E-Commerce Law

Consideration in e-commerce

What is consideration?

“A valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given suffered or undertaken by the other”

Currie v Misa (1875) L.R. 10 Ex. At 162

What is consideration?

“An act of forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.”

Dunlop Pneumatic Tyre Co. Ltd v Selfridge & Co. Ltd. [1915] AC 847

Consideration in the future

Adam and Eve Smithson

Consideration

In the real world, consideration for a contract can take many forms

- cash- cheque- card- kind- barter

Electronic Consideration

When dealing with consideration in e-commerce, all ordinary forms of consideration are possible.

However, some are better and more appropriate than others.

Consideration in e-commerce

What sort of contracts should we look at?

For the most part e-commerce contracts will be for purchase of goods with money.

Consideration in e-commerce

Consideration

E-commerce by its very nature suggests that the consideration should also be electronic.

Although this is the ideal, this is not the case.

Consideration

In many cases money is still transferred by traditional methods, e.g. cheque.

Are there any alternatives for electronic commerce?

Electronic Consideration

There are two main ways to transfer money electronically.

1. Payment card.

2. Electronic Funds Transfer.

Payment Cards

What is a payment card?

"payment card" includes credit cards, charge cards, debit cards and store cards.

Regulation 21(6) of the Consumer Protection (Distance Selling) Regulations 2000.

Payment Cards

The transfer of consideration by payment card is thought by many to be the most common way of money transfer.

Certainly when buying from the Internet, this method is generally favoured.

Payment Cards

Is this the best method of payment?

No. Many consumers are worried about using payment cards on the Internet due to concerns over their security.

We will look more at this in a lecture on Consumer Protection.

Electronic Funds Transfer

There are numerous definitions for electronic funds transfer (EFT)

What is EFT?

any transfer, other than a transaction originated by check, draft or similar paper instrument which is initiated through an electronic terminal, telephone instrument, or a computer or magnetic tape so as to order, instruct or authorise a financial institution to debit or credit an account.

United States’ Electronic Funds Transfer Act 1978

What is EFT

a funds transfer in which one or more of the steps in the process that were previously done by paper based techniques are now done by electronic techniques.

UNCITRAL - the United Nations Commission of International Trade Law

What is EFT?

The transfer of funds, as from one account to another or from buyer to seller, by telephone or computer. The use of EFT results in the instantaneous movement of money. The additional time that the funds are available to earn income can more than offset the fees charged by institutions for this service.

Wall Street Words: An Essential A to Z Guide for Today's Investor by David L. Scott © 1997, 1998 by Houghton Mifflin Company

EFT

There are numerous EFT systems in operation around the world.

CHAPS

SWIFT

EFTPOS

EFT

With improvements in technology and telecommunications EFT will improve and its use will undoubtedly increase.

In many instances EFT is not viable.

Digital Cash

One alternative to Payment Cards and EFT for e-commerce is the use of digital cash.

Here money is purchased in advance and stored on a smart card. This is then transferred electronically between consumer and merchant.

Electronic Consideration

What are the advantages and disadvantages of each method?

Payment Card

Electronic Funds Transfer

Digital Cash