25/09/2014

E-contracts are the cornerstone of online shopping, but without ink, paper or an exchange of promises, knowing when and how a deal is formed online is vital for you to buy safely on the Internet.

E-commerce is increasingly preferred, and it is not surprising with the convenience of buying with a click of a button and paying electronically.  

Online contracts involve massive transactions, from buying groceries to bidding for expensive rare items. These transactions, while cutting edge and futuristic, are, with good reason, rooted in the long-held principles of contract: offer, acceptance and performance.

In normal 'hard copy' contracts, you deal with another party by word, promise or performance.  In an online transaction an E-contract is initiated when you click on "I agree" or "I accept".  

You would also have inputted your payment details.  That is your clear offer and performance to the other online party.  

But often there is no one on the other side.  Large corporations especially send out automated confirmations which are not acceptance of an enforceable and binding contract for various reasons; for example the inability to provide the goods because they are out of stock.  

This raises many questions. When is there a contract? Do you have to wait until they send the goods to be 100% sure? And what if the order was wrong, how can you be sure of the terms?

The answers are to be found in the traditional tenets of contract to which e-contracts are governed.  The contract does exist before the goods are received, we know by the actions of the other party that they have accepted and usually this is by them accepting and transacting the payment, and unless otherwise stated and agreed to, the terms would be as you ordered them.

Online buying is indeed the bold new frontier, but it is not run by lawless marauders.  The long-held principles of contract law still govern these transactions. Problem is – with you here and them over there, how could you ever enforce that contract?  

Probably best to adopt a rule that says never spend more on an online purchase than you are happy to lose if it all goes wrong.  

For more information, call Townsends Business & Corporate Lawyers on (02) 8296 6222.