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FORMING CONTRACTS ONLINE

One of the problems associated with online trading in the 1990s was the suspicion among both businesses and customers that they did not enjoy the same protections in law when entering into contracts online as they did when a sale was made ?over the counter?.

 

In fairness to these businesses and consumers, the law at the time needed to be updated to give greater certainty to this new trading development. The law has been updated. Its application to the formation of online contracts is now relatively straightforward.

 

Under IRISH and EU law, binding contracts can be concluded electronically. No special provision needs to be made for this. In fact, it is assumed that unless the parties to the contract agree otherwise, an email containing an offer or an acceptance is sufficient to form the appropriate part of the contract.

 

There is one set of exceptions to this ? contracts for the transfer of land or for the execution of certain documents such as wills or trusts still have to be conducted in the traditional ?paper? way. So put another way, the vast majority of day-to-day business contracts can be formed online. So what about the signature, the all-important sign from the ?paper? era that someone was agreeing to a contract?

 

The legislation governing electronic commerce has sought to simplify contract formation by allowing for the receipt of electronic signatures. A simple email from a customer is normally sufficient to constitute an electronic signature.

 

For most purchases on a website, the customer will type his or her name and contact details before submitting the order. Sending this data ? by clicking ?send? ? is, in effect, making an electronic signature, and this signature will be given the same legal validity as if the customer had signed a written contract and posted it. The legislation goes on to provide for an ?advanced electronic signature?, which is required for contracts where signatures are required to be witnessed. These advanced signatures are normally achieved by encoding an email message through systems such as the Public Key Infrastructure. There are organisations that are accredited by law to offer certified public and private ?keys?. These keys are used by parties to a transaction to authenticate more securely that the sender is the person with whom you intend to enter into a binding contract.

 

In summary, given that a contract can now be concluded online, you should take the same care in concluding a contract in this form as you would in the traditional ?paper? way.

 

For advice about contracts online or any commercial matter contact LawPlus Commercial today.


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