by Merlin Hernandez

I keep encountering people with problems regarding internet transactions. Many traditional contract rules apply to Internet transactions but e-commerce has created new issues that relate specifically to e-contracts which can span different states within the US and different countries. The ubiquitous nature of e-commerce has created the need for a uniform set of rules that would govern interstate and international activity on the Internet. In domestic e-trading, the National Conference of Commissioners on Uniform State Laws, a group comprising lawyers, judges, and legal scholars has drafted the Uniform Computer Information Transactions Act (UCITA) that establishes legal rules to govern electronic contracts and licenses. The Act only becomes law in each state when a state legislature adopts it as a statute. Because the Act has only been adopted by some states, while others prefer to formulate their own statutes, problems arise in forming e-business contracts, enforcing such contracts, and providing consumer protections. E-businesses need to identify applicable laws in each of their markets and have contracts that protect them from liability. An End User Licensing Agreement (EULA) offers protection for both licensor and licensee for copyrighted products like computer software.

The issues become more complex in cross-border transactions as legal and cultural differences and idiosyncrasies can preclude contract enforcement and may require extensive overhaul of local laws and/or comprehensive judicial reform. Contract laws, registering property, closing a business, industrial relations climate and labor laws, as well as tax regimes may be so different from what obtains in the US as to require a unique set of approaches and rules which may be a negotiated amalgam of practices and statutes. It demands systems for an informed allocation of risks that do not usually exist in a corporation’s home base. US corporations have found it useful to establish local partnerships for foreign business activities as a means to satisfy local laws and operate within established customs.

Meanwhile disputes could rely on arbitration in an international forum. The United Nations Convention on Contracts for the International Sale of Goods (CISG), adopted in 1980, has the binding power of law for businesses operating in signatory countries and recommends that all contracts be concluded in written form. International arbitration avoids uncertainties associated with doing business in the international arena where local customs can create a litigation quagmire. It offers a quick and efficient way to access international commercial expertise. Agencies include the International Chamber of Commerce (ICC), the International Center for Dispute Resolution (ICDR), the international branch of the American Arbitration Association, and the London Court of International Arbitration (LCIA), among others.