Maritime and Commercial Law

Question: Discuss about the Maritime and Commercial Law. Answer: Introduction: There are a number of rules that apply in case of ordinary contracts that have been concluded between parties orally or in writing. These rules also apply in case of electronic contracts. Electronic contracts are created online, using e-mail or other electronic means. These days, an increasing number of businesses and suppliers are opting for online credit applications with the customers were not present face-to-face and in some cases, they're not even present in Australia. Under these circumstances, the effects of the rules applicable in case of electronic contracts become much more significant. Several of these rules have been considered by the courts, for example the Supreme Court of Queensland in Stellard's case where they have to deal with the issue of signing a contract by e-mail in case of a contract according to which an interest in land has been created. Issues related with electronic Contracts: While considering the issues related the electronic contracts, there are mainly three parts of the issue related with the impact created by electronic contracts. Never was a college has to be seen if an e-mail can be treated as a signature, when the terms and conditions, guarantees and the credit applications need to be signed by the parties. Similarly, there is another issue according to which it has to be seen who has the authority to sign the contract on behalf of a customer or guarantor and similarly it also needs to be seen what will happen if the person signing the contract does not have the necessary authority. Another issue that is present in this regard is that with the times when it can be said that the parties are bound by the contract during the negotiation even if they have expressly stated that the negotiations are subject to contract. Can e-Mails be Treated as Signatures: In this way, the first issue that is present in this regard is if an e-mail can be treated as a signature when the parties have entered into an electronic contract. According to the general law, in case of a contract which creates an interest in land or guarantee, according to the law in Australia, a memorandum on a note in writing should be present which has to be signed by the relevant party or the agent of such a party. This requirement is especially relevant in cases where the creditors had relied on charging clause for the purpose of lodging caveats related with interest on land or guarantees. In this regard an example can be given of the Stellard's case where Stellard wanted to purchase land from NQF and for this purpose, several e-mails were exchanged between the parties. Ultimately, an e-mail was sent by Stellard to NQF in which the amount that the company was going to pay has been mentioned and similarly in this e-mail, the general terms of the offer were also mentioned. The refore in other words it was the offer e-mail. In this case, a formal contractual document was not present between the parties, that was in writing or electronically encrypted signatures have been placed on it. Under these circumstances, the son of the director, Drew was considered as an agent of NQF, had sent an e-mail, accepting this offer. At the end of this e-mail, the name Drew was intentionally mentioned. In this regard, NQF had agreed that e-mail containing the acceptance of the offer was sent by Drew but the company claimed that the e-mail was only a memorandum or a note in writing and therefore it was not an acceptance e-mail. Similarly, arguing on these grounds, the NQF also alleged that the acceptance e-mail had not resulted in the formation of a valid contract related with land, due to the reason that it was not signed. Under these circumstances, the issue in this case was if the acceptance e-mail can be treated as a signed memorandum or writing. In order to deal with these issues, a national scheme of legislation has been applicable in Australia that deals with electronic transactions. In this regard, the Electronic Transactions Act, (Vic) 2000 needs to be mentioned. Similar the legislations have also been limited in other countries. As a result, in Stellard's case, the court was of the opinion that considering the trail of e-mails that were exchanged between the parties, the acceptance e-mail sent by the agent of NQF had signatures and therefore, an enforceable contract that was related with land, has been formed between the parties because it was a writing or a memorandum signed by the registered owner of the land or its agent. Under these circumstances, it was the decision of the court that when the parties were conducting negotiations with the help of e-mail and especially when one party has made an offer using e-mail, it can be inferred by the court that the consent regarding the use of e-mail for this purpose has been granted due to the conduct of the parties. Hence, it was mentioned by the court that while communicating their negotiations by using e-mail, th ere was an implied consent given by NQF relate with the method of signing by using an e-mail. The display of goods on the internet does not amount to an offer but it is merely an invitation to treat as is the case under contract law. It is also worth mentioning at this point that the law of electronic transactions will apply to the terms and conditions mentioned by the supplier, will depend on the words that have been used in them and also regarding the e-mails and other electronic communications that have been used by the businesses for credit applications and guarantees, especially, if a trail of e-mail is not present between the parties. Consequently, if it is done aptly, a document can be signed by using electronic means other than e-mails, although it is required in such a case that the supplier has strictly followed the provisions of the applicable electronic transaction laws. Essential Elements: As mentioned above, the elements that are necessary in case of ordinary contracts, are also required in case of electronic contracts. In this way, it is essential that the elements like offer, acceptance and consideration along with the intention of the parties to create a legal relationship as well as the capacity of the parties should be present in case of electronic contracts. But in such a case, which may arise that when the terms and conditions and guarantees need to be assigned for the purpose of being enforceable. Hence, generally the terms and conditions and guarantees provide the express terms for securing any payment that may be owed to the supplier. In this regard, an example can be given of the case where it has been provided that the supplier shall retain the ownership in the goods until they have been paid off. In the same way, sometimes a charge is granted to the supplier in case of any interest in land that the customer has, either present or future. Such a situation is known as a charging clause. In case of a charging clause, the supplier is allowed to lodge a caveat related with an interest in land, registered in customer's name. It has been established as a significant related with the purpose of debt recovery. For lodging a caveat in accordance with the Australian law, the terms and conditions (as in Stellard's case) need to be signed by the customer. A similar requirement is also present in most of the other countries regarding the caveat lodging system. Similarly, in the context of the guarantees, generally a charge is granted in context of an interest in real property of the guarantor. It is called a general charging clause. The Australian law provides in this regard that guarantee needs to be signed by the guarantor or its agent for the purpose of being made enforceable. The test that can be used for deciding if an e-mail has been signed by the guarantor or its agent is the test provided in Stellard's case. Similarly, the requirement tha t provides that the guarantee needs to be signed is also applicable in most of the other countries. Electronic Signatures: Therefore the situation regarding electronic contracts can be described that under the law, electronic signatures are valid for creating a legally enforceable agreement. But in some cases, a difficulty may arise regarding electronic signatures when evidence has to be provided for confirming the identity of the person who has signed the contract or regarding the intention of the parties that they will be bound by the agreement. Although, it is possible to mitigate these risks by using the digital signature tools that include the context of identity verification and also the methods used for authenticating like public-key cryptography however still there are some important issues that have to be considered. The result is that although the law recognizes electronic signatures but still there can be some difficulty in proving the signatures. As noted above, for the purpose of creating a valid contract, certain elements are considered as being essential. The intention of the parties to cr eate a legal relationship is also one of these elements along with the acceptance of the offer and providing consideration. Therefore, in context of commercial transactions, the use of electronic means for creating and executing a valid contract requires the presence of these elements under the Australian law and also in accordance with international law. Therefore, as is the case with paper contracts, these elements are required in electronic contracts also. But other than the requirements that have to be fulfilled in case of paper contracts, in case of electronic contracts, the contract is considered as a valid only if it has been stored appropriately and is capable of being accessed after it has been executed. Similarly, another requirement is that the parties should expressly or impliedly give their consent that in case of a particular agreement, information will be supplied by using electronic means. It also needs to be pointed out that the law provides that in such case the pu rported originator of the communication is treated to be bound by it if the communication was sent by the originator or with the consent of the purported originator. But this causes a problem related with establishing the fact that this element is present, particularly when the parties were not dealing face-to-face and consequently, they are not in a position to verify the identity with the help of traditional means. Increasing use of Electronic Contracts: These days, the number of e-mails sent by businesses had surpassed the traditional letters and faxes. In this way, e-mails are being preferred by the businesses for various purposes including contract negotiations. Generally it is believed that courts are behind the times but in this context, the shift in communication has been recognized by the courts and as a result, the courts have accepted e-mail as one of the means to create a legally enforceable contract. But still there are a large number of businesses that are not aware of this fact. These businesses mistakenly believe that anything agreed over the e-mail is not considered as binding and similarly, they also under the impression that an enforceable contract can be created only if there is a written document present that is signed by them. However, according to the law, if the parties have been negotiating an agreement by using e-mail, but they do not desire that these e-mails should result in a binding agreement, they should clearly mention this fact in the e-mail that a binding contract will not be created unless they have executed a formal contract. But if such a condition was not expressly mentioned by the parties, it is not likely that it will be implied by the courts in these e-mails. In this regard, the example of Stellard's case can be given in which it was held that a binding contract for the sale of land has been executed by e-mail. It is also worth mentioning at this point that in case of the offer e-mail and the acceptance e-mail, it was mentioned by the parties that it is subject to contract and subject to execution. After the parties have exchanged these e-mails, the buyer had sent a contract for being executed but it was not signed. Therefore, the seller withdrew from the transaction and entered into a contract with a third-party. Under these circumstances, it was held that regarding e-mails, it is the intention of the parties that they will be bound by the agreement immediately. This situ ation prevails even if the parties had expected that such an agreement will be replaced by a formal contract that will carry additional terms also. The court also held that the requirement has been fulfilled by the e-mails which provide that a contract regarding sale of land needs to be in writing and signed, keeping in view the Electronic Transactions Act, 2001. A similar decision was earlier given in Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd when it was held that a the eighth foreseeable agreement is present between the parties related with the lease of commercial premises through e-mails although the parties have mentioned that it was subject to approval. The court also ignored the fact that in this case the parties could not agree regarding the reinstatement clause. Similarly the court was not infected by the fact that Nader on the parties have not signed a formal lease although they intended to do so. Similarly the trend, according to which the e-mails are considered as binding, have also been extended to the settlement negotiations among lawyers using e-mails. Therefore in Universal Music Australia Pty Limited v Pavlovic, it was held by the NSW Supreme Court that the parties have created a binding settlement through the e-mails that were exchanged by their lawyers. The court further mentioned that the e-mail of the lawyer men tioning that the client will sign the settlement deal as well as, keeping in view the other communications and the parties conduct, it was held that a binding agreement has been concluded. Conclusion: In view of the rapid expansion of World Wide Web and e-commerce, the number of contracts that are created by using electronic means, has increased significantly. At the same time, new legislation is also being implemented to deal with electronic contracts. But despite the application of new legal framework, there are still some uncertainty is present with the formation of contracts by using electronic means. Bibliography Argy, P. Martin, N., 2001, The Effective Formation of Contracts By Electronic Means, Computers Law, vol.46, p. 20, available at https://www.nswscl.org.au/journal/46/Argy.html (accessed on 1 Sept 2016) Beale, H. Griffiths, L., 2002, Electronic Commerce: Formal Requirements in Commercial Transactions, Lloyds Maritime and Commercial Law Quarterly, 2002, part 4, p. 467 Becerik, B., 2004, Critical Enhancements for Improving the Adoption of Online Project Management Technology, Global Congress Proceedings North America Bellare, M., Kilian, J. 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