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Juridic Aspects of Electronic Commerce

Lots of interesting parallel events are going on at the WSIS mostly regarding policy, laws and regulation. UNCITRAL had a presentation today on the Juridic aspects of Electronic Commerce.

UNCITRAL – Franca Musolino Legal Officer, Secreariat, UNCITRAL gave an Overview of her organisation . Harmonization is important so that legal environment is predictable for companies working in different countries. She spoke about the UNCITRAL Model Law on Electronic Commerce and Model Law on Electronic Signatures. Why such legislation were needed? To enable the legal environment for companies working on Information Technology. UNCITRAL Model law is flexible because the technology was still developing. There was a need to fill the vacuum. She explained the principles behind the Model laws of UNCITRAL

Media and Technology Neutrality. No specific technology or medium is prescribed in the Model Laws.

Parties are free to use the technology and forms to make agreements. If the contract is simple and he parties have been dealing with each other through mails for some years then simple mail will suffice however if it is multi million dollar contract electronic signatures are needed.

UNCITRAL Model Law on Electronic Signatures

Electronic Signatures should be legally recognized. It provides a functional equivalence to the hand written signatures. It treats all signature technologies equally. Allows the states to indicate in advance recognized signature technologies. Aricle 1 sets out that the law does not override consumer protection laws. Applies if electronic signatures used in commercial laws. Article 3 sets out the technology neutrality. Atricle 6 gives the conditions which the electronic signature should meet. More info on the above is available at

Jeffry W T Chan Chair of Electronic Commerce group. The United Nations Convention on the use of the Electronic Communications In International Contracts. States who are willing to adopt the Model laws should do this subject to the updates in this convention. In 1986 Legal Guide to Electronic Funds Transfers, 1996 MLEC, 2001 MLES, however there has not been complete harmonization. States have not adopted the model laws completely – they have adopted it only partially. Need for model laws arose because of the global market place, need for certainity for cross border transactions. Objectives of Working Group on Electronic Commerce which commenced in Fall 2002 – harmonise national laws on the use of electronic communications in the formation and performance of croass border transactions. It is a binding international treaty between states. It is a interpretative instrument. No substantive rules except where absolutely necessary. Europeans have a tighter consumer provisions than Americans. It interpretes the contracts and does not create rules. Party Autonomy. Staes are permitted to make declarations. States are obliged to adopt certain principles. However they are permitted to make declarations. It assumes that the sates know about the MLEC and MLES. It is based on the Convention on the International Sale of Goods which is a harmonized law. These are only working assumptions. Working Group comprises state representatives and invited observers. Process of the Working group was also presented. The process was rigorous and every country in the world had the opportunity to make its comments and observations. There cannot be different rules for contracts entered into electronically and other contracts (especially when mixed means are used) For example the offer is electronically but acceptance is in writing on paper. The convention applies to the use of the electronic communications in connection with the formation or performance of a contract between parties whose places of business are in different Sates. The domain name does not indicates the location. For example .IN does not indicates that party is in India. The place of location is that indicated by the party unless it is objected to. In case the party has different places of location then the place of business will be the closest relationship with the contract and not the party. Convention applies only to commercial contracts however states may adopt it to make it applicable to personal contracts also. The convention gives several definitions including Electronic Communication, Data messages. Article 8 provides that a communication or a Contract shall not be denied validity or enforceability on the sole ground that it is in the form of an electronic communication. The Convention provides that E- Signatures is valid if Reliable (as given in the model law of electronic signatures). The communication is presumed to receive if it is capable of being received – if the addressee has designated an address to receive communication, whether or not he has received it does not matter. In case of other addresses when capable of being retrieved and the addressee is aware of it. However there are problems that nowadays because of the anti spam software and firewalls installed in the system of the addressee the mails could be deleted by the system. However even then it will be presumed that the address has received it. The onus is on the addressee to prove that he has not received the mail because the system is under his control and is easier for him to prove that.

Electronic addresses has not been defined. No consensus could be achieved. Email address per se is not electronic address. There was controversy that whether is the address or is the address.

Sales through websites are invitations to treat not offers. It is not binding until the final click by the intending buyer.

Provision regarding Error – Concerned only with the automated systems. Rules of error applies only to error of action and not error of choice. The operator must provide opportunity for correction. But the whole transaction is not nullified only the error can be corrected. Example of 100 books but buying 1 book.

Some important dates

Drafting of Convention by the Group completed in April 2005 and accepted by UNCITRAL in July 2005.

Adopted on 26 October 2005

June 2006 signing ceremony in New York

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