Volume 6, Number 23, Page 1
Electronic Commerce in the Western Hemisphere: An Ongoing Series
In this edition of the series, experts from throughout the Americas discuss the implications to electronic transactions of a “mixed contract situation.” In this context, a mixed contract situation implies disagreement among the parties as to whether civil or commercial law is applicable. The issue is of varying significance depending on the country in question, as is evident below. In light of this fact, a number of Latin American countries, such as Colombia, are adopting new legislation to address specifically such issues and create greater uniformity. For further information on this subject, contact Mariana Silveira (msilveira@natlaw.com) or Francisco Laguna (flaguna@natlaw.com).
Question: In a “mixed contract situation,” in which one party is governed by commercial law and the other is attempting to be governed by its civil code, could a party to an e-commerce transaction in your jurisdiction successfully argue that the transaction is governed by the applicable civil code and hence that it is under no obligation to enforce the e-commerce transaction?
ARGENTINA: D.C. Bunge
Under current Argentine law, in a “mixed contract situation,” general contract law principles are applied to both civil and commercial contracts. Thus, the Commercial and Civil Codes would be applicable. In addition, under the general principles of the Civil Code related to contract formation, it can be argued that a local court has the discretion to reject trade customs and practices when an aggrieved party to an e-commerce contract claims that a binding agreement was not entered into, provided such argument is based on valid consent (consentimiento) grounds, despite evidence of existing electronic records.
BRAZIL: R. Nogueira, L.H. Ventura
In Brazil, both the Civil and Commercial Codes are applicable to all commercial transactions. However, the Civil Code is only secondarily applicable to such transactions; the primary source of law is the Brazilian Commercial Code. Moreover, the term “e-commerce” embraces both commercial and civil relationships, similar to the rendering of a service. Thus, in a “mixed contract situation,” a party to an e-commerce transaction could not successfully argue that the transaction is solely governed by the applicable civil code, to the exclusion of commercial law.
BRAZIL: R. Lemos
Article 121 of the Brazilian Commercial Code provides that Civil Law rules and provisions regulating contracts and agreements in general are applicable to commercial contracts, unless any modification or restriction shall be set forth herein1. Consequently, despite theoretical divisions, the line between Brazilian civil and commercial laws has been effectively blurred.
The Brazilian Commercial Code was enacted in 1850. As a result, it requires complementary civil provisions in many instances. Accordingly, courts refer both to Civil and Commercial provisions when deciding commercial cases. Arguing whether a case involving e-commerce should be decided under civil or commercial law is of no consequence; the courts may apply commercial or civil provisions as they see fit.
A good example of the integration of Brazilian civil and commercial law is the recent Civil Code Project2 currently being considered by the Brazilian Senate. The bill proposes to unify civil and commercial contracts, as well as general obligations, in a single code regimen. The Civil Code project would unify all commercial and civil obligations in a single statute, codifying existing practice.
Therefore, with respect to electronic commerce, classifying certain transactions as civil or commercial is irrelevant. If the Senate enacts the New Brazilian Civil Code (as expected), the current Code and the entire First Part of the Commercial Code will be immediately repealed, so that matters involving commercial contracts, practices and obligations will be uniformly regulated by the new Civil Code.
In principle, once consent has been achieved, a contract exists, thus defining the rights and obligations of the parties.
Take for example a mixed contractual situation, wherein one party seeks to enforce commercial law provisions, and the other advocates application of the Civil Code. Such contradictory claims would have no legal basis: the only relevant legal issue is whether valid consent exists.
CHILE: J. Otero
The most problematic aspect of e-commerce litigation is determining the applicable evidentiary rules. Article 1709 of the Chilean Civil Code stipulates that all acts or contracts involving the delivery of goods or services worth over two monthly tax units (currently equivalent to about US$100) must be evidenced in writing. Such requirement prevents the submission of witness testimony/depositions on any issue related to the formation of the contract. In such cases, however, one may argue that the requirement of a “writing”, despite contrary interpretations of such term, is satisfied by electronic contracts.
COLOMBIA: F. Reyes
Colombian legal doctrine and jurisprudence have analyzed extensively the problems relating to the dual civil and commercial aspects of private law. The lack of solid, objective criteria to determine whether a particular transaction is civil or commercial in nature makes it difficult to establish the applicable substantive law.
The recently enacted law on e-commerce, Law 527 of 1999, clearly delineates its applicability. Article 1 provides that the Law shall be applicable to any kind of information in the form of a data message, except for the following situations:
a. Within the context of duties assumed by the Colombian State in international conventions or treaties; or
b. Within the context of any required written warnings to be printed on certain products, related to risks produced by the sale, use or consumption thereof.3
This provision makes clear that all information reduced to data format is subject to the law, regardless of whether it is civil or commercial in nature. Nevertheless, the existence of the aforementioned dichotomy within Colombian private law warrants a brief discussion.
The so-called “objective” system of Commercial Law analyzes the underlying act to determine whether civil or commercial law applies. Article 20 of the Commercial Code lists numerous acts deemed to be mercantile. Such list includes: transactions for the supply or exchange of goods or services; distribution agreements; commercial representation or agency; factoring; leasing; construction; investment; financing; banking; insurance; several forms of industrial or business ventures; and carriage of goods or passengers by air, sea, rail or road.
With regard to “mixed contract situations,” Article 22 of the Commercial Code states that if “an act is considered mercantile for one of the parties, it shall be regulated by commercial law”. This principle establishes the priority of mercantile rules over civil law provisions. Consequently, for a party to argue successfully that an act is governed by the Civil Code, the act cannot fall within the broad purview of Articles 20, 21 and 22 of the Commercial Code.
ICC: J. Avellan
The ICC is a business organization and as such represents the commercial sector. For this reason, many ICC instruments delegate the determination of the nature of the transaction to the applicable domestic law, or limit their scope to commercial parties and transactions, generally excluding application to consumers and non-merchants. For example, the General Usage for International Digitally Ensured Commerce (GUIDEC (1997)) expressly assumes that the provisions shall only apply to commercial parties operating under lex mercatoria.4 Some instruments, however, expressly deal with merchant-consumer transactions, such as the ICC International Code of Direct Selling (1999). Nevertheless, the ICC has not expressly addressed the enforceability based on the diversity between commercial and civil law.
MEXICO: O. Becerril
In a mixed contract situation, the party governed by the Mexican Civil Code cannot successfully argue that an electronic transaction is void. The Civil and Commercial Codes are complementary, and both apply to all commercial transactions.
SPAIN: F. GALINDO
In Spain, the problem lies in whether the courts are willing to accept computer records to evidence basic contract elements, such as consent. To date, the courts have adopted a case-by-case approach. For example, two recent Supreme Court decisions recognized the validity of e-contracts, provided such contracts had secured electronic signatures.
USA: O.T. Johnson, I. Rubinstein
In the case of the United States, a party to an electronic commerce contract occurring within this country would generally be bound by the contract.
This question is inapplicable to the U.S., but to answer the general point, a party to an e-commerce contract is bound under U.S. law.
