The Impact of Digital Disruptions on Business Contract - Research Paper Example

The Impact of Digital Disruptions on Business Contract Insert your name here Insert Grade Course Insert Tutor’s Name Data of submission Table of Contents i.Abstract 3 1.0.Introduction 4 2.0.Cloud Computing and Acceptance in Contracts 5 3.0.Effects of Cloud Computing in Statement of the Rule 7 4.0.Cloud Computing Creates Uncertain and Ambiguous Business Contracts 9 5.0.Unconscionable Conduct in Cloud Computing 11 6.0.Conclusion 12 i. Abstract The introduction of digital disruption challenges the very norm of business contracts. It offers different dynamism in understanding contract law and ascertaining whether there was a legally binding agreement. The statement of general rule is that it must be seemed facile that there was an offer and that the offer must be accepted in business contracts. However, the introduction of digital disruption, in this case, cloud computing, challenges this norm. As such, we assess digital disruption and whether it provides ground on how parties would agree on offer, acceptance, and an intention to create legal. The study critically evaluates digital disruptions working with cloud computing as one of the current time digital disruption. Working on tender as an element of business, the paper analyse how cloud computing agreements appear in a wide variety of forms and how Australian legal framework has attempted to provide solutions to the growing trends of the digital disruption on tender processes. 1.0. Introduction Following recent Court cases that quoted various provisions the law, there is seems to be contestations between business contracts and digital disruptions. Policy frameworks or considerations that have led to the formulation of consumer laws in Australia and by extension, contract laws be given consideration owing to the fact contracts continue to face dynamism with different types of digital disruptions. For instance, the recently enacted Trade Practice Amendment law by the federal government has since proposed major reforms (Australian Consumer Law) streamlining challenges faced in the business contracts including a general regime regarding unfair contracts however, infiltration of different digital disruptions continue to pose different challenges to the law.1 In this paper, we critically analyse the impacts of digital disruptions on business contracts. To conceptualise the argument within the framework of Australia the paper focuses on cloud computing as one of the many digital disruptions. Furthermore, the case studies and legal frameworks the paper will focus on will be relating to tendering business contract within Australia. We look at digital disruptions and business contracts within the framework of Australian law and the tenets of the acceptance of an offer which we regarded as expression by conduct or words consenting to the terms regarding the offer in a way that has been indicated or prescribed by the offer. This is to mean that within the provision of business contract law, an acceptance in Australia may be implied or expressed. This paper further stretches the understanding of the concept by analyzing the effects of cloud computing on acceptance of contracts, what the law provides and specifically, where parties are dealing with instantaneous communication, meaning that for any contract to be accepted, such acceptance must be communicated. 2.0. Cloud Computing and Acceptance in Contracts An understanding regarding what constitute an offer was argued in the case involving HBF Dalgety v Morton.2 Relating this argument with cloud computing we first observe that cloud computing may not necessarily be privacy invasive as far as contracting is concerned or specifically, acceptance of the offer. However, the effects are the possibility of manipulating the offer, terms of acceptance and storage of the data within the boundaries of Australia. It would therefore amount to one party in the business contract negotiating the ‘cloud’ since control of details and data of agreement and further acceptance might be compromised thus affecting such contracts.3 Such obligations have been provided under s 95B of the Privacy Act 1988(Cth) which requires that parties entering into business contracts for the provision of tendering or services to take contractual agreements or measures that ensure that contracted tenders or services do not engage in any act that breach any information privacy principles (IPPs).4 Cloud computing agreements however, are likely to generate privacy breach with regard to acceptance of the offer since with cloud computing one party may not be guaranteed that the provider will be prohibited contractually from using the data for the provider’s other purposes. The likely contestation with these levels of digital disruption is that the offeree may not have the knowledge of and act concerning an offer. Putting it differently, interference with s 95B of the Privacy Act 1988(Cth) through cloud computing may make acceptance invalid since the act of acceptance will be performed without the knowledge of offer.5 The general rule provides that when there is mode of acceptance is instantaneous communication then the contract will be said to have been formed if acceptance is communicated to the offeror and such communication is received.6 Just like it was with Reese Bros Plastics Ltd v Hammon-Sabelco Australia Pty Ltd7 communications are only instantaneous when it can be received by the offeror in one piece. However, with privacy issues and security concerns inherent in cloud computing, there is likelihood of communication breach thus affect provisions of contract terms8. 3.0. Effects of Cloud Computing in Statement of the Rule Moving to the cloud computing business contracts means one or both parties are relinquishing to some extent physical control over their information technology infrastructure and process of relaying, in part, on the contractors cloud vendor to make sure that the contractors’ information is kept in secure and private place.9 However, if the contracting data is kept in offshore locations, then to the contracting parties, locations may, in some cases not countries with privacy laws which are similar or same to those in Australia. Additionally, cloud services, particularly those relating to business contracts are not compatible with Australia’s security laws, privacy laws or protection laws in general.10 Relating this position to the statement of the rule, a business contract will be termed as valid if parties are able to express themselves in a way that can be determined with a reasonable level of certainty11. Since cloud data can be manipulated especially when outsourced outside the boundaries of Australia12, it would not be possible to hold, under the doctrine of statement of the rule that the contracting parties in business had the same intentions, which is likely to generate a situation where the consensus ad idem would be a matter of sheer conjecture as a result of data manipulations. Facet to this principle is that with cloud computing, parties in business are likely to have their data manipulated to an extent that the contract may contain a language that might be so obscure and as such, incapable of precise or definite meaning that courts may not be able to attribute to the contracting parties any given contractual intention.13 The amendments to the unfair contract terms law, which now applies to business to business transactions took effect on 12th November 2016 and defines contract terms as: Clauses that are legally binding Clauses that define the main subject matter of the contract Additionally, Unfair Contract Terms Act of 2016 defines unfair contracts as agreements that are not reasonably necessary when it comes to the protection of legitimate rights and interests of parties that have agreed or consented to the contract. In such cases, one party will be advantaged by the term14. A contract is regarded unfair when it causes financial or otherwise, effects to one party if it were to be relied on or applied. Relating Unfair Contract Terms Act of 2016 with cloud computing, the Act comes as a cushion against unfair contracting generating from statement of the rule. That is, it seeks to provide guidelines for contracting directly with suppliers or purchase of goods and services where in such cases, offeror or offeree do not use cloud technology to changes terms of agreement which in turn affects the contract. 4.0. Cloud Computing Creates Uncertain and Ambiguous Business Contracts Contract cannot be said to exist unless what parties agreed on can be determined objectively and with a reasonable level of certainty. Different terms have adopted to explain clauses that are struck down due to uncertainty. Whether such clauses are ambiguous, vague or uncertain that is indeed void. The modern approach that courts have argued in respect to cloud computing is the willingness of the courts to uphold a contract entered into by the parties, more so where they issue or circumstance indicate that the contractors/parties had the intention to be bound by the agreement15. As it stands, cloud computing venders have not been able to offer pre-contractual information to business contracts especially on how they (vendors) can interplay between the existing Australian law and their (vendors) terms of service. Currently, Unfair Contract Terms Act of 2016 does not specify when or how a cloud provider may make modifications to the cloud contract. As such, there is likelihood of unilateral amendments by cloud provider that may be detrimental to businesses or user. The effects of these problems to business contracts are manifold. To begin with, it will test the principle of ‘agreement to negotiate.’ As a result of possible interference of data through cloud computing, there is likelihood that parties may not reach final contract terms or agreement regarding essential terms. This principle was defined in a case involving Booker Industries Pty Ltd v Wilson Parking Qld Pty Ltd 16and Andrews v Australia and New Zealand Banking Group Ltd17. Currently, the level of access to security protocols that defeat unauthorized attempts to access contractual data by the third party have not been formalized by law and in that case, an agreement to negotiate for any contract enforceable but data could be manipulated by third parties that in turn creates uncertainty or ambiguity. Important to note is that users may to some extent, not have a control over the infrastructure used in the system like networks, servers, operating systems, storage and networks since they are controlled and managed by other cloud providers. Sharing cloud resources blur perimeters needed to safeguard data third parties but measures of ensuring these processes have not been fully implemented. It therefore means that before such measures are put in place, data in the cloud are exposed to security as well as privacy threats. The complication of this matter is that one party can no longer understand what constitute personal data under Australia laws. The Full Court of the Federal Court of Australia on 19 January 2017 handed down its much anticipated decision in relation to personal data. In Privacy Commissioner v Telstra Corporation Limited18. Following the decision on Privacy Commissioner v Telstra Corporation Limited19 regarding what constitute personal data, cloud computing complicates terms of tendering contracts in Australia. From the one hand, cloud computing brings the problem of multi-tenancy in business contracts. Users of cloud computing apparently share most of cloud data with others and this may extend to common layers regarding software virtualization. Since the environments are shared brings about an entirely potential risk whereby the resource stacks from one user is likely to be attacked by another. 5.0. Unconscionable Conduct in Cloud Computing One of the features of cloud computing is data mobility and movement since it is practically very possible to move data from static physical servers into virtual volumes as it can live anywhere in the world. This mobility arouses the risk and danger of replication and reassigning of business contract data for various users by the storage administrators for instances, where server maintenance is required. This may be done with little or no knowledge or consent from the user and owner of the moved data. This problem creates not only a security concern and issue for business contract parties, but also a legal issue and problem. Some jurisdictions forbid mixing and storing residents’ data with foreigners’ data but the issue needs to be assessed with the jurisprudence of Australia and specifically, unconscionable conduct in business contracts. What constitute unconscionable conduct has been presented in courts and specific argument relates to Kakavas v Crown Melbourne Ltd.20 This position was argued in the case involving Commercial Bank of Australia v Amadio.21 Relating to tendering as business contract in this case, this study invokes s 21 of Australian Consumer Law dealing with unconscionable conduct regarding acquisition or supply of goods or service. According to the provision of this section action that can lead to the breach of previous agreement contravene this section thus affecting contractual agreements between the parties. Section 22 succinctly sets factors court may consider in determining the extent to which cloud computing data manipulation leads to unfair term or unconscionable conduct.  6.0. Conclusion Generally, we observe that cloud computing as a factor of digital disruptions on business contract remains multifaceted. First, we likely to have data infringements that are likely to take place with cloud computing. This impact will be a class of case where either party makes unconscientious use of her bargaining power or position regarding the data in cloud to the detriment of another contracting party who might be placed in a disadvantaging position or because of their inability to access and or manipulate the cloud data. Again, we are likely to be in a situation where the contract will be dealing with dominant and weaker party where a party with the ability to manipulate cloud data could take advantage of the other. There is therefore the need to address policy framework for business contract and digital disruptions because people entered in the contract may not be aware of the case or that their data are accessed or subject to manipulation. A possible point forward from these studies is that there is need for jurisdictions to forbid mixing and storing residents’ data with foreigners’ data but the issue needs to be assessed with the jurisprudence of Australia and specifically, unconscionable conduct in business contracts. Read More