Special Nuances of E-Commerce Law - Term Paper Example

E- Commerce Law LACM03 To advise X Co, brings us to the main rules established for the contract, offer and acceptance. An offer is “a proposal or promise by one party (the offeror) to enter into a contract, on a particular set of terms, with the intention of being bound as soon as the party to whom the promise is made (the offeree) signifies his acceptance”.1 It means that an offer is a presentation of clear terms and conditions coming from one person (the offeror) to another person (the offeree) to make a contract2. When the offer has been made, it will be bound after the offeror agrees to accept the offer.3 An offer could be in written or spoken form, as in phone calling or any kind of verbal communication between parties.4 In this stage, there is a difference between an offer and an invitation to treat: an invitation to treat is “merely an attempt to engage in negotiations or to elicit an offer”.5 Basically, it is inviting another person make an offer, and the seller making a decision to accept or refuse that offer.6 The difference between them is the intention to be bound7. This difference comes clearly from the court decision Gibson v Manchester city council.8 The judgement from the court and the court of Appeals said that the parties made a contract.9 Lord Denning said that the parties agreed with the conditions, and letters were exchanged between them as proof of their agreement.10 Also, in Harvey v Facey11, the decision was that information about the lowest possible price did not constitute a bound offer. To understand the difference between an offer and an invitation to treat, we have to distinguish between an offer and its acceptance. Primarily, we can find an offer and its acceptance in the shop context. This principle states that the offer of the contract is concluded at the till of the shop and that the customer is addressed to an invitation to treat before that. This principle also extends to the shopping window,12as the display of goods is not an offer, but an invitation to treat.13 The reason for this is that the, “shop or market is bargain not compulsory sales”14 For instance, when people are shopping in the store, they put the items in shopping bags and are not bound to pay.15 This view has been adjudicated clearly in cases such as Fisher v Bell16 and Pharmaceutical Society of GB v Boots Cash Chemists17. Next, we can find offer and acceptance in advertisements. In general, advertisements in a shop or in the media are invitations to treat because there is no intention to be bound to sell, as the sellers can not supply all offers they might receive18. In Grainger & Son v Gough19 Lord Herschell said “The transmission of such a price-list does not amount to an offer to supply an unlimited quantity of the wine described at the price named, so that as soon as an order is given there is a binding contract to supply that quantity. If it were so, the merchant might find himself involved in any number of contractual obligations to supply wine of a particular description which he would be quite unable to carry out, his stock of wine of that description being necessarily limited.”20 There are many cases that prove advertisements are an invitation to treat, not an offer; for example, Partridge v Crittenden 21 and Grainger & Son v Gough 22. However, advertisements can be an offer if the advertisement has a term that can be understood as an offer23 since, “no further bargaining between the parties is possible or intended.”24 In Carlill v Carbolic Smoke Ball Company25 Lord Justice Lindley, Lord Justice Bowen and Lord Justice AL Smith agreed that advertisements contained an offer.26 There are some issues arising in advertisements on websites. The first issue is using personal details such as credit cards on the internet, as people are afraid of crime27. Another issue is if the contract is an international and the parties are from different countries28. This becomes an issue when the contract is written in a language foreign to one of the parties. The Electronic Commerce (EC Directive) tried to raise the number of people shopping on the internet by strengthening confidence and avoiding different approaches in Member States.29 Finally, we can find an offer and an acceptance in automatic vending machines. It is clear that the display of goods in automatic vending machines is an offer not an invitation to treat. 30 The buyer accepts the machine’s offer by inserting money into it.31 The reason it is an offer is that it is impossible for bargaining to occur between the parties.32 Lord Denning MR said “The customer pays his money and gets a ticket. He cannot refuse it. He may protest to the machine, even swear at it; but it will remain unmoved. He is committed beyond recall. He was committed at the very moment that he put his money in the machine. The contract was concluded at that time. It can be translated into offer and acceptance in this way. The offer is made when the proprietor of the machine holds it out as being ready to receive the money. The acceptance takes place when the customer puts his money into the slot.”33The second part in the contract’s acceptance occurs when the offeree shows that he agrees to the terms and conditions of the offer.34 We can find an acceptance in postal rule: an acceptance must be received because the contract will be made at the place where the letter of acceptance is received.35 It also must have the attention of the offeror for it to be valid.36 Holwell Securities v Hughes 37 made clear that the letter of acceptance had to be received.38 On the other hand, some argue that the acceptance has to be received. This can be seen in Adams v Linsell (1818)39 where the contract was made when the offeree sent the letter of acceptance by mail.40 Also, we find an acceptance in Electronic communications. On the internet the buyer makes an offer and the seller may accept or refuse the offer.41Moreover, the letter of acceptance has to be received by the buyer to be valid.42 This means general rules shall apply. i. As mentioned above, advertisements on websites are invitations to treat, not offers. In Partridge v Crittenden43 Per Lord Parker C.J. stated, “There is business sense in construing advertisements and circulars, unless they come from manufacturers, as invitations to treat and not offers for sale.”44 Also, the seller is not to be bound to any information he gives about his goods,45 and “their offers can be rejected by the supplier in cases where an error has occurred.”46. See Grainger & Son v Gough47. Basically, if the company accepted all offers which had an incorrect price and the quantity of orders was high, this could adversely affect the company's budget. This happened in our case. Bob noticed an incorrect price and ordered a large number of products. He clearly wanted to make the company lose profits.48 It is widely accepted that X Co has the right to reject Bob’s order; however, the company has to send a letter or an e-mail to him to inform him of the rejection. ii. It is generally argued that an automated e-mail (confirmation letter) is not an acceptance letter; it can constitute acceptance if it includes a clause that expressly refers to the acceptance of the offer. a) There was a mistake made by Charles when he ordered his laptop. First, if these cases were brought to common law, the courts have a view that any error in the order must be clear to the seller and the seller must also have recognized the wrong. In this case, Charles is not to be bound with his order, see Hartog v Colin & Shields.49 Second, if the parties are from different European countries then E-Commerce Directive and Electronic Commerce (EC Directive) Regulations 2002 shall apply. Considering Article 10.1.C that references “the technical means for identifying and correcting input errors prior to the placing of the order;” 50 the seller has to include measures to correct any mistake that may happen when placing the order. Finally, if the parties are from different countries and outside of Europe, then the UN Convention on the Use of Electronic Communications in Electronic Contracts Convention shall apply. Charles has to send a e-mail to correct his input error as soon as he notices his mistake51 and he must not use or receive the product or take any benefit from it.52 “Article 14.1. Where a natural person make an input error in an electronic communication exchanged with the automated message system of another party and the automated message system does not provide the person with an opportunity to correct the error, that person, or the person on whose behalf that person was acting, has the right to withdraw the portion of the electronic communication in which the input error was made if: (a) The person, or the party on whose behalf that person was acting, notifies the other party of the error as soon as possible after having learned of the error and indicates that he or she made an error in the electronic communication; and(b) The person, or the party on whose behalf that person was acting, had not used or received any material benefit or value from the goods or services, if any, received from the other party.”53 To conclude, Charles is not to be bound with his order if he has done the information above. See Chwee Kin Keong v Digilandmail.com Pte Ltd54 Read More