Electronic contracts : principles from common law

412 Pages·2015·2.916 MB·English

by  Simon Blount

Electronic Contracts
Second Edition
Simon Blount
BA (Hons), LLB, PhD (UNSW)
Barrister at Law
Adjunct Lecturer in Law
University of New South Wales
LexisNexis Butterworths
Australia
2015
In memory of Samar Ataya
LexisNexis
AUSTRALIA LexisNexis Butterworths
475–495 Victoria Avenue, Chatswood NSW
2067
On the internet at: www.lexisnexis.com.au
ARGENTINA LexisNexis Argentina, BUENOS AIRES
AUSTRIA LexisNexis Verlag ARD Orac GmbH & Co KG,
VIENNA
BRAZIL LexisNexis Latin America, SAO PAULO
CANADA LexisNexis Canada, Markham, ONTARIO
CHILE LexisNexis Chile, SANTIAG
CHINA LexisNexis China, BEIJING, SHANGHAI
CZECH REPUBLIC Nakladatelství Orac sro, PRAGUE
FRANCE LexisNexis SA, PARIS
GERMANY LexisNexis Germany, FRANKFURT
HONG KONG LexisNexis Hong Kong, HONG KONG
HUNGARY HVG-Orac, BUDAPEST
INDIA LexisNexis, NEW DELHI
ITALY Dott A Giuffrè Editore SpA, MILAN
JAPAN LexisNexis Japan KK, TOKYO
KOREA LexisNexis, SEOUL
MALAYSIA LexisNexis Malaysia Sdn Bhd, PETALING JAYA,
SELANGOR
NEW ZEALAND LexisNexis, WELLINGTON
POLAND Wydawnictwo Prawnicze LexisNexis, WARSAW
SINGAPORE LexisNexis, SINGAPORE
SOUTH AFRICA LexisNexis Butterworths, DURBAN
SWITZERLAND Staempfli Verlag AG, BERNE
TAIWAN LexisNexis, TAIWAN
UNITED KINGDOM LexisNexis UK, LONDON, EDINBURGH
USA LexisNexis Group, New York, NEW YORK
LexisNexis, Miamisburg, OHIO
National Library of Australia Cataloguing-in-Publication entry
Author: Blount, Simon.
Title: Electronic Contracts.
ISBN: 9780409340747 (pbk).
9780409340754 (ebk).
Notes: Includes index.
Subjects: Electronic Contracts.
Dewey Number: 346.022.
© 2015 Reed International Books Australia Pty Limited trading as
LexisNexis.
This book is copyright. Except as permitted under the Copyright Act 1968
(Cth), no part of this publication may be reproduced by any process,
electronic or otherwise, without the specific written permission of the
copyright owner. Neither may information be stored electronically in any
form whatsoever without such permission.
Inquiries should be addressed to the publishers.
Typeset in Myriad Pro and Minion Pro.
Printed in Australia
Visit LexisNexis Butterworths at www.lexisnexis.com.au
Foreword to First Edition
This book is like an acorn. It is well-structured, compact and bound, in years
to come, to grow in further editions.
Dr Simon Blount has investigated the emerging body of case law which
electronic or internet commercial transactions have spawned over the last
decade or so. His idea of collecting and systematising the common law cases
on contracts in the new context of electronic dealing is timely. In the last 15
years, the internet and computer communication have transformed not only
our commercial, but also our social, relationships. I can enter a contract over
the internet with the hotel I want to stay at when I travel interstate or
overseas. And, as we have recently learned, I can also defame someone in
every jurisdiction where what I have written about him or her can be viewed
online: Dow Jones & Company Inc v Gutnick (2002) 210 CLR 575.
By clicking on an ‘I agree’ box or icon, a person can enter into a legally
binding contract on the internet. But what if you are clumsy and accidentally
hit the button? Worse, what if you are not particularly computer savvy and do
not know how to send a recall message? Some of these issues are considered
by the author in Chapter 4; others will be left to the courts to work out a
solution. Forty years ago, potential litigants did battle with automatic ticket
issuing machines when entering carparks. Could you make a contract with
those machines? In Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163, the
contract was made by the customer taking the ticket before he or she could
know of an exemption clause on the back. Lord Denning MR described the
machine as ‘a booking clerk in disguise’. He said, graphically, that if the clause
were to be part of the contract it needed to be drawn to the customer’s
attention by being ‘… printed in red ink with a red hand pointing to it — or
something equally startling’.
Ordinary users of the internet today when asked to click on an ‘I agree’ box
or icon are often presented with a long and complex set of terms and
conditions, either directly or by being offered a link to them. Generally, when
you click or are about to click, no red hands or red ink pop up on the screen
telling you about any onerous or unfortunate terms. Few people would ever
read those terms. Will they nonetheless be bound because their click is a
signature?: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165.
Time will tell.
Dr Blount’s scholarly analysis explains the new (at least to me) concepts of
‘clickwrap’, ‘browsewrap’ and ‘shrinkwrap’ contracts. He discusses these new
mysteries and their nuances in Chapter 6. Perhaps these will become as
commonplace in the common law categories of contract as the offer to the
world at large which Mrs Carlill brought to life when she tried the overrated
carbolic smoke ball and found that it did not, as promised, prevent her from
catching influenza: Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256; see, too,
the more prosaic Australian Woollen Mills Pty Ltd v The Commonwealth
(1954) 92 CLR 424.
Dr Blount’s initiative will make a valuable contribution to a fertile field
which is now starting to be tilled.
Steven Rares
Chambers
30 September 2008
Foreword to Second Edition
This second edition has updated Dr Simon Blount’s pithy and useful work on
the major common law jurisdictions’ treatment of electronic contracts. Most
contracts are made electronically in the commercial world today. Contracts of
significant value, such as charterparties that were once made by telex, an
earlier and now obsolete form of electronic technology, are now routinely
made through email exchanges.
Consumers buy a vast range of goods and services online, ranging from
books and clothing to accommodation, airline and theatre tickets. It is now a
commonplace to join, or renew subscriptions to, organisations or
publications by the click of one’s inanimate mouse while looking at a
computer screen. We even learn in Chapter 2 that you can enter into
contracts to buy land using email. The author has collected an impressive
range of authorities from around the common law world that have grappled
with the integration of the workings of cyberspace into the law of contract.
Just as with paper based contracting, we ordinarily do not read the fine
print online when clicking the ‘I agree’ box to signify a perhaps false, but
probably exasperated, assent to the screen’s request to acknowledge that we
have read the offeror’s usually interminable and incomprehensible standard
terms and conditions. This casualness or resignation can have somewhat
significant consequences as the British online retailer, GameStation, showed
in 2010 in an April Fools’ Day prank it played on purchasers. The retailer
inserted two additional terms in the plethora of its other online terms and
conditions.
The first new term was:
By placing an order via this Web site on the first day of the fourth month of the year 2010 Anno
Domini, you agree to grant Us a non transferable option to claim, for now and for ever more, your
immortal soul. Should We wish to exercise this option, you agree to surrender your immortal soul,
and any claim you may have on it, within 5 (five) working days of receiving written notification
from gamestation.co.uk or one of its duly authorised minions.
GameStation also added the following additional term:
We reserve the right to serve such notice in 6 (six) foot high letters of fire, however we can accept
no liability for any loss or damage caused by such an act. If you a) do not believe you have an
immortal soul, b) have already given it to another party, or c) do not wish to grant Us such a
license, please click the link below to nullify this sub-clause and proceed with your transaction.
The shoppers were given a simple tick box option allowing them to opt out.
Few of them did that even though, if they had, they would have received a £5
voucher. News reports suggested that GameStation had estimated that about
88% of people who contracted with it on that fateful day may have paid more
than they realised that they bargained for. Luckily, GameStation cancelled
those conditions and announced that it did not intend to enforce them after
April Fools’ Day 2010.
The author has also added a new Chapter 10 discussing the efforts made
and difficulties encountered by those seeking international harmony for
electronic dealings in an ever-changing technological landscape.
In this new edition, Dr Blount continues his scholarly and very valuable
contribution to this emerging area of the law. The significance of a text like
this, that synthesises the law and categorises issues that arise in an area vital to
our daily lives, cannot be understated. Moreover, as I noted in the foreword
to the first edition, Dr Blount has collected cases from many common law
jurisdictions and contextualised them through his analysis in this informative
and skilled text. Our law is the richer for it.
Steven Rares
Chambers
30 June 2015
Preface to First Edition
… the world’s contracted thus …1
Four hundred years after John Donne, poet and lawyer, wrote these words,
the world has now truly contracted. Electronic communications enable
contracts to be made over vast distances at the click of a virtual button. This
book is about how the common law world has contracted by electronic
means.
My primary source materials are the decisions of the courts in electronic
contract cases in the United States, Canada, the United Kingdom and
Australia. I am grateful for the research assistance I received from Nina
Bliesner, Johanna Mayr, Tim Schaper and Samar Ataya in the early stages of
writing. I also thank Jennifer Nott of the New South Wales Bar Library for her
help in locating hard-to-find decisions and articles. I record my thanks also to
the Faculty of Law of the University of New South Wales for financial
assistance to defray the costs of research.
In the later stages of writing, I became particularly indebted to Franco
Corsaro SC, and to Robert Lovas and Jeanette Richards, barristers, who
generously gave of their time to read drafts of this book. Their comments and
suggestions have been invaluable. Any errors that remain are entirely my
own.
I thank Joanne Beckett of LexisNexis Australia for believing in this project
and assisting me to see it through to publication, Marley Zelinka for her
efficient coordination of the manuscript, and Nicola Tomlin for her
meticulous preparation of the final draft. My thanks also to the Honourable
Justice Steven Rares for finding time in his busy schedule as a Judge of the
Federal Court to contribute a foreword to this book.