Part B The law of obligations 4: Formation of contract II 69
(b) Signed? In 2000 the UK government passed legislation to give legal effect to 'digital signatures’,
thereby giving an electronic contract the same status as contracts in more traditional formats.
(c) Timing of acceptance. A contract comes into existence when an offer is accepted; in the case of
acceptance by letter, this is when the letter is posted not when it is received. Internet email shares
many of the qualities of conventional mail – it is not usually instantaneous and may be subject to
delay. Therefore the postal rule, with any problems arising from it, may apply, although the point
has not been tested.
(d) Consideration. Difficulties with credit card payments have slowed the growth of electronic
commerce. The Internet is largely insecure, and this may cause problems when it comes to
payment.
Activities on the Internet are largely unregulated at the moment, but this is likely to change, as
governments recognise the business opportunities available and the EU seeks to protect consumers.
Basic legal principles must therefore be applied.
Of course, the Internet is much more than simply a means of sending and receiving messages. As the
commercial applications of the world wide web have been exploited, a new 'shop front' has been
developed. Some sites are highly automated and software handles ordering, stock checking, payment
processing and despatch confirmation without human involvement.
There are risks associated with leaving commercial transactions to automated IT programs. Eliminating
human intervention and fully automating the sales process, for example, can increase the likelihood of
errors. There have been several instances of websites mis-pricing goods for sale, such as offering
television sets for £2.99, rather than £299.
The following are some of the practical legal issues that must be faced by a seller when contracting on-
line.
Websites should be constructed as shop windows, that is, invitations to treat rather than offers.
Terms and conditions governing electronic transactions should be made explicit and clear.
An indication of interest by a purchaser visiting the website should be understood by both parties
to be an offer, not an acceptance, which the seller is then free to accept or reject.
Sellers can continue to use disclaimers of liability, clearly displayed on the website, subject to the
usual consumer protection laws on unfair terms.
The law and jurisdiction governing the transaction should be made clear, for example, 'All
transactions are governed by English law'.
The seller should make sure that any web pages do not contravene local laws (for example, those
relating to advertising standards) in the countries targeted.
A time limit should be set for all offers made on the website, which should take account of
potential delays in receiving emails.