The law of e-commerce
Electronic Contracts
Electronic contracts
How can contracts be created in the
real world?
- Verbally
- Conduct
- In writing
Electronic contracts
How are contracts created electronically?
- By email (in writing as per the real
world.)
- Via the Internet.
Electronic contracts and
email
It is important to remember that when
dealing with the creation of a contract all
that is really needed is offer, acceptance
and intention.
Consideration can and often will move
after the contract has been made.
Email and e-commerce
There are numerous methods of
creating a contract via email.
For example … …
Examples of contract
creation via email
Alphie sends Benny this email:
“I have a computer for sale – you know, the one that you
used last week. I want to raise some money to go on
holiday so I will sell it to you for £600. Come and get it
this evening if you want it”
THIS IS AN OFFER
Examples of contract
creation via email
Benny emails Alphie
“That sounds great, I will come over
tonight and get it”
THIS IS AN ACCEPTANCE
A contract will now have
been formed
Examples of contract
creation via email
This example is possibly the most
simple example of an emailed offer and
acceptance.
You could have email used to create the
contract in other ways.
Examples of contract
creation via email
A person could send an email to an
account advertised in the classifieds of
a newspaper.
Alternatively, an email would probably
amount to valid acceptance for any offer
that required acceptance to be made in
writing.
Electronic contracts and
email
Therefore, when looking at electronic
contracts and email, it is important to
appreciate that the acceptance email is
very important.
Communication of
acceptance
It is therefore important to ensure that
communication of acceptance has
occurred.
In Entores Ltd v Miles Far East
Corporation [1955] 2 All ER 493, Lord
Denning said:
Entores v Miles
“Suppose, for instance, that I shout an
offer to a man across a river ... but I do not
hear his reply because it is drowned by an
aircraft flying overhead.
There is no
contract at that moment. If he wishes to
make a contract, he must wait until the
aircraft is gone and then shout back his
acceptance so that I can hear what he
says” (at page 495)
Communication of
Acceptance
Acceptance must therefore be
communicated.
The law is the same regardless of the
fact that we are dealing with ecommerce
Silence and acceptance
The rule that silence cannot constitute
acceptance will still apply.
Felthouse v Bindley
Exceptions to the normal rules
of acceptance
Unilateral Contracts
Carlill v Carbolic Smokeball Co.
Communication of
acceptance
When examining the creation of a
contract via email it is important to look
in some detail at the applicability of the
postal rule to electronic mail.
The postal rule was created in the case
of Adams v Lindsell (1818) 1 B & Ald
680
What is meant by the postal
rule?
The postal rule states that where a letter
is posted, the acceptance is deemed
effective from the moment that the letter
is posted and not when the letter has
been received.
The Courts have been careful to limit
the ambit of this rule wherever possible.
Limitations on the postal
rule
In Holwell Securites v Hughes [1974] 1
All ER 161 where the term ‘notice in
writing’ is used this meant that notice
must occur and the postal rule is not
valid.
Limitations on the postal
rule
The postal rule is also invalid if the rules
and regulations of the Post Office are
not followed.
This means that the letter must be
properly addressed and that the correct
postage must be paid.
Limitations to the postal
rule
Letters must also be placed in post
boxes if they are available.
The postal rule will not apply to
instances where a letter is handed to a
postman. (re London and Northern
Bank ex parte Jones [1900] 1 Ch 220)
Does the postal rule apply
to email?
The position is unclear as there has
been no legislation or case law on the
matter.
If the matter was to come to court and
the legal position tested, what would the
courts decide?
Books
L Edwards & Charlotte Waelde, Law & the Internet,
2nd Edition, 2000, Hart Publishing, Oxford, p 22-26.
Paul Todd, E-Commerce Law, Cavendish Publishing,
p 179-182.
Articles
E-mail and the postal rule
Kirsten Houghton & Kate Vaughan-Neil, Computers & Law
2001/02, 12(5), 31-35,
The postal rule in electronic commerce: a reconsideration.
Susannah Downing & Justin Harrington, Communications Law,
2000, 5(2), 43-47
Copies of these articles are available on short loan. There are
also many other articles around as well – available on Westlaw
and Lexis Nexis Professional.
Does the postal rule apply
to email?
Q
Why was the postal rule created?
A
Because at the time it was
necessary.
Should the postal rule apply
to email?
Is email so similar to posted letters of
acceptance that it should?
Similarities
Post
Email
Non instantaneous
Non instantaneous
Control
Control

Why should the Postal Rule
not apply to Email
You can now check whether the
acceptance has been received
-
Delivery and read receipts
Non-delivery notification
Email recall
UNCITRAL’s Model Law of ECommerce - http://www.uncitral.org/
Does the postal rule apply
to emailed acceptances?
There is no legal authority on this point
within the UK.
Academics are divided on the issue and
therefore it is a grey area.
Does the postal rule apply
to emailed acceptances?
The Model Law of E-commerce states
that the postal rule should not apply to
emailed acceptances.
Other Jurisdictions, e.g. America have
legislated similarly.