This is the third lecture in the electronic transactions law lecture series

1. Electronic Transactions Law
ELECTRONIC CONTRACTS
1 Department of Commercial Law
University of Cape Town

2. INTRODUCTION
 Electronic contracts are wholly or partially negotiated &
concluded through data messages (e.g. email, sms,
websites)
Electronic Transactions Law
 They may be negotiated and concluded by natural persons
(as principals or agents) or by electronic agents
(automated transactions)
 However the following transactions may not be concluded
electronically:
1. Sale/long-lease of land
2. Wills
3. Bills of Exchange
s4(3) & Schedule 1 ECTA
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3. CONTRACT IN SA LAW
 Essentalia for valid contract:
1. Offer & Acceptance = Meeting of minds/consensus between
parties
Electronic Transactions Law
2. The parties must have contractual capacity
3. The agreement must be both legally and physically possible
4. The agreement must comply with any formalities prescribed by
law
 Validity may be affected by misrepresentation, mistake or
duress
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4. TIME AND PLACE OF CONCLUSION OF
ELECTRONIC CONTRACTS
 NB re Jurisdiction, Applicable Law, Lapsing of Offers.
 Information/Expedition/Reception/Objective
Theories
Electronic Transactions Law
 s22 ECTA: reception theory applies to electronic
transactions
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5. ECTA- RECEPTION THEORY
 Sending: s23(a) :
a data message, must be regarded as having been sent
by the originator, when it enters an information system
Electronic Transactions Law
outside the control of the originator or, if the originator and
addressee are in the same information system, when it is
capable of being retrieved by the addressee.
 Reception: s23(b) :
a data message must be regarded as having been
received by the addressee when the complete data
message enters an information system designated or used
for that purpose by the addressee and is capable of being
retrieved and processed by the addressee.
Case: Jafta v Ezemvelo KZN Wildlife [2008] JOL
22096 (LC) 5

6. ECTA- RECEPTION THEORY: PLACE OF
RECEIPT
 s 23(c): ‘a data message must be regarded as having
been sent from the originator’s usual place of residence
or business and as having been received by the
Electronic Transactions Law
addressee, at the addressee’s usual place of residence
or business’.
 s25: attribution of data message (originator himself/
authorised agent/automated system programmed by self
or authorised agent) *Automated Transactions
 s 26(1): the agreement is valid upon receipt of the
acceptance and it is not necessary for the addressee to
acknowledge receipt.
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7. ONLINE AGREEMENTS
 Categories:
Electronic Transactions Law
 Contracts for sale of goods
 Contracts for the supply of digitised products
 Contracts for the supply of services/facilities
 Manner of Acceptance:
o Terms and Conditions: Shrink Wrap, Click-wrap and
Browse-wrap contracts which refer to the way in which the
contracts are concluded more so than the content thereof.
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8. SHRINK WRAP & BROWSE-WRAP
CONTRACTS
 SHRINK WRAP: e.g. software licenses printed on paper,
placed within the shrink-wrap of the software package itself.
1. Purchaser bound upon opening of packaging
Electronic Transactions Law
2. May be voidable if buyer’s attention not drawn to terms and
conditions
 BROWSE WRAP: binds the user of a website to a contract
created by the user's mere browsing of the website.
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9. CLICK-WRAP CONTRACTS
 agreements built into
Internet web pages. The
purpose of these
agreements are wide
Electronic Transactions Law
ranging, but they are
commonly used for:
• Accepting term of use, e.g.
regulating access to
websites with an adult
content
• Containing exclusion
clauses, in an effort to limit
or deflect liability from the
site owners or
administrators
• License agreements
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10. TERMS AND CONDITIONS
 Binding if not read? What
is the position in SA
Law?
 Ticket cases – Durban’s
Water Wonderland (Pty)
Electronic Transactions Law
Ltd v Botha and Another
1999 1 SA 982 A
 reasonable
measures to bring
the content thereof to
the attention of the
client
 terms and conditions
therein contained
constitute binding
contractual terms.
 opportunity must be
given to accept or
decline
 highlight unusual or
unexpected terms
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11. AUTOMATED TRANSACTIONS S20 ECTA
 an electronic transaction conducted or performed, in whole or
in part, by means of data messages in which the conduct or
data messages of one or both parties are not reviewed by a
Electronic Transactions Law
natural person in the ordinary course of such natural person’s
business or employment
 A party (X) interacting with an electronic agent to form an
agreement is not bound by the terms of the agreement unless
those terms were capable of being reviewed by a natural
person representing that party (X) prior to agreement
formation. (S20(d))
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12. AUTOMATED TRANSACTIONS S20 ECTA
 no agreement is formed where a natural person (X) interacts
directly with the electronic agent of another person (Y) and
has made a material error during the creation of a data
Electronic Transactions Law
message and—
(i) the electronic agent did not provide that person (X) with an
opportunity to prevent or correct the error;
(ii) that person (X) notifies the other person (Y) of the error as
soon as practicable after that person (X) has learned of it;
(iii) that person (X) takes reasonable steps, including steps that
conform to the other person’s (Y) instructions to return any
performance received, or, if instructed to do so, to destroy that
performance; and
(iv) that person (X) has not used or received any material
benefit or value from any performance received from
the other person (Y). 12

13. ENFORCEABILITY
 Interpretation of terms and conditions, including
disclaimers, exclusions & limitations of liability
(traditional contract law approach)
Electronic Transactions Law
 Seeking damages for breach
 Actions / Applications – applications inappropriate for
damages
 Problems with damage claims – legal costs, uncertainty of
outcome, determining quantum, damage may be less than
cost needed to recover it
 Uniform Rules of Court Rule 5 – service of summons
outside South Africa: time consuming and frustrating process
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14. ENFORCEABILITY
Damages Specific Performance
ECTA’s Influence on
Electronic Transactions Law
 Defendant not in SA –
recovery of how to enforce?
damages: Complications iro
 Section 43 – Uniform Rules of Court
Cancellation Rules
 Section 44 –  ECTA: Section 46 –
Cancellation during
statutory rights to
cooling off period
specific performance
 Section 43(5) –
Damages or loss to customers in some
incurred due to internet related
payment system of transactions.
supplier
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15. Electronic Transactions Law
Electronic Transactions Law compiled by Caroline B
Ncube is licensed under a Creative Commons Attribution-
NonCommercial-ShareAlike 2.5 South Africa License.
To view this a copy of this license visit
http://creativecommons.org/licenses/by-nc-sa/2.5/za/
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