Modifying contract law principles to accommodate automated transactions in South Africa
MetadataShow full item record
Modern electronic commerce is chiefly characterised by the use of unattended computers in the negotiation and conclusion of agreements. Commonly referred to as "electronic agents," these computers assist their users to negotiate better and profitable deals in virtual marketplaces. In South Africa, the legal force and effect of automated transactions, i.e. agreements concluded by electronic agents, is addressed in section 20 of the Electronic Communications and Transactions Act 25 of 2002 (hereinafter referred to as the ECT Act). According to section 20 (a) of the ECT Act, a valid and enforceable agreement will be formed where an electronic agent performs an action required by law for agreement formation. The same statute provides further in section 20 (b) that a valid and enforceable agreement will be formed where all the parties to a transaction or either one of them uses an electronic agent. The overall effect of these provisions is that an agreement cannot be denied legal validity and enforceability on the ground that an electronic agent was used, whether by one or both parties, to conclude it. Likewise, an agreement cannot be denied legal validity and enforceability on the ground that no human being took part in its formation. Although the ECT Act provides as a general matter that automated transactions are valid and enforceable in South Africa, that statute does not, however, create new rules for the formation of such agreements. This is made clear in section 3, which provides, amongst others, that the ECT Act should not be interpreted to exclude the application of the common law of contract to electronic transactions. Therefore, as with traditional or non-automated agreements, automated transactions too must satisfy the individual requirements of a valid contract at common law. As a matter of fact, the common law theory of contract formation is predominantly based on the assumption that human volition will always play a pivotal role in the making, acceptance or rejection of offers. For that reason, this research proceeds on a strong hypothesis that common law rules and principles pertaining to the formation of agreements are either insufficient or inadequate to accommodate the validity of agreements concluded by computers without the immediate intervention of their users. Consequently, the aim of this research is to discuss how the rules and principles of the common law of contract can be modified or developed in order to accommodate, within the common law theory of contract formation, the statutory validity of automated transactions in South Africa. The discussion of this research is limited to five legal issues, namely the basis of contractual liability in automated transactions, the analysis of offer and acceptance in automated transactions, the time and place of contract formation in automated transactions, the incorporation of standard terms and conditions in automated transactions, and the treatment of mistakes and errors in automated transactions. These issues are discussed first with reference to South African law, primarily with the purpose of determining the extent to which relevant common law rules and principles provide adequate solutions to specific challenges posed by automated transactions. To the extent that relevant common law rules and principles do not provide adequate solutions to the challenges of automated transactions, recommendations are made in this research for their development or modification. As shall be demonstrated in the course of this work, in relation to some of the abovementioned legal issues, the development or modification of common law rules has been done by the ECT Act. These "statutory developments or modifications of the common law" are also discussed in this work, primarily with the aim of determining the extent to which they provide adequate solutions to specific challenges posed by automated transactions. To the extent that these statutory modifications of the common law do not provide adequate solutions to the challenges of automated transactions, recommendations are made in this work on how the relevant provisions of the ECT Act may be interpreted by courts of law or amended by Parliament in order to strengthen the response of that statute. The abovementioned legal issues are also discussed in this work with reference to US and UK law, primarily with the purpose of determining how the law addresses the challenges of automated transactions in these jurisdictions, and to draw valuable lessons for the development or modification of South African contract law.
- Law