E-commerce Essay Sample: Murray describes Article 11 of the E-Commerce Directive

Murray Describes Article 11 of the E-Commerce Directive as “Rather Anodyne” and a “Missed Opportunity”

Discuss.

In discussing the idea that the E-Commerce Directive at Article 11 could be considered “rather anodyne” and a “missed opportunity” according to Andrew D. Murray, this essay will first stress the internet’s importance in relation to electronic contracts and electronic commerce’s (‘e-commerce’s’) development in general for the purchase of consumer goods and services. This essay’s discussion will then look to consider the development of the law regarding the E-Commerce Directive in general so as to then be able to look to much better understand its aims and purposes. Then, more specifically, this essay will then look to focus more ostensibly upon Article 11 of the Directive’s development through each of its proposals by the European Commission along with its nature and scope. Finally, this essay will seek to conclude with a summary of the key points that have been derived from this discussion regarding whether the E-Commerce Directive at Article 11 could in fact be considered “rather anodyne” and a “missed opportunity”.

To begin with, in looking to consider the remit of Article 11 of the Electronic Commerce Directive 2000/31/EC (‘E-Commerce Directive) regarding the placing of the order on the Internet by consumers, the Internet’s development was meant to provide for what is best described as a rapid and free exchange of information with a very limited commercial side that has since developed significantly to the point that the E-Commerce Directive was implemented in Europe. In addition, the Internet has become increasingly commercial with the utilisation of electronic contracts becoming increasingly significant along with systems of e-commerce around the world analogous to a real marketplace on electronic systems generating billions of sales. Therefore, the creation and development of the Internet began to further shape our current ‘global’ information society and revolutionised the way business is now conducted along with consumer activity automatically across the world. As a result, e-commerce may be the quickest growing business segment ever and its evolution has caused lawyers to pay much better attention to this medium’s legal aspects and for pressure to be placed upon the EU to afford some form of ‘special protection’ to consumers through specially tailored mechanisms for many countries to then establish laws in this area.

Then in relation to Article 11 of the E-Commerce Directive regarding the placing of the order on the Internet by consumers it is also to be appreciated that the E-Commerce Directive as a whole looked to establish principles with a view to then regulating e-commerce transactions regarding on-line-dispute settlement through which service providers are then bound. This Directive also served to recognise service providers should regularly consult and respect opt-out registers, since the E-Commerce Directive is one of maximum harmonisation meaning there are only limited circumstances where Member States can interfere with other states’ services. In addition, the EU’s strategies are continuously evolving through community legislative instruments – including the E-Commerce Directive and the Distant Contracts directive – that seeks to provide basic principles of protection for consumers, whilst the European Commission has also issued two green papers in this regard. This is because European law is generally considered automatically applicable in the courts and legal systems of all EU member states in keeping with the laws and regulations derived from the Treaty of Rome 1957 (now the EC Treaty), whilst the European Court of Justice also established the doctrines of ‘direct effect’ and ‘supremacy’ that provided for the general impact of European law upon individual member states that gave it a similar effect to decisions that are reached in individual EU member states jurisdictions by what are then domestic courts.

When seeking to consider the remit of Article 11 of the E-Commerce Directive with regards to whether it is in fact “rather anodyne” and a “missed opportunity”, it falls within the scope of Chapter II, Section 3 (‘Contracts Concluded by Electronic Means’). It is one of three Articles that also seeks to fulfill the need for equivalence that has been found in the form of the UN Commission on International Trade Law (UNCITRAL) Model Law. This is because the UNCITRAL Model Laws have effectively established what are considered to be ‘model’ rules for other countries to copy with a view to then encouraging sound policies regarding international trade law – although these ‘Model Laws’ usually differ significantly from most international procurement rules. Therefore, most rules merely serve to effectively prohibit discrimination in this area and also served to establish a procedural framework for making foreign suppliers much more aware of opportunities and ensuring that any entities in this area cannot conceal discrimination. But, whilst the recognition of the UNCITRAL Model Law on Electronic Commerce 1996 has served to create an almost universal domestic legislative reaction, there still remains what has been recognised as something of a fundamental dilemma largely unresolved regarding the ‘labelling’ of electronic contracts.

In the UK, however, there is a “tendency … to deal with specific e-contracting issues”. Moreover, this could also be somewhat reflective of the fact UNCITRAL Model Laws do not cover every aspect of e-commerce because the problem is with trying to determine the extent to which the Internet will lead to significant variations to the established structure of private international law. However, the E-Commerce Directive also goes further with a view to determining basic rules for electronic contracts’ formation. Article 9 is considered to be fundamental because – subject to the exceptions recognised in Article 9(2) – it provides for the equivalent recognition of electronic documentation in recognising a contractual agreement. Articles 10 and 11 of the E-Commerce Directive have sought to harmonise basic rules of contract formation regarding electronic contracts. By way of illustration, Article 10 established minimum informational standards that are needed for what are labelled as electronic business-to-consumer (B2C) contracts in this context. As a result, it is perhaps considered to be best described as being a consumer protection provision, whilst Article 11 has attempted to determine when an electronic contract is concluded after many drafts.

The E-Commerce Directive went through three specific drafts and approaches to electronic contracting with the first arising in November 1998 that also dealt with the issue of electronic contracting in Section III. In this first draft Article 9(1) was meant to guarantee for Member States “the legal requirements applicable to the contractual process neither prevent the effective use of electronic contracts nor result in such contracts being deprived of . . . effect and validity” in the circumstances of any given case that may arise. Therefore, when taken alongside the measures contained in the Electronic Signatures Directive, the provisions of Article 9(1) regarding the development of the E-Commerce Directive would serve to allow for electronic documentation to be used for creating both informal and formal contracts.

Nevertheless, since the European Commission was well aware of the sensitivity that has arisen to documents regarding transfers of interest in land and family documents, governments can exclude certain contracts. With this in mind, such documents were listed under the E-Commerce Directive at Article 9(2) including those – (i) involving a notary; (ii) that need to be registered with a public authority; (iii) contracts that are governed by Family Law; and (iv) governed by the Law of Succession. In addition, any exceptions must be agreed to by the European Commission under Article 23 of the E-Commerce Directive. Articles 10 & 11 would then seek to cater for the narrower issue of harmonisation. This is because, whilst Article 10 was a general provision for consumer protection and boost confidence, Article 10 of the proposed E-Commerce Directive provides a consumer protection provision and Article 11 was intensely scrutinised throughout its drafting with an examination of its various incarnations since its first draft was particularly ambitious.

At this point Article 11 was somewhat grandly referred to as the ‘Moment at which the Contract is Concluded’ since the Article sought to harmonise the law for B2C e-contracts across the EU to provide the certainty required to boost consumer confidence – although some member states would have to lose their current rules. As a result, it was perhaps hardly surprising that this proposed system was subject to severe criticism from both retailers and service providers online. However, when the provision was reviewed by the European Parliament’s Committee on Legal Affairs & Citizens’ Rights, it was rejected because there was no reason for e-businesses like Amazon to need customer confirmation before processing an order. Therefore, changes to the wording of Article 11 were then recommended by the Committee including removal of the need for confirmation from consumers before processing an order that the European Parliament then opted to approve in the circumstances subject to the proposed amendments that were still to be undertaken at the times.

With this in mind, in August 1999 the European Commission presented an ‘Amended Proposal’ that then led to substantial amendments being made to the proposals for Article 11 as part of the E-Commerce Directive. This is because, although the E-Commerce Directive at Article 11 still sought to harmonise the “moment at which the contract is concluded”, it was also recognised that “in cases where a recipient, . . ., is required to give his consent through technological means, . . . , the contract is concluded when the recipient of the service has received from the service provider electronically an acknowledgement of receipt of the recipient’s acceptance”. Therefore, this particular incarnation of Article 11 could then be considered to be somewhat more akin to what lawyers within the UK legal system are used to with regards to the recognition of the terms referred to as ‘Offer’, ‘Acceptance’ and ‘Acknowledgement’ being replaced by the terms that have now come to be known as ‘Invitation to treat’, ‘Offer’ and ‘Acceptance’.

However, the proposed European Commerce Directive still had to be adopted by the European Council and, for somewhat unclear reasons, the text of Article 11 was still not considered to be acceptable. As a result, when the Common Position regarding the draft Directive of the European Council was published in February 2000, the wording of Article 11 had been substantially redrafted once more. Now Article 11 was limited to listing requirements because “The Council considered that it was not appropriate to harmonize national law regarding the moment at which a contract is concluded”. Then in April the Rapporteur Ana Vallerlersundi proposed the European Parliament approve the common position unamended since “this directive must be adopted as soon as possible to make sure that e-commerce can genuinely develop in the Community” before the Common Position was then approved in May and the E-Commerce Directive was finally fully enacted but with Article 11 having lost almost all its meaning.

Such a view of Article 11 is then only further emphasised by both the European Parliament and European Commission who sought to achieve harmonisation regarding the conclusion of e-contracts. This is because it was recognised that there were several significant advantages to this development – (i) this kind of certainty in the law in this regard would serve to guarantee consumer confidence in international trading; and (ii) harmonisation of the contracting rules would also benefit e-businesses who could streamline their systems. Unfortunately, however, in keeping with Article 11’s final entitlement under the remit of the E-Commerce Directive, whilst at the first and second draft stage when it was then clearly declaiming the ‘Moment at which the Contract is Concluded’, it now meekly states it is called ‘Placing of the Order’ with a single vision of e-contracting then being abandoned in favour of what was really such a minor move.

Therefore, the most significant remaining provision – Article 11(1)’s second indent – states “The order and the acknowledgement of receipt are to be received when the parties to whom they are able to access them”. This is because a key question of contractual formation has been as to how e-contracts and their recognition fit with the currently accepted means of forming contracts. Such an issue is to be considered logically before harmonising rules of contract formation but, whilst the E-Commerce Directive fails on that further step, the former point is finally answered. This is largely because we now know that delivery occurs when a party can access the communication so the ‘postal rule’ that arose out of the English Common Law is not applicable to the delivery and receipt of e-mails with the ‘delivery rule’ replacing its application to online contracts as well.

The ‘postal rule’ does not depend on a message’s receipt to actually take effect because an epistolary acceptance became binding when placed in the course of the postal service, since the communication links in 1818 were not then as well established. This is because the doctrine was formulated in response to the delay when parties attempted to conclude contracts at a distance in this early industrial period. As a result, a complete contract was only said to be brought into effect when the properly stamped and addressed letter was placed in the course of the post. Therefore, whilst the common law generally provides there is a contract only when acceptance is communicated to the ‘offeror’, clearly, the ‘postal rule’ has an obvious advantage for the ‘offeree’ because the burden of uncertainty lies with the ‘offeror’. On this basis, it is possible to be bound by messages no one has even actually ever read by the ‘delivery rule’ so the ‘postal rule’ paradoxically also serves as a reminder how a message is circulated is often of greater significance than its apparent content because ‘the contractual act’ may have an independent existence.

However, conversely, the Internet does not require there to have been anything of a direct physical link between the users and also allows individuals to be notified if a message is successfully sent and/or received. But, although it is for an individual to look to re-send their message, the need to be able to formulate e-contracts properly remains somewhat open to debate because the ‘postal rule’ has become something of ‘an artificial concept’. This is because it applies to the postal service and the telegraph, but not to either telex machines or telephones that are considered instantaneous and contractual relations are established where acceptance is received. Therefore, the ‘postal rule’s’ paradoxical nature could be considered emblematic of further concerns regarding a post-modern account of contract law in the context of sale of goods relationships. This is because, even when laissez-faire economics and the doctrine regarding freedom of contract were in the ascendancy, the ‘postal rule’ of the contract will uneasily testify to the contract’s character because it passes from one subject to the other with regards to a contractual agreement.

On this basis, it has been recognised that contract law in this regard is now concerned with a series of linguistic questions essential to any understanding of the tradition that has developed so, for the revocation of acceptance of an offer to be effective, it would be said to take effect if they were considered to be revoking the ‘offer’. As a result, an acceptance can generally be revoked at any time prior to the ‘acceptance’s’ arrival, but this is not the case with an ‘electronic contract’ in this context; even if revocation of any acceptance is received before the said acceptance. The problem with this, however, is that the only direct legal authority is that of Countess of Dunmore v. Alexander over 170 years ago – when the first computer was not even an afterthought – so it is a far better view to consider acceptance in such circumstances to be generally irrevocable. With this in mind, it is now considered to be possible to cancel an order when the cancellation is sent, but the problem is that this is usually only after acceptance has been received so it still then remains somewhat difficult to resolve on the basis of as to how their contract was established.

Therefore, to conclude, having discussed the idea the E-Commerce Directive at Article 11 could be considered to be “rather anodyne” and a “missed opportunity”, it would seem that there was, in fact something, of a missed opportunity with the final drafting of Article 11 of the E-Commerce Directive. This is because Article 11 was one of three provisions (including Articles 9 and 10) that sought to harmonise some of the basic rules of contract formation regarding electronic contracts and, whilst it initially started off as something seeking to be revolutionary, by its final drafting into what became Article 11 of the Directive it is arguable that its nature and scope was practically useless for fulfilling its initial aims. However, that is not to say Article 11(1) of the E-Commerce Directive does not serve a purpose. This is because, as was previously alluded to in the preceding paragraph, delivery occurs when a party is able to access the communication so the ‘postal rule’ that arose out of the English Common Law Legal System is not applicable to the delivery and receipt of e-mails along with online contracts. It is just unfortunate Article 11 of the proposed E-Commerce Directive in its second drafting could not be accepted by the European Council so that Article 11 could then be more akin to what lawyers in the UK are used to with ‘Offer’, ‘Acceptance’ and ‘Acknowledgement’ being replaced by ‘Invitation to treat’, ‘Offer’ and ‘Acceptance’ with regards to the recognition of the ‘delivery rule’ with regards to the recognition of E-Commerce.