncitral.org/pdf/english/texts/electcom/06-57452_Ebook.pdf • http://www.uncitral.org/pdf/french/texts/electcom/06-57453_Ebook.pdf • A.H. Boss & W. Kilian, eds. The United Nations Convention [etc], Kluwer Law International, October 2008 (530 pp) E-Contracts and the Convention