“Distance contracts” regulate the laws that bind the two parties who have concluded a contract which occurs not face to face but at a distance. It is important to determine the laws that apply to a contract. Also, what effect do the local consumer laws have on the information given on the exporter’s website? The terms and conditions of the offer o
n the website of the seller must be clearly stated and only after having read and accepted those terms will the customer be able to progress to accepting a formal offer. For distance contracts, the consumer must be explicitly informed of the moment at which payment is required, by the indication "order with an obligation to pay". Traders are also prohibited from pre-ticking boxes for the acceptance of additional paid goods or services, failing which consumers cannot be charged for such extra costs.
The UNCITRAL Model Law on Electronic Commerce states that
”an offer and the acceptance of an offer may be expressed by means of data messages. Where a data message is used in the formation of a contract, that contract shall not be denied validity or enforceability on the sole ground that a data message was used for that purpose.”
An obligation on Member States to ensure that their legal system allows for contracts to be concluded electronically, which requires Member States to screen their national legislation to eliminate provisions which hinder the electronic conclusion of contracts. This means that member states introduce into their legislation a horizontal provision stipulating that contracts concluded by electronic means which have the same legal validity as contracts concluded in writing. Thus, contracts concluded by electronic mean should be able to fulfil the requirement of contracts being in writing.
“A contract is concluded when the consumer becomes bound to buy something and the business becomes bound to supply it. The conclusion of a contract is determined by the facts in each case.
It is in your interest to make clear to your consumers exactly when a binding agreement will be reached. For example, you need to explain if the contract becomes binding when the customer places the order or only when you confirm that you have accepted their offer to buy. If you are selling in a way that comes within the definition of an information society service in the ECRs, you are also required to explain the technical steps that the consumer has to follow to conclude the contract.”
Article 10 on the information to be provided before the conclusion of the contract
“Member States shall ensure[…] clearly, comprehensibly and unambiguously and prior to the order being placed by the recipient of the service:
the different technical steps to follow to conclude the contract;
whether or not the concluded contract will be filed by the ‘Mere conduit’ service provider and whether it will be accessible;
the technical means for identifying and correcting input consists of the transmission in a communication network of errors prior to the placing of the order
(d) the languages offered for the conclusion of the contract”
Also, article 11 of the e-commerce directive provides that:
“Member States shall ensure, except when otherwise agreed by parties who are not consumers, that in cases where the recipient of the service places his order through technological means, the following principles apply:
— the service provider has to acknowledge the receipt of the recipient’s order without undue delay and by electronic means
— the order and the acknowledgement of receipt are deemed to be received when the parties to whom they are addressed able to access them.
2. […] the service provider makes available to the recipient of the service appropriate, effective and accessible technical means allowing him to identify and correct input errors, prior to the placing of the order.”
Hypertext is the functionality which prevents a customer from proceeding to the next webpage before having accepted the terms and conditions. For example, does the website constitute an invitation to treat or offer of goods for sale? Where the terms of the website are an invitation to treat, they need to be followed by offer and acceptance. As per recital 39 of the CRD, the trader must “ensure for distance contracts concluded through websites that the consumer is able to fully read and understand the main elements of the contract before placing his order. To that end, provision should be made in this Directive for those elements to be displayed in the close vicinity of the confirmation requested for placing the order. It is also important to ensure that, in such situations, the consumer is able to determine the moment at which he assumes the obligation to pay the trader. Therefore, the consumer’s attention should specifically be drawn, through an unambiguous formulation, to the fact that placing the order entails the obligation to pay the trader.” Furthermore, the terms and conditions that apply to the contract of sale must be accessible by the consumer so that they can be easily stored and reproduced. Parties to an E-contract do not meet face to face when they conclude a contract. Instead the retailer who is selling its goods or services online advertises its products online where a full catalogue of products are shown offered to consumers who are visiting the retailer’s website.
Whether the catalogue of offers indicate the retailers wish to create an offer or an invitation to treat is a matter of contention. It is presumed that the catalogue on the website are an invitation to treat rather than an offer.Thus, it is presumed that the website visitor would make an offer for an item that he would like to purchase, which the business would accept, as demonstrated in the English jurisdiction systems. For instance, in the case of Entores Ltd. v Miles Far East Corporation, the court reiterated that the contract was concluded when the acceptance was received by the offerors, stating that “[…]So far as telex messages are concerned, though the dispatch and receipt of a message is not completely instantaneous, the parties are to all intents and purposes in each other’s presence just as if they were in telephone communication, and I can see no reason for departing from the general rule that there is no binding contract until notice of the acceptance was received by the offeror.” However, where there are difficulties in the transmission, such as technical delay or human error, the House of Lords have previously stated; “Some error or default at the recipient’s end which prevents receipt at the time contemplated and believed in by the sender ….No universal rule can cover all such cases; they must be resolved by reference to the intentions of the parties, by sound business practice and in some cases a judgment where the risks should lie.” Furthermore, the E-commerce directive 2000 article 10(1)(a) states that, where a contract is concluded by electronic means, the service provider must notify the service recipient or consumer of the steps that must be taken in order to conclude the contract. Further, in interchange agreements, the service provider has to communicate to the consumer, in the terms and conditions of the contract of when acceptance is bound to take place. There are various ways in which contract formation may take place in internet sales, where the most common form is “click-wrap” contract, whereby a party visits a website and accepts the terms by clicking on an acceptance button.
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