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E-Commerce

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Electronic payment systems 12. Secure contract formation in a digital environment 13. Identity and capacity to contract 14. Secure storage of electronic records – PowerPoint PPT presentation

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Title: E-Commerce

1
E-Commerce

1. What is e-Commerce?
2. What is a contract?
3. Elements of an enforceable contract
4. Standard terms of a contract
5. Form and execution of contract
6. Benefits of a written contract
7. Contract issues in the digital environment
8. Jurisdiction
9. When is an e-contract formed?

10. Electronic Transactions Act 1999 (Cth)
11. Electronic payment systems
12. Secure contract formation in a digital
environment
13. Identity and capacity to contract
14. Secure storage of electronic records
15. E-commerce best practice
16. EFT Code of Conduct
17. Scams and Swindles
18. UNICITRAL Model

2
Commerce and contracts

1. What is Electronic Commerce?
2. What is a contract?
3. Elements of an enforceable contract
4. Standard terms of a contract
5. Form and execution of contract
6. Benefits of a written contract
7. Contract issues in the digital environment

3
1. Electronic Commerce

2. What is Electronic Commerce?
Commercial transactions that occur on the
Internet. In e-commerce transactions the parties
rarely meet each other face to face
Creates obvious trust issues between the parties
Makes it difficult to ensure the parties act
lawfully, and transaction itself is legal
Particular concern Unequal bargaining power
between the parties.
Online contracts play an important role in
e-commerce as they stipulate the terms and
conditions governing a transaction between two or
more parties. A body of law has developed to
ensure the legality of all aspects of e-commerce
and the online contracting process.
2. What is a contract?
Legally binding agreement, between two or more
people or organisations.
The Terms of a contract may be expressed in
writing or orally, implied by conduct, industry
custom, and law, or by a combination of these
things.

4
3. Elements of an enforceable contract

A binding contract is usually formed when the
elements below are satisfied
One party makes an Offer, setting out the terms
of the proposed contract to another party or
parties. The terms must be sufficiently certain.
An unequivocal Acceptance of the offer is
communicated to the party who made the offer.
In common law countries (Australia, US, Canada,
UK and other countries whose law originated from
UK), contract must be supported by Consideration.
Consideration is a promise for a promise.
Consideration presumed to exist if certain formal
requirements are followed (for example where
contract is executed as a deed).
The parties to the transaction must have an
Intention to create legal relations. Courts will
not force people into a contract if they did not
intend to be legally bound. The following
rebuttable presumptions exist
if the parties are in a commercial (but not
domestic) environment, the parties are presumed
to have an intention to create legal relations
if the parties are in a domestic environment (e.g
family members or neighbours), the presumption is
that the parties did not intend to create legal
relations.
All parties to the transaction must have the
Legal capacity to effect the transaction.
If any one of these elements do not exist or are
vitiated (e.g due to fraud) there will be no
contract between the parties.

5
4. Standard terms of a contract

Subject to exceptions (for example, consumer
transactions), the parties are free to choose
the terms of their contract. An online contract
should at least contain the following terms
a clear identification of the Parties to the
transaction
the subject matter of the transaction, including
a description of any goods or services to be
supplied
the price, delivery and payment terms
warranties, liability, insurance, intellectual
property and dispute resolution
how orders are to be placed and accepted
including use of electronic agents
record keeping, audit trails and evidence
security, format and authentication of messages
when and where messages are sent and received
responsibility for lost, incomplete or garbled
messages and
the law governing the transaction.

6
5. Form and execution of contract

Some contracts inc. conveyance of land, or
consumer credit transactions must be in a
particular form, or signed a certain way.
Otherwise there is no general requirement under
Australian law that a contract be in a particular
form, or be executed in a particular manner.
(Side of a cow case)
Apart from contracts which must be completed with
certain formal requirements, there is no reason
in principle that contracts cannot be formed by
email exchange, or "click through" agreement, or
executed by digital signatures.
In each case, the question will be whether
anything in the formation of the contract might
leave either party at risk that the other party
will later challenge the enforceability of the
contract, for example on the basis that
terms were not brought to their attention, or
that they did not in fact participate in the
formation of any contract (perhaps because
another person impersonated them).
The legal status of computer-generated evidence
is not the same in all jurisdictions. To reduce
the risk that a court will reject the evidence on
which a party relies to establish a contract, a
jurisdiction clause in an online contract should
specify a jurisdiction whose laws of evidence
accept electronic evidence.

7
6. Benefits of a written contract

Benefits of a written contract include
Risk terms will be implied into the contract by a
court is reduced
when signed, the parties are deemed to have read
the contract and accepted the written terms,
making it difficult for either party to deny the
existence of the written contract, except in the
case of fraud, mistake, unconscionable conduct or
other exceptions recognised by the law
when properly drafted, the parties should know
with certainty their respective obligations
identifies the parties to the transaction and the
commencement of the commercial arrangement and
a conventional or electronic signature on an
original contract provides protection against
tampering or repudiation by the signatory.

8
7. Contract issues in the digital environment

The parties to an electronic contract should
satisfy themselves about the identity and
capacity of the other parties to the contract
determine when a binding contract is formed
determine the governing law of the contract
agree on the electronic payment system used
ensure information exchanges leading up to and
including the formation of a contract are secure
to prevent later repudiation
determine by appropriate terms in the contract
the consequences of breach, frustration and other
factors which may affect the performance of the
contract and
store electronic data relating to or evidencing
the contract in a manner that prevents alteration
by any agent without detection.

9
Jurisdiction

8.1. Where is an electronic contract formed?
8.2. Jurisdiction and online contracts

10
8. Where formed? ETA

The Electronic Transaction Act 1999 (Cth) (ETA),
establishes presumptions about when and where a
contract is formed over the internet. The
presumptions can be displaced by agreement
between the communicating parties. In the absence
of agreement, default presumptions apply. Default
presumptions
Time of Dispatch the time of dispatch of an
electronic communication is as soon as it enters
the first information system outside the control
of the originator (sender) (ss 14(1) and 14(2)).
An Information System is defined as a system
for generating, sending, receiving, storing or
otherwise processing electronic communications
(section 5). Note that this definition is so
broad as to include anything a standalone
internet connection at home, to a large network
of computers running its own server.
Time of Receipt the time of receipt of an
electronic communication is when it enters into
the information system designated for receipt of
electronic communications by the addressee
(section 14 (3)). Where there is no such
delegated information system, then it is the time
that it comes to the attention of the addressee
(section 14 (4)).
Location Under the ETA, the parties are deemed
to be located at their respective place of
business, or if they have not place of business,
at their residential address (section 14(5)).

11
Electronic aspects

9. When is an electronic contract formed?
10. Electronic Transactions Act 1999 (Cth)
11. Electronic payment systems
11.1. Types of payment systems
11.2. Regulation of EPSs
11.3. Consumer friendly EPS

12
When is an e-contract formed?

The general law rules are that
acceptance must be communicated before a contract
will come into existence, and
a contract is formed in the jurisdiction where
acceptance is received.
Offer or mere invitation to treat?
Displaying information about a product or service
for sale on a website may be construed either as
a binding offer, or a mere "invitation to treat".
The courts will look at the intention of the
alleged offerer, gathered from all the
circumstances to determine how the display of
information is characterised.
If the sellers intention shows a willingness to
be contractually bound without any further
negotiations, the display may be regarded as an
offer.
If the traders intention falls short of this,
the display is likely to be interpreted as a mere
"invitation to treat". An "invitation to treat"
is invitation to the website visitor to make an
offer that the seller may accept or reject.
It may be in a traders interests to ensure that
information displayed on a website is not
characterised as a binding offer, as this will
provide an opportunity to review their capacity
to supply goods (or other issues, for example,
any legal restrictions on entering into contracts
with users from particular jurisdictions) before
a binding contract is formed.
Assuming a website is an invitation to treat, and
the website visitor makes an offer in relation to
the goods or services displayed and the seller
communicates acceptance of that offer to the
purchaser through the website, it is likely that
the law may regard the contract as forming in the
jurisdiction of the website visitor (that is the
place where the offeror received communication of
the acceptance).
Timing of acceptance - can be revoked prior
The timing of acceptance is critical, because
generally an offer may be revoked at any time
before it is accepted.

13
11 Types of payment system

There are a number of ways payment of goods can
be effected through cyberspace. A paramount
concern for electronic payment systems is the
security of the transaction, including ensuring
that payment reaches the vendor, and the
customers credit card information or the
customers identifier for some other form of
electronic payment is not intercepted and used
without the customers knowledge. The following
are some of the common electronic payment systems
(EPS)
Internet banking
Current Internet banking only permits cash
deposits and withdrawals to be made using
existing non-Internet methods such as cheques,
cash or electronic funds transfer. Future PCs or
telephones with smart card readers will permit
the transfer of value from an account onto a
stored smart card, using the Internet or
telephone lines.
Credit cards
Credit card details are entered into a merchants
web form on the Internet. The details may be
manually sent by e-mail and verified by the
merchant as a mail-order/telephone-order (MOTO)
transaction, or encrypted using secure socket
layering (SSL) techniques and then automatically
processed by the relevant bank. Transactions
using SSL are more secure but are also more
costly.
Virtual credit card
Appearing as an icon on a computer screen, the
card is used to purchase products using secure
electronic transaction (SET) protocol to
authenticate the buyer and seller by use of
digital signatures. Under the SET mechanism, it
is a third party not the merchant who verifies
the credit card details, increasing
confidentiality and security.
Digital cash
Digital cash is a payment or transfer of value
initiated and processed electronically within
current inter-bank payment systems. Digital cash
is effectively money stored as computer code. The
digital cash is essentially a message issued by a
bank containing its value, the banks identity,
the banks Internet address and a serial number.
The digital cash is securely transferred using
data encryption methods.
Stored value cards (SVCs) (including smart cards)
SVC is a plastic card that can contain a
microprocessor chip (more commonly known as a
smart card) or a magnetic strip. The chip stores
more information than magnetic strip cards and
can perform simple computing operations. The SVC
is inserted into a terminal with a read/write
mechanism that allows information to pass between
the card and the terminal.

14
Secure contracting

12. Secure contract formation in a digital
environment
12.1. Legal risks in electronic transactions
12.2. Digital signatures
12.3. Legal risk with digital signatures
13. Identity and capacity to contract

15
Secure storage of e-records

14. Secure storage of electronic records
14.1. Electronic records and the record keeping
requirements of Commonwealth or State law
14.2. When electronic records must be kept
14.3. Corporations Act 2001 (Cth)
14.4. Limitations legislation
14.5. Retaining electronic contract records

16
Good and bad practice