Error in electronic communications

The issue of error in electronic communications has been a key element of the discussions on e-commerce laws, due to the high possibility of errors being made in this form of communication. Moreover it can be difficult to correct such errors or withdraw orders once submitted, also it is not easy to distinguish between the error and the mere change of mind. This makes it all the more essential to clarify the situation regarding differences between electronic and paper-based contracts of the issue of error and mistake.

Contracts made over the phone or in person allow the individual who realises a mistake has been made to immediately take action to rectify this by communicating by some means, electronic or otherwise. An incorrect letter can be followed up by a correct version and the recipient then has clear proof that the error has been noted and amended accordingly. However, when dealing with an automated system via a website, someone making an offer may make a technical mistake by mis-clicking the mouse or a keyboard error, and find there is no chance to correct this. This erroneous offer may be accepted and subsequent communication with the corrected information considered as a new binding offer and acted on.

Initially, UNICITRAL chose to avoid making any changes to commercial law or adding any substantive rules to contract law. A similar approach of avoiding rules of validity of contracts has been taken in most UNICITRAL model laws and conventions, for instance, the United Nations Convention on Contracts for the International Sale of Goods (CISG) clearly states in

302_{The United Nations Convention on Contracts for the International Sale of Goods CISG (Vienna, 1980) United} Nations Publication, New York, 2010

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Article 4 subparagraph (a) that: “it is not concerned with the validity of the contract or of any of its provisions or of any usage”.303

Analysis of the legal consequences of mistake and error in different legal systems reveals that the rules are complex and vary in their approaches. Some legal systems have attempted to distinguish between different situations to cover those cases in which someone enters into a contract and later changes his/her mind and then claims to have made a mistake in order to avoid the consequences of the original agreement.

The working group considered the usual UNICITRAL approach of avoiding making substantive changes to commercial law or creating unnecessary complexity in contract law principles, but in the final text, the Commission decided to adopt Article 14 about Error in electronic communications304 on the grounds that it is more likely to relate to the electronic field even though it involves some substantive rules.

The United States Uniform Electronic Transactions Act (UETA)305 requires the individual who want to avoid the effect of an electronic record that resulted from an error promptly to notify the other party both of the error and of the individual's intention not to be bound stating that it did not intend to be bound by the electronic record or taking reasonable steps to return to the other person the consideration received.306 _{However, in keeping with its usual principles of}

minimal interference in domestic law, the UNCITRAL Commission limited the scope of the article to two conditions: first, input error, and second, error committed by an individual exchanged with an automated system.

303 _{The United Nations Convention on Contracts for the International Sale of Goods CISG (Vienna, 1980) United} Nations Publication, New York, 2010

304 _{United Nations Convention on the Use of Electronic Communications in International Contracts} 305 _{The United States Uniform Electronic Transactions Act (UETA) Section 10(2) UETA (1999)}

306_{Gabriel, ‘New United States Uniform Electronic Transactions Act: Substantive Provisions, Drafting History} and Comparison to the UNCITRAL Model Law on Electronic Commerce’2000 The. Unif. L. Rev. ns, 5, p.651.

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The earliest draft of this Article as prepared by the working group, raises three issues. The first of these, is the obligation on the party offering goods or services through an automated computer system to make available to the customers a technical means which allows them to identify and correct errors prior to the conclusion of a contract. This is clearly based on Article 10 of the E-commerce Directive which requires the provision of “(c) the technical means for identifying and correcting input errors prior to the placing of the order”.307 _{Secondly, if an}

individual makes a material error in a data message, he or she has the right to avoid the resulting contract. Thirdly, it identifies those conditions under which the individual enjoys this right. These include a system not providing an opportunity to prevent or correct errors. However, the individual who has committed the error must notify the other party about this as soon as practicable after he/she learns of this. In addition, this individual must not have used or received any material benefit or value from any goods or services resulting from this error.308

The working group expressed concerns relating to the enforceability of this positive obligation to provide a correction mechanism. In addition, it considered this to be part of consumer protection legislation which does not lie under the scope of the convention. Its third concern was that this might interfere with substantive contract law. However, despite these concerns, these new provisions were adopted and confirmed.

The working group also debated the possible consequences of error in this context which might include invalidity of the whole contract; avoidability of the contract, or avoidance of the consequences of the error without this invalidating the contract as a whole. Finally, it was concluded that it is necessary to narrow the scope of this Article to create less impact on national laws and legislation. Some proposed that it should cover all situations; for instance, if

307 _{Directive on Electronic Commerce [2000] OJ L 178/1–16}

308 _{UNCITRAL Working Group IV (Electronic Commerce) Thirty-ninth session, New York, 11-15 March 2002} A/CN.9/WG.IV/WP.95 Article 12

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someone clicked “I accept” by mistake or had mistakenly sent confirmation without consent, then the right of withdrawal would be the best solution; if someone inputted the wrong quantity, the right of correction would be more appropriate.309 After long deliberation, the term “withdraw the error” was chosen rather than “correct the error”, although the right of withdrawal enables a party to avoid the consequence of error, whilst the right of correction may involve costs to operator systems and may require offers to be kept open for longer to allow for changes to be made in communication.

The working group debate highlights that balancing the interests of the party who is relying on the promise to act upon it and those of a mistaken party not to be bound by an unintended expression of a promise presents a major challenge, as does determining whether something constitutes mistake, misrepresentation or merely a change of mind.

Thus, Article 14 of the Convention limits liability to very specific situations where the error occurs only between a real person and an automated system, when that system does not provide any opportunity for error correction. It also limits the rights of the mistaken party to withdraw the erroneous portion of the electronic communication. The Convention requires two conditions for the right of withdrawal. The first addresses timing, requiring the mistaken party to “notify the other party of the error as soon as possible after having learned of the error and indicate that he or she made an error in the electronic communication”. The second condition is that the individual has not “used or received any material benefit or value from the goods or services.”310

With regards to the first of these conditions, the use of the phrase “as soon as possible after having learned of the error,” needs to be clarified to enhance the certainty of electronic

309 _{John D Gregory and Joan Remsu, ‘Error in electronic communication’ in AH Boss and W Kilian (eds) United}

Nations Convention on the Use of Electronic Communications in International Contracts (Kluwer Law International 2008)

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contracts as the Convention does not specify any set period. However, the most recent Directive on Consumer Rights adopted by the European Commission on 25 October 2011 introduced a 14-day cooling off period, giving consumers the right to withdraw from a contract.

After analysing the function of “withdrawal” of input error which could protect the party who hits a wrong button, Faye Wang311 _{suggested a 24-hour time limit depending on the calculation}

of the starting point of the timing.

In fact, given the characteristics of the electronic communication environment, which include high speed and sophisticated automation, there is a high possibility of a mistake being made which proves impossible to correct before the communication reaches the other party; in that case, as soon as the individual realises this, he/she should take action. Therefore, it is a vital that legislation includes provisions relating to error and mistake. However, for the time being, responsibility may lie with domestic legislation to clarify and specify such provisions in order to avoid concerns relating to this aspect of electronic contracts.