Domestic legistaion

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The brief will investigate the potential problems that can arise in electronic contracts. It will discuss some of the problems and discuss how the domestic legislation and the international entities endeavour to regulate such contracts to ensure that Ecommerce continues to grow and thus promote the growth of a healthy economy.


When parties enter into contracts with each other and they are interacting face to face, it is easier to avoid mistakes than when they are at a distance and contracting with each other through the internet as medium. When parties enter into electronic contracts the whole contract can literally be concluded within seconds at the click of a button. The traditional paper based contract law has rules that apply to matters such as jurisdiction, validity, formation of contract, modifications to contracts. In the world of online trading these are all issues that arise in online contracts and is a challenge to the traditional concepts of contract law.[1] An example of an electronic contract that went horribly wrong occurred in 2002 when Eastman Kodak placed a camera for sale on its United Kingdom website for £100 instead of £329. Before Kodak could rectify the error, thousands of orders had already been placed. The company was faced with an option of honouring the contracts or face a lawsuit by the disgruntled customers. Initially Kodak said that it was a mistake and they would not fill the orders. One of their arguments was that the orders were simply bids to accept its offer for sale but it was not a cogent argument as the company accepted the orders and thereby formed an online contract. In the end Kodak was left with little choice but to honour the contracts. The total cost to Kodak was enormous and Kodak shrugged off the question whether customers would have won the lawsuit by saying that trade on the internet is a grey area.[2] ECommerce has rapidly grown to such an extent that the US market for online transactions was between $100 billion to $130 billion.[3] In the United Kingdom it has grown to the point where it accounted for £17 billion worth of commerce.[4] The internet market is extremely large and continues to grow as new methods of Ecommerce develops.

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Recognition of the legality of electronic contracts

The first issue that arises is to ensure that online contracts are legally enforceable. Before the advent of the internet contracts were normally concluded either in writing or by oral agreement. The United Nations Convention on Contracts for the International Sale of Goods (1980) (CISG)[5] which was adopted in 1980 provides for the recognition of contracts in international sale of goods. It does not provide for E-Commerce but a frequently overlooked article in the CISG provides for a description of what writing means in the context of contracting.

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