Introduction to Electronic
Commerce
copyright 1997
Editor: Donald M. Cameron, Aird
& Berlis
Contributors: David Castell
Contents
Introduction
Electronic commerce is simply commerce conducted electronically. In the past, this has included technologies such as the telegraph, telex, telephone and even the fax. In the present, the focus is increasingly on networked computers.
Whether they are buying or selling tangible goods or intangible information, consumers and businesses alike are increasingly capitalizing on the speed and cost benefits of conducting business via computer. In 1994, 4.5% of purchases, or $245 million, were made electronically.[1] This is predicted to grow to 16.2% of purchases, or $1.6 billion, by 2000, fuelled in part by the growth of Internet commerce. In 1995, the Internet's economy was about the size of Holland's economy and growing exponentially.[2] This growth in electronic commerce will undoubtedly be matched by a growing concern over the legal issues surrounding this method of transacting business.
Although electronic commerce is only now entering common parlance, computerized transactions have been around since the 1970s with the birth of electronic data interchange (EDI). EDI is the electronic exchange of standard business forms -- quotations, purchase orders, invoices, receipts, etc. The exchange usually occurs between trading partners with a pre-existing business relationship. Lawyers usually recommend that trading partners execute a trading partner agreement (TPA) to contract around the legal issues and provide certainty where the law does not. This single agreement provides ground rules that govern subsequent electronic transactions. Many observers suggest that the lack of litigation over the legal issues is more likely due to the value of trading relationship outweighing potential gains from disputing a single transaction than the effectiveness of a TPA.[3]
The growth of the Internet and other on-line services has brought network connectivity to the masses. Once epitomized by EDI between large corporate trading partners, electronic commerce is evolving due to a growing number of `one-off' transactions by individuals. The lack of continuing relationship between the parties has several effects. The value of preserving a relationship may no longer be a factor in dispute avoidance. In addition, the cost of negotiating a TPA prior to trading electronically, which was once spread over a large number of transactions, is now too costly in the `one-off' context. The result is that the legal issues that have been around since the birth of EDI may need a new solution.
While an exhaustive treatment of every legal issue surrounding electronic commerce is not possible, this Chapter attempts to deal with several major issues. The first issue explored the potential impact of statutory formalities on electronic messaging. Existing legislation often requires documents to be written and/or signed. Next, contract formation issues are raised by the use of computers as a method of communication as well as an automated contracting agent. Finally, this Chapter addresses the challenges of using computer records as evidence in legal disputes.
1
Forecast from BusinessWeek, June 12, 1995, p.70; Source of data: Commerce Department, Killin & Associates. Electronic purchases include TV, Business-to-business, Internet, and other Online Commerce.2L. Irving, "Telecommunications policy reform: competition and consumer protection" (August 1995) 29 Telecommunications 26.
3See e.g., David Woolford, Simon Chester, "When is a deal really a deal?", (April 1995) International Corporate Law 18 at 20; Bryan Grayton, Canadian Legal Issues Arising From Electronic Data Interchange" (1993) 27 U.B.C.L.R. 257 at 263.
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