This document discusses several key legal issues related to e-commerce transactions. It outlines how contracts are formed online and notes challenges around offer/acceptance and electronic signatures. The document also discusses statutes of fraud and how performance and enforcement of online contracts works. Finally, it briefly touches on other legal topics like consumer protection, privacy, jurisdiction and taxation as they relate to e-commerce.

1. Legal Issues
E-Commerce

2. Legal Issues
 Legal rules govern formation,
interpretation and enforcement of
contract.
 E-commerce transactions ought to
specify
 Governing Law (“the law of California”)
 Forum for resolving disputes

3. Legal Issues
 Common Law
 Collection of legal principles developed by
common-law courts in reaction to cases
before them.
 Statutes (by legislative bodies).
 (US) Uniform Commercial Code

4. Legal Issues
 Civil Law
 Statutory code replaces common law.

5. Legal Issues
 In common and civil law systems, other
items have legal significance
 Course of dealing over time
 Usage of trade
 Parties’ agreement on principles to govern
their relationship
 Trading Partner Agreements (TPA)

6. Legal Issues
 International / interstate character of E-
Commerce
 Promulgation of model laws and rules
 UN Model Law on Electronic Commerce
 Directive on a Community Framework for Electronic
Signatures in Europe
 Federal E-Sign Law (US)
 Uniform Electronic Transactions Act (UETA)
 Uniform Computer Information Transaction Act (UCITA)
 Advancement of legislation and regulation in
jurisdictions according to these model laws and
rules.

7. Contracts
 Contract needs
 Offer of specific terms;
 Acceptance of the offer;
 Adequate Consideration.
 To be enforceable, contract needs to
satisfy other requirements
 Statute of fraud

8. Contracts
 Offer and acceptance needs
 Mutual assent,
 Sufficiently definite terms.
 E-commerce problem:
 Does posting on a website constitute
sufficient assent?
 Can an inventory control program that
automatically reorders items give assent to
a transaction on behalf of its owner?

9. Contracts
 Section 14 UETA:
 Interaction of electronic agents or between
electronic agent and individual can result in a valid
contract.
 UCITA
 “Contract might be formed by the operations of
the electronic agent.”
 “A person that uses an electronic agent is bound
by the operations of the electronic agent, even if
no individual was aware of or reviewed the agent’s
operation.”

10. Contracts
 In the absence of statuary law:
 THE LAW ARGUES BY ANALOGY.
 Similar problems were introduced with
letter writing.
 Includes problems with “battle of the form”

11. Contracts
 Consideration
 Can be anything of value
 Delivery of goods
 Delivery of services
 Payment
 Return promise
 Novel methods of payment, delivery, … do
not pose a legal problem per se.

12. Contracts
 Statutes of Fraud
 Certain types of agreements are
unenforceable unless they satisfy the
statute of fraud.
 Includes: the agreement … or
memorandum or note thereof shall be in
writing and signed by the party to be
charged therewith

13. Contracts
 Contracts subject to the statues on fraud:
 Executor or administrator to answer for a duty of
his / her decedent
 Surety-ship
 Contracts made upon consideration of marriage
 Sale of interest in land
 Contracts that are not to be performed within oen
year from the making of them
 Contracts for the sale of goods for the price of
$500.00 or more

14. Contracts
 In addition, many statutes require
contracts to be in writing and signed.
 E-commerce question:
 What is writing?
 What is a signature?

15. Contracts
 Current UCC (Uniform Code of Commerce):
 Writing includes “printing, typewriting, or any
other intentional reduction to tangible form”
 Signed includes “any symbol executed or adopted
by a party with present intention to authenticate
the writing as that of the signer.”
 The restatement of Contracts:
 Signature may be “any symbol made or adopted
with an intention, actual or apparent, to
authenticate the writing as that of a signer.”

16. Contracts
 Office of the U. S. Comptroller General
(1991):
 Contracts formed using Electronic Data
Interchange technologies may constitute valid
obligations of the government for purposes of 31
U.S.C. sec. 1501, so long as the technology used
provides the same degree of assurance and
certainty as traditional ‘paper and ink’ methods of
contract formation.”

17. Contracts
 Electronic Signatures in Global and
National Commerce Act (E-Sign) 2000.

18. Contracts
 Performance
 Once a valid contract is entered, both parties need to
perform their obligations.
 Compliance
 Failure to perform completely and strictly constitutes breach
of contract.
 Perfect tender rule: buyer can reject goods unless they
comply strictly with quality and quantity of the bargain.
 UCC: Buyer who chooses to retain a shipment of goods that
does not strictly conform in quantity or quality waives
his/her right to revoke such acceptance unless “the non-
conformity substantially impairs” the value of the goods to
the buyer.

19. Contracts
 Enforcement
 Goal of law is either
 Restitution (state before contract) or
 Expectation: to set the injured party into a state it would
have entered when the contract was fulfilled.
 Incidental / Consequential Damages
 A breach committed in bad faith, willful and
malicious conduct results in
 Punitive damages.
 Parties can agree to limit exposure to liability for
damages by agreeing to clauses that liquidate or
cap the amount of damages.

20. Contracts
 Evidence
 See COEN 252

21. Other Legal Issues
 Consumer Protection
 Law in general sees consumers as less
sophisticated and in need of a higher
degree of protection.
 A number of statues regarding e-
commerce explicitly state that they do not
preempt consumer protection laws.

22. Other Legal Issues
 Consumer Protection Proposals
 Electronic disclosure is only permitted when the transaction
is initiated and consummated electronically.
 E-signature technologies need to reflect an actual intent to
sign a document.
 No shrink-wrap acceptance.
 Consumer should be given the opportunity to accept or
refuse disclosures.
 Consumer must be able to obtain paper copies.
 Disclosures must be delivered to the consumer’s email
address with a reply requested or retained on the website
for the duration of the contract.

23. Other Legal Issues
 Consumer Protection Proposals
 Electronic record must be accessible and
retainable by the consumer. It must also be
provided in a format that prevents alteration after
it is sent, so it can be used to prove the terms of
the record in a court of law.
 Consumer’s failure to respond to the consent
should trigger paper disclosures before it triggers
default.

24. Other Legal Issues
 Privacy
 Gramm-Leach-Bliley Financial
Modernization Act
 HIPAA
 COPPA

25. Other Legal Issues
 Personal Jurisdiction
 US law: Defendant must have sufficient level of
minimal contacts to be summoned in a certain
jurisdiction.
 EU law: Defendants must be domiciled to be
summoned.
 Negotiability
 Taxation
 Illegal Bargains