E-contracts

Posted: January 4th, 2023

E-contracts

                                                                   Introduction            

            Developments in technology have had a significant impact on the social, economic, and political aspects of life globally. The adoption of different technological advancements has led to the evolution in the ways of production and consumption.[1] In the economic scale, technology has been vital in the growth of digital businesses through the application of digital technology and media to obtain a competitive advantage by optimizing internal organizational processes with digital and traditional channels to market supply.[2] Many organizations have leveraged the use of technology in enhancing their production and interaction with their consumers.

            The discovery of the internet led to vital changes in business operations. The internet has resulted in the rise of electronic commerce, which involves the purchasing and selling of products and services using the internet, and the transfer of cash and information to execute transactions. It requires business from an online perspective.[3] In e-commerce, electronic transactions can be done either between parties within the same jurisdiction or parties in different jurisdictions.[4] The commercial dealings normally happen between firms, companies and customers, private organizations and the public sector, and between customers. E-commerce has different business models and approaches which are reached in terms of online agreements referred to as e-contracts. Various aspects of e-commerce and e-contracts are analyzed.

The Formation and Legality of E-Contracts

            E-contract refers to different types of legally binding agreements in the line of e-commerce involving the interaction of two or more represented parties using electronic means or other programmed agents that recognize each other’s existence.[5] The contracts are formed wholly or partly through communications over the internet or other computer networks.[6] The significant ways through which e-contracts are executed are using the electronic mail, website trading, and electronic data interchange.

            The electronic mail system is a technology through which messages, letters, pictures, and audio and video content can be exchanged from the author to one or more recipients using the internet.[7] The use of the email involves typing the message and attaching digitally packaged documents and sending them to the recipient. Contracts initiated through the use of emails are, to a greater extent, similar to the traditional contracts[8]. All negotiations are conducted using email by exchanging messages until the terms of the contract are reached. Usually, in such agreements, the mails exchanged could be the contract or a separate electronic document outlining the terms of the agreement and digitally signed by the parties that could be attached.

Besides, website trading, also referred to as clickwrap agreement, is common in electronic contracting, mostly involving business products. Commodities are marketed on the website, and consumers are requested to select the products they want to buy, payment mode, and methods of delivery.[9] The strategy presents customers with a standard form of agreement that states the rights and duties of the concerned parties. In website trading, buyers interact with the vendor’s software.[10] Transactions are automatically terminated when clients disagree with the terms provided. In cases where clients agree with the terms of the contract, they are allowed to proceed with the transactions.

The universal law provides that a contract does not necessarily require taking a specific outline. Therefore, with technological development, agreements can be reached through different approaches, including the internet, telephone, orally, in person, or through the completion of a formal document.[11] The legality of e-contracts is outlined in the UNCITRAL Model Law on Electronic Commerce, which describes that agreements expressed through the use of data messages shall not be denied validity provided that the data message is used as per the terms of the contract.[12] Also, the draft Electronic Transaction Bill 2011 has similar provisions.

Law Provisions for Consumer Protection in E-contracts

Despite the goodwill use of technology by leveraging the internet in e-commerce, many cases of online crimes are often encountered. Developments in cyberspace have led to increased online crimes, mostly targeting confidential data in online banking transactions, internet purchases, and electronic cards.[13] The sort of crimes coordinated includes fraud, money laundering, and identity theft, among other cyber-related offenses. Consumer security is essential in all aspects of commerce.[14] The global arena is experiencing a hard time in handling cybercrimes to ensure the protection of consumers in e-commerce.

Consumer law requires that users are entitled to sufficient information regarding the services being provided. In e-contracts, both parties involved in the agreement are subject to clarification and understanding the provisions of the contract before getting into one.[15] This process is essential to ensure that consumers are aware of the contract terms and conditions and have the knowledge of the products they wish to purchase via the internet. The provision of sufficient information is vital in eliminating consumer complaints after completion of purchase and transactions.

Besides, consumer legislation globally provides for the respect and confidentiality of consumer data. Specific policies may vary from state to state but have the same objective.[16] The basic principles of Data Protection and Protection Laws, as outlined in the Organization for Economic Co-operation and Development (OECD), include data awareness, which pushes for websites to provide consumers with a clear and detailed notice regarding any practices of their data.[17] Consumers should be presented with the choice of how their information could be used beyond the terms of the agreement. They should also guarantee reasonable approaches to protect consumer information.

Consumer protection in electronic commerce dispute resolution is guaranteed, and nations have different approaches towards implementing resolution procedures. Formations of e-contracts should consider state approaches towards dispute resolutions should any occur.[18] Business platforms and consumers are expected to adhere to provisions of national law, as well as the conditions in their agreements. For instance, according to the Consumer Protection Law no. 39/2013 in Kuwait, consumers have the right to exchange or get refunds within fourteen days of purchase provided that the product is in good condition, and the consumer has the custody of the merchant’s invoice confirming the validity of the product.

The law also provides penalties to reported cases of violation of the consumer protection law provision.  The approach is essential as vendor platforms offer their services according to the regulations following the terms of the agreement.[19] The law ensures consumer protection by imposing harsh penalties on vendors who violet contracting conditions. In Kuwait, chapter seven of the national Consumer Protection Law outlines the penalties for violations of the law, while chapter eight supplement information about the impacts of the penalties vendors.

Administrative regulations in electronic agreements require the provision of electronic evidence. Online purchasing in Kuwait is guided by Article 16 of the national Consumer Protection Law that involves the provision of invoices confirming the purchase of the product, including the date of sale and purchase, price, quantity, and description of the product.[20] The invoice is essential for the consumer as it provided the basis on which claims against the satisfaction of the product can be brought to legal action.

Aspects of the Electronic Signature in E-contracts

Electronic signatures are the different provisions through which electronic documents can be signed off. Basically, an electronic signature is a series of codes, digits, or objects that have a unique identity of the signing party and distinguishes them from others.[21] The uniqueness of electronic signatures is vital in the prevention of personification incidences aimed at obtaining data or tracking online transactions illegally. Advancements in technology have resulted in the formation of digital signatures that serve the same purpose as electronic signatures in maintaining the uniqueness of electronic documents.[22] Electronic signatures are essential as they ensure the provision of security of electronic documents through the provision of the identity of record signers.

Examples of electronic signatures include the use of a biometric signature, an automated technique that involves the determination of the physical characteristics of an individual and comparing it to that in the database before accessing online content.[23] The traits may include the use of fingerprints or the eye’s retina by looking on a special camera to obtain access to information. The use of passwords and personal identification numbers is also an example of e-signatures[24]. Electronic documents with such security cannot be accessed by someone who does not know the PIN or password. The clickwrap signature involves the clicking of specific icons to apply a signature on electronic documents.[25] For instance, clicking on the send icon for an email can be considered as a clickwrap.

Electronic signatures are considered valid signatures as they specify the authenticity and certification of authors and persons accessing electronic documents. E-signatures are legally valid and admissible in the court of law in Kuwait. The Electronic Transaction Law, No.20 that was established in 2014 highlights that the credibility of a contract is not only limited to handwritten signatures but also electronic signatures and e-contracts will remain legally valid as agreed by the involved sides.[26] Article 2 of the law provides that the regulatory scope of applications of e-signatures which include electronic records, messages, information, documents and signatures related to civil, commercial and administrative transactions. However, the law excludes the use of digital signatures in transactions related to personal status, real estate tittle deeds, and promissory notes and negotiable bills of exchange.[27]

Conclusion

The use of the internet in commercial activities has led to a rise in different aspects of e-commerce. Currently, there is no need for one’s physical presence in reaching agreements and signing of contracts. The invention of e-contracts has eased the ways through which business transactions and purchase of goods and services are conducted. The contracts are formed wholly or partly through communications over the internet or other computer networks. The significant ways through which e-contracts are executed are using the electronic mail, website trading, and electronic data interchange. E-contracts are legally binding, and their authenticity is guaranteed. Electronic signatures are unique codes and patterns incorporated in electronic documents signifying the individuals involved in its production.

Operations in e-commerce should abide by the state and international laws that govern online data and purchasing. Nations have a set of policies that protect consumers in the fast-developing field of e-commerce. Consumer protection is essential since developments in cyberspace have led to the vulnerability of online consumers with the imminent risk of being victims of cybercrimes. The global arena is experiencing a hard time in managing cybercrimes to ensure the protection of consumers in e-commerce despite the developments in associated technologies.

Bibliography

Becher, Shmuel, and Tal Zarsky. “E-Contract Doctrine 2.0: Standard Form Contracting in the Age of Online User Participation.” Michigan Telecommunications and Technology Law Review 14, no. 2 (2008): 302–366.

Ilobinso, Ihuoma. “Formation of Electronic Contracts: Melding the Traditional Contract Law with Contemporary Electronic Commerce.” 2 Commercial and Industrial Law Review (2016): 49–71.

Kavia, Hussein. “Consumer Protection in Electronic Contracts.” International Arab Journal of e-Technology 2, no. 2 (2011): 96–105.

Sasso, Lorenzo. “Certain Comparative Notes on Electronic Contract Formation.” Law. Journal of the Higher School of Economics, no. 1 (2016): 216–131. doi.org/10.17323/2072-8166.2016.1.216.231.

Svantesson, Dan, and Roger Clarke. “A Best Practice Model for e-Consumer Protection.” Computer Law & Security Review 26, no. 1 (2010): 31–37. doi.org/10.1016/j.clsr.2009.11.006.

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[1]. Lorenzo, Sasso, “Certain Comparative Notes on Electronic Contract Formation,” Law. Journal of the Higher School of Economics, no. 1 (2016): 217.

[2]. Sasso, “Certain Comparative Notes,” 218.

[3]. Sasso, 218.

[4]. Sasso, 219.

[5]. Ihuoma Ilobinso, “Formation of Electronic Contracts: Melding the Traditional Contract Law with Contemporary Electronic Commerce,” 2 Commercial and Industrial Law Review (2016):53.

[6]. Ilobinso, “Formation of Electronic Contracts,” 53.

[7]. Ilobinso, 55.

[8]. Ilobinso, 56.

[9]. Ilobinso, 59.

[10]. Ilobinso, 64.

[11]. Shmuel Becher and Tal Zarsky, “E-Contract Doctrine 2.0: Standard Form Contracting in the Age of Online User Participation,” Michigan Telecommunications and Technology Law Review 14, no. 2 (2008): 314.

[12]. Becher and Zarsky, “E-Contract Doctrine,” 314.

[13]. Hussein Kavia, “Consumer Protection in Electronic Contracts,” International Arab Journal of e-Technology 2, no. 2 (2011): 98.

[14]. Kavia, “Consumer Protection,” 98.

[15]. Kavia, 99.

[16]. Kavia, 100.

[17]. Kavia, 103.

[18]. Kavia, 104.

[19]. Dan Svantesson and Roger Clarke, “A Best Practice Model for e-Consumer Protection,” Computer Law & Security Review 26, no. 1 (2010): 33.

[20]. Svantesson and Clarke, “A Best Practice Model,” 31.

[21]. Becher and Zarsky, “E-Contract Doctrine,” 345.

[22]. Becher and Zarsky, 345.

[23]. Becher and Zarsky, 345.

[24]. Becher and Zarsky, 346.

[25]. Becher and Zarsky, 346.

26. Kavia, 104.

27. Kavia, 105.