New Convention on Electronic Contracting

Many thanks to Jong Navarro for pointing out that the UN General Assembly adopted a new convention on electronic contracting.  The UN press release is here and a copy of the convention is here.

I scanned through it and it’s basically a re-statement of the UNCITRAL Model Law on Electronic Commerce but with some additions and clarification on the use of electronic communications for contract formation.

For me, two things stand out in the convention. 

Article 11 of the Convention reads:

A proposal to conclude a contract made through one or more electronic communications which is not addressed to one or more specific parties, but is generally accessible to parties making use of information systems, including proposals that make use of interactive applications for the placement of orders through such information systems, is to be considered as an invitation to make offers, unless it clearly indicates the intention of the party making the proposal to be bound in case of acceptance.

Sound confusing? Well, this provision reminds me of problems some years ago about pricing errors in on-line websites. I recall there was one involving a store in the U.K. which advertised on its site a TV set for 1.99 pounds. Someone made a mistake on the text which was supposed to read 199 pounds. If memory serves, a court later found that the website information was merely an invitation to make offers — not an offer.

You see, the people calling in to avail of the advertised price were claiming that the site was making an offer and since they had accepted it, they had a perfected contract that could be legally enforced.  The court disagreed, saying that the site owner was not making an offer but merely asking people to make offers.  The above-quoted provision in the Convention takes the same position.

The other provision that stood out for me is Article 12 which reads:

A contract formed by the interaction of an automated message system and a natural person, or by the interaction of automated message systems, shall not be denied validity or enforceability on the sole ground that no natural person reviewed or intervened in each of the individual actions carried out by the automated message systems or the resulting contract.

This provision reminded me about a comment that Sen. Miriam Defensor-Santiago made in the Senate deliberations for the E-Commerce Act. She asked about the validity of contracts where a human being deals exclusively with a machine or computer. Many on-line transactions fall into this category (domain name registration was even mentioned in  a string of US cases) — not to mention computer software EULAs (end-user license agreements) which all of us have clicked-through at one time or another.

At any rate, this provision makes it clear that the contract will be valid even if no human intervened in the contracting process.

So, the convention puts to rest some problems arising from on-line contracting.  I’ll be reading it in the near future and if I see something more, I’ll be posting it right here.