Intellectual Property Law

Computer Contracts and International Law

By Martha L. Arias

The United Nations (UN) Convention on Contracts for the International Sale of Goods (CCISG) came into force on January 1, 1988. It applies to contracting parties located in different countries and was issued to foment international trade. CCISG has been ratified for most countries including the United States and the majority of European countries, except United Kingdom and Ireland.  Contracting parties may exclude application of this convention or apply those parts of the convention best suitable for the parties' objectives.  This convention applies only to contracts for the sale of goods, even if celebrated through the use of the Internet.  Contract principles included in CCISG try to incorporate those recognized by civil law and common law systems. For instance, the definition of goods incorporated in this convention reflects that definition applicable in civil law and common law systems; that is, tangible objects or articles. Thus, software incorporated in a tangible form constitutes goods but software electronically delivered does not constitute goods.  This is the current approach in the United States -a common law system- and the European Union member states -mostly made of civil law system with some few exceptions.  Companies celebrating computer contracts at an international level should compare their countries' basic contract laws with those in the CCISG and determine which of them could be more advantageous.  For example, CCISG precludes open price contracts just as the U.S. Uniformed Commercial Code requires a price to be set for a contract to be formed.  Hence, some countries may allow open price contracts.   Also, the CCISG allows irrevocable offers while under some countries' contract law these offers are prohibited.

The UN Commission on International Trade Law (UNCITRAL) developed the United Nations Conventions on the Use of Electronic Communications in International Contract (UECIC), which the UN Assembly approved in 2005.  Many countries have approved UECIC, but given is recent enactment a great number of countries is still within the ratification process. UECIC's objective is facilitating the use of electronic communications in international contracts.  This convention specifically applies to any time of electronic communication, including data messages, used when celebrating international computer contracts; the only requirement is that the parties to these contracts must be located in different countries. Yet, some critics argue that this requirement may be easy to simulate given the contracts' electronic nature. This is despite the convention requirement that the parties must disclose their location. Some of the specific benefits UECIC offers are that the writing and signature requirement (commanded by some contract laws) are satisfied by the existence of the electronic communication.  UECIS also establishes rules about the dispatch and receipt of an electronic communication for purposes of determining when a contract is formed.

Full post as published by IBLS Internet Law Blog on June 03, 2009 (boomark / email).