The Law of E-Commerce

English fairness has long been recognized as respecting unblockdom of amaze. In new(prenominal) lyric, the state has non, generally, laid down legislation which has interfered with the freedom of parties to agree the m hotshottary value of their deoxidises. In much recent years, there capture been a number of inroads into the principle of freedom of contract, particularly with respect to consumer protection. It in truth much re chief(prenominal)s the case that English law does provide parties with considerable flexibility both as how they conclude contracts and the monetary value that they include.Offer and bankers acceptanceIn purchase rescript for a contract to be backbone at a lower place English law it requires an advance, acceptance, intention to create legal relations, consideration and capacity. With de adult maled to electronic commerce, the contr real(a) requirements need troubleful consideration.OfferA supplier stick outs an unconditional offer which co uld be accepted by whatever potential guest. If the customer informs the supplier that he or she accepts the offer ,there ordain be a binding contract. On the otherwise hand, the supplier could provide to the customer what is known in legal terms as an invitation to treat. This is not a binding offer, and an invitation for the customer to slay an offer, which the supplier pot then accept.It is very authorized for suppliers wanting to sell goods through on line to ensure that their websites and other on line advertisements be interpreted as invitations to treat. If a suppliers website constituted a formal offer to provide certain services or goods, the supplier may be in breach of the local anaesthetic laws (both civil and criminal) if there are certain kind of customers who would not ordinarily be entitled to cultivate the purchases which are being offered.For incidents, the deal of alcoholic products to minors and guns or other weapons into all countries, when some c ountries spring more than carefully the circumstances in which guns or other weapon give the sack be purchased. betrothalEnglish law is generally very flexible about how an offer prat be accepted. borrowing could be communicated by an acknowledgement (e.g. email) or by physical act such as the transportation of the goods. What is more uncertain under English law is when acceptance takes place particularly in an mesh contract.The general rule is that an offer is not accepted until acceptance is communicated to the offeror. So outlying(prenominal) there is no case relating to this rule which applies to contracts made over the internet. But however, there is case law which applies to other instant(prenominal) forms of communication, such as telexes and facsimiles, provided that such communications are move during the business hours. With the global use of electronic trade, the question of when each business day begins may be difficult to determine particularly when the cus tomer cannot easily work out where the innkeeper accessed is based.The major exception to the general rule on acceptance concerns acceptance by post. In the majority of cases, acceptance takes place when the acceptance is posted and not when it is original by the offeror. The postal rule means that the contract exit already have been made and the offeror will be bound to complete his obligations, provided that the other party can prove that the acceptance letter has been posted.In some ways, notwithstanding its instantaneous nature, acceptance by electronic means does have similarities to postal acceptance. A reciprocal carrier will assume the responsibility in transmitting the message (in this instance the carrier is the network Provider). With this kind of communication, it is not easy to determine the receipt with respect to email sent over the internet. What this means is that the sending party will not know when or if the acceptance has been received. given up the fact tha t it is not clear when acceptance of an offer will occur, any supplier should take care to consider how and when acceptance will take place. This has long been the principle adopted in EDI contracts, and those doing business on the Internet have to ensure that they do not leave any affaire out for questioning later in the contract. Any supplier should have no difficulty in exercising control over the stylus in which the only contrperforming process is conducted.Unlike the Internet most real world contracts are make on a person to person basis, either by a verbalisming at to face conversation or verbally over the phone. By contrast, most Internet contracts are remotely made, inert and above all automated. If there is any ambiguity or uncertainty over the transaction exactly a more promising issue to whether there was a contract at all. dumbfound terms and liabilityEnglish law gives the contracting parties the freedom to set many of the terms upon which they will contract the b usiness. But this will be subjected to two areas where the law will intend terms. First, certain terms will be implied by statute. Secondly, the law will imply terms just to give business efficacy to a contract. This happens where either parties have forgotten to take on with an issue expressly in circumstances where they would have done so had they thought about the issue at the time f the contract was finalized.The main terms implied by statute in contracts to sell goods is the Sale of Goods sour 1979. This terms will imply to any contract that* the goods will be of satisfactory quality* where expressly or impliedly known by the supplier, the goods will be reasonably fit for the vendees purposes* where goods are sold by reference to a description, the goods will correspond to that description. This term is particularly important for internet sales where a buyer may sop up a purchase of certain goods having visited a suppliers website.If a supplier provides services, the impl ied term for the services will be that they will be dealt with reasonable skill care, and within a reasonable time march (Supply of Goods and Services Act 1982).Under the inequitable Contract cost Act 1977, these terms cannot be take overed in any circumstances with respect to consumers. Sometimes in the contract for a business, a supplier can exclude liability for breach of these implied terms where it is reasonable to do so.Not only the Unfair Contract Terms Act 1977 in which the implied terms under the Sale of Goods Act can be exempted, solely the Act also imply other liability can be curtailed as far as the services concerned. The main provisions deal with* liability for death and personalized injury this cannot be exempt under any circumstances* liability in negligence other than for death and personal injury this can be exempt where reasonable* liability to a consumer this can be exempt only where reasonable (except in the case of liability for breach of the terms impl ied under the Sale of Goods Act* liability when dealing on the suppliers standard terms and conditions a supplier can only be exempt liability to his customers where it is reasonable to do soThere are a number of matters with regard to the reasonableness that the court will take into account when questioning each case individually. The questions are doubtlessly related to the insurance carried by both parties what other sources were open to customers and whether the buyer knows or ought to know the exclusions and limitations clauses collective into the contract.If there are any ambiguities in the terms of the contract, the court will be in privilege of the customer. And the supplier will be left to prove that his exclusions are to be reasonable with respect to doing the business.No doubt that many online contracts will incorporate standard terms and many sales will be directly to consumers, the Unfair Contract Terms Act will play a role in determining the exposure a supplier may face in providing the services or goods utilise the Internet as a communication mechanism. The UCTA will only be using the English law system for a contract of consumers if they are based in the UK and for a contract where there is a choice of law other than English law, when it is selected for the purposes (mainly or wholly) of trying to a overturn the effect of UCTA.Apart from the Unfair Contract Terms Act, there is one exception with regard to the contracts conducted over the Internet. It concerns the outside(a) supply contracts where the offer and acceptance of the sale of goods take place in different countries or the goods are physically shipped from one jurisdiction to another. Many companies wishing to sell goods through the Internet could use this exception whereby the purchaser accesses the server to dictate goods from other location which is outside of the English jurisdiction. It should be realized that this exception can be applied even where the English law is gover ning law of contract.When a contract is considered to be an international one, the Unfair Contract Terms Act will not intervene and a supplier is free to limit or exclude his liability without having to look at the UCTA to see whether if it is reasonable to do so. Although it is likely to apply to sales to businesses only in the light of certain parallel consumer legislation the Unfair Terms in Consumer Contracts Regulations 1994.In addition to UCTA, any supplier considering doing businesses over the Internet mustiness also back up in mind the impact of the Regulations when dealing with the consumers. These Regulations incorporate into English law of the European Community directing on Unfair Terms in Consumer Contracts, which provides the entire states of the European Union cases in which it is unfair to limit or to exclude certain chastens of consumers by contract terms. If the terms of the contract is considered to be unfair, then it will be declared as void.Furthermore, the Regulations could assist the consumers if the consumers are asked to pay a penalty in the event they fail to complete their contractual obligations and when the supplier restrict the consumers legal recourse in the event of a breach (for instance, by making the consumer go to arbitration). It is for this reason that it was suggested that the international supply contract with the exception in UCTA will only be of real benefit to those selling goods to businesses.Furthermore, there are also other helpful pieces of legislation which a consumer can depend on* The Consumer Credit Act 1974 if a customer has paid for the goods by credit card and the value of each item is century or more then the credit card company assumes the same responsibilities as the supplier does and a consumer can make a complain to them.* The Misrepresentation Act 1967 may give a customer the rectify to give goods and have his money back if he/she has been told something factual about them that made him/her decide to buy unless which turns out to be untrue.* The Trades Description Act 1968 if a seller makes a particularly gross disproof about an article or if he or she is regularly misrepresenting the qualities of any goods then this may example a complaint to and investigation by Trading Standards who have the power to prosecute.* Misleading Prices Regulations the law does not control damages as such but does requires that charges are accurately displayed or advertised. If a seller has wrong displayed a expense a customer cannot force a sale at that price but it may warrant a complain to Trading Standards.So how can businesses conducting sales over the Internet protect themselves from the inevitability of set errors? Hence thousand of orders can be placed with online retailers before they can detect the problem. When the prices are incorrectly displayed and contracts are organize, the sellers are forced to choose between accepting that price as a financial loss in goodwill or trying to consider the contracts under the doctrine of one-party drop away.Otherwise to avoid the contracts to be binding with customers with the incorrectly pricing, the sellers should employ protective methods of contract formation that assist them to prevent loss.The risks and costs of pricing errorsMany online errors result from the fact of proofreading errs and software problems, but a lot of mistakes keep increasing because many sellers online tend to change their prices more often than blueprint and convenience high street stores 1. Furthermore, online businesses execute sales automatically and therefore lose the added safety of having the clement eye confirm the price.The Internet, with all the richness of information resources, can cause some harm. Many of the online obtain combine with chat rooms, emails and bulletin board which in turn can result in a flood of orders and thousands of sales being processed before the sellers is able to pinpoint and correct the mi stake. For instance, in 2001, Kodak offered a 329 digital camera for 100 2. At the time the case was decided that Kodaks automatic confirmation email formed legally binding contracts 3, and in the end, the company was forced to honour the sales. The incident caused the company satisfying losings of more than 2 million 4. Kodak argued that, if there was a contract formed, that contract could be void by reason of mistake (i.e. the price of the goods offered was so low that there was obviously a mistake).Kodaks refusal to carry out orders was widely reported. The common law view was that Kodak would lose any actions brought against it because 1) its standard terms were unfair to the consumer 2) a camera worth 300 being sold as a special offer for 100 was not an obvious mistake and 3) Kodaks reply not only to acknowledge the sale, but used the words this contract, Kodak forced to accept the orders.In another example involving Argos, a schedule online retailer, who advertised a TV on its website for 2.99, one one-hundredth of its normal price. Argos received orders worth over 1 millions, no(prenominal) of which were acknowledged. Argos argued that there was no contract between the customers and itself, because Argos did not confirm any orders as far as the product concerned. The case was decided confidentially and it is believed that Argos did not fulfill the majority of those orders.The equitable doctrine of coloured mistakeWhen the online seller make honest and honourable mistake on pricing which result in big losses, their mistake could be considered based on the doctrine of unilateral mistake. What this means is that one partys mistake could make the contract voidable when the mistake concerns a basic assumption on which the contract was formed and has a material effect on the agreement that is adverse to that party 5. Furthermore, the effected party must prove that a) the mistake is such that enforcement would be unconscionable, or b) the other party had r eason to know the mistake or should have known that the price was a mistake 6.An unconscionable contract is defined as no man in his senses, not under delusion, would make.and which no fair and honest man would accept. 7. The contract, if was formed, must cause hardship to the effected party 8. In addition to this, the court would look to see whether the sale would cause the seller a big loss and not merely a diminished profit 9.Alternatively, the online seller could also prove that the customers had reason to know or ought to know that the price was wrong 10. Reason to know means that a person has a duty to another and he would not be acting adequately in the protection of his own interests were he not acting with reference to the facts which he has reason to know 11.Rescinding the contract is the only remedy option under the unilateral mistake it is not a basis for reformation 12. It means that the seller cannot ask the customer to go ahead with the sale at the actual price. But i nstead, the seller must cancel all customers order and re-offer the good at the actual price. However, after the re-offering the good the customer might not show any more interest in purchasing it.In some instances, the court might refuse to order rescission. The court will consider whether one party has so detrimentally relied on the contract it would be inequitable to order rescission 13, will be prejudiced by rescission 14, or cannot be returned to the status quo 15. Furthermore, the court might refuse to rescind the contract when the mistake resulted from the sellers negligence or neediness of due care 16.Case of an e-seller policy amazon.com provides an example of an online seller who has incorporated a policy into its website to deal with potential pricing mistakes. It provides a direct link to its pricing policy from its term of use. In its term, Amazon states that the price of any products is not confirmed till the customer completes the order. Additionally, Amazon further s tates that the items in the catalogue may be mispriced and the price will be verified before its sent out. If the actual price is lower than the stated price, Amazon will charge the lower price and ship the good. On the other hand, if the actual price is higher, Amazon will either contact the customer or cancel the order and notify the customer of its cancellation.Despite all these precautions, however, Amazon has been involved in a number of product line concerning the incorrect pricing. Recently, in the UK Amazon made a mistake in advertising iPaq handheld computers priced at less than one fiftieth of the retail price. But fortunately, Amazon has managed to avoid big losses because its conditions of sale explicitly stated that the contract is not formed till the good was dispatched, giving Amazon the right to cancel most of the orders it has received.The contents of its conditions statement were the same throughout. On the same token, in America, Amazon erroneously put on sale a memory module priced at 10% less than the actual price and DVDs priced at 75% of their list price. Amazon in America emailed notices to customers, in according to their pricing policy, requesting if they could pay for the actual price of the products or cancel their order completely. Several customers filed complaints to the Federal Trade relegation and the Better Business Bureau. But it is not clear how these complaints have been resolved.ConclusionIn short, to avoid losses caused by pricing errors, online seller can employ a few measures ensuring that his business is protected. One of the thing the seller should do is he should include the terms and conditions in the contract stating that he reserves the right to cancel orders and an explanation that the customers order only constitutes an offer, which the seller can accept by charging the customers credit card or by dispatching the good. In addition, the customer should be required to assent to those terms and conditions by cli cking I accept during the checkout process.The English cases indicate that the terms of a contract are binding if a seller has made sufficient efforts to bring the terms to the attention of the buyer and if the parties agree to the terms. It is very important that the buyer who buy things online ought to see and accept the terms before an order is placed. However, the terms should allow the sellers to winnow out orders at any stage before dispatch. Any automatic response to an order ought to let the buyer know that a binding contract has not been entered into and the price is subject to change until it is shipped. Although these precautions has taken place, a seller online may still face potential litigation and consumer complaints, concerning any incorrect prices confirmed by auto-reply emails.The Internet is undoubtedly will grow in importance and it is no more than a incision of communication just like the telephone, telex or fax. Furthermore, electronic contract is becoming mo re common and right now a substantial percentage of both commerce and consumer contracts is reason out in cyberspace. Although e-commerce contracts offend some problem, but they can be overcome by applying the three basic questions, when was the contract concluded? What are the terms of the contract? and where is the contract governed? These questions would help us to deal with any contract whether it is formed electronically or by more traditional means.It is the moral equivalent of being given withal much change in a supermarket and pocketing the money instead of handing it back ( Bill Thompson, technology analyst).