Module_3

MODULE 3: DESIGNING ON-LINE AGREEMENTS: CONTRACTUAL
CLOSURE AND INDIAN CONTRACT LAW

The World Wide Web presents an incredible opportunity for business of every size and
shape to peddle their products and services to a market audience of potentially anybody in
the world with access to a computer, or now even a WAP phone1, at a comparatively small
cost. The Internet has taken the world by storm. Contrary to prophecies of doom e-
commerce is growing at a tremendous rate and will continue to be with us, establishing
itself as a formidable medium of cross-border commerce.

To some it may sound strange, but electronic commerce has been with us for quite some
time now. Traditionally, established business partners, for example, have used it between
wholesalers and manufacturers or by banks exchanging magnetic tapes containing details of
clearing cheques. It has been a long established manner of conducting business on a
business-to business basis. It is only in the past few years, with the advent of the Internet,
that electronic commerce concluded over the Internet on a business-to-consumer or
consumer-consumer-basis has become feasible, and allowed to grow at an exponential rate.

Electronic commerce by way of EDI is conducted between existing business partners
operating under a pre-existing contract containing all the terms and conditions pertaining to
all transactions between the business partners. These terms and conditions are usually
negotiated between the business partners before any transaction takes place. The
agreements are most likely to be extremely detailed and explicit leaving very little room for
unresolved issues or the possibility of litigation. Each transaction over EDI is effectively an
electronic agreement that is subject to the pre-determined terms and conditions between
the business and consumers generally does not enjoy the same luxury of having such pre-
existing contract in the event of a dispute, since such business is often conducted on a one-
off basis. Under these circumstances, the parties must then rely on the standard terms and
conditions of the merchant and the court’s interpretation of available law to resolve any
disputes.

3.1 INTERNET LEGISLATION

The tremendous rates of growth of the Internet and e-commerce have outpaced the rate of
specific Internet legislation being drafted to govern this new trading arena. For now,
legislation is playing a “catching up” game. The nature of the Internet and the globalization
of the world economy means that the developments in electronic commerce create legal
problems concerning, amongst others, legality and enforceability of on-line contracts and
click-wrap agreements that contain the merchant’s standard terms of the conditions
prepared without negotiation or consultation with the customer. So what is the legal
position of buying or selling on the Internet? Is there any law governing the Internet that
merchants can rely on to make sure that the contracts that they enter into to sell their
products are legally binding and enforceable?

1 In its ‘basic’ application, for, a cellular phone with Wireless Application Protocol technology
enabled.

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Contrary to popular belief, cyberspace is not a lawless arena for conducting commerce.
More often than not, existing contract laws are generally able to deal with on-line and click-
wrap agreements. In addition, the United Nations Commission on International Trade Law
(UNCITRAL) has drafted a Model Law on Electronic Commerce that provides a basis for
jurisdictions to prepare legislation relating specifically to electronic commerce.

Article 11 of the Model Law provides that “unless otherwise agreed by the parties, an offer
and the acceptance of an offer may be expressed by means of data messages. Where such
data message is used, the contract shall not be denied validity or enforceability on the sole
ground that a data message was used for that purpose.” This concept, under the Model
Law, has been adopted by various jurisdictions as a model for drafting their own electronic
transaction legislation, including Hong Kong, which saw the coming into force of part of the
Electronic transactions Ordinance (ETO) at the beginning of this year. Section 17 of the
ETO has incorporated Article 11 and gives legal validity to contracts concluded over the
Internet.

However, the mere acceptance of on-line contracts is not in itself sufficient protection for
the merchant. The contract itself still has to be structured in such a way for the merchants
not to be caught by any deficiencies under this new trading arena.

3.2 CONTRACTUAL ISSUES IN CYBERSPACE: A BRIEF PROLOGUE

The issues relating to formation of a contract in cyberspace are intriguing. While rules on
the formation of contracts are clear in the physical world, there are significant ambiguities
in the electronic world. There is, therefore, a need to enact legislative provisions to clarify
the rules of formation of electronic contracts. This would supplement the digital signature
system, as the signatures are likely to be used in an environment where contracts and
transactions are concluded electronically. The main issue involving the transmission of a
message through different electronic mechanisms such as electronic mail is when the
message was considered sent or received. For sending or dispatch, it is proposed that it
occurs when the message enters a system outside the control of the sender. For receipt, a
system of designating specific electronic mailboxes as receiving points is proposed. A
message is deemed received by such designated mailboxes when it enters the system. If
there is no designation, it is also to a mailbox other than he designated one; it is received
when the recipient retrieves the message. The place of contract is also an issue in electronic
contract formation. The proposal is to designate the place of dispatch and receipt as the
regular place of business or residence of the sender and recipient respectively, regardless on
the actual place of receipt. In order to achieve harmony with other countries on the
formation of international digital contracts, it is recommended that the provisions of the
UNCITRAL Model Law on Electronic Commerce be adopted.

Is authentication by electronic means equivalent to the traditional signature? In our world
of day-to-day business, a signed document denotes legal authenticity and validity. It
imposes clearly defined legal rights and responsibilities on the parties who have signed it
and represents a solid foundation upon which a commercial relationship can be sustained.

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In a few countries, such as Austria, a written signature is required as proof of commitment
or proof of performance.

Telegraph and telex have been used for many years and have been found to be legally
acceptable. Nevertheless, there are limited possibilities for authentication, and disputes
have arisen where a telex has been materially altered during transmission, or where a
confirmation differs from the text of the telex. The use of computers offers a valid
replacement for a signature, giving verifiable guarantees as to the identity of the parties.
Recognition message can be exchanged by systems and their use can be the subject of
written agreement.

Telex and computer-to-computer telecommunications over the Internet often use call-back
procedures and test keys to verify the source of the message. Access to a computer will
invariably require the use of passwords, or the use of a magnetic strip or microcircuit plastic
card and a personal identification number (PIN). It is pertinent here to note, where the data
contains material subject to the United Kingdom Data Protection Act; there is a statutory
obligation to take appropriate security measures. It is necessary for parties intending to
make use of electronic data interchange to agree beforehand on the means to be utilized to
authenticate documents.

3.3 THE GENESIS OF LEGAL RELATIONS

In principle, the formation of a contract takes place after an offer is made and that offer is
accepted. The law requires a ‘meeting of the minds’. This usually results from the
acceptance of an offer. The growing e-commerce practice is that the online seller does not
make an offer online, which would be accepted by the purchaser’s acceptance, but merely
an invitation to treat [i.e. a call for proposals]. This practice can be seen for example in
Amazon’s terms and conditions www.amazon.co.uk. The purpose of such a provision is to
protect the seller from making a unilateral offer directed at the world and from being bound
by an agreement that is finalized outside of its control. It ensures that a failure by the seller
to honour an online request from a buyer will not adversely affect the seller and both
parties are informed of the actual time of the conclusion of the contract. There is no [legally]
binding contract until there has been a assent to the offer signified in the mode required by
the terms of the offer2 At common law prima facie,3 an acceptance by post is complete
when the letter is posted4 or by telegram when it is handed in5; but acceptance by
instantaneous form of communication takes effect only on receipt.6

2 Please refer to Campagne de Commerce et Commission SAREL v. Parkinson Stove Co. Ltd (1953)
2 Lloyd’s Rep 487, C.A. Offers are commonly divided into two categories, according to whether they
may be accepted by: [1] a return promise )”bilateral contracts’) or [2] a requested act {‘unilateral
contracts’). Please also refer to 9 Halsbury’s Laws (4th Edn) para 248 et seq.
3 The rules in common law give way to contrary terms in the agreement: please refer to Financing
Ltd. V. Stimson [1962] All ER 386, [1962] 1 WLR 1184, CA [acceptance to become binding on
signature].
4 Please refer to Dunlop v. Higgins (1948) 1 HL Cas 381. This is true even if the acceptance never
arrives. Household Fire and Carriage Accident Insrtuance Co. v. Grant (1879) 4 ExD 216, CA. For a
contrary agreement postponing the operation of acceptance until receipt, see Holwell Securiteis Ltd.
V. Hughes [1974] 1 All ER 161, [1974] 1 WLR 155, CA.

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The formation of contracts over the Internet is a contentious issue. However, under the
Indian Information Technology Act, 2000, electronic media is no longer an obstacle to
forming a valid contract. The international dimension may add additional problems to the
complicated issue and it is possible that courts other than those in India may forming have
jurisdiction in the event of a dispute [ for example, where one of the contracting parties
resides overseas and the services or goods are to be provided to him there]. Non-Indian
Courts also may hold that the local legal requirements have not been complied with to form
a valid contract.

3.4 COMPARISON

Under the Indian Contract Act, 1982, there are four essential requirements of a contract:

[1] an offer;
[2] acceptance of the offer,
[3] an intention to create legal relations; and
[4] consideration.

In many [ordinary!] everyday situations, the four elements are obvious: a person sees the
intended item of purchase in a showroom; he makes an offer which is accepted; he tenders
the purchase price [the consideration] and the relevant documentation and receipt are
handed over by the seller and a binding contract has been formed. However, if the
potential purchaser saw the goods advertised in the newspaper and tendered the asking
price, a valid contract would not be formed unless the seller accepted the offer.
Advertisements, as s rule, are generally only “invitations to treat’, in other words invitation
to the world at large to make an offer to buy. In other examples, it is less clear which party
is the offeror and which one the acceptor. The distinction between an offeror and an
acceptor is a subtle but an important one as it affects their respective abilities to withdraw
or reject an offer.

3.4.1 OFFER

In a number of cases where a company is likely to enter into contracts over the Internet, it
will do so by way of an advertisement which, if worded correctly, would amount to an
‘invitation to treat’. Thus, where a potential customer is applying for a service or purchasing
over the Internet, the Web site owner would be entitled to turn down the application. Each

5 Stevenskion v. McLean (1880) 5 QBD 346
6 Entores Ltd v. Miles Far East Corp. [1955]2 QB 327, [1995] 2 All ER 493, CA. IN Brinkibon Ltd. V.
Stalag Stahl und Stahlwarenhandelsgesellschaft mbH [1983] 2 AC 34, [1982] 1 All ER 293, HL, it was
held that where there was instantaneous communication ( in this case, by telex) between the parties
the formation of a contract was governed by the general rule that a contract was concluded where
and when acceptance of the offer was received by the offeror. It was held, per curiam, that where
communication by telex is not instantaneous ( e.g. where the message is sent out of office hours or at
night) the time and place of the formation of a contract so made by telex can only be resolved by
reference to the intentions of the parties, by sound business practice and in some cases by judgement
where the risk is to lie, and not by applying a universal rule.

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case will turn on its own facts and the intended objectives of the Web site owner should
determine how the advertisement is worded.

In addition, it is important that the terms and conditions should be at least referred to
[prominently] on the first Web page relating to the services/goods with hyper-text link to
the actual terms and conditions. In addition, they should be available from the Web page
from which the order is placed/application made. The objective is to bring the terms and
conditions to the attention of the consumer and to give to him every opportunity to read
and accept them8. Immediately prior to finalising a transaction, the consumer should be
asked to confirm that he has read the relevant terms and conditions and that he accepts
them. In the event that they do not so confirm the consumer should be offered the
opportunity cancels the transaction/application or review the terms and conditions. The
transaction should not be completed without confirmation that the terms and conditions
have been accepted. These points should be in mind when designing a Web page.

Another issue that may need to be considered is the time and place the contract will be
deemed to have been formed. Whilst there is no specific legislation on this and there is no
judicial guidance on how the Courts are likely to address the issues in the context of the
Internet, it is instructive to consider historical development of the law over the years
following the advent of modern communication networks and how it has been applied in
the past.

3.4.2 ACCEPTANCE

As a rule, a contract will not be formed until acceptance of the offer has been
communicated to the offeror. However, as an exception to the general rule, the Courts
have developed a rule where an offeror has explicitly or implicitly agreed to the offer being
accepted by post. Once the letter accepting the letter has been posted, the contract is
deemed to have been formed even should the offeror not receive the letter accepting the
offer. This rule, known as the postal rule, is well established and was developed in the early
19th century as representing the fairest method of allocating the risk and consequence of
letters going astray in the post. By analogy, one could similarly argue where the offeror has
expressly [or impliedly] agreed to acceptance by e-mail, once the acceptance has been sent
by the acceptor ‘into the ether’, the contract is formed even if the e-mail message is never
received by the offeror. Until the Courts have ruled on the point, there must be uncertainty
as to whether or not a contract has been formed where the e-mail accepting the offer is not
[or where it is alleged that it was not] received. To avoid this situation, the terms should
spell out the circumstances where a contract is to be formed without any further approval
by the Web site owner/controller. Parameters should be made clear; under the relevant
terms and conditions or by a statement that will be seen by the user before he
communicates acceptance. The contract will not, under these circumstances, be formed
until the Web site owner has received the e-mail accepting the offer.

8 The terms and conditions on which goods or services are to be provided are specific in nature and
will require review in each specific instance.

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May rules have developed to take into account the use of telex in international commerce?
The English Courts have held that when a contract is formed by exchanges of telex, the
contract is concluded in the country where the telex accepting the offer is received. By
analogy, it could be argued that a contract is concluded where the e-mail accepting an offer
is received. The significance of this is that the overseas Courts may be able to assume
jurisdiction merely because the message is received in their jurisdiction.

The Web site owner could pre-empt matters by specifying the law to be applied to the
contract and the Courts to have jurisdiction in the event of a dispute. However, the
effectiveness of these measures would [ in all probability] be determined by the foreign
Court, and in any event, the measures would not bind third parties [such as a person who
has been defamed on an electronic bulletin board run by the Web site owner] nor would
they be effective to avoid regulatory regimes or criminal sanctions.

There is very little authority on when acceptance is deemed to have been received by the
offeror when the offer is transmitted via a computer communication. The case referred to
for the purposes of the discussion deal with telex transmission, but there is no case law on
facsimile transmissions or Internet. Therefore, all discussions in respect of computer
communication can only be by analogy. The receipt rule must apply to computer
communications where there is a direct link between the parties. Direct Internet
communications, that is to say those relayed from one Internet node to another, are more
closely analogous to a telephone conversation rather than a postal situation. If the
communication is not received, one of the parties, probably the offeree, is likely to become
award of this. In addition, there is no intermediary to whom the transmission is entrusted.
Therefore, the receipt rule would equally apply any analogy to Internet contracts, if there is
no intermediary service provider. This would have to presume that the transmission is
instantaneous and that once the acceptance is communicated, it is read immediately on
receipt.

Analysis in respect of e-mail communications highlights that whilst the receipt rule seems to
apply in theory, communication by e-mail is only effective when the recipient opens it and
reads its, seems more analogous in application to the postal rule as there is a delay
between sending the message and the receiver opening it. In addition, the destination
address attached to the message will be that of the server rather than the offeror, which
implies the involvement of an intermediary.

3.5 INTERMEDIARY

Internet communication or where there is likely to be a delay between sending [the offer]
and receiving the acceptance involves an intermediary. In Lord Wilberforce accepted
Brinkeibon Limited9, that while the receipt rule applies as the general rule, the postal rule
may become more relevant as technology develops: “The senders and the recipients may
not be the principals to the contemplated contract. They may be servants or agents with
limited authority. The message may not reach, or be intended to reach the designated

9 Brinkibon Ltd. V. Stahag Stahl und Stahlwarenhandelsgesellschaft mbH [1982] 1 All ER 293, HL.

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recipient immediately: messages may be sent out of office hours, or at night, with the
intention or on the assumption, that they will read it a later time. There may be some error
or fault at the recipient’s end that prevents receipt at the time contemplated and believed
in by the sender. The message may have been sent and/or received through machines
operated by third persons and many other variations may occur. No universal rule can
cover all such cases; they must be resolved by reference to the intentions of the parties, by
sound business practice and, in some cases, by judgment where the risks should lie.” If the
acceptance message is sent via an intermediary, who may be a third person or, for example,
a service provider, the postal rule will apply. A communication via a common service
provider would fall into this category. Similarly, if there; is an element of store and forward
in this transaction, the postal rule is likely to apply.

3.6 ‘A MIDDLE PATH’

The practical reality of communications via the Internet that they are not as instantaneous
as one would like to believe. There can be some if not considerable delay. In addition, there
is no guarantee that the received message will actually arrive at the Web site owner’s
server, that it will arrive without any corruption, or that it will be read immediately. The
consensus among academics appears to be that therefore, the postal rule, although it is
meant to be an exception to the general rule, is generally more applicable to modern forms
of communication.

In any event, it was held in Holiwell Securities Limited v. Hughes10 that it is permissible for
the parties to stipulate what acts would constitute acceptance and therefore it seems
essential that any standard terms and conditions which provide for on-line transactions
should stipulate exactly when a message will be taken to have effect, that is to say, when a
contract is formed, and which law is to govern the performance of the contract.

It is obvious that once an offer has been accepted it cannot be revoked. There is no Indian
authority on the question of whether a postal acceptance can be revoked by later
communication [such as telephone call], which reaches the offeror before, or at the same
time, as the acceptance.

3.7 TERMS AND CONDITIONS

In addition to the necessity that the on-line agreement is binding, the merchant would want
to sell its products under its own terms and conditions and not have to rely upon consumer
laws. Therefore, it is vital that its standard terms and conditions of sale are properly
incorporated into the on-line agreement.

The terms and conditions contained in an on-line agreement will be not be negotiated –
they will be drafted unilaterally by the merchant for the customer on a “take-it-or-leave-it-
bais” and predominately for the benefit of the merchant. However, the benefit that the
merchant proposes to achieve will not be achieved unless the terms and conditions have

10 [1974] 1 WLR 155

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been made known to the customer before the customer places an order. In the English case
of Olley v. Marlborough Court Limited1, a contract for a hotel room having been signed at
the hotel’s reception desk, was not subject to the terms found on a notice in the bedroom.
Therefore, if the merchant’s terms and conditions were not made known before the
contract concluded the merchant runs the risk of finding the terms that it plans to impose
on the customer not to be binding.

Furthermore, the fact that the terms and conditions are merely somewhere on the
merchant’s website may not be sufficient. In Parker v. South Eastern Railway Co.2, the
railway’s standard terms and conditions were printed on the back of the ticket. The court
divided the concept of notice into three questions of fact, namely:

• Did the passenger know that there was printing on the back of the ticket?
• Did the passenger know that the ticket contained or referred to conditions? And
• Did the railway company do what was reasonable to notify prospective passengers

of the existence of conditions and where the terms were placed?

Put simply by Lord Denning in Thornton v. Shoe Lane Parking, “…..the customer is bound by
the conditions if he knows that the ticket is issued subject to it [the terms and conditions] or
if the company did what was reasonably sufficient to give the customer notice of it.” Online
merchants must therefore use all reasonable efforts to make their terms and conditions
known to their customers.

For more onerous terms, such as those that deprive the customer of any rights otherwise
available to them, Lord Denning in Thornton v. Shoe Lane Parking suggested that: “In order
to give sufficient notice, it would need to be printed in red ink with a red hand pointing to it
or something equally startling.”

In the case of an on-line agreement, this would probably mean onerous terms should be
placed on the ordering from itself, as part of the sequenced of placing orders, and not just
on the page containing the terms and conditions. Something startling could also be used,
such as flashing icons that the customer must click through before being able to proceed
any further.

3.8 DISPLAYING THE MERCHANTS STANDARD TERMS AND CONDITIONS ON THE
WEBSITE

Unlike real world business, merchant’s web sites have various means of displaying the
merchant’s terms and conditions to their customers. An examination of various websites
has shown that the following are common methods of setting out the merchant’s standard
terms and conditions:

1 [1949] K.B. 532
2 (7877) C.P.D. 416

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3.8.1 REFERENCE STATEMENT WITHOUT HYPERLINK

A reference with a hyperlink to a separate page containing the standard terms and
conditions of the merchant seems to be the most popular method of making known to the
customer its standard terms and conditions. It does, after all, achieve some kind of
credibility without substantial disruption of content and the purchasing process of the
customer.

Such a method seems to satisfy the reasonableness test in Thornton v. Shoe Lane Parking.
However, applying the principle in Parker v. South Eastern Railway, there must be sufficient
notice to the customer during the purchase process that points to the fact that the purchase
will be subject to the standard terms and conditions.

Another school of thought is that the hyperlink seemingly hides the terms and conditions
from the customer. Just because the terms are somehow accessible, it does not mean that
the customer is bound to examine them. In the US case of Microstar v. Formgen3, the court
expressed its condemnation to the merchant for putting restrictive terms in a separate, non-
cross-referenced file that the customer did not necessarily have to view.

In respect of onerous terms contained in the standard terms and conditions, the hyperlink
method may not be adequate, as it many not sufficiently stand out. In Interfoto Picture
Library Ltd v. Stiletto Visual Programmes Ltd.4, the court held that the vendor had a duty to
draw attention to particularly surprising or onerous terms using boldface type or a separate
attached note.

3.8.2 DISPLAYING TERMS AND CONDITIONS AT BOTTOM PAGE

The merchant’s standard terms and conditions may be placed on the same page as the
order from itself. Such a form is usually extremely long and unsightly, but does lend greater
weight to the legal requirement of giving notice as ascribed in the aforementioned cases.
However, as the customer may not necessarily interact with the terms, it may not be
possible to establish that the customer has had the opportunity to read the terms and
conditions.

3.8.3 USE OF CLICK-WRAP AGREEMENTS OR DIALOGUE BOXES

This is most likely the best available method of ensuring the customer goes through the
terms and conditions. There are many variations of this method, typically the terms and
conditions are contained in a dialogue box or within a page containing the merchant’s
standard terms and conditions. These are made part of the ordering sequence, and the
customer must scroll to the bottom of the box or page before being able to press the “I
accept” button agreeing to the Merchant’s terms and conditions before being able to

3 942 F.Supp. 1312 (S.D. Cal 1996)
4 [12989] Q.B. 433

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proceed or to type the words: “ I agree to the above terms and conditions.” Only when the
words have been correctly typed in, can the customer click the “proceed” button and accept
the merchant’s terms and conditions.

The US decision of Hotmail Corporation v. Van Money Pie Inc., et. Al.5, and Pro CD, Inc. v.
Zeidenberg6, held that click-wrap agreements were duly enforceable, stating that: “Shrink-
wrap licences are enforceable unless their terms are objectionable on grounds.” The
Scottish decision of Beta Computers v. Adobe that followed the US decisions indicated that
click-wrap agreements are also enforceable under English and Scottish laws.

Although the methods may, in the opinion of the merchant, seem tedious and troublesome,
it is the most effective and beneficial to the merchant in case of dispute. Because the
customer has interacted with the merchant’s standard terms and conditions, the customer
must have realized that it has agreed to be bound by those terms and conditions
irrespective of the fact that the customer may not have read the contents contained in
the click-wrap agreement or dialogue box. Finally, in the light of the above cases, there is no
doubt the strengths of click-wrap agreements and that the use of this method ought to be
the way forward.

Naturally the most “unattractive” method usually affords the best legal protection and may
be designed so that the customer is “forced” to go through the terms and conditions before
being able to make an offer to purchase. But the purpose of the website is for the sale of
goods or services and not a lecture on law. Such design may well be off-putting, in particular
to those that are only purchasing items of law value, which may result in such potential
customers leaving before they even have the opportunity to make an offer to purchase
anything.

The merchant would therefore need to weigh its options and consider whether it wants the
protection or not. Since virtually all on-line contracts require advance payment before
delivery of gods and the probability that the customer is from a different jurisdiction, the
chances that a customer will argue about the legality of the terms and conditions, or
whether it is bound by them may be small, especially when the value is insignificant.

An alternative method is to have customers become one of its members and open a virtual
account and go through this process of scrolling and accepting the terms and conditions
upon their first purchase only once, since previous dealings can bind a party to standard
terms and conditions even if the part is not presented with the terms on the subsequent
occasions (Spurling v. Brandshaw7]. However, nothing is capable of beating the terms and
conditions thrust upon the customer on each occasion.

5 C98-20064 (N.D. Ca., April 20, 1998)
6 86 F. 3d 1447 (7th Cir. 1996)
7 [1956] 2 All ER 121

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3.9 DESIGNING THE WEB PAGE

From the above, we have seen what an on-line merchant has to be wary of when setting up
a website to sell products, how a contract for sale is created and what must be done for its
standard terms and conditions to be binding on the customer.

In order for the merchant to reap the rewards of selling on-line, it must have the purchasing
process laid out in synchronicity so that the sequence the customer must follow will ensure
that a valid, binding and enforceable contact is created together with the proper
incorporation of its standard terms and conditions. In addition the merchant must also
ensure that records recording each step of the transaction are maintained. Thus an “audit
trail”, which records the customer’s every click, should be maintained and may be used as
evidence in the event of dispute.

A typical example of a well-laid out sequence should be similar to the following:

1. Products selected by the customer should be placed in a shipping cart no matter
what types of products are being sold.

2. When proceeding to the check out, express terms such as the description of the
product (where possible including a photo), price, quantity, availability and
estimated delivery time (after a mode of delivery has been selected by the customer)
should be clearly stated. The customer should also have the option of removing any
item from the shopping cart and be asked to confirm if the selection is correct before
proceeding.

3. On proceeding to the next step, details of the customer are taken and if any
particular field is not completed in a prescribed manner the customer should not be
entitled to proceed. Such details would include whether the customer is a minor,
whether the customer resides in a jurisdiction that the merchant does not wish to
contract with, etc. When satisfactory details have been given the customer may
proceed to the manner of payment.

4. Thereafter, the merchant’s standard terms and conditions of the sale, as stated
above, should be placed in a dialogue box with the customer having to complete a
pre-programmed manoeuvre, whereby they have to type the words “I agree to the
above terms and conditions” in a box which will only become active after having
scrolled to the bottom of the dialogue box.

5. A final confirmation from the merchant detailing the products the customer offered
to purchase together with the details referred to in step two. This should be
accompanied by any onerous terms in bold (or pointed to with a red hand) placed in
a prominent part of the page, and finally the option to cancel the order.

6. If the customer has not by now cancelled, the customer may proceed to offer to the
merchant to purchase the selected products. A final message should be displayed to
the customer to the effect that “this is the customer’s last chance of cancelling: prior
to the customer scrolling to the bottom of the page and submitting the offer.

7. A screen should be displayed after the offer to purchase has been sent to the
merchant requesting the customer to wait for a confirmation of acceptance.

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8. Finally, sending an instantaneous confirmation notice to the customer that the offer
has been accepted should be displayed to the customer, and a subsequent electronic
mail sent to double confirm.

At each of the above stages, up to and including step six, it is necessary for the customer to
be given the opportunity to cancel or discontinue the process and that such cancellation
option should be placed prominently. Furthermore it would be ideal to design the page so
that the “proceed button” should be at a different position on each page and placed near
the button so that the customer has to scroll to the bottom of the page and look for the
button. The purpose of this is to increase the customer’s interactivity with the web pages.
The long, tedious and comprehensive sequence of events leading to the customer making
an offer, together with an audit train recording the customer’s actions and pages viewed,
would make it hard for the customer to argue afterwards that it had accidentally pressed
the “proceed” buttons at the end of the transaction and claim that it had no intention of
creating a legal relationship at any time. Although there is no authority to support this view,
a reasonable court of law would probably not think otherwise.
3.10 CONCLUSION
Designing and creating a successful website for electronic commerce is no small feat, let
alone having to worry about the legal implications of how the site is set out and designed.
There are many pitfalls awaiting the unwary merchant. Leaving the design and layout purely
in the hands of it layman designer may bring about lawsuits it had never contemplated. An
entrepreneur hoping to be successful in a dot com venture should probably consult its legal
adviser first before consulting its designer!

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