Electronic Transactions Law - Lecture 3: contracts


Published on

This is the third lecture in the electronic transactions law lecture series

Published in: Education
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Electronic Transactions Law - Lecture 3: contracts

  1. 1. Electronic Transactions Law ELECTRONIC CONTRACTS1 Department of Commercial Law University of Cape Town
  2. 2. INTRODUCTION Electronic contracts are wholly or partially negotiated & concluded through data messages (e.g. email, sms, websites) Electronic Transactions Law They may be negotiated and concluded by natural persons (as principals or agents) or by electronic agents (automated transactions) However the following transactions may not be concluded electronically: 1. Sale/long-lease of land 2. Wills 3. Bills of Exchange s4(3) & Schedule 1 ECTA 2
  3. 3. CONTRACT IN SA LAW Essentalia for valid contract:1. Offer & Acceptance = Meeting of minds/consensus between parties Electronic Transactions Law2. The parties must have contractual capacity3. The agreement must be both legally and physically possible4. The agreement must comply with any formalities prescribed by law Validity may be affected by misrepresentation, mistake or duress 3
  4. 4. TIME AND PLACE OF CONCLUSION OFELECTRONIC CONTRACTS NB re Jurisdiction, Applicable Law, Lapsing of Offers.  Information/Expedition/Reception/Objective Theories Electronic Transactions Law  s22 ECTA: reception theory applies to electronic transactions 4
  5. 5. ECTA- RECEPTION THEORY Sending: s23(a) : a data message, must be regarded as having been sent by the originator, when it enters an information system Electronic Transactions Law outside the control of the originator or, if the originator and addressee are in the same information system, when it is capable of being retrieved by the addressee. Reception: s23(b) : a data message must be regarded as having been received by the addressee when the complete data message enters an information system designated or used for that purpose by the addressee and is capable of being retrieved and processed by the addressee. Case: Jafta v Ezemvelo KZN Wildlife [2008] JOL 22096 (LC) 5
  6. 6. ECTA- RECEPTION THEORY: PLACE OFRECEIPT s 23(c): ‘a data message must be regarded as having been sent from the originator’s usual place of residence or business and as having been received by the Electronic Transactions Law addressee, at the addressee’s usual place of residence or business’. s25: attribution of data message (originator himself/ authorised agent/automated system programmed by self or authorised agent) *Automated Transactions s 26(1): the agreement is valid upon receipt of the acceptance and it is not necessary for the addressee to acknowledge receipt. 6
  7. 7. ONLINE AGREEMENTS  Categories: Electronic Transactions Law  Contracts for sale of goods  Contracts for the supply of digitised products  Contracts for the supply of services/facilities  Manner of Acceptance: o Terms and Conditions: Shrink Wrap, Click-wrap and Browse-wrap contracts which refer to the way in which the contracts are concluded more so than the content thereof. 7
  8. 8. SHRINK WRAP & BROWSE-WRAPCONTRACTS SHRINK WRAP: e.g. software licenses printed on paper, placed within the shrink-wrap of the software package itself.1. Purchaser bound upon opening of packaging Electronic Transactions Law2. May be voidable if buyer’s attention not drawn to terms and conditions BROWSE WRAP: binds the user of a website to a contract created by the users mere browsing of the website. 8
  9. 9. CLICK-WRAP CONTRACTS  agreements built into Internet web pages. The purpose of these agreements are wide Electronic Transactions Law ranging, but they are commonly used for: • Accepting term of use, e.g. regulating access to websites with an adult content • Containing exclusion clauses, in an effort to limit or deflect liability from the site owners or administrators • License agreements 9
  10. 10. TERMS AND CONDITIONS  Binding if not read? What is the position in SA Law?  Ticket cases – Durban’s Water Wonderland (Pty) Electronic Transactions Law Ltd v Botha and Another 1999 1 SA 982 A  reasonable measures to bring the content thereof to the attention of the client  terms and conditions therein contained constitute binding contractual terms.  opportunity must be given to accept or decline  highlight unusual or unexpected terms 10
  11. 11. AUTOMATED TRANSACTIONS S20 ECTA an electronic transaction conducted or performed, in whole or in part, by means of data messages in which the conduct or data messages of one or both parties are not reviewed by a Electronic Transactions Law natural person in the ordinary course of such natural person’s business or employment A party (X) interacting with an electronic agent to form an agreement is not bound by the terms of the agreement unless those terms were capable of being reviewed by a natural person representing that party (X) prior to agreement formation. (S20(d)) 11
  12. 12. AUTOMATED TRANSACTIONS S20 ECTA no agreement is formed where a natural person (X) interacts directly with the electronic agent of another person (Y) and has made a material error during the creation of a data Electronic Transactions Law message and—(i) the electronic agent did not provide that person (X) with an opportunity to prevent or correct the error;(ii) that person (X) notifies the other person (Y) of the error as soon as practicable after that person (X) has learned of it;(iii) that person (X) takes reasonable steps, including steps that conform to the other person’s (Y) instructions to return any performance received, or, if instructed to do so, to destroy that performance; and(iv) that person (X) has not used or received any material benefit or value from any performance received from the other person (Y). 12
  13. 13. ENFORCEABILITY  Interpretation of terms and conditions, including disclaimers, exclusions & limitations of liability (traditional contract law approach) Electronic Transactions Law  Seeking damages for breach  Actions / Applications – applications inappropriate for damages  Problems with damage claims – legal costs, uncertainty of outcome, determining quantum, damage may be less than cost needed to recover it  Uniform Rules of Court Rule 5 – service of summons outside South Africa: time consuming and frustrating process 13
  14. 14. ENFORCEABILITYDamages Specific Performance ECTA’s Influence on Electronic Transactions Law  Defendant not in SA – recovery of how to enforce? damages: Complications iro  Section 43 – Uniform Rules of Court Cancellation Rules  Section 44 –  ECTA: Section 46 – Cancellation during statutory rights to cooling off period specific performance  Section 43(5) – Damages or loss to customers in some incurred due to internet related payment system of transactions. supplier 14
  15. 15. Electronic Transactions Law Electronic Transactions Law compiled by Caroline BNcube is licensed under a Creative Commons Attribution- NonCommercial-ShareAlike 2.5 South Africa License. To view this a copy of this license visit http://creativecommons.org/licenses/by-nc-sa/2.5/za/ 15