e Contracts – Contracting in an Electronic Age

Around 15 years ago we started on a journey of electronic everything. Suddenly the Internet had become commercial and we were all scrabbling around trying to ensure we could still do business with each other in this new online environment.

How e contracts (electronic contracts) were formed, who was authorised to 'seal the deal', their confidentiality and whether e contracts were admissible as evidence in court were just some of the questions organisations asked of their lawyers... and politicians! 

Today, we still ask the same questions, albeit with the benefit of hindsight and a sense that the real world is different from the one predicted. Sure, measures such as the Electronic Communications Act, E-commerce Regulations, Distance Selling Regulations, and E-signatures Regulations have all tried to create a legal framework in which online commerce can flourish, but the fact remains that around 60 per cent of EU cross border e-commerce transactions still fail for one reason or another. In a report published today, the OECD has more than hinted that the European Single Market is failing because of a lack of political will whilst the troubled Euro does nothing to help provide the certainty that online markets demand.

Even the proposed European Sales Law, designed to help ease cross-border e-commerce is kicking up a fuss. Lawyers don't want it because providing standard contractual terms to businesses trading cross-border  is staple income; sinister moves could be afoot at policy level to take legal services out of the UK and into Germany; and British businesses still need to find the appropriate empirical data to support the proposed text in order to fend of the critics.

Scottish Law Commission

Consumer contracts, e contracts

Enter the Scottish Law Commission, which has decided to take another look at electronic contracts in light of the European Sales Law.  The Commission argues that we enter into contracts so frequently that we sometimes don't even notice that we are doing so: buying a bus ticket, a loaf of bread or a ringtone.  In other situations, the contract will be the product of lengthy and careful negotiation, such as when we get a home extension or new kitchen or, in the commercial field, when a public authority has a school built or an airline buys a new plane.

In many cases, the contract is performed satisfactorily, but in a few cases problems may emerge and legal advice is needed.  Are the rules of Scots contract law adequate?  Could they be improved?

These are questions which need to be answered periodically to make sure that the law is still satisfactory and is keeping pace with expectations of all users, whether private individuals or commercial parties.  Just now there is added urgency because of the rapid rise in the use and importance of electronic media – how do you form a contract in the electronic age and what role can electronic signatures play?  Do the rules which were designed for oral and paper contracts still work for e-contracts?

The popularity of mobile devices and the predicted growth of mobile commerce (m-commerce) over the next years will doubtless challenge many of the basic rules governing e contracts. But the principles will still remain the same. Both parties will need to agree the terms and show their commitment through electronic process. That's where we want certainty and market forces will not tolerate politicians and legislators who like to talk about the issues but don't have the intellectual capacity or political commitment to act.


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