The Time of Online Contract Formation

Abstract: Generally, the time of contract formation is when the acceptance becomes binding and effective. This point in time may vary widely under different jurisdiction's national laws. Further, the special characteristics of the Internet may complicate the issue of the time of online contract formation The purpose of this thesis is to shed light on whether there is a requirement of a uniform rule, defining the exact moment of when an online contract is formed. If so, is it practically possible to adopt a uniform rule, applicable to international as well as domestic online contracting? The common view is that the law that governs online contracting should not differ too much from the law that governs traditional contracting. However, traditional contract laws may not regulate online contracting in a satisfactory way, and certain issues may therefore require special regulation. One issue is when an online contract is deemed to have been formed. The trend, and also the approach taken by several nations around the world, is to put in place a regulatory framework that enables electronic contracting. Australia, as well as Sweden has chosen a light-touch approach in regulating electronic contracting. Importantly, Australia has adopted rules that regulate the time of dispatch and receipt of an online offer and acceptance. No such rules have been adopted in Sweden. In both countries, strong reliance lies on traditional contract law, rules and principles. This approach may be sufficient when regulating online contracting domestically. However, one of my concerns is, that due to the international and borderless nature of the Internet, it may be clumsy to rely on national contract laws that may differ between nations. The major difference in determining the time of online contract formation under Australian and Swedish law, stems from the application of the principle of promise and the principle of contract. In Australia, the principle of contract has forced the appearance of the postal acceptance rule, under which a contract is formed when an acceptance is dispatched. In Sweden, there is no such rule, and an acceptance must have reached the offeror to become effective. This thesis argue that there is a need for an international uniform rule on the time of online contract formation that will apply to international as well as domestic online contracting. Ultimately, such rule should be supplemented with rules on the effectiveness of an online offer. One problem is that it would be extremely hard to agree upon such rule on an international level. For example, throughout the drafting of the UNECIC it was constantly pointed out that the Convention should focus on specific issues in electronic contracting and the provisions of the CISG should not be repeated. It was argued that including a rule on the time of contract formation in the UNECIC would make the Convention less attractive for countries to sign. Another issue is the strong desire of technology neutral laws. Along with new technological developments rules that solely regulate online contracts will perhaps become dated within the next decade. Because of the strong influence of interests of national sovereignty and of the desire of technology neutral laws, it may not be a feasible to bring about a uniform rule on the time of online contract formation. Having said that, this thesis argues that a need of such rule still exists.