E contract under uncitral’s model laws and us’s laws, experiences for vietnam

MINISTRY OF EDUCATION HO CHI MINH CITY UNIVERSITY OF LAW MANAGING BOARD OF SPECIAL TRAINING PROGRAM - BACHELOR’S THESIS Major: Comercial Law E-CONTRACT UNDER UNCITRAL’S MODEL LAWS AND US’S LAWS, EXPERIENCES FOR VIETNAM STUDENT : PHAM THI ANH THU CLASS : CLC 35 STUDENT ID No : 1055010264 SUPERVISOR : NGUYEN HOANG THUY TRANG, LLM HO CHI MINH CITY-2014 AFFIRMATION I hereby affirm that the thesis is the work on my own, the resources used are authentic and no other references are used without citing The research results have not been published in any other work Ho Chi Minh City, July 2014 ABBREVIATIONS EDI Electronic data interchange E-SIGN Act Electronic Signatures in Global and National Commerce Act 2000 NCCUSL National Conference of Uniform Law Commission UCC Uniformed Commercial Code UCITA The Uniform Computer Information Transactions Act 1999 UETA Uniform Electronic Transactions Act 1999 UNCITRAL United Nations Commission on International Trade Law TABLE OF CONTENTS INTRODUCTION CHAPTER 1: LEGAL BACKGROUND OF ELECTRONIC CONTRACT AND ITS VALIDITY 1.1 E-contract and its relating matters 1.1.1 Definition of E-contract: 1.1.2 Characteristics of E-contract 1.1.3 Classification of E-contract 1.2 The role and enforceability of E-contract 12 1.2.1 The enforceability of E-contract 12 1.2.2 The role of E-contract 13 1.3 Legal requirements for validity of E-contract 14 1.3.1 The conditions for validity of a contract 14 1.3.2 The legal requirement of E-contract 19 1.4 Introduction of the legal systems providing the E-contract in UNCITRAL’s Model Laws, USA Laws and Vietnamese Laws 21 1.4.1 UNCITRAL’s Model Laws providing E-contract 21 1.4.2 USA’s Laws on E-commerce 23 1.4.3 Vietnamese Laws on E-contract 25 CHAPTER 2: THE VALIDITY OF ELECTRONIC CONTRACT UNDER UNCITRAL’S MODEL LAWS AND US LAWS- EXPERIENCES FOR VIETNAM 29 2.1 The specific factors for the validity of E-contract 29 2.1.1 The functional equivalence of data message 29 2.1.2 The original, evidence of data message 30 2.1.3 The electronic signature in E-contract 33 2.2 The time and place in electronic contracts 39 2.2.1 The time of entering into Electronic contracts 39 2.2.2 The place of entering electronic contract 41 2.3 Validity of standard contracts on websites and EDI contract 43 2.3.1 Standard contracts on websites 43 2.3.2 EDI contract 46 CONCLUSION 49 INTRODUCTION The basis of the thesis Nowadays, the concepts of E-commerce in general and E-contracts in particular are no longer strange but prevailing increasingly to business and daily life because of its fastness, convenience, less time and money consuming as the traditional (written) contracts They can be simply an agreement for selling a book, software, etc via websites or the one concluded by means of email, or even through an electronic system absent of human The vibrant growth has called for a constant and watertight legal system to prove and provide for the legal validity and enforcement of electronic legal contracts At the beginning, many countries have been aware of composing and promulgating a set of uniform and standard legislations governing these subjects Typically, the United Nations Commission on International Trade Law (UNCITRAL) issued Model law on Electronic Commerce in 1996 and years later the Model Law on Electronic signatures to promote the harmonization and unification of international trade law for the enforceability of this modern form of contract Until now, the set of Model Laws has been adopted by many countries and cited for the resolution of validity and enforcement of E-contracts In that context, one leading country about e-commerce - USA also issued important Acts contributing significantly to the US’ e-commerce legislations: UETA, UCITA and E-Sign Act They all can be the source of learning for the issuance and application of regulations respecting to electronic transactions for other countries, including a hot E-commerce growing country as Vietnam In Vietnam, the development of Internet and the joining of global economic integration at the beginning of 2007 creates a favorable environment for the development of electronic commerce The legal bases for E-commerce, particularly electronic contracts have been created, but still contain some vagueness and blanks for the perfection It is significant that learning from the international conventions/ model laws or from progressive legal systems with a careful selection to handle the similar matters is one positive methodology for the growth of Vietnam’s legal bases of commercial electronic contract That is the reason why the author chooses this angle of investigation for the review and making suggestions for the Vietnam’s e-contract legislations Hence the topic of the thesis is “Electronic contract under UNCITRAL’s Model laws and US’s laws, experiences for Vietnam” Purpose and Delimitation of the Thesis The purpose of this thesis is to introduce a new form of contract in the Information Age that goes beyond the regular contract, and to explain how it shall be formed to satisfy full validity like the traditional one in the world, which is represented by UNCITRAL’s regulations and US’s provisions From that analysis, the author suggests some recommendations for the perfection of Vietnamese’s legislation regarding the same matter and its application in business and daily life To achieve the goal, the author focuses on the validity of all types of electronic contracts; what, how and when for a contract to be considered valid, in different views varying from UNCITRAL’s Model Laws, US’s Laws to Vietnam’s Laws with comparisons where necessary The Literature review In the scope of foreign study of validity of e-contract, there are a number of articles as well as dissertations, however the study of comparison between UNCITRAL’s Model Laws and US’s Laws appears so limited The typical examples are: “The New United States Uniform Electronic Transactions Act: Substantive provisions, Drafting History and Comparison to the UNCITRAL Model Laws on Electronic Commerce”,written by Henry D Gabriel in 2000; “Electronic contract and the legal environment” by Sarabdeen and Jawahitha & Noor Raihan Ab Hamid, “Adapting contract law to accommodate electronic contracts: Overview and suggestions” by Donnie L Kidd, JR & William H Daughtrey, JR In general, these works discuss all dimensions of electronic contract from the validity to enforcement of the contract and cover the details of data messages, electronic signature and the authentication, the matters of cyber protections and consumer protection, dispute settlement, etc Added to the variety of study source, the book “Business Law- Legal environment, online commerce, business ethics, and international issues” by Henry Cheeseman gives out a concise and complete overview of electronic contract and all its relating matters under the provisions of US laws Within the domestic works of study, there are certain volumes of articles and dissertations touching this issue though not abundant, such as the article “Phap luat va hop dong dien tu” by Tran Van Bien, published in the volume of The People’s Supreme Court Review 2010; “Su thoa thuan giao ket hop dong thuong mai dien tu” of the same author in the 2010’s Volume of State and Laws Reviews; “Hop dong thuong mai dien tu va bien phap han che rui ro” by Le Thi Kim Hoa in the Jurisprudence Review2008 Several articles focusing on the electronic signature-a vital part of the validity of E-contract can be named “Nhung van de ve chu ky dien tu o Vietnam” by Mai Hong Quy published in the Jurisprudence Review 2008, next to “Chu ky dien tu phap luat ve thuong mai dien tu cua Hoa Ky va lien minh chau Au” by Tran Viet Dung in State and Law Review 2004 Respecting to books and textbooks, the issue of e- contract is found in the Textbook on basic Ecommerce by the National Economy University in 2007, and“Cam nang phap luat ve giao ket hop dong đien tu” by Nguyen Thi Mo from Lao Dong Xa Hoi Publisher 2006 To sum up, foreign and Vietnamese authors have recently discussed this subject However, such a new angle like the introduction and comparison of UNCITRAL’s Model laws, US’s laws, Vietnamese laws has not been appropriately approached Methods One method adopted in this thesis is the dialectical materialism, which is the foundation of the investigation Besides that, the author also uses analysis, synthetic, statistic and cases study to help prove for the author’s viewpoints These methods will be used in different parts of the thesis in a flexible ways for the best effect Contribution The thesis is expected to contribute to the study of electronic commerce from the most basic of view: what makes up a valid e-contract in a fresh way of approaching – the comparison of UNCITRAL’s Model laws and US laws for a fresh way of reviewing; and establish the foundation for further investigation catching up with the development of e-commerce Additionally, it provides insight knowledge of econtract enhances the awareness of validity for users when they decide to enter into this modern form of contract Structure of the Thesis The thesis contains two following chapters: Chapter 1: The background of electronic contract and its validity Chapter 2: The validity of electronic contract under UNCITRAL’s Model laws and US’s laws- what advantages can be learned for Vietnam CHAPTER 1: LEGAL BACKGROUND OF ELECTRONIC CONTRACT AND ITS VALIDITY Electronic contract is such a broad term that relates to various legal matters However, due to the limitation of a thesis, the research will be scaled down to the most general understanding of the E-contract and its significance and its distinction to the traditional contract Most importantly, chapter one focuses on the validity of an E-contract, including what are obliged in an ordinary contract and what specific rules for an E-contract to fulfill The author intends to approach this legal issue under the law of UNCITRAL, U.S., Vietnam and legal specialists 1.1 E-contract and its relating matters 1.1.1 Definition of E-contract: Despite the fact that electronic contract (e-contract) has been used popularly, a complete definition of e-contract is still missing The UNCITRAL does not bring forward an exact concept what an E-contract means, but from the Article 11 of UNCITRAL’s model law on e-commerce, it can be inferred that E-contract is an agreement that are expressed by means of data messages1.Data message means information generated, sent, received or stored by electronic, optical or similar means including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy2 Regarding US’s laws, the article 2B of the US Uniform Commercial Code which was later incorporated into the Uniform Computer Information Transaction Act 1999 states that an electronic contract is a transaction formed by electronic messages in which the message of one or both parties will not be reviewed by an individual as routine step in forming the contract This explanation replaces the “writing” requirement with a “record” to equate electronic record with paper record and accepted electronically formed contract as valid3 Vietnamese Law on Electronic Transaction gives out a so-called simple definition that inherits to the view of UNCITRAL: E-contracts mean contracts established in the form of data messages provided for in this Law4 The term data message is defined more concisely but remains as sufficient as the UNCITRAL’s rules by not listing types of electronic means to form the contract5 After all, the electronic contract is the contract established under the form of data message or in other words, that is the contract using the form of data messages More specifically, according to John S Foster, a "cyber", or electronic contract can be created entirely by the exchange of e-mails where an offer and an acceptance are evident or they can be made by a combination of electronic communications, paper Article 11 of UNCITRAL’s model law on e-commerce: “in the context of contract formation, unless otherwise agreed by parties, an offer and the acceptance of an offer maybe expressed by means of data messages Where the data message is used in the formation of a contract, that contract shall not be denied validity or enforceability on the sole ground that a data message was used for that purpose” Point a, Article of UNCITRAL’s Model Law on e-commerce Sarabdeen and Jawahitha & Noor RaihanAb Hamid, at http://www.irfd.org/events/wf2003/vc/papers/papers_global/R38.pdf, 12/5/2014 Article 33 of Vietnamese Law on Electronic Transaction 2005 Clause 12, Article of Vietnamese Law on Electronic Transaction 2005: “A data message means information created, transmitted, received and stored by electronic means.” documents, faxes and oral discussions6 Hence, the concept of “E-contract” is concerned with the way to achieve it, not a particular type of contract that bases on a certain object, because the information technology does not change the nature of a contract All the general principles of a traditional contract shall be applied for this modern form of contract For example, in Vietnam, when entering into a sale contract, whatever the form of the contract: in writing or in electronic means, the parties to the contract shall comply with the basic principles of the Civil Code The principles of the Civil Code remain its supreme effect over electronic transactions7 The current provisions regarding E-contract in general not discriminate between the E-contract with and without commerce8 One reason for this is that the legal systems of the E-contract have still been in the primitive time, when the law makers have just concentrated on the technique for drafting the E-contracts and in general the E-commerce The other reason is that the legal basis for E-contract is the procedural law, which governs only in the fields of the outside matters Some arguments support the idea that this lack of distinction is a shortcoming of the current provisions of E-contracts, if there is no prior agreement to select a civil law or a commercial one, this leads to vagueness in defining legal basis to govern the disputes raised from transaction9 However, the author agrees that there is no need for a procedural law as E-contract’s to have a clear separation, the matter of deciding the law bases on the principle of the traditional contract’s provisions To give an example, in Vietnam, the Commercial Law 2005 has set a rule that: the commercial activities- activities for gaining profit and the noncommercial activities of a party with traders in which the party doing the noncommercial activities chooses the Commercial law shall be provided by the Commercial Law Otherwise, the activities not provided by the Commercial Law shall be regulated by the Civil Code 200510 To sum up, though Internet and other telecommunications have boomed for decades but the provisions for E-contract have still been within the most general understanding, and even though each legal system has its own definition of Econtract, they come to agreement that: E-contract is a contract that uses any kinds of data messages Currently, there is no discrimination of commerciality in E-contract 1.1.2 Characteristics of E-contract To begin with, E-contract contains in itself the features of a regular contract: it is established based on the unity of agreement between parties, the parties must have capacity to enter into the contract, the object on which the contract is entered must be lawful, the principle of entering into contract such as offer and acceptance, etc Remarkably, the terms of E-contract follows terms of a traditional contract: - The terms stated in the discussions and writings exchanged by the parties that are not in conflict; John S Foster, Esq 1997-2000, athttp://www.corbinball.com/articles_legal/index.cfm?fuseaction=cor_ArticleView&artid=506§ionCode =art_legal,14/5/2014 Tran Van Bien (2010), “Phap luat va hop dong dien tu”, People Court Review (20), page 17 Typically, the UNCITRAL’s Model Law on E-commerce, UETA of USA, Law on E-transaction 2005 of Vietnam not provide the discrimination of commercial E-contract and the non-commercial E-contract Vu Kim Hanh Dung, 2010, “Phap luat ve giao dich dien tu hoat dong ngan hang”,Ho Chi Minh City University of Law, p.24 10 Article 1, Article of the Commercial Law 2005 Terms implied by the current and past conduct of the parties; Terms implied by industry custom and practice; and - Terms implied by law, i.e., damages for breach, liability for negligence, jurisdiction and venue, etc 11 If parties to a contract exchange promises by e-mail for example, the law will interpret this agreement the same way it would interpret a more traditional contract written on paper Parties to an electronic contract should be as careful in articulating the terms as they would be in traditional contracts12.This confirmation is not pointed out clearly but inferred from the regulations of UNCITRAL’s Law, Vietnamese Law, and US Law: the content of data message shall be considered as enforceable as the written content as long as the information contained therein is accessible and usable for reference when necessary13 This confirmation concurrently provides the same requirement as the writing for the data message to be enforceable Especially, though the UETA has another call of data-message: the electronic records, also recognizes the same value of content sent electronically equal to the traditional writing14 However, by the means of data messages, the E-contract stands out from traditional contracts with the following characteristics: Firstly, E-contract is borderless The data of E-transactions are transferred through global computer network, hence the contract entered and exercised by this means are usually across the border This feature enables people in anywhere in the world can enter into a contract with each other, hardly seen in other forms of contracts However, this also creates disadvantages when parties get difficulty in defining the location of parties of the contract The illusions is reflected in the process of entering into an E-contract: A normal contract is entered through the process that: parties meet each other directly or indirectly and exchange their offer and acceptance, the relating documents in writing in turn and finally comes the result is a contract established in writing with a signature handmade by the parties However, with E-contract, the exchange of offer and acceptance and relating documents shall be made in electronic means and signed with electronic signature It is clear that with the help of technology in contracting, the problem of distance or border is not influential any longer Secondly, E-contract is invisible and immaterial This paperless contract exists in virtual environment (the digital environment) thus cannot be “hold” or “touched” like the traditional contract, because as in former instance, the transfer - 11 12 John S Foster, Esq 1997-2000, Ibid., Footnote John S Foster, Esq 1997-2000, Ibid., Footnote 13 Article 12 of Vietnamese Law on E-transactions 2005 and Article 6, clause of UNCITRAL’s Model Law on E-commerce bring forward the same provision: “Where the law requires information to be in writing, a data message shall be considered having met this condition if the information contained therein is accessible and usable for reference when necessary” Point c, Section of Uniform Electronic Transactions Act 1999 of US: “If a law require a record to be in writing, an electronic record satisfies the law.” 14 Section 8, point a of UETA: “If parties have agreed to conduct a transaction by electronic means and a law requires a person to provide, send, or deliver information in writing to another person, the requirement is satisfied if the information is provided, sent or delivered, as the case may be, in an electronic record capable of retention by the recipient at the time of receipt An electronic record is not capable of retention by the recipient if the sender or its information processing system inhibits the ability of the recipient to print or store the electronic record.” transmission of information, questions are raised: the time of sending data message is when it is transmitted outside the sender’s information system, or when the offer enters the information system out of the sender’s control? The time of receiving the data message is when it enters the recipient’s information system or when the recipient retrieves the data message? The following comparison is made under the view of UNCITRAL’ model laws, USA’s UETA, and Vietnam’s laws 2.2.1.1 The time of dispatch of data message Regarding the time of dispatch of data message, UNCITRAL brings forward a simple way for definition: the parties can agree on, otherwise when the data message enters an information system outside the control of the originator or of the person who sent the data message on behalf of the originator196 Inherit to that spirit, the UETA of USA provide clearer conditions when the dispatch is made successfully: - First of all, the information system should be the one the addressee has designated or uses for the purpose of receiving data message or the information of the type retrievable by the addressee, for example an email account set up by the addressee for business purpose are placed at his workplace only197 - Secondly, that data message should be capable of being processed by addressee’s system198, only when the data message is supported by the system is it retrieved by the addressee 199200 - Thirdly, the information once sent is outside control of the originator , for instance the originator cannot edit the content or undo the sending any more Hence, the question of when the dispatch is recognized has been answered by UNCITRAL and UETA: when the information if out of control of the sender, regardless it enters the addressee’s information system or not Inheriting the spirit of UNCITRAL’s Model Law on E-commerce, the Article 17 of Vietnamese Law on E-transactions 2005 defines concisely: “the time of sending a data message is the point of time when such data message enters an information system outside the control of the originator” Besides that, the Article 10 of Decree 52/2013/ND-CP clarifies the time of sending E-document: “The time for sending an e-document is the time that e-document leaves the information systems under the control of the creator or his/her representative In case the e- document does not leave the information systems under the control of the creator or his/her representative, the sending time is the time of receiving the e-document” From the Clause 3, Article of Decree 52/2013/ND-CP: “E-document is contract, proposal, notice, certification or other documentation in the form of a data message”, the terminology of “E-document” and “data message” is identical Thus, when 196 Article 15, UNCITRAL’s Model Law on E-commerce Section 1, point a, Section 15 UETA 198 Section 2, point a, Section 15 UETA 199 Section 3, point a, Section 15 UETA 200 With the advent of information technology, the issue of communication of offer and acceptance needs to be revisited as regards to e-mail and web-page The electronic communication is first sent to the Internet Service Provider (ISP) The ISP will then send that message to the actual recipient, after the recipient sends his ISP to download the message that the ISP has received and sent to the recipient only Once the downloading is completed, the message will reach the recipient Hence, when the message is sent by the acceptor to his ISP, the message can be considered out of control of the offeree 197 40 providing over the same content, this will cause mistake in understanding when the dispatch is valid, because the time data message leaving outside the sender’s information system is not homogeneous to the time data message is out of sender’s control201 2.2.1.2 The time of receipt of data message Regarding the time of receipt, the UNCITRAL’s model law and UETA have similar conditions for the receipt of data message: unless otherwise agreed, the receipt occurs when the data message enters the addressee’s designated or used information system for the purpose of receiving information from which the addressee can retrieve the electronic record202 Hence, the condition that the information enters addressee’s information system and be retrievable to the addressee is decisional factor Besides that, the UETA provides one extra condition for the assurance of the transmission of the data message: the data message is in the form capable of being processed by that system In addition, a data message is considered to be received notwithstanding the individual is aware of its receipt or not at Point e, Section 15203 Turning into Vietnam, the time of receipt adopts the provision of UNCITRAL laws with the clarification Thus, if not agreed by parties, if the recipient has designated an information system for receiving a data message, the messagereceiving time shall be the time when the data message enters the designated information system; if the recipient has not designated a specific information system for receiving the data message, the message-receiving time shall be the time when the data message enters any information system of the recipient 204 But in case there is agreement upon the time of receiving the data message, in particular the originator has stated that such message will be valid only when he/she/it receives an acknowledgement, such data message shall be considered having not been sent till the originator receives a written acknowledgement of the receipt of such message from the recipient205 2.2.2 The place of entering electronic contract The place of entering into a contract is the basis for defining the legal provision and the place of dispute settlement, especially for the international transactions In electronic commerce, due to the contract is concluded via virtual environment, parties to a contract may not know each other, let alone meeting each other when concluding an E-contract, the definition of place of contract is a difficult task To define the place of entering electronic contract, the question is to define the place of sending and receiving the data message 201 Nguyen Thi Quynh Trang(2009), Ibid., p.32 Clause Article 15 UNCITRAL’s Model Law on E-commerce; point b Section 15 UETA 203 However, here, there is an exclusion to that provision in the Comment, UETA assumes that to assure the address retain control of the place of receipt, point b assures that the recipient can designate email address or system to be used in particular transaction, for example home e-mail for personal matters, work e-mail for business matter If A sends B a notice at his home which relates to business, it may not be deemed received if B designated his business address as the sole address for business purpose, thus the data messes is not deemed received without the awareness of the addressee The question when the receipt is valid has been answered by UNCITRAL and UETA: the time the data message enters the addressee’s information system 204 Clause 1, Article 19, Law on E-transactions 2005 205 Point d, Clause 2, Article 18, Law on E-transactions 2005 202 41 As can be seen, the UETA adopts the total provisions of UNCITRAL on the place of sending and receiving the data message Accordingly, unless otherwise agreed by parties, each party’s place of business shall be place of sending and receiving data message206 This enables the convenience and makes sure the addressee receives the data message fastest In case the originator or the addressee has more than one place of business, the place of business having the closest relationship to the underlying transaction shall be preferred207 If the originator or the recipient does not have a place of business, the above principle shall be applied with parties’ habitual residence208 Besides these important features, one remarkable thing is that even though the place where the information system is located may be different from the place where the data message is deemed to be received, this discrepancy does not affect the provision of receiving data message209, this means the data message is considered receipt when it enters the addressee’s information system though it is not deemed to be in that address In Vietnam, the provisions of the place of sending and receiving data message, were patterned from the Model laws of UNCITRAL However, the problem lies in the definition of business place of parties, where there is no unity between regulations of laws The place of sending data message is found at the clause 2, Article 17 of Law on E-transactions: “The place of sending a data message is the headquarters of the originator if the originator is an agency or organization or the permanent residence of the originator if the originator is an individual If the originator has more than one headquarters, the place of sending the data message is the one which has the closest relationship with the transaction” The place of receiving data message is found at the clause 2, Article 19 of Law on Etransactions: “The place of receiving a data message shall be the headquarters of the recipient if the recipient is an organization or the permanent residence of the recipient if the recipient is an individual If the recipient has more than one headquarters, the place of receiving the data message shall be the headquarters, which has the closest relationship with the transaction” Besides, the Decree 52/2013, at the Clause Article 10 provides that: “Place of business of the creator is regarded as a place to send the E-document and places of business of the recipient are regarded as a place to receive the E-document” Here, as can be seen the term “head quarter” is used as the equal meaning to “business place” However, this may go contrary to the traditional civil law, as the Article 90 of Civil Code 2005 providing the headquarter of a legal entity: “The headquarter of a legal person is the place where its managing body is located”, thus the headquarter is not a business place-where happens the business activities of parties The fact proves this provision, because in business, normally, the business activities are not conducted in headquarter, but in the company’s branches, for example In general, the Vietnamese provisions of sending and receiving data message are vague and likely to cause misunderstanding of the E-contract users because of the legal terminologies and the lack in unity between traditional laws and E-commerce 206 Clause 4, Article 15 UNCITRAL’s Model law on E-commerce, Point d Section 15 UETA Point a, Clause Article 15 UNCITRAL’s Model law on E-commerce; Clause 1, Point d Section 15 UETA 208 Point b, Clause Article 15 UNCITRAL’s Model law on E-commerce; Clause 2, Point d Section 15 UETA 209 Clause Article 15 UNCITRAL’s Model law on E-commerce; Point c Section 15 UETA 207 42 laws as well as between Law on E-transactions and its sub law It is time the law makers modify and fix these mistakes for the unity of the civil laws and the specific E-commerce laws, to meet the demand on fast and convenient economic developing However, Vietnamese laws have learned many positive rules of UNCITRAL’s Model laws on sending and receiving data message Besides, several advantages of UETA over UNCITRAL’s Model Law on e-commerce should be considered by Vietnamese legislators for a better E-transaction Statute 2.3 Validity of standard contracts on websites and EDI contract Standard contracts on websites and EDI contract are the ones lacking the negotiation factor, hence are they as valid as the other cyber, for example email, in the back ground that they are flourishing? 2.3.1 Standard contracts on websites As mentioned in chapter one, the standard forms of contracts on websites are: click-wrap contract, browse-wrap contract, shrink-wrap contract Each type of contract has its own way of entering into, but come to a similar characteristic: the agreement is not negotiable, in which one party has only option to agree or not of the content of the contract without changing any terms of the standard contract The standard forms of contracts are drawn by one party in a contract, normally by a strong party like a vendor or a bank or an insurance company210 The validity of these types of electronic contract will be considered its validity as follows, in the background of US judgment of laws: Firstly, regarding the click-wrap contract, at the present, the use of this contract is most frequently and its effect is usually upheld by the US Courts To illustrate, in the case of Hotmail Corporation v Van’s Money Pie Inc., the plaintiff Hotmail Corporation sued the defendant Van’s Money Pie for breaching click-wrap contract: in the contract the Hotmail requires the users to accept all the standard terms of use before using Hotmail’s account via clicking “I agree”, in which the users are prohibited from using Hotmail’s account to send junk mail Van’s Money Pie Inc., sent the "spam" e-mails to thousands of Internet e-mail users bearing Hotmail account return addresses including Hotmail's domain name This overwhelming number of e-mails caused many troubles and damage to Hotmail Finally, the court decided that the defendant took a violation against the Terms of use in Hotmail’s website and therefore breached their contract with Hotmail and shall be liable to Hotmail’s damage211 Secondly, regarding the browse-wrap contract, the general situation is that there is no agreement in courts of US about whether the necessary agreement is reached or not Because as mentioned in chapter one, the buyers are not requested to click on any button to show the agreement, and instead simply download the product to impliedly accept the Terms of use, thus the assent is not as clear as in click-wrap agreement Majority of users not pay attention to the Terms of use In one example, in the case of Specht v Netscape, the Second Circuit Court of Appeals looked at the enforceability of a browse-wrap contract entered into on the Netscape website Users of the site were urged to download free software available on the site by clicking on a tinted button labeled "download" Only if a user scrolled down the page to the next screen did he come upon an invitation to 210 Sarabdeen and Jawahitha& Noor RaihanAb Hamid, Ibid.,p.16 See more at http://cyber.law.harvard.edu/property00/alternatives/hotmail.html, 8/7/2014 211 43 review the full terms of the program's license agreement, available by hyperlink The plaintiffs, who had not seen the agreement, downloaded the software and then were later sued for violations of federal privacy and computer fraud statutes arising from the use of the software The Second Circuit assumed that the manifestation of assent is an essential ingredient to the formation of contract The court found that "a consumer's clicking on a download button does not communicate assent to contractual terms if the offer did not make clear to the consumer that clicking on the download button would signify assent to those terms" Because the plaintiffs were not put on notice of these terms they were not bound by them212 Here, Netscape failed to require the user to show their assent to the Terms of use in Browse-wrap contract However, in another case, the agreement in such types of contract is recognized by the court In the case of Hubbert v Dell Corp, the plaintiff is buyers of Dell Computer, on the webpages of the Dell Corporation, the “Terms and Conditions of Sale” were accessible by clicking on a blue hyperlink The terms and conditions were also printed on the back of the plaintiffs' invoices, which were sent, along with separate documents containing the "Terms and Conditions of Sale" On the last three forms the plaintiffs completed online, the following statement appeared: "All sales are subject to Dell's Term[s] and Conditions of Sale" The Illinois Appellate Court ruled in favor of a browse-wrap agreement, and found that this repeated exposure and visual effect would put a reasonable person on notice of the "terms and conditions"213 Hence, if the buyers decide to take the product, evidently come to agreement with the vendor Finally, regarding the shrink-wrap contract, the users have to agree with all the terms of use before opening the product, similarly to tearing the wrap of the product for knowing what is inside This type of website contract actually does not contain the negotiation, unlike the other types which the users have opportunity for considering the terms of uses before using the product Courts in US still have left the validity of shrink-wrap contract in question of consents among the judges Typically, one line of cases follows ProCD v Zeidenberg214 which held such contracts enforceable (see, e.g., Bowers v Baystate Technologies215) and the other follows Klocek v Gateway, Inc., which found the contracts at hand unenforceable (e.g., Specht v Netscape Communications Corp.216), but did not comment on shrink wrap contracts as a whole Particularly, the Netscape contract was considered invalid due to the lack of expressive indication of consent (no “I agree” button) and because the contract was not shown directly to the users In contrast, in the case of ProCD v Zeidenberg, the user had purchase a great number of product from ProCD, and this could not prove that he remained ignorant of the terms of use, and he bound himself to the terms because he had right to return the good to the seller if he did not accept the terms of use But principally, in shrink-wrap contract, the user is not binding to read the terms, let alone consent to any literature or envelope packaging that may be contained inside a product The court held that whether the 212 See more at Specht v Netscape Communications Corp., 306 F.3d 17 (2nd Cir.2002) See more at Hubbert v Dell Corp., 835 N.E 2d 113 (Ill App Ct 2005), https://www.courtlistener.com/illappct/bfWt/hubbert-v-dell-corp/, 8/7/2014 214 See more at ProCD, Inc v Zeidenberg, 86 F.3d 1447 (7th Cir 1996) 215 See more at Bowers v Baystate Technologies (320 F.3d 1317) 216 See more at Specht v Netscape, 306 F.3d 17 (2d Cir 2002) 213 44 user could not see the term of contract does not affect the validity of the contract At the very least, the fair trade laws of most U.S states would grant a buyer the right to cancel the purchase of a product where an enclosed contract provides terms of which purchaser cannot be aware at the time the product is purchased In three types of website contract as above, the display of agreement between parties in the click-wrap contract is the most obvious, because the clicking on button “I agree” with the terms of use resembles to the signing on paper contract As a result, click-wrap contract is the most popular website contract217 Besides that, many contracts via websites are standard contracts, drafted solely by vendors for transactions with the customers The terms are modeled about establishing a repeated transaction, these types of contract are typical examples of the unbalance of information, and negotiation The users are always the weaker parties, because there is not negotiation of the content relating to the goods, services, and the customers usually bear the disadvantage obligations, and the better benefit is for the seller That calls for a legal frame for the balance of rights and obligations of sellers and buyers, without affecting the assent of two parties This situation is concerned not only in US, but also in Vietnam In US, the matter of license contract via internet, especially in Websites are subject to UCITA, but at the moment many cases of disputes are solved by the precedents and state laws, because the UCITA is adopted by states only and disagreed by many organizations The reason is that UCITA dramatically shifts the balance of existing contract law in favor of software vendors when they contract with businesses and consumers, undermine the privacy protection 218 In Vietnam, the Circular 09/2008/TT-BCT on provision of information and concluding contracts via the E-commerce websites provides basic and concise rules for these types of contract, and legal tools for the protection of customer’s right and make the content of transaction reach a certain unity, for example the principle for provide information on websites is that the information provided is sufficient as: clear, exact, easy to understand, arranged in relevant sections on website and available for access; storage, print, and display and presented clearly to customer219 However, the Circular fails to distinguish the conditions of validity among these types of website contracts, while the resolution of disputes base on legislation only without the flexibility of consideration of the judges, this shortcoming create ambiguous provision for protecting customers’ rights In sum, the standard contracts via website nowadays are developing increasingly, that even outrun the current legal provision Even though website contracts may not be denied legal validity and effect but each type of contract needs a particular provision If in US laws, the resolution of disputes is based on courts’ decision, the users have bases for belief in website contracts, such civil system like Vietnamese laws need to improve better for meeting the growing online transactions’ demand 217 Tran Van Bien (2010), Ibid., Footnote 18, p.65 See more at http://affect.ucita.com/why.html, 8/7/2014 219 Article 11, Circular 09/2008/TT-BCT 218 45 2.3.2 EDI contract220 As mentioned in chapter one, EDI contract is a type of electronic contract and more specifically, its method of contracting is even the fastest among all types of Econtracts Conducted by the interaction of computer to computer, EDI can be alternatives to postal mail, fax and email, but without the intervention of human221 Hence, when the man is not in the transaction, does it cause any differences in comparison with other electronic contract? Like other types of electronic contracts, EDI is governed by the electronic commerce laws In USA, EDI is defined via a statement that a contract can be formed by the interaction of electronic agents of the parties, even if no individual was aware of or reviewed the electronic agents’ actions or the resulting terms and agreement222, and the terms of the contract are determined by the substantive law applicable to it223 In Vietnam, the Law on E-transactions recognizes the EDI contract as well and all the analogies of sending and receiving data messages are applied to automated transactions224 The Vietnamese Decree 52/2013/ND-CP repeats the undeniable legal effect of automatic transactions just because “there is no human examination or intervention in each specific action due to automatic performance of the information system or the contract is concluded”225.Hence, it is clearly that the lawmakers considers EDI as equal as any other types of E-contracts, the civil capacity of the EDI is defaulted as sufficient, because after all, EDI is a organizations of machines that are created and programmed by human for transacting to each other All the issues of sending and receiving data message are applied by the law on E-commerce, the terms of contract laws are applied by substantive laws In general, in the world, contracting via EDI is developing and becoming as popular as website contracts in E-commerce Even though it is a type of electronic contracts, EDI has many characteristics that are different from the others, and the absence of human interaction is the most outstanding This features may looks simple for the law makers, thus the regulations designed solely for the EDI is very 220 As UNCITRAL’s definition, the formation of EDI in which electronic transfers from computer to computer requires an agreed standard to structure the information A standard format describes what each piece of information is and in what format (e.g integer, decimal, mmddyy) Without a standard format, each company would send documents using its company-specific format and, much as an English-speaking person probably doesn’t understand Japanese, the receiver’s computer system doesn’t understand the companyspecific format of the sender’s format There are several EDI standards in use today, including ANSI, EDIFACT, TRADACOMS and XML When two businesses decide to exchange EDI documents, they must agree on the specific EDI standard and version There are three steps in sending EDI document Firstly, one party’s system collects and recognizes the data, for example creates an electronic file with the necessary information to build an EDI document Secondly, it is the translation of electronic data into the EDI standard format through translator software Finally, the business documents once translated are ready to be transmitted to your business partner 221 Having people involved slows down the processing of the documents and also introduces errors Instead, EDI documents can flow straight through to the appropriate application on the receiver’s computer (e.g the Order Management System) and processing can begin immediately (source: http://www.edibasics.co.uk/what-is-edi/, 15/7/2014) 222 Clause 1, Section 14 UETA 223 Clause 3, Section 14 UETA 224 Article 20, Vietnamese Law on E-transactions 2005 225 Article 13, Vietnamese Decree 52/2013/ND-CP 46 limited, but may contain several risks if there are errors in conducting the automated transactions The E-commerce laws both in USA and Vietnam both neglect this issue when the provisions are for the automated transactions involving individual only226 The author assumes this is a gap of current provisions that need to be considered by the law makers for more effective governing EDI 226 Clause 2, Article 10 UETA; Article 14 Vietnamese Decree 52/2013/ND-CP 47 Summary of Chapter In the pace of technical and economic growing, an advanced legal framework for E-commerce suiting the national background is indispensable to Vietnam Vietnamese E-commerce laws have inherited almost all provisions of the UNCITRAL’s model laws, whose contents are very positive and can meet the basic demand on using E-contract They are the validity of data message, the effect of original and evidential weight of data message, electronic signature-one element indispensable for enforceability of the E-contract Moreover, all advantageous stipulations of sending and receiving data message in UNCITRAL’s Model law on E-commerce are adopted thoroughly not only by Vietnamese laws but also by a developed E-commerce system as USA The recognition of foreign certification of e-sign is an advantage of Vietnamese laws as well Many other issues, for examples the conditions of validity of standard forms of E-contract are recommended to be considered carefully the case laws and provisions of USA for better investigation and fulfillment of the current gap Last but not least, several inconsistencies in terminologies, such as e-document and data message, the place of business and the lack in providing the errors issue in EDI transactions, the need to investigate validity of standard contracts are other problems that Vietnamese E-commerce laws should take into exam to avoid troubles and inconveniences in practical transactions 48 CONCLUSION In the flow of developing of high technique and electronic tools, the automated transactions or electronic transaction is flourishing, for the time saving and convenience in human’s activities Electronic contract, in this background, is getting concerned because contract is the soul of the trading, and how to make a valid and enforceable alternative to the paper and ink contract is more and more important to business Besides that, the diversity of electronic means results in the variety in types of electronic contract that contribute to their complexness and risk The UNCITRAL has brought forwards the two model laws, in which the Model law on E-commerce has put a great impact on the cyber law globally, including USA and Vietnam The basic rules in legal recognition of data message, validity and formation of electronic contract, etc are the foundation for national regulations Being patterned on the UNCITRAL’s Model laws, the USA’s electronic commerce laws have created a reformation when putting the parties’ will and agreement in priority However, both agree that electronic contract may not be denied its validity as traditional contract The electronic contract’s validity is decided by many factors Firstly, the validity of data message that composes the agreement, it should have original value and evidential weight as information on paper Secondly, cyber requires an effective electronic signature, which is usually the digital signature attached with an electronic signature certification Finally, for the formation of electronic contract, the laws require defining the exact time and place of sending and receiving data message, because of the characteristic that in virtual environment, when people are likely to be unknown by each other, the definition get more difficulty than in the paper-based contract However, the requirement in content of electronic contract is subjected to the substantive law In Vietnam, E-contract and its legal framework are in the way of growth, and in its journey, has inherited the advantages of UNCITRAL’s Model laws, but contains several legal gaps that not meet the increasing E-commerce’s development There are several lessons that Vietnamese laws can learn from the USA, mostly the conditions of validity of standard forms of E-contract, the flexibility in concluding electronic contracts Last but not least, the current contrast in terminologies, the short coming of EDI’s regulations in Vietnamese E-commerce laws needs reviewing and modification by the legislators 49 REFERENCES LEGISLATION Vietnamese Law Civil Code 2005 Commercial Law 2005 Law on E-transactions 2005 Law on Information Technology 2006 Decree 52/2013/ND-CP on the E-commerce Decree 26/2007/ND-CP detailing the Law on E-transactions on the digital signatures and the authentication of the digital signatures Circular 09/2008/TT-BCT by the Ministry of Industry and Commerce detailing the Decree 57/2006/ND-CP on provision of information and concluding contracts via the E-commerce websites UNCITRAL’s Model laws UNCITRAL’s Model Law on E-commerce 1996 (amended in 1998) with Guide to Enactment UNCITRAL’s Model Law on Electronic Signatures 2001 with Guide to Enactment US Law Uniform Commercial Code 1962 Uniform Electronic Transactions Act 1999 Uniform Computer Information Transactions Act 1999 Electronic Signatures in Global and National Commerce Act 2000 Uniform Rules of Evidence 1974 Restatement (Second) of Contracts 1981 BOOKS Vietnamese books Department of Civil Law, Ho Chi Minh City University of Law,“Phap luat ve hop đong va boi thưong thiet hai ngoai hop đong”, Ho Chi Minh City Nguyen Thi Mo (2006), “Cam nang phap luat ve giao ket hop dong dien tu”, Nhà xuất Lao động- Xã hội, Hà Nội Uy ban quoc gia ve hop tac kinh te quoc te (2005), Tim hieu ve thuong mai dien tu, Chinh tri quoc gia Publisher, Hanoi English books Amelia H Boss, Beasley School of Law, Temple University, Philadelphia, PA (2004), Electronic Contracting: Legal problems or Legal solution?, Studies in Trade and Investment [54], New York Charles L Knapp & Nathan M Crystal (1987), “Problems in Contract LawCase and Materials” (2nd Edition), Little Brown & Company, Boston Christopher T Poggi (2000), 'Electronic Commerce Legislation: An Analysis of European and American Approaches to Contract Formation', 41 Va J Int'l L Henry Cheeseman (2009), “Business Law-Legal Environment, Online Commerce, Business Ethics, and International Issues”, the seventh edition, Pearson Prentice Hall LAW JOURNALs In Vietnamese Le Minh Hung (2009), “Anh huong cua yeu to hinh thuc doi voi hop dong”, the Legal Science Review (No.1), p 12-22 Tran Van Bien (2010), “Phap luat va hop dong dien tu”, People Court Review (No 20), p 17-24 Tran Van Bien (2010), “Su thoa thuan giao ket hop dong thuong mai dien tu”, State and Law Review, (No.10), p55-66 Tran Viet Dung (2004), “Chu ki dien tu phap luat ve thuong mai dien tu cua Hoa Ky va lien minh chau Au”, The State and Law Review, 02, p.7075 Vietnam-France Legal House (2009), the Workshop Summary Record: “Nhung thach thuc ve mat phap ly cua su phat trien cong nghe thong tin”, Hanoi, p.63 In English Donnie L Kidd, Jr and William H Daughtrey, Jr (2000), “Adapting Contract Law to Accommodate Electronic Contracts: Overview and Suggestions”, Rutgers Computer and Technology Law Journal, p.215 Sharon Christensen (2001), “Formation of contracts by email- Is it just the same as the post?”, Queensland University of Technological Law & Justice Journal, p.26 THESISES/ DISERTATIONS In Vietnamese Chau Viet Bac (2006), “Luat giao dich dien tu Vietnam 2005- Co so phap ly cho hinh thuc giao dich moi o nuoc ta hien nay”, Ho Chi Minh City University of Law Nguyen Thi Quynh Trang, 2009, “Phap luat ve hop dong thuong mai dien tu”, Ho Chi Minh City University of Law Tran Thanh Hoa (2006), “Van de chung cu va bao mat thuong mai dien tu”, Ho Chi Minh City University of Law Vu Kim Hanh Dung, 2010, “Phap luat ve giao dich dien tu hoat dong ngan hang”, Ho Chi Minh City University of Law In English Cluj-Napoca (2011), “The Electronic commerce”, Babes-Bolyal University Sarabdeen and Jawahitha & Noor Raihan Ab Hamid, “Electronic contract and the legal environment”, Multimedia University, Malaysia WEBSITES: http://www.irfd.org/events/wf2003/vc/papers/papers_global/R38.pdf http://www.corbinball.com/articles_legal/index.cfm?fuseaction=cor_ArticleView& artid=506§ionCode=art_legal, http://www.ncsl.org/research/telecommunications-and-informationtechnology/uniform-electronic-transactions-acts.aspx http://www.ucitaonline.com http://en.wikipedia.org/wiki/Electronic_Signatures_in_Global_and_National_Com merce_Act, http://en.wikipedia.org/wiki/Uniform_Commercial_Code http://www.lplegal.com/content/when-email-becomes-binding-contract http://www.webopedia.com/TERM/R/real_time.html http://www.webopedia.com/TERM/C/chat.html http://www.techopedia.com/definition/4243/clickwrap-agreement http://www.techopedia.com/definition/4350/shrink-wrap http://www.edibasics.co.uk/what-is-edi W Harry Thurlow (2001), “Electronic contract in the United States and the European Union: Varying approaches to the Elimination of Paper and Pen”, Vol 5.3, November 2001, at http://www.ejcl.org/53/art53-1.html http://cyber.law.harvard.edu/ilaw/Contract/Kidd1.html Jeff Dodd and James Hernandez, 'Contracting in Cyberspace', (Summer 1998), Computer Law Review and Technology Journal, available online at http://www.smu.edu/~csr/articles.html http://www.uniformlaws.org/ActSummary.aspx?title=Electronic+Transactions+Act http://www.uniformlaws.org/ActSummary.aspx?title=Electronic+Transactions+Act Henry D Gabriel (2000), “The New United States Uniform Electronic Transactions Act: Substantive provisions, Drafting History and Comparison to the UNCITRAL Model Laws on Electronic Commerce”, see more at http://www.unidroit.org/english/publications/review/articles/2000-4-gabriel-e.pdf Patricia Brumfield Fry, 'A Preliminary Analysis of Federal and State Electronic Commerce Laws', 2000, Baker & McKenzie, Global E-Commerce Law Website, http://www.bmck.com/ecommerce/topic-esignatures.htm http://www.ncsl.org/research/telecommunications-and-informationtechnology/uniform-electronic-transactions-acts.aspx http://electronicsignature.com/esignact/ http://www.realtor.org:8119/legal-case-summaries/young-v-rose-court-considers-esignature-requirements http://cyber.law.harvard.edu/property00/alternatives/hotmail.html, https://www.courtlistener.com/illappct/bfWt/hubbert-v-dell-corp http://affect.ucita.com/why.html APPENDIX A typical manual process looks like this, with lots of paper and people involvement: The EDI process looks like this – no paper, no people involved: Source: http://www.edibasics.co.uk/what-is-edi/