Electronic commerce – B2B
contracts
Introduction
• E-Commerce is sharing business information, maintaining
business relationships and conducting business
transaction by means of telecommunications network
• It is conducting the exchange of information using a
combination of structures and unstructured messages
across the entire range of networking technologies
• The Internet’s WWW has been the prime driver of
contemporary E-commerce
• E-commerce enables organizations of all sizes and in all
market sectors to improve their competitiveness
Traditional vs. electronic
• Traditional commerce:
• Firms engages in many other activities in addition to buying
and selling their product
• Traditional commerce include: buyers and sellers using old
fashion method to do business
• Electronic Commerce:
• Firms has used various electronic communications tools to
conduct different kinds of business transactions.
• Electronic Commerce use technology to moves people
around the world
Online/E-commerce
 E-commerce is the paperless exchange of business
information using electronic data interchange (EDI), email, electronic bulletin boards, fax transmission,
electronic funds transfer
 Internet shopping, online stock and bond transactions,
downloading and selling of „soft merchandise“ (software,
documents, graphics, music etc.)
 The concept of e-commerce is all about using the Internet
to do business better and faster
Pros for consumer
 Price
 Quick, convenient, easy
 In depth product overview
 Consumer reviews
 Find products online that you cannot find at a local, real
store
 Doors are always opened to customers, 24/7
 No sale pitches (store empoyees)
Cons for consumer
 Unable to examine products personally
 New way for cyber-criminals to steal personal, financial
info and even your identity
 Product overload
 Do not always know what you are getting
 Shipping delays (purchases and returns)
 Slower product verification and problem resolutions
 Loss of emotional fulfillment
Pros for businesses
 Increased market share (global)
 Provide for niche markets
 Operation costs
 Increased productivity
 Survey of customers
 Less likely to make returns
Cons for businesses
 Elimination fo face to face interaction
 Distribution (in-stock)
 Competition (prices down=profit margin down)
 24/7 (updating, responding etc.)
Barriers to e-commerce
1. Access and Connectivity
2. Authentication and Standardization
3. Cyber Laws
4. Technology
E-commerce
 Information exchange <-> product/service exchange
E-commerce
 Information exchange
 Partner/product search
 Negotiation, market, auction
 Contract
 Contract fulfilment
 Legal information
 Etc.
E-commerce
 Product/service exchange
 (micro)payment
 (intangible) products
 Logistics of products and services
 Subscription mechanisms
Types of e-commerce
 B2B – examples
 Internet bookshop, shopping malls, auctions, collective
buying
 B2C – examples
 Finance – stock market, electronic banking
 B2B support, marketsE-commerce
 C2C – examples
 G2B/B2G – information, procurement, tax administration,
medicine, education, weather
Role of institutions
 Facilitate the transactions
 Provide efficient price discovery mechanism, standard
transaction protocols, settlement mechanisms
 Enhance trust through
 Provision of info on potential partners
 Legal provisions to back up contracts
 Provide securities/guaranties
Practical concerns
for e-commerce deals
 Identity and capacity of seller or buyer
 Authenticity of offer and acceptance (digital
signatures)
 When and where contract formed
 Governing law
 Terms and conditions (click through)
Practical concerns
for e-commerce deals
 Agreement on electronic payment system
 Security of information exchanges
 Consequences on breach
 Storing electronic data to prevent alteration
 Technical and legal barriers
Contracts – the basics
 Offer
 Acceptance
 Intention to enter legal relations
 Consideration
 Legal capacity
 Genuine consent
Contract formation
 Computers are not the first human actors to be involved
in contract formation – vending machines, tickets
 Thorton v Shoe Lane Parking Ticket Ltd. - a contractual
term displayed or communicated to contractual party
after consensus ad idem is reached is not incorporated
into the contractual terms
Contract formation
 E-commerce directive
 Electronic contracting, SPAM emails, protection of ISPs and
other third parties carriers
 E-commerce directive – Arts. 9 – 11
International organizations
 Hague Conference on Private International Law
 The EU
 Inter-American Specialized Conference on PIL
 UNCITRAL
International instruments
 The EU
 Brussels I Regulation
 Rome I Regulation
 E-commerce directive
 International conventions
 The Hague Convention 2005 on choice of court agreements
 CISG
International instruments
 United Nations Convention on the Use of Electronic
Communications in International Contracts, 2005
 Rotterdam Rules – the UN Convention on Contracts for the
International Carriage of Goods Wholly or Partly by Sea 2008
 International substantive law, electronic transport documents
 Deemed to be one the greatest steps towards harmonization of
international business
International instruments
 UNCITRAL Model Law on Electronic Commerce
 United Nations Convention on the Use of Electronic
Communications in International Contracts, 2005
 Do not contain rules on jurisdiction,
 time and place of sending and receiving data
messages/infomation - > interpretation of place of
business, place of dimicile etc.
 Valuable for analyzing parties location in cyberspace
International instruments
 The Hague Convention 2005 on choice of court agreements
 1st – U.S.
 Only to B2B
 Exclusive choice of courts agreements
 Expressly aims at applicability to the digital age (Arts. 1 , 3c)
In preparation, pending
 Draft Hague Principles on the Choice of Law in
International Contracts
 Proposal for Regulation on Common European Sales Law
Jurisdiction
 „…for on-line contracts in general, in the matter of jurisdiction
and applicable law, if the performance of the relevant
obligation takes place off-line, the existing rules of private
international law referring to the place of performance remain
relevant. If the performance takes place on-line, the place of
performance is not appropriate as a connecting factor. In that
case, the relevant connecting factors are the location of each
of the parties involved“.

Geneva Round Table on Electronic Commerce and Private
International Law
E-commerce directive
 No rules on PIL or jurisdiction
Brussels I Regulation
 General jurisdiction Art. 4
 Special jurisdiction Art. 7/1
 Prorogation Art. 25
Regulation Brussels I - Article 7 section 1
1. A person domiciled in a Member State may, in another
Member State, be sued:
in matters relating to a contract, in the courts for the
place of performance of the obligation in question;
b. for the purpose of this provision and unless otherwise
agreed, the place of performance of the obligation in
question shall be:
a.


in the case of the sale of goods, the place in a Member State
where, under the contract, the goods were delivered or
should have been delivered,
in the case of the provision of services, the place in a Member
State where, under the contract, the services were provided
or should have been provided
Regulation Brussels I - Article 5 section 1
Special jurisdiction
Multiple places of
delivery of goods or
provision of services
No real
connection
Not within
Article 7/1
Dispute
concerns
more than
one
obligation
Several
obligations
but with one
principal
obligation
Each
obligation
has its own
jurisdiction
The
principal
obligation
determines
jurisdiction
over the
whole claim
One
obligation
has been
performed
in a
number of
states
Art. 7/1 not
applicable?
Article 4
B2B electronic contracting
 Is article 7/1 still applicable and how?
 Necessary to distinguish
 Electronic contract for the sale of goods X for the provision
of services
 Physical goods/services X digitised goods/services
 Physical performance X digitised performance
B2B electronic contracting
 Place of performance?
1. The place of dispatch/uploading (Art. 10/3 UN
Convention)
2. The place of receipt/downloading
3. The place where either the seller or recipient has a
closest connecting factor
B2B electronic contracting - conclusion
 The place of performance
 At recipient‘s place of business indicated by the party
 If not indicated or more than one – the one with the closest
relationship to the relevant contract
 If no place of business – recipient‘s domicile
 Supported by:

Art. 60 Brussels I, Art. 2 e-commerce directive, Art. 31 CISG, Art.
15/4 Model Law, Art.6 + 10 UN Convention
Brussels I Regulation
 Art. 25
 Only provision that explicitly aknowledges agreements
made via electronic means, which provide a durable
record fo the agreement
 Choice of jursdiction clause in the standart conditions and
terms on website
 Click-wrap agreement – „I agree“ + must be made available
 Problem – to prove contractual consensus + incorporation
Brussels I Regulation
 Art. 10/1b) – the concluded contract must be filed by the
service providers and must be accessible
 Art. 10/3 – contract terms and general conditions must be
made available in a way that allows to store and
reproduce them
 No consequnces if not fulfiled
Jurisdiction over E-Commerce Transactions:
United States Law
 The Uniform Computer Information Transactions Act
Personal jurisdiction
 Constitutional rule of due process
 Rule of fairness
 Requires sufficient contacts with forum state
Zippo criterion
 Three categories:
 Doing business with residents of forum jurisdiction
 Posting a passive website
 Middle category: depends on “the level of interactivity and
commercial nature of the exchange of information”
Revision of the Zippo test
 Directs electronic activity into the state
 “With the manifested intent of engaging in business or
other interactions within the State”
 Gives rise to a cause of action
— ALS Scan v. Digital Svc. Consultants
Effects test
 Intentional actions
 “Expressly aimed at the forum state”
 “Causing harm, the brunt of which is suffered—and which
the defendant knows is likely to be suffered—in the
forum state”
Revision of the effects test
 Takes “expressly aimed” requirement more seriously
 “Mere foreseeability that the defendant’s conduct would
have such an effect is not sufficient.”
— Young v. New Haven Advocate
Convergence of Zippo and effects test
 Both require the defendant to take some action that
indicates a specific intent to have contacts with people or
businesses located in the territory where the court sits
International applications
 Application of Zippo:
 Graduate Management Admission Council v. Raju:
targeting of US found based on providing ordering
instructions
 Applications of the effects test:
 MGM v. Grokster: defendant charged with knowing of
effect on California industries
 Yahoo! v. LICRA: no jurisdiction because no wrongful
conduct
UCITA
 Like the Uniform Commercial Code
But
 Unlike UNCITRAL Model Law on Electronic Commerce
 Unlike Uniform Electronic Transactions Act
UCITA is controversial
 Opposed by consumer protection advocates
 Adopted in only two states
 Banned by “bomb-shelter” legislation in four states
Links
 http://www.uncitral.org/pdf/english/texts/electcom/05



89450_Ebook.pdf
http://www.uncitral.org/pdf/english/texts/electcom/0657452_Ebook.pdf
http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2001:012:00
01:0023:EN:PDF
http://www.hcch.net/upload/conventions/txt37en.pdf
http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2000:178:00
01:0016:EN:PDF
Links
 http://www.ted.com/talks/andrew_blum_what_is_the_in
ternet_really.html
 http://www.ted.com/talks/jonathan_zittrain_the_web_is
_a_random_act_of_kindness.html