Basic default rules for interchange

The Model Law includes, in Chapter III of the first part, a number of rules (Articles 11 to 15), which are common to interchange agreements or ´system rules´. The Guide to Enactement uses the notion of ´system rules´ to cover two different categories of rules. Firstly, it could refer to general terms provided by communication networks, and secondly, it could refer to specific rules that might be included in those general terms to deal with bilateral relationships between originators and addressees⁴⁵ of data messages.

The provisions of Articles 11 to 15 may be used in several ways. They may be used for concluding interchange agreements, or they may fill the gaps that may exist in contractual terms. More importantly, however, these provisions set a basic default standard for situations where data messages are exchanged without a previous agreement being entered into by the communicating parties. Thus the Model Law paves the way in an important manner for open-network

communications.

Article 11 relates to the formation and validity of contracts and provides that an offer and the acceptance of the offer may be expressed by means of data messages.⁴⁶ Similarly, as between the originator and the addressee of a data message, a declaration of will or other statement shall not be denied legal effect, validity or enforceability solely on the grounds that it is in the form of a data message.(Article 12)

Article 13 (attribution of data messages) provides rules on what basis the addressee is able to rely on the origin and contents of the data message.⁴⁷ A data message can be attributed to the originator in several ways. Firstly, a data

message is that of the originator if it was sent by the originator himself. Secondly, a data message is deemed to be that of the originator, if it was sent by a person who had the authority to act on behalf of the originator in respect of that

message, or if the message was sent by an information system programmed by, or on behalf of, the originator to operate automatically.

45 The Definitions of the Model Law (Article 2) give meanings to these terms:

- An ´originator´ of a data message means a person by whom, or on whose behalf, the data message purports to have been sent or generated prior to storage, if any, but it does not include a person acting as an intermediary with respect to that data message.

- An ´addressee´ of a data message means a person who is intended by the originator to receive the data message, but does not include a person acting as an intermediary with respect to that data message.

46 Some domestic laws based on the Model Law, such as the Uniform Electronic Commerce Act prepared by the Uniform Law Conference of Canada, contain more detailed

provisions on expression of consent in an electronic environment. Section 20, paragraph (1)(b) of this act expressly refers to “touching or clicking on an appropriately designated icon or place on a computer screen” as a manner of manifesting consent. Official records of UNCITRAL Working Party IV (Electronic Commerce) Thirty-ninth session, New York, 11-15 March 2002, A/CN.9/WG.IV/WP.95, p. 14.

47 This Article has its origin in Article 5 of the UNCITRAL Model Law on International Credit Transfers, which defines the obligations of the sender of a payment order. (Guide to Enactment, p. 41)

Thirdly, an addressee is entitled to regard a data message as being of the originator, and to act on that assumption, if the addressee properly applied a procedure previously agreed to by the originator for ascertaining whether the data message is of the originator. Similarly, an addressee can act on the

assumption that a data message is of the originator, if the data message received resulted from the actions of a person whose relationship with the originator or with any agent of the originator enabled that person to gain access to a method used by the originator to identify data messages as its own.⁴⁸

The entitlement described in paragraph 3 does not apply after the addressee has received notice from the originator that the data message is not that of the originator and has had reasonable time to act accordingly.⁴⁹ In a case in which the relationship of a person to the originator has enabled that person to gain access to a method of identifying a message, the addressee cannot act on the assumption of origin after it knew or should have known, had it exercised

reasonable care or used any agreed procedure, that the data message was not that of the originator.

In all the above three cases, where the message can properly be attributed to the originator, the addressee is entitled to regard the data message as being what the originator intended to send and to act on that assumption. However, if the addressee knew or should have known, had it exercised reasonable care or used any agreed procedure, that the transmission resulted in any error in the data message as received, it cannot act on the assumption on the contents.

The addressee is thus protected as being in good faith in cases where the message was sent by a person capable of sending it, but not authorised to do so (an employee could be a good example), as well as in cases where errors occur in the transmission. An originator which fails to control the sending of messages, or an addressee which fails to use the agreed authentication procedures to verify the origin of the message, has to bear the consequence of the negligence.⁵⁰

It should be noted, however, that the actual purpose of the Model Law is not, as stated in the Guide to Enactment, to assign responsibility.⁵¹ Contract laws in various legal systems have a wider arsenal of rules for dealing with various shortcomings in the formation of contracts. The Model Law provisions create

48 Paragraph 3. The method used for identify a message may be a private key used in cryptography.

49 However, if the message had been properly authenticated to have been sent by the originator, it cannot be repudiated.

50 In the United States (on US legislative developments, see 5.3. and 5.6, infra), UCC § 2-212, Draft of November 2000, provides that an electronic record or electronic

authentication is attributed to a person if the record was created by or the authentication was the act of the person or their person´s electronic agent or the person is otherwise bound by the act under the law.

UCITA § 213 provides that an electronic authentication, display, message, record, or performance is attributed to a person if it was the act of the person or its electronic agent, or if the person is bound by it under agency or other law.

51 Guide to Enactment, p. 41.

rules for the particular hazards created by electronic transmissions. The basic contract law rules should apply in conjunction with the Model Law provisions.⁵² Attribution of data messages, for instance, is particularly concerned with some issues of agency law. Moreover, these rigorous rules can be rebutted in some cases such as fraud.⁵³

Article 14 contains rules on acknowledgements of receipt. These rules apply only to cases, where the originator has requested or has agreed with the

addressee that receipt of the data message be acknowledged. A provision on acknowledgements of receipt is a standard component in interchange

agreements. Article 14 creates a presumption that the relevant data message has been received by the addressee if the acknowledgement reaches the originator.

This presumption does not, however, extend to the contents of that message.⁵⁴ The Model Law is rather liberal as to the form of the acknowledgement. If no form has been agreed between the parties, the acknowledgement may be given by any communication, whether electronic or not, or by any conduct of the addressee sufficient to indicate to the originator that the data message has been received. The originator may make the data message conditional on the receipt of the acknowledgement. If the time limit (or reasonable time in case no time limit is set) for sending the acknowledgement has passed, the originator has to notify the addressee and to provide the latter a reasonable time to react before the message can be treated as not sent.

Article 15 deals with the time and place of the dispatch and receipt of data messages. These rules are again very detailed and technical, but could have significance in the context of international trade transactions, where for instance documents under documentary credits have to be presented to banks at a certain time and at a certain place. More importantly, these rules have a bearing on when and where a contract is deemed to be concluded, applying the reception rule⁵⁵ contained in Part II of the Convention on Contracts for the International Sale of Goods and may even have an impact on the choice of an applicable law.

52 To illustrate this by an example, let us imagine that an offer for the supply of goods erroneously contains a price of 50.000 euros instead of the correct figure of 500.000 euros. The Model Law would deal here only with a possible error in transmission, whilst the applicable rules would deal with typing errors, as well as the entire consequences of either event for the parties.

53 According to UCC § 2-212, Draft of November 2000, Comment 3, once attribution is established, a person can rebut such attribution by establishing fraud, forgery, or some other invalidating cause.

54 Article 13(5) establishes, as described above, the conditions under which, in case of an inconsistency between the text of the data message as sent and the text as received, the text as received prevails.

55 The use of the reception rule does not deal with the situation of instantaneuous acceptance of an offer. However, a view of significance expressed in a Note by the Secretariat (UNCITRAL Working Party IV (Electronic Commerce), doc A/CN.9/WG.IV/

WP.95, para. 61) is that Article 15 would be sufficient to cover both the situation that mirrors the use of traditional mail and the situation of an instantaneous acceptance.

The authors of the Model Law Guide stress, however, that no substantive implications on contract law or private international law are meant.

The Article applies a dual system by defining the time of receipt of a message by referring to the time when the message actually enters an information system, and at the same time defining that the place where the message is deemed to be received may be different.

The general default rule of dispatch is that the dispatch of a data message occurs when it enters (any) information system outside the control of the

originator or of the person who sent the data message on behalf of the originator.

For receipt, the originator may have designated an information system for the purposes of receiving data messages. Receipt occurs at the time the message enters the designated information system. If no information system is designated, receipt occurs when the data message enters (any) information system of the addressee. Even if an information system were designated by the addressee, receipt occurs when the addressee retrieves the message from another

information system.⁵⁶ Retrieval is, as I understand it, a technical act, and does not necessarily mean that the addressee becomes aware of the contents of the

message. This provision is relatively central in the Model Law since the same question is addressed one way or another in many instruments.⁵⁷

Paragraph 4 defines the places where a data message is deemed to be dispatched or received.This provision follows the approach of the CISG. A data message is deemed to be dispatched at the place where the originator has its place of business, and is deemed to be received at the place where the addressee has its place of business. If the originator or the addressee has more than one place of business, the place of business that which has the closest relationship to the underlying transaction or, where there is no underlying transaction, the principal place of business. Should neither the originator nor the addressee have a place of business, reference is then made to their habitual residence.