Conclusion of a contract on the Internet  I

  Directory  

  A  Introduction 1

  B Conclusion of a Contract 2  

1.  Offer of a Contract 2  

1.1  Coming into effect of a declaration of intention 2  

1.1.1  Divestiture of a declaration of intention 2  

1.1.2  Entry of a declaration of intention 3  

1.1.3  One-way- and dialog-traffic 3  

1.1.3.1  Entry of a declaration by e-mail 4  

  A) Sphere of reception 4  

  B) Possibility of notice 5  

  )C Automatic forwarding and processing 6  

  D) Entry interference 6  

1.1.3.2  Entry of a declaration in the WWW 7  

1.1.3.3  Entry of a declaration in a chat channel 8  

1.1.3.4  Entry of a declaration during Internet telephony 9  

1.1.4  Revocation of a declaration of  intention.................................9

1.1.5  Proof of entry 10  

1.2  The contestation of a faulty declaration of intention 10  

1.2.1  Input error as a mistake 10  

1.2.2  Faulty declaration by computer 11  

1.2.3  Transmission error 11  

1.3  Allocation and liability for acting in somebody s name 12  

1.3.1  Representation and acting under strange name 12  

1.3.2  Ostensible authority and authority by estoppel 13  

1.3.3  Acting under imaginary names 13  

2.  Offer or invitatio ad offerendum 14  

3.  Term of Acceptance 15  

3.1  Acceptance of the offer by e-mail 15  

3.2  Acceptance in the WWW 16  

3.3  Acceptance during Internet telephony and video conference 16  

3.4  Reasons for nullity 16  

  C Particularities of Online-auctions 18  

1.  Forms of Online-Auctions 18  

2.  Auctions according to 156 BGB 18  

  D Result 21  

  E Appendix Applicable Right 22  

1.  UN Convention on Contracts for International Sale of Goods CISG 22  

2.  International Civil Law (Internationales Privatrecht -  IPR)..................22

3.  Legal System of Characteristic Contract Performance 23  

4.  German Law 23  

  Conclusion of a contract on the Internet  II

List of abbreviations

  AG...........................Amtsgericht  

  a m and more  

  Art article  

  b2b business-to-business  

  b2c...........................business-to-consumer  

  BGB Bürgerliches Gesetzbuch (German Civil Law)  

  BGHZ Bundesgerichtshof in Zivilsachen  

  CISG UN Convention on Contracts for International Sale of Goods  

  Cf confer  

  Cp............................compare  

  e g for example  

  DNS Delivery Status Notification  

  EDP electronic data processing  

  EGBGB Einführungsgesetz zum BGB  

  et sqq and the following  

  etc et cetera  

  GewO Gewerbeordnung  

  i e that  is

  IPR Internationales Privatrecht (International Civil Law)  

  LG Landgericht  

  NJW-RR Neue Juristische Wochenschrift Rechtssprechungs-Report Zivilrecht  

  OLG Oberlandesgericht  

  Rn............................Randnummer  

  SMTP Simple Mail Transfer Protocol  

  WWW world wide web  

Conclusion of a contract on the Internet 1

Conclusion of a contract on the Internet

A. Introduction No closing time regulations, no purchase stress, timesaving and uncomplicated ordering, comparable prices, detailed information and direct contact to the manufacturers, these are just some advantages the Internet offers. The number of people using the internet as a shopping platform is increasing steadily – in Germany already more than 28 million people now use the Internet frequently to make purchases. 1 This underlines the importance of legal matters on the electronic Highway and will contribute furthermore to the electronic drive on legal issues within the next years. All the more, it is important to strengthen the confidence of the consumer of the safety of so-called Internet contracts. This paper shall give a summary of issues concerning contracts on the Internet and its consistency with the norms of the BGB (German Civil Code).

Commonly every manner of economic activity on the Internet is referred to as e- commerce. Nevertheless, one can distinguish these activities into so-called offline and online business. With offline business, solely the conclusion of the contract occurs electronically. An example would be the ordering of a book through the internet, however, it will still be delivered conventionally by mail. So this remains a simple sales contract with rare online-specific problems. With online business the whole performance including delivery will be conducted on the net. This presupposes when purchasing goods that the objects can be digitalized (e.g. software, music, electronic books etc.). Also in the field of services (e.g. the use of databases, Internet telephony, ticket booking, electronic trade of securities, etc.) online businesses occur. 2 1 source: AGIREV, www.agirev.de 2 Cp. ZERDICK, p. 148

Conclusion of a contract on the Internet 2

B. Conclusion of a Contract A contract is concluded by two or more declarations of intention given mutually and coextensively. The term ‘declaration of intention’ (Willenserklärung) subsumes the expression of a will entailing legal consequences. 3 Electronic declarations of intention must be distinguished into the electronically transmitted declaration and the (automated) computer declaration. The first-mentioned obviously implies a personal will of legal consequences. On the other hand it is questionable whether a computer can conduct a declaration of intention without human participation. The prevailing opinion affirms this with reference to the underlying human decision when programming or putting into operation the software the computer uses to compile and transmit declarations. 4 With the use of IT-systems and software the operator expresses knowledge of the programming and therefore allows himself to be classed with any execution actions as his own declarations of intention. 5 In order to conclude a contract it is necessary to have at least two declarations of intention take effect, the offer of the contract as well as its acceptance.

1 Offer of a Contract 1.1 Taking effect of a declaration of intention (Wirksamwerden einer empfangsbedürftigen Willenserklärung) For taking effect of a declaration of intention as the offer of a contract, it is necessary that it has been submitted by the declaring person and has been received by the donee.

1.1.1 Proposing a declaration of intention (Abgabe einer Willenserklärung)

The explanatory person must express his will of legal significance in such a way which leaves no doubt at the finality of his will. The declaration must be initiated to the receiver in such a way that the reception can be assumed based on normal circumstances.

A declaration of intention via Internet (e.g. online-order) becomes effective with the willful authorization of the sending command, which leads to the irreversible dispatch 3 Cp. PALANDT/HEINRICHS, § 104 Rn. 2 4 Cp. BRAUNER, p. 39 et sqq.

5 Cp. BETTENDORF, p. 9

Conclusion of a contract on the Internet 3

of the data. 6 It is irreversible when the data transmission has been carried out to a point that the explanatory person cannot exert any influence on it any more. 7

If there is still the possibility to cancel the sending process, no effective divestiture and no offer in the legal sense have occurred. 8 For oral declarations of intention through

Internet telephony or a video conference one can refer to § 147 I 2 BGB. After its change (13.07.2001) this norm also includes declarations by other communication systems besides the telephone and also classifies them as declarations of attendees. Such a declaration is regarded as released if it is expressed in a way that the other attendee is able to understand it. In addition, a computer declaration is regarded to be released not before the computer system finally emits it, i.e. it has left the IT-system and is irrevocably transferred to the receiver. 9

1.1.2 Entry of a declaration of intention (Zugang einer Willenserklärung)

With respect to the entry a distinction is generally made, whether the declaration of intention is given between absentees or attendees and whether it is given in embodied or not embodied form. In the legal literature as well as in findings of the courts one can find the notion that declarations of intention via Internet can generally be considered as declaration (embodied) under absentees. 10 Another view makes a further distinction of the different Internet services into one-way- and dialog-exchange. 11

To distribute the risk of loss, delay or mutilation of the declaration of intention adequately between sender and receiver, the latter view seems more proper due to the multitude of communication possibilities on the Internet.

1.1.3 One-way- and dialog-exchange (Einweg- und Dialog-Verkehr)

With one-way-traffic one understands those forms of communication where an imme- diate communication contact is missing due to a spatial and temporal separation. The most common form of one way traffic on the Internet is the communication via e-mail. Due to the spatial separation it is considered as declaration of intention under absentees. The actual entry is determined by the reception- or entry-theory of the 6 Cp. BGHZ 65, 13, 14; LARENZ/WOLF, §26 Rn. 3 7 Cp. SÜßENBERGER, p. 136 8 Cp. BETTENDORF, p. 9 9 Cp. BROX, AT, Rn. 147; SÜßENBERGER, p. 139 10 Cp. KÖHLER/ARNDT, p. 94; HOEREN/SIEBER/MEHRINGS, Rn. 73;

cf. BGH, 14.12.1995, IX ZR 242/94, NJW 96, 1062; also see AG Ulm, 29.10.1999, 2 C 1038/99 11 Cp. GLATT, p. 34 et sqq.; HERGET/REIMER, p. 1291

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common law based on § 130 BGB: the declaration of intention must have reached the sphere of control of the receiver, so that under normal circumstances and conventions he could have gained notice, not whether he actually took notice. 12

With dialog traffic a mutual, simultaneous communication takes place between the parties, which makes it possible to react immediately on received information. Also it allows one enquiring whether declarations were received, perceived and understood. Examples are video conferences or Internet telephony. Despite a spatial separation of the parties dialog traffic can be understood as communication under attendees, comparable to telephony since there are contemporaneous transmission and communication contact. Therefore the entry according to § 147 I 2 BGB complies with the theory of notice (Vernehmungstheorie): 13 an entry is completed when the receiver

correctly and completely takes note of the content of declaration. If the declaration of intention is elusive and not embodied, increased protection of the receiver seems justified. In turn if he has the possibility of saving the declaration and therefore embodying it, it is appropriate to judge the entry time by the reception theory (Empfangstheorie). 14 To follow, the types of one-way-exchange will be illustrated then

those of dialog-exchange.

1.1.3.1 Entry of a declaration of intention by e-mail

a) Area of Reception According to reception theory, the sphere of control (Machtbereich) includes mail box, PO Box and answering machine. 15 However it is questionable whether the electronic

mail box on the mail server of the provider also belongs to the reception area of the receiver. Since the provider has the possibility to close down the mail server, delete e- mails or deny access to ones account, he concentrates the actual sway over the mail server on himself. The electronic mailbox however is destined to receive the e-mails of the addressee and therefore it belongs to the addressee’s sphere of risk. 16 It is incumbent

to the receiver to choose a reliable provider which can ensure him a safe retrieval of received and saved e-mails at any time.

12 Cp. LARENZ/WOLF, § 26 Rn. 17 13 Cp. LARENZ/WOLF, § 26 Rn. 13,17 und 33 14 Cp. MEDICUS, Rn. 288 15 Cp. PALANDT/HEINRICHS, §130 Rn. 5 16 Cp. KOCH, p. 142; a.m.

Conclusion of a contract on the Internet 5

If a businessman (§ 14 I BGB) appears in legal and commercial relations with his e-mail address, he demonstrates that an entry of legal consequence (§ 130 I BGB) can be carried out in his mailbox. 17 A restriction to other means of communication and an

exclusion of the Internet must be expressed explicitly to each business partner ("opt out"). The opposite applies to the private consumer (§ 13 BGB); for his protection it must be made clear ("opt into"), that he wishes communication via Internet – the consumer may already show this by establishing contact to a business partner via e- mail. 18

b) Possibility of Notice The possibility of notice is given when the e-mail is stored in and can be retrieved from the electronic mail server. The accomplishment of the entry does not occurs until one can count on its notice. The prevailing opinion distinguishes between e-mail use in the private and business sector. 19 In the course of business one assumes that e-mails are

obtained regularly, so one concludes that entry of a declaration occurs immediately with its saving within the normal working hours. This is criticized to that effect that the businessman cannot be expected to check his mailbox permanently for recently received e-mail. The common expectation is that a business man would check for incoming mails at least twice a day. Consequently an e-mail with a declaration is considered to take effect by the closing hour of the business day. If a message is not sent within the usual business hours, it is regarded to be delivered with the beginning of the next business day. 20

According to the prevailing opinion it cannot be expected that the private consumer would check his mailbox more than once a day, normally within the afternoon hours. Otherwise it could cause him significant expenditure in time and cost to establish a connection to the mail server more than once per day. To protect the consumer, an e- mail is regarded to be delivered within the next day. 21

However, this is only valid if the private consumer has "released" his electronic mail address and explained that he may be contacted this way. If he has not, the entry concludes according to the theory of notice: the declaration takes effect when the 17 Cf. OLG Köln NJW 1990, 1608 (Btx); cp. KRÖGER/GIMMY, p. 69 18 Cp. DÖRNER, AcP 202 (2002), 368 19 Cp. DÖRNER, AcP 202 (2002), 368 et sqq.

20 Cp. DÖRNER, AcP 202 (2002), 369; CORDES, p. 110 et sqq.; SÜßENBERGER, p. 168 21 Cp. ERNST, NJW-CoR 1997, 166; WENDEL, p. 91