5 key tips to make E Commerce easier:
At a recent networking meeting I was asked a question about electronic signatures and their validity in e-commerce.
Many people at the meeting were interested in the answer but what became apparent was that business people were confused about contracting electronically. To some extent this has been caused by the rapid pace of change in the way business transacts with both other businesses and consumers in the electronic space and attempts made by legislators and the law to keep up with rapid change.
In an endeavour to make e-commerce transacting easier there are certain fundamental rules:
- Although certain legislation has been enacted to remove impediments to using electronic communications to contract which are referred to below, the fundamental rules of contract still apply to all such transactions. Accordingly, for any such transaction in B2B, B2C or B2G relationships to be valid and binding the 5 elements of a contract must be present. Essentially these are that there must be an offer, acceptance of the offer, consideration, intention to enter legal relations and each party must have capacity to enter into it. If any of these are absent then the transaction will not be legally enforceable.
- Generally speaking, the advertising of products and services by business online only constitutes an invitation to treat and not on offer. Therefore the offer is generally made by the business or consumer seeking to purchase products or services which are accepted by the business trader. The customer completing an online form and clicking for example “I agree” or “I accept” does not constitute an acceptance but merely an offer to be bound by those terms and conditions. The business trader has the opportunity to accept or reject that offer.
- To overcome uncertainties about the formation of contracts online it is prudent for the business trader on its website to provide information about the following:
. the time and place an offer is considered to be accepted;
. whether any specified methodology of acceptance is required;
. whether that trader retains the right to accept or reject offers;
. a statement to the effect that the trader will not be contractually bound to
supply anything until the offer is accepted; and
. a statement to the effect of whether or not the trader will notify acceptance
of the offer.
- More importantly it is crucial to understand the process that will result in a binding contract.
Essentially it is as follows:
Generally speaking a website displaying information about products or services is an advertisement and therefore an invitation to treat. It would be a good idea to have a statement to that effect on the website.
A consumer or business wishing to purchase goods or services transmits an e-mail message or communication via the website offering to purchase the products or services.
The business trader must unequivocally accept that offer and communicate acceptance to the purchasing consumer or business.
- There are a number of practical measures that can be taken by business traders to ensure binding and enforceable contracts online. Essentially they could be:
Make sure there is a clear and visible statement displayed on the website stating that there are terms and conditions which govern transactions.
Prominently display in a very visible location all relevant terms and conditions so that they can be seen by the consumer or business purchaser before the transaction is completed and before any products or services are provided.
Ensure that any such terms and conditions are drafted in plain English to avoid legalese and jargon so that they are readily understood.
Endeavour to design the website so that consumers or business purchasers can scroll through the terms and conditions before being able to complete the transaction.
Where possible use only a click wrap form of agreement whereby the terms and conditions are set out and the consumer or business purchaser must click on an “I accept” or “I agree” icon to proceed with the transaction.
Identify to the consumer or business purchaser when the online transaction results in the formation of a binding contract.
Give those persons an opportunity to decline or not agree to proceed with the transaction. For example, by inserting an icon saying “I do not agree” or “I decline”.
Provide opportunities for consumers or business purchasers to correct and confirm a choice before finalising the transaction.
Display a confirmation page to indicate when the transaction has been successfully completed.
A useful publication to assist business in respect of transacting online is the Australian Guidelines for Electronic Commerce published in March 2006 that sets out matters to consider when trading in this manner.
By the way, more on electronic signatures and their validity later. If in any doubt about contracting online then it is prudent to consult your legal adviser.
At Priority Business Lawyers we have a team of lawyers to provide you with the advice that you need in this space. If you have a query or would like more information, we suggest that you consult with us on 4305 3500