1.2.4. COUNTRY-BY-COUNTRY ELECTRONIC CONTRACTING LAW PERSPECTIVES

As long as for development of electronic contracting three principal areas must be legally governed such as: 1) guaranteeing legal efficacy of electronic records, electronic authentication and the binding nature of electronic communications; 2) formation process of electronic contracts; 3) fraud prevention – the governments of many countries adopted acts intended to cover some or all abovementioned “key” areas. Taking the existence and scope of legal regulation as a criterion, three groups of countries can be distinguished. The first one is represented by those where all “key” areas have been regulated. The second group consists of countries where only certain aspects of electronic contracting were legally framed. And at least, all countries where only drafts of electronic contracting legislation can be found belong to the third group.

Historically, the leading positions in the first group have been occupied by the USA and Canada. That is why the legislation of these countries will be considered in details.

In the USA there are two levels of legal regulation: federal and state. It is appropriate to analyze them separately. The first “federal” step in regulating of electronic contracting was the adoption of the Uniform Electronic Transactions Act (hereinafter the UETA)[1] in 1999. It was [d]esigned to remove obstacles to e-commerce while avoiding revision for existing substantive law provisions to the greatest extend possible[2]. The provisions of the UETA are based on UNICTRAL Model Law on Electronic Commerce; Uniform Commercial Code; Restatement 2d, Contracts; and Canadian Uniform Electronic Commerce Act. The UETA covers such areas of electronic contracting as use of electronic records and electronic signatures (section 5), legal recognition of electronic records, electronic signatures, and electronic contracts (section 7); attribution and effect of electronic record and electronic signature (section 9); contract formation issues (sections 11-15). The UETA has to be enacted into state law before it will be effective. Nowadays it is adopted in twenty eight states[3].

Next important act contributed to development of legal regulation of electronic contracting in the USA is the Uniform Computer Information Transaction Act (hereinafter the UCITA) promulgated by the National Conference of Commissioners of Uniform State Laws in 1999. [T]he UCITA is a proposed uniform state law governing only transactions involving computer information (such as the licensing of computer software or databases)[4]. The UCITA contains a number of important provisions related to electronic contracting such as formation of a contract, performance of a contract, warranties, remedies, etc. But [u]ntil UCC article 2 governing sales of goods is revised, the legal status of electronic contracts for sales of goods will remain uncertain[5].

For further facilitation of use of electronic records and signatures in interstate or foreign commerce in 2000 the Congress adopted the Electronic Signatures in Global and National Commerce Act[6] (hereinafter E-Sign). The primary concerns of this Act are to assure that:

[N]otwithstanding any statute, regulation, or other rule of law…, with respect to any transaction[7] in or affecting interstate or foreign commerce —

1.     a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; 

2.     a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation;

3.     a contract or other record relating to a transaction…may not be denied legal effect, validity, or enforceability solely because its formation, creation, or delivery involved the action of one or more electronic agents so long as the action of any such electronic agent is legally attributable to the person to be bound.

The remarkable feature of E-Sign (not typical for US law) is that it is constructed in the best European Union traditions of consumer protection. Namely, all issues related to electronic contracting are considered in the context of consumer disclosure [§ 101 (c)]. E-Sign stipulates that all information in the form of electronic record satisfies the requirement that such information be in writing if: 1) the consumer has affirmatively consented to such use and has not withdrawn such consent, and 2) prior to consent the consumer is provided with a clear and conspicuous information about the procedure of withdrawal of such consent, receiving paper copies of electronic records, etc. E-Sign also requires full disclosure to the consumer all information concerning the electronic contract he entered in.

The E-Sign does not override any state laws on electronic transactions if the state has adopted the Uniform Electronic Transactions Act, which also establishes the legal validity of electronic signatures and contracts [§ 102 (a)]. [I]n other words, if the state's law is more or less the same as the new federal law, it will remain in force - but if not, it will be trumped by the federal law. This ensures that electronic contracts and electronic signatures will be valid in all states, regardless of where the parties live or where the contract is executed[8].

Considering state level of legal regulation of electronic contracting it can be noted that in resent years (since 1995, when the State of Utah adopted the Digital Signature Act[9]) individual states have enacted a number of statutes indented to clarify the legal status of contracts formed electronically. Some states, such as Utah, have adopted comprehensive legislation that is technology specific. Other states, such as California, has attempted to avoid promoting a specific technology by enacting legislation that recognize several different technologies as legally effective. Still others, such as Illinois, has enacted legislation that tries to remove obvious obstacles to electronic contracting in general while also providing more specific legal consequences for the use of electronic contracting technologies deemed to be more reliable. New Jersey legislators, for example, have not enacted any new statutes specifically aimed at promoting e-commerce, but instead have painstakingly reviewed all their existing statutory signature and writing requirements and are considering revisions to existing statutes only when the need of revision was demonstrated.

The main measures for the removing barriers to electronic contracting in Canada were taken by the Uniform Law Conference, which in August, 1999 approved a Uniform Electronic Evidence Act, and in September, 1999 adopted the Uniform Electronic Commerce Act[10] (hereinafter the UECA). The UECA was designed to implement the principles of UNCITRAL Model Law of Electronic Commerce in Canada. It has three parts. The first part sets out the basic functional equivalents rules, and spells out that they apply when parties involved in the transaction have agreed, expressly or by implication to use electronic documents. Part two of the UECA sets out special rules for particular kinds of communications including the formation and operations of contracts, the effect of using automated transactions, and deemed time of sending and the place of sending and receiving computer messages. Part three makes special provisions for the carriage of goods.

Like US UETA, the UECA must be enacted into law of provinces and territories, before it be effective. Only five of them such as Manitoba, Newfoundland & Labrador, Nova Scotia, Prince Edward Island, and Yukon have recently passed legislations modeled on the UECA[11]. Another provinces and territories[12] enacted Electronic Transactions Acts (hereinafter ETA), which are very similar (in structure and essence) to the UECA. ETAs address such aspects of electronic contracting as recognition of legal effect of contracts in electronic form, conditions for satisfaction of requirement for records to be in writing, electronic signature, formation and operation of electronic contracts.

To complete the analyses of the first group of countries it should be noted that all-caught acts, significantly similar to the US UETA and Canadian UECA were also adopted in Spain (Royal Decree Law 19 – Law 1906/1998)[13]; Singapore [Electronic Transactions Act (1998)][14]; Columbia [Electronic Commerce Law (1999)][15]; Philippines [Electronic Commerce Act  (2000)][16]; Antilles [State Ordinance 168 (2000)][17], Republic of Slovenia [Electronic Commerce and Electronic Signature Act (2000)][18]; South Korea [The basic law of Electronic Commerce (2000)][19]; Tunisia Electronic Commerce and Exchange Bill (2000)][20]; the UK [Electronic Communications Act[21] (2000)][22].

As mentioned above the second group consists of countries, where only some of electronic contracting issues are covered by the legislation. To the opinion of governments of many states the most important problem, solution of which will significantly contribute to further development of e-commerce and electronic contracting is guaranteeing legal efficacy of electronic records, electronic authentication and the binding nature of electronic communications. That is why the acts intended to regulate using of electronic signature were adopted in Germany [Digital Signature Ordinance (1997)][23]; Italy [Italian Digital Signature Legislation (1997)][24]; Austria [Austrian Federal Electronic Signature Law (2000)][25]; Check Republic [Digital Signature Bill (2000)][26]; Estonia [Digital Signatures Act (2000)][27]; Finland [The Act on Electronic Service in the Administration (2000)][28]; France [Electronic Signature Bill (2000)][29]; Lithuania [Law on Electronic Signature (2000)][30]; Argentine (Digital Signature Act (2001)[31]; Hungary [Act on Digital Signature (2001)][32]; Russia [Federal Law # 1-FZ “On Electronic Digital Signature” (2002)][33].

The main leitmotif of these statutes is assuring that electronic signature is granted the same legal force that a hand-written signature in written documents has and is admissible as evidence in court. All these acts provide that the electronic signature must be certificated by a certification-service provider (CSP), who is responsible for issuing of private keys and for maintenance of depository of public keys. In some countries (like Malaysia) the activity of CSP must be licensed by the government, in others (like Slovakia) - “certification service provider does not require a special permit for performing his activity”. Generally, CSP is obliged with reasonable professional care: 1) to use trustworthy systems and products, which are protected against modification and ensure the technical and cryptographic security of the process supported by them, and 2) to take security measures against forgery of certificates, and, in cases where it generates signature creation data, guarantee confidentiality of the data during the whole process of generating these data.       

In countries, which belong to the third group, the process of elaboration of electronic contracting law just started. Like in the countries of the second group the main attention is paid to the electronic signature. Thus, drafts of Electronic Signature Acts are under consideration of legislative bodies of Malaysia [Digital Signature Bill (1997)][34]; Denmark (Act on Digital Signatures (1998)[35]; Mexico (proposed modification to Commercial Code (1999)[36]; Brazil[37]; Ecuador[38]; Peru[39]; Belgium[40]; Israel (Electronic Signature Bill)[41]; Luxemburg[42]; Netherlands [Electronic Signature Act (2000)[43]; Poland[44]; Sweden[45].

So, completing the reviewing of country-by-country law in the sphere of electronic contracting the following conclusions must be made:

  1. Taking the existence and scope of legal regulation as a criterion, three groups of countries can be distinguished: 1) countries with comprehensive, all-caught legislation, which cover all aspects of electronic contracting (the main representatives are the USA and Canada), 2) countries with electronic signature legislation, 3) countries, where only drafts of legislation can be found.
  2. The US and Canadian schemes of regulation of electronic contracting because of their completeness and comprehensiveness can be used as guides for the development of Ukrainian law in this sphere.
  3. The principle structure of Canadian legislation: adoption of single comprehensive UECA - all-caught act covered all aspects of e-commerce, including electronic contracting[46] - is desirable for implementation in Ukraine. Not underestimating the quality of US Model laws it can be said that whereas UETA and E-Sign are well-founded, reasons for enactment of the UCITA are not entirely clear. Even differences between computer information transaction and other types of transactions, concluded in electronic form, cannot justify adoption of the UCITA, which in many respects duplicates the provisions of the UETA and is not adjusted with UCC. It seems that the best way to regulate such specific types of electronic transactions (like computer information transactions) is to include separate chapter in all-caught act, similar to Canadian UECA. It will allow avoiding “what act must be applied” problems and preventing the risk of overlapping and contradiction between a number of acts, which very often have similar provisions.

Copyright 2002 © Sakharuk Dmytro



[1] Available at: http://www.law.upenn.edu/bll/ulc/fnact99/1990s/ueta99.htm

[2] Jane K. Winn, Benjamin Wright, Law of Electronic Commerce, 4th Edition, Aspen Law & Business 2001: 5.61.

[3] Arkansas, California, Delaware, District of Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Wyoming.

[4] American Bar Association Working Group Report on the Uniform Computer Information Transactions Act January 31, 2002, available at: http://www.abanet.org/leadership/ucita.pdf

[5] Jane K. Winn, Benjamin Wright, Law of Electronic Commerce, 4th Edition, Aspen Law & Business 2001: 5.61

[6] Available at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=106_cong_bills&docid=f:s761enr.txt.pdf

[7] The term “transaction” means an action or set of actions relating to the conduct of business, consumer, or commercial affairs between two or more persons [§106 (19) of E-Sign].

[8] Peri H. Pakroo, New Law Makes E-Signatures Valid, Nolo Legal Encyclopedia, available at: http://www.nolo.com/lawcenter/ency/article.cfm/objectID/029C847E-2EFC-4913-B6DDC5849ABE81F9/catID/806B7BA0-4CDF-4221-9230A3135E2DF07A

[9] Available at: http://www.le.state.ut.us/~code/TITLE46/46_03.htm

[10] Available at: http://www.law.ualberta.ca/alri/ulc/acts/eueca-a.html 

[11] Barry B. Sookman, Computer, Internet and Electronic Commerce Law, Carswell Thomson Publishing, 2001: 10-9.

[12] Alberta, British Columbia, New Brunswick.

[13] Available at: http://www.boe.es/boe/dias/2002-02-11/

[14] Available at: http://www.cca.gov.sg/eta/framecontent.html

[15] Available at: http://www.qmw.ac.uk/~tl6345/colombia_en_final.htm

[16] Overview available at: http://www.bmck.com/ecommerce/Philippine%20E-Com%20Law.doc 

[17] Available at:  http://www.bmck.com/ecommerce/State%20Ordinance%20Agreements%20via%20Electronic%20Channels-Eng.pdf 

[18] Available at: http://www.sigov.si/ep/ecaes.doc

[19] Available at: http://www.mocie.go.kr/work/index.html

[20] Overview available at: http://www.bmck.com/ecommerce/Tunisian%20National%20Certification%20Agency.pdf

[21] Although this act does not directly address contractual issues, it gives recognition to electronic communications in place of paper and gives authority to electronic signatures.

[22] Available at: http://www.hmso.gov.uk/acts/acts2000/20000007.htm

[23] Available at: http://www.iid.de/iukdg/sigve.html

[24] Available at: http://www.aipa.it

[25] Overview available at: http://www.bmck.com/ecommerce/austrianesig.pdf

[26] Available at: http://www.ebusinessforum.com/index.asp?layout=rich_story&doc_id=1100&catego

[27] Available at: http://www.riik.ee/riso/digiallkiri/digsignact.rtf 

[28] Available at: http://www.om.fi/2838.htm

[29] Overview available at: http://www.bmck.com/ecommerce/france-t.htm  

[30] Summary available at: http://www.bmck.com/ecommerce/lithuania-t.doc  

[31] Available at: http://www.cnv.gov.ar/FirmasDig/ProyLeyCamaraDiputados.htm

[32] Overview available at: http://www.bmck.com/ecommerce/hungary-t.htm 

[33] Overview available at: http://www.bmck.com/ecommerce/Russia-E-Signature-Alert.doc

[34] Available at: http://www.geocities.com/Tokyo/9239/digisign.html

[35] Available at: http://www.fsk.dk/fsk/div/hearing/draft.html

[36] Overview available at: http://www.bmck.com/ecommerce/mexico-t.htm

[37] Available at: http://www.natlaw.com/ecommerce/docs/e-commercebill-brazil.htm

[38] Available at: http://www.natlaw.com/ecommerce/docs/ecommercebill-ecuador.htm

[39] Available at: http://www.natlaw.com/ecommerce/docs/e-commerce-peru-firmaycert.htm

[40] Doing E-commerce in Europe, Baker & Mckenzie, 2001: 40, available at: http://www.bmck.com/Doing%20E-Commerce%20in%20Europe/Doing%20E-Commerce%20In%20Europe.pdf

[41] Available at: http://www.justice.gov.il/

[42] Available at: http://www.etat.lu/ECO/

[43] Available at: http://www.minaz.nl/data/976884536.pdf

[44] Available at: http://venus.ci.uw.edu.pl/~dancop/ustawa.pdf

[45] Available at: http://naring.regeringen.se/propositioner_mm/pdf/ds9814e.pdf

[46] While the USA adopted three acts: UETA, UCITA, and E-Sign, intended to address certain aspects of online business activity.