Electronic Contracts: Principles, Cases and Analysis

This report provides an overview of electronic contracts, also known as e-contracts, examining their formation and legal principles. It explores the essential elements of a valid contract, including offer, acceptance, consideration, and the intention to create legal relations, highlighting their application...Read More

Electronic Contracts
ELECTRONIC CONTRACTS
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Electronic Contracts 1
Introduction
With increased reliance on the internet as the main interactive medium, lots of contracts
are now being created online. The contracts are generally referred to as the electronic contracts
or E-contracts. The law has maintained that all these electronic contracts must meet the basic
requirements of a contract. These elements are a valid agreement, intention to create legal
relation, and valid consideration. However, as all these contracts are negotiated and executed
online, issues of their formation have risen creating complexities in the judicial systems. Most of
the disputes are centered on contractual terms, the intention of the parties, where and when the
contract was formed. This paper will be an illustration of these concepts.
The basic principles in the law of contract have been transferred to online contracts. That
is, in order to have enforceable contract, (i) there must be a valid offer coming from one of the
parties; (ii) the other party must then provide its acceptance; (iii) both parties must make the
arrangements with intention to be legally bound (iv) and the promises must be supported by
sufficient consideration (Carlill v Carbolic Smoke Ball Company, [1892]).
As it was stated in Carlill v Carbolic Smoke Ball Company, an invitation to treat does not
act as an offer, but a mere invitation to negotiate. However, some circumstances may depict that
an advertiser has extended to providing an offer. In such circumstances, the courts consider the
language of the contract as opposed to what the parties assert in their claims. Another
controversial issue in modern contracts regards acceptance by email. Most commentators
propose that the court should be viewing emails acceptance as a spontaneous method. This has,
however, be taken as the next principles that courts would be upholding following a recent
decision in (Bieber and others v Teachers Limited (in liquidation) [2014]). In the case, the court
resolved that exchange of emails between the contracting parties constituted a binding

Electronic Contracts 2
agreement. As can be seen, other courts are likely to follow this principle and regard email
communication as valid contracts where all the parties’ intentions are satisfied. The Court also
reiterated an important principle of parties’ intention that has upheld in the traditional principles.
Despite being an online contract, the Court stated that whether the parties’ intention is to form a
binding agreement immediately or after a formal agreement has been executed will depend on an
objective approach. As it can be seen, this was a principle regarding the intention to form legal
relations in the traditional principles as in the case of (RTS Ltd v Molkerei Alois Muller GmbH
& Co AG [2010]). Courts are then moving the same principles to online contracts which
demonstrates that the principles in Contract law would be maintained to preserve business
certainty.
Conclusion
Even if there many changes that are happening in the business environment due to the
adoption of the technology. Courts have shown that the traditional principles would be preserved
to ensure that there is always business certainty. Therefore, the same rule of offer, acceptance,
consideration and the intention to create legal relationship would not be eroded by the
technology.

Electronic Contracts 3
Refences
Bieber v Teathers Ltd (In Liquidation) [2014] EWHC 4205 (Ch).
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
RTS Ltd v Molkerei Alois Muller GmbH & Co AG [2010] UKSC 14.