Electronic Commerce

INTRODUCTION

The meaning of Electronic Commerce (e-commerce) has changed over the past 30 years as today it is considered to be the buying and selling of products or services over an electronic system i.e. the internet. Since the spread of this, the amount of trade conducted electronically has grown tremendously. Now the World Wide Web (WWW) is being used by modern e-commerce, which is generally considered to be the sales aspect of electronic business and consists of the exchange of data to facilitate the financing and payment of business transactions.

This paper analyses a problem question, advising a company, Freegames, on the liabilities of the individual parties to them. It starts with advising Freegames on the general introduction of the key elements to contract law which are also relevant to electronic contracts (e-contracts) as to paper-based agreements. And later sets out basic principles of relevant legislation, applying it to specific circumstances in the problem question likely to be encountered in e-contracts i.e. terms and conditions, consumer protection, crimes, vicarious liability. Finally, the legal concept of domain names in e-contract, mentioning the effects of the Nominet system in English Law and the citation of appropriate cases where applicable.

Freegames advice on Alfred (A)

The formation of e-contracts is crucial in this scenario before us and should be discussed first to indicate where the parties lie. This has changed the way most businesses are conducted, as almost all types of contracts can now be made online. E-contracts are basically the same as offline contracts, and as such the same requirements and legislations have to be fulfilled to ensure the legally binding effect of the contract. Under English law, a contract is formed when an offer is made by one party (the “Offeror”) which is then accepted by the other party (the “Offeree”). Freegames is the Offeror whereas Alfred is the Offeree. However, there are certain requirements that need to be fulfilled for the legality of the contract to be binding and enforceable namely; offer, acceptance, consideration and intention to be legally bound, which will be discussed hand in hand with the problem question before us. In regards to e-contracts, a customer notifies the server of his intention to buy an item from the site or in this case, submits an order. As such, Freegames running of a hypertext links for the downloading of games stored on its server, will be regarded as an offer being made to the public at large as was in Carlill v Carbolic Smoke Ball Co. where an advertisement placed by the company was not regarded as an invitation to treat but an offer to the world and the contract was formed by the person who performed, Mrs. Carlill. The general rule in English law is that an offer must be revoked at anytime before acceptance and must be communicated to the Offeree to be effective. As the fact of the case before us does not indicate Freegames intention to revoke its offer at any point, this rule will not be applicable.

Before going any further, it should be pointed out that English law also distinguishes between an offer and an invitation to treat (ITT). An offer being a willingness by one party to enter into a contract on stated terms provided they are accepted by the party and an ITT being a negotiation leading to the formation of a contract. The ITT always comes before the offer in a contractual process. An example is the case of Fisher v Bell , where Lord Parker CJ indicated that the display of an article in a shop window was an ITT not an offer. The question now is where an ITT is considered to be present in e-contracts? This was answered in Partridge v Crittenden and Grainger v Gough where English case law suggested that a website will be construed as an ITT not an offer. This being the case, the advertisement placed by Freegames on the internet as an “Unlimited Games Downloads: Subscription Ð'Ј5 per month”, will be regarded as an ITT for Alfred or the world at large.

Aside the offer discussed above, there must be an acceptance by the Offeree for a contract to be formed at which point he must notify the Offeror either expressly or by implication. Denning LJ stated in Entores Ltd v Miles Far East Corporation, that:

“If an oral acceptance is drowned out by an over flying aircraft, such that the Offeror cannot hear the acceptance, then there is no contract unless the acceptor repeats his acceptance once the aircraft has passed over”.

The principle reason being, without it people might be bound by a contract without knowing their offers had not been accepted. Alfred is left with the option of accepting or rejecting Freegames offer for a binding contract. With the above said, there has been issues as to what point e-contracts become accepted, in which case existing contract law rules will still apply to e-contracts. But now the click-wrap agreement is a known method for e-contract acceptance. This is created when an Offeree completing an e-contract is required to indicate his intent to be bound by the terms of the contract by clicking a button that says “I agree”. Using the above definition, Alfred entered into a click-wrap agreement with Freegames on clicking the “I agree to the terms of use” icon at the bottom of the page, signifying his acceptance and his intentions to contract. The first clear ruling on the validity of the click-wrap agreement was in the US case of Hotmail Corp v Van Money Pie Inc. discussed later. Alfred’s acceptance will be said to be communicated when it reached Freegames computer system, a failure of which it would be argued that no legally binding contract was formed. For e-contracts there have also been suggestions in the past as to an offer being accepted when payment has been charged and taken from the Offeror. In which case, Freegames can also be advised to argue that Alfred’s acceptance was made at the point of payment. It is therefore crucial that Freegames is advised to make it clear in the terms which acts amount to acceptance. The click-wrap agreement is also regarded as a form of electronic signature and is considered legally valid by the Electronic Signature Regulation 2001 as it identifies the person buying the product, indicates a personal involvement and an intention to be bound to the contract. As such, Freegames will be advised that in accordance to the Regulation above, Alfred’s clicking on the “I accept” icon initiated a valid signature.

There should also be some form of consideration between the parties