The success of e-commerce transactions is largely dependent on the acceptance by the various parties involved of the binding nature of contracts concluded electronically. Identifying the existence of binding e-commerce contracts is merely a matter of applying common sense to the situation, said Lisa Thornton of Thornton & Morris Attorneys.
"In fact, the unique issues relating to an e-commerce contract concern mostly the form of the contract, not the substance of it."
Speaking at the ICM CyberLaw conference currently underway in Rosebank, Thornton explained that there are some very definite ways for businesses utilising e-commerce to ensure their contracts are binding. Thornton cited three of the most prolific e-commerce contracts as being electronic data interchange (EDI) contracts, "click wrap" agreements and written contracts negotiated and entered into through the medium of e-mail.
EDI contracts, she explained, are those formed electronically, usually with no human intervention. "For example, where a supplier and buyer connect their respective databases, and a buyer`s database of inventory is programmed to place an 'order` for additional inventory from the supplier`s database of inventory and their supplier`s database is programmed to 'accept` the order if there is stock, an EDI contract will be concluded."
However, Thornton acknowledged that the problem with the enforceability of EDI contracts is whether the law, in particular the law of agency, recognises the authority of a programmed computer to bind a person to a contract.
Click wrap agreements are where contracts are concluded in an online environment where the terms of the contracts are set out and offered by one party, and are accepted by another party through, for example, clicking on an "accept" button. Thornton said the determination of binding depends on, among other things, the details of how the terms of the contract are set out and how the accepting party is required to indicate acceptance.
"It`s got to be an affirmative act."
Contracts where the terms are negotiated and concluded via e-mail are also binding, providing that when all parties agree to the terms, each affixes a digital signature on duplicate originals and transmits these "signed documents" to the other.
But, Thornton pointed out, South African law in this regard is uncertain. "Although the Law Commission has studied issues of electronic evidence in court and made various recommendations with regard to legislation from time to time, our courts will have to follow common sense in this regard.
"Two other important issues are those of security and privacy. Attention to these aspects will enhance consumer confidence [in e-commerce]."
Thornton also advocated the implementation of good business practices, such as not selling illegal products and services, not misleading customers, providing complete and accurate product information, with price of product and/or delivery clearly indicated, delivering the products and services timeously, and creating return and after-sales policies.
"As you can see," Thornton concluded, "we don`t create new law, but evolve what is there. The best advice is to keep in mind normal contracting principles and practices and try emulate them in forming electronic contracts, keeping in mind the particular pitfalls of electronic contracting."
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