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| What is this Chapter about? |
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This Chapter provides a general summary of some of the legal considerations
associated with conducting commercial business by electronic communications.
Other Chapters deal in more detail with specific legal issues.
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| Key Points |
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· English law is generally permissive of e-Commerce;
· It is important that organisations conducting e-Business
understand and agree on how to conduct business by electronic
communications;
· EU Procurement Directives are being revised to recognise
the conduct of commercial business by Public Authorities may include
electronic communications.
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| The Detail |
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Contracting
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English law requires no particular form for the creation of contractual
rights and obligations. A contract can be created, providing the
necessary elements are in place, orally or in writing. Accordingly,
there are no legal bars to the creation of contracts by electronic
communications.
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Proof |
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Of greater concern is establishing that a contract has been entered
into and defining what the terms of the contract are. For this reason
it has become established practice within the commercial world for
contracts to be in writing and to be authenticated by the signatures
of the parties.
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Writing |
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The Electronic Communications Act 2000 (the ECA), specifically Section
8, allowed Ministers to amend legislation where there existed doubt
about whether that legislation would preclude use of electronic
communication. The most recent Government view in relation to this
aspect is that, in interpreting the word “writing” in
statutes, regard should be made to what “the intent of Parliament”
was, rather than a strict interpretation of the word “writing”.
Accordingly, it is likely that moves to amend existing legislation
will be restricted to those areas where there is doubt that an interpretation
of electronic communication could be applied to words such as “writing”.
Coupled with that view is the report from the Law Commission Electronic
Commerce – Formal Requirements in Commercial Transactions
dated December 2001. Although doubt remains over the status of Electronic
Data Interchange (EDI) messages, there is a strong body of legal
opinion which states that electronic transactions such as e-Mail
satisfy the requirements of the definition of writing. This is on
the basis that they are capable of reproducing words in a visible
form that can be read by a person (EDI is a form of electronic messaging
which is read by programmed computers and does not produce “words”
in the normal usage of the expression).
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Signature |
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The ECA dealt with the issue of the admission as evidence of electronic
signatures. Thereafter, the Law Commission Report on Electronic
Commerce concluded that what was determinative of the validity of
a signature was its function rather than any particular form. Accordingly,
it concluded that digital signatures, scanned manuscript signatures,
typing one’s own name or initials and even clicking on a web
site button could constitute methods of satisfying a signature requirement,
on the basis that the “signing” party, in so doing,
intended to be bound.
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Practice |
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The detail given in the earlier part of this chapter, suggests that
e-Commerce could operate without any constraints. It is therefore
essential when conducting commercial relations, that the parties
to those relations understand how they intend to contract and to
be bound. What form do they intend their contracts will take? What
form will be acceptable as a valid signature at specific levels
in the procurement/ contractual hierarchy, e.g. will it be necessary
to have the same level of authentication, such as by reference to
certification issued under a Public Key Infrastructure (PKI), for
Quality Assurance (QA) certification as for contract signature?
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Jurisdiction |
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In using e-Commerce one of the major problems is determining the
law that will apply to individual transactions which may be carried
out by electronic communications. It is unlikely that this will
have a significant impact on defence business since this should
be covered by contractual provisions which set out the relevant
jurisdiction. The MOD do not presently envisage that their procurements
will take place over the Internet in a way that jurisdictional issues
arise, as long as the contractual provisions are clear and not open
to interpretation.
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EU Procurement Directives |
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The present Directives were put in place before the full impact
of e-Commerce was known. Accordingly, they do not, in places, sit
comfortably with some of the practices being developed. However,
negotiations are ongoing to produce a consolidated Public Sector
Procurement Directive to Facilitate e-Procurement which will deal
with matters like shortened time limits for procurement based on
electronic communications and Reverse Auctions.
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Summary |
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There are no major legal impediments to the conduct of e-Business,
but it is important to understand how legal and procedural issues
impact upon the conduct of particular activities and what can be
done to reduce the risk of these issues arising.
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Who should I contact to find out more? |
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Organisations should contact their own legal departments for specific
advice.
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Are there any background documents? |
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The Chartered Institute of Purchasing and Supply publication e-Procurement
Legal Aspects Guide - A practical guide to the legal aspects of
eProcurement
Electronic Communications Act 2000 www.legislation.hmso.gov.uk/acts/en/2000en07.htm
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The Law Commission Report, available at:
www.lawcom.gov.uk/library/lcspecial-1/e-commerce.pdf
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