A new set of rules for contract formation?

The solution contemplated in the initial Note by the Secretariat¹⁴⁸ is to produce an additional layer¹⁴⁹ of rules relating strictly to contract formation in the context of electronic commerce concluded through an exchange of electronic messages, and not to reproduce any rules of the Sales Convention especially with any substantive content.¹⁵⁰ In one meeting report¹⁵¹ of the Working Group on Electronic Commerce, solutions for issues not dealt with in earlier legislative instruments are considered possible, although “every effort should be made to avoid interfering unduly with the legal regime established by those instruments, in particular the UN Sales Convention...”.

One of the rules that could be considered important in view of the

Secretariat´s note would be a definition as to the time of contract formation. In the early drafts for the Convention, a contract is stated to be concluded at the moment when the acceptance of an offer becomes effective. An offer becomes effective when it is received by the offeree, and an acceptance of an offer becomes effective at the moment the indication of an assent is received by the offeror.¹⁵² The main rule contained in the CISG is that both the offer and the acceptance become effective upon their receipt, more exactly “when they reach the (addressee)”.¹⁵³ The solution offered in the draft Convention is to back up Article 24 of the CISG with the principles contained in Article 15 of the

UNCITRAL Model Law on Electronic Commerce which deals with the time and place of the dispatch and receipt of the data message. The outcome is to be found

148 A/CN.9/WG.IV/WP.95, paras. 10-12 and 49-52.

149 Author´s own description. All provisions contained in the draft convention in its reported form are not novelties however, since the Working Group is considering reiterating some provisions of the Model Law on Electronic Commerce and Model Law on Electronic Signatures.

150 For instance, criteria as to when a declaration of will can be considered an offer or an acceptance, Articles 14 and 18 of the CISG. These are objective contract formation criteria, in addition to which contract law contains more subjective, ´cognitive´ elements.

151 A/CN.9/509 United Nations Commission on International Trade Law, Thirty fifth session, New York, 17-28 June 2002, Report of the Working Group on Electronic Commerce on its thirty-ninth session (New York, 11-15 March, 2002), para. 27.

152 Draft Article 8, Doc A/CN.9/WG.IV/WP.95, p. 29. There appears to be much criticism against this provision (as evidenced in Doc A/CN.9/528, para. 103). Article 13 as contained in Doc A/CN.9/WG.IV/WP.103 deals with contract formation. Article 13(2) provides two options:

Variant A: “When conveyed in the form of data message, an offer and the acceptance of an offer become effective when they are received by the addressee”; and

Variant B: “Where the law of a Contracting State attaches consequences to the moment in which an offer or an acceptance of an offer reaches the offeror or the offeree, and a data message is used to convey such offer or acceptance, the data message is deemed to reach the offeror or the offeree when it is received by the offeror or the offeree.”

I would personally prefer to retain variant A since the reception rule is well-established in electronic commerce. See also the comments in the conclusions of this chapter, infra.

153 CISG Article 24 states “for the purposes of this Part of the Convention, an offer, declaration of acceptance ´reaches´ the addressee when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address”. The communication can thus be instantaneous or such that the parties are at a distance.

in draft Article 10 of the suggested instrument. As noted already supra, the rule for a designated information system is that receipt occurs when the message enters the system. The draft Article 10(2) builds on this idea but adds a requirement that the message is capable of being retrieved. The message is presumed to be capable of being retrieved “unless it was unreasonable for the originator to have chosen that particular information system for sending the data message, having regard to the circumstances of the case and the content of the data message”.¹⁵⁴

Another reiteration of provisions contained in previous instruments is draft Article 10, which reproduces a rule contained in Article 11 of the UNCITRAL Model Law on Electronic Commerce.

Article 14(1) of the CISG provides that a proposal for concluding a contract that is addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. This intention is decisive irrespective of the means of

communication used. However, Article 14(2) of the CISG lays down a

presumption on invitations to treat by providing that a proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal. This is because the intention to be bound is considered to be lacking.¹⁵⁵

The Internet makes it possible to address specific information to a virtually unlimited number of persons and current technology permits contracts to be concluded at once. In the view of the Working Group, even advertisements on the Internet would be classified as invitations to treat (draft Article 12(1) of Doc.

A/CN.9/WG.IV/WP.103). This rule would apply if a website only offers

information about a company and its products, and any contact with potential

154 A great majority of those some 20 jurisdictions that have implemented the Model Law so far have taken Article 15 almost unmodified. However, the US UETA and the Canadian UECA have modified the above rule so that proper receipt requires that the recipient be able to retrieve the record from the system and that the message be sent in a form that the addressee´s system can process.

Cf. Article 11 of Directive 31/2000/EC on electronic commerce, which requires Member States to ensure that a customer´s order, and the acknowledgement of receipt of the order by the merchant, is deemed to be received at the moment when the parties to whom they are addressed are able to access them. This rule would require the ability the addressee to retrieve the message. It has been pointed out that only the technical possibility of retrieval was relevant, and not the addressee´s availability for retrieving the message. UNCITRAL Doc. A/CN.9/WG.IV/WP.104/Add.2, paras. 26 to 31.

The above cited note by UNCITRAL´s secretariat suggests cautiously (in para, 38) that a presumption of knowledge should be attached to the effective delivery of a message to the addressee´s information system. It would thus be for the addressee to adduce evidence that, through no fault of its own or of any intermediary of its choosing, it could not technically access the message. This language on presumption would make the rule a mixture of the reception and information rules, see Chapter II.7., ante.

Cf. also the First Opinion of the CISG Advisory Council and the ICC E-Terms 2004 Article 2, infra.

155 Thus advertisements in newspapers or a mere display of goods in shop windows and on self-service shelves are usually regarded as invitations to submit offers.

customers lies outside the electronic medium. Should the website, however, enable the conclusion of a contract through interactive applications, the draft instrument creates, in Article 12(2), the presumption that “unless otherwise indicated by the offeror, the offer of goods or services through automated computer systems allowing the contract to be concluded automatically and without human intervention is presumed to indicate the intention of the offeror to be bound in the case of acceptance.”¹⁵⁶

The Working Group has recently decided to add, as an option, a provision similar to Article 10(1) of Directive 2000/31/EC on Electronic Commerce requiring that a person offering goods or services through information systems accessible to the public should provide means for the storage or printing¹⁵⁷ of the contract terms. This provision is labelled ´availability of contract terms´.¹⁵⁸ In the EC Directive that rule applies between an information society service provider and the user of the information society service. It does not, however, apply between normal traders using electronic communications.

There are a number of issues listed in the Secretariat´s Note that call for attention although these have not so far been reflected as draft provisions in the suggested new instrument. One of them is whether specific rules are required in the context of electronic contracting to clarify the legal regime applicable to agreements reached in ways other than a discernible offer and acceptance.¹⁵⁹

Other questions of interest that were once listed as items that could be considered by the Working Group are the acceptance and binding effect of contract terms displayed on a video screen but not necessarily expected by a party and the incorporation by reference of contractual clauses accessible through a ´hypertext link´.¹⁶⁰ For incorporation by reference, see further infra.

156 See Note by the UNCITRAL Secretariat: Electronic contracting: background information (Qualification of parties´ intent: offers and invitations to make offers). Note by the Secretariat, A/CN.9/WG.IV/WP.104/Add. 1.

157 Websites cannot easily, as far as I understand, prevent printing of the contents displayed on the screen. Many websites offer, however, the possibility to download or print the text in user friendly form such as the ´.pdf´ form.

158 For the latest version of the provision, see Article doc. A/CN.9/WG.IV/WP.108. For the discussion on it, see doc. A/CN.9/546 paras. 130-135. Some members would like to make the ´making available´ a precondition for the enforceability of the terms, some would like to see the Convention mention that nothing in it requires the terms to be made available.

159 The note concludes that according to a majority of commentators, the CISG covers the agreements reached without resorting to the traditional ´offer-acceptance´ scheme although it does not expressly address them. This matter should therefore “be settled in conformity with the general principles on which it is based” under Article 7(1).

The ICC has expressed its preference for including the text of Article 2(1) of the UNIDROIT Principles of International Commercial Contracts which states that a contract may be concluded either by the acceptance of an offer or by the conduct of the parties that is sufficient to show agreement.

160 Article 15 of the draft A/CN.9/WG.IV/WP.103, page 16, mentions making “the contract terms available to the other party in a way that allows for its or their reproduction”. If the text is accessible through a hyperlink, it is normally also available in that way.