Electronic Commerce in the Western Hemisphere: An Ongoing Series

In this edition of the series, Latin American legal scholars discuss the extent to which private agreements may govern e-commerce transactions, and offers and acceptances, in general. Given the length of the experts' responses, this topic has been divided into two segments. It will be concluded in the following issue of the Trade Report. For further information on e-commerce, contact Mariana Silveira (msilveira@natlaw.com) or Francisco A. Laguna (flaguna@natlaw.com).

Agreements and Private International Law (conflicts of law rules) - In the absence of specific legislation and/or market practices, do parties resort to private agreements to govern their e-commerce transactions? Are these agreements enforceable? What rules regulate offers and acceptances? (Please describe) Are model or master agreements that regulate e-commerce transactions between private parties used in your country?

D.C. Bunge - Argentina

E-commerce is just burgeoning in Argentina. Consequently, electronic consumer transactions tend to be international. Regardless of the nationality of the parties, the Consumer Protection Law No. 24.240 applies to e-agreements. This law does little to promote e-commerce private agreements because it renders void contractual clauses that establish disclaimers considered to be unconscionable as well as clauses that stipulate rights considered to be unduly one-sided.

Second Issue: "What rules regulate offers and acceptance?"

The Civil Code prescribes general rules that govern contract formation. (Civil Code, Articles 1144 - 1159). Such rules are applicable to civil and commercial contracts. In addition, consumer transactions are also subject to the Consumer Protection Law referenced above which governs, among other things, how and when a contract is formed. Argentina is also a party to the Vienna Convention on the International Sale of Goods (ratified by Law N° 22.765), which contains specific rules on contract formation. If a particular transaction falls within the Convention's definition of an international sale of goods, the treaty provisions would apply.

Third Issue: "Are model or master agreements that regulate e-commerce transactions between private parties used in your country?"

Model agreements are not used for consumer transactions. Specific sectors or industries use them if they want to abide by accepted international standards.

Fourth Issue: "Does your legal system allow the parties to a commercial transaction to choose the applicable law irrespective of a nexus between the legal jurisdiction and the transaction?"

The Argentine legal system allows parties to private commercial transactions to choose the applicable law, provided no public order issues are raised. With regard to international contracts, caselaw allows the parties additional discretion.

R. Nogueira / L.H. Ventura - Brazil

In the absence of specific legislation and/or market practices, parties resort to private agreements to govern their e-commerce transactions.

If the agreements are in writing and have fulfilled certain legal requirements, they are enforceable. However, an agreement executed exclusively by electronic means only constitutes circumstantial evidence of a binding agreement.

One of the rules that regulates offers and acceptances is the Introduction to the Civil Code Law (4657/42), which stipulates that "the obligation resulting from a contract arises in the place of the offeree's residence" (Section 9).

In Brazil, private parties do not use model or master agreements for e-commerce transactions.

J. Remsu - Canada

In Canada, some parties have entered into private agreements (such as trading partner agreements) to govern their e-commerce transactions. In principle, these agreements are enforceable, subject to mandatory provisions of law, although the enforceability of these agreements has not been judicially tested to date. Nonetheless, these agreements are a means used by commercial parties to plan e-commerce relationships and to manage risk associated with such operations.

With respect to offers and acceptances, the common law, as applied in Canada, does not have any general rule about when and where electronic messages are received. Therefore, the time and place of making an offer and the acceptance of the offer will depend on the facts of the case and the particular method of communication used.

J. Otero - Chile

Private agreements have not been used to fill the void of specific regulations or business practices applicable to electronic commerce.

However, there are some indications that we are headed in that direction. For instance, the Chamber of Commerce of Santiago is fostering a self-regulation project for electronic transactions and is promoting an arbitration system to resolve conflicts.

F. Reyes - Colombia

Unless specifically prohibited by law or by market practices, private parties may enter into any contract. As such, the Colombian legal system permits parties to enter into private agreements, which agreements include electronic contracts.

As other parts of this series have discussed, Private Law is plagued by the dichotomy between the Civil and Commercial Codes. This legal duality is particularly troublesome when applied to contract law due to duplicative regulations applicable to many private agreements. The determination of which substantive regime governs a particular transaction is difficult and subjective.

Article 1 of the Commercial Code stipulates that commercial law regulates all matters related to commercial transactions and merchants. However, if the Commercial Code does not provide specific legislation or guidance, Article 3 of the Code allows for the enforcement of commercial practice, subject to certain restrictions1. In order for commercial customs to be legally binding, the legal requirements set forth in Articles 3 and 6 must be satisfied.

If specific commercial legislation or commercial customs are applicable, the Civil Code is used to supplement such laws. Article 2 of the Commercial Code states that commercial issues that are not subject to the Commercial Code shall be governed by applicable civil law. If neither civil nor commercial legislation can be appropriately applied to a specific transaction, the parties can enter into any licit private agreement pursuant to the principle of "self-ruling determination." Both the civil and the commercial codes provide for this principle. For instance, the Civil Code recognizes that private contracts that respect third party rights and public policy contribute to the general welfare and evolution of the society. Therefore, the Colombian legal system strives to guarantee private parties the greatest contractual freedom possible. This liberty is extended to all legal, economic transactions.

Article 1602 of the Civil Code provides that private parties may agree upon the nature and breadth of the contracts they enter into. This principle implies that private parties may decide all relevant aspects of any civil or commercial agreement. For example, they can decide whether to enter into a specific agreement or to act directly or through an agent. In addition, they are free to choose the form and wording of the contract, the applicable dispute resolution mechanisms and the applicable law.2 Indeed, Article 1602 provides that, "Any duly executed contract is equivalent to a mandatory law. Such contract cannot be invalidated in the absence of the parties' mutual agreement or upon legal cause."

Despite the fact that the law affords private parties extensive contractual rights, some legal boundaries must be respected. For example, third party interests and public policy are highly protected by both Civil and Commercial Codes. (See, e.g., Civil Code, Articles 1518, 1524, 1741, 1742.)

The Commercial Code regulates contract formation and includes provisions controlling offers and acceptances. Article 845 defines an offer as "the framework for a juridical transaction made by one party to another, which must contain the essential elements of the transaction and be delivered to the offeree. An offer is considered delivered when any adequate means to convey it to the offeree have been used."

Depending on the manner in which it is formulated, an offer may be express or implied. When an offer is implied, the offeror is not required to follow a specific or prescribed course of action. Similarly, the offeree may accept the offer expressly or tacitly. Article 854 of the Commercial Code establishes that "tacit acceptance, as evidenced by an unequivocal fact of performance of the proposed contract, shall bear the same effects as an express acceptance, provided the offeror is aware of such tacit acceptance, in accordance with Articles 850 through 853, as applicable."

An offer may be made in the presence of the offeree or in his absence. This distinction is essential to determine the validity of the offer and the time period within which the offer must be accepted. For instance, if the offer is made in the presence of the offeree, it must be accepted or rejected immediately.

The term "presence" as used in Article 8503, does not necessarily imply physical presence. For example, offers made by telephone are considered to have been made in the offeree's presence. In this regard, it is arguable that a broad interpretation of the article requires only direct and immediate communication between the parties, regardless of the means of communication.

The objective content of an offer is regulated by Article 845 of the Commercial Code. The offer must include the essential elements of the underlying transaction. Such elements are enumerated in Article 1501 of the Civil Code. From a subjective standpoint, the offer must express the intention of the offeror to be bound by the transaction proposed.

An offer must be delivered in accordance with Article 845. This provision establishes that "it shall be understood that a proposal has been delivered when any adequate means have been used to convey it to the offeree." Offers between absent parties are made when they are remitted (Ibid.).

The term of offers that are not made in the offeree's presence is controlled by Articles 851 and 852 of the Commercial Code. These provisions stipulate that an offer will be valid for a term of 6 working days. If the offeror and the offeree are in different locations, such term is increased. It is noteworthy that Article 853 allows private parties to set a specific term within which the offer must be accepted.

Once communicated, an offer is binding upon the offeror (Commercial Code, Article 846). If the offeror revokes the proposal, he will be liable for any resulting damages. Furthermore, as a general rule, the offer survives the offeror for the term determined by the parties or established by the code.

The Commercial Code further regulates binding and non-binding offers. Binding offers can be classified into:

a. Typical Offer: offer in which both parties are identified.

b. Indefinite offer directed to a determined party: a person can offer the performance of several different business transactions to a certain person. Such party can accept any or all of the proposed transaction.

c. Exhibition of Merchandise: Articles 8484 and 8495 govern this subject.

d. Fixed Price Public Offer: Such offers are binding upon the offeror for one day. (Article 848).

e. Public Offer of Prize or Reward: Although not an offer for a proposed transaction, offers of prizes or rewards are considered binding (Article 8566).

The Commercial Code also defines non-binding offers:

a. Offers between unidentified parties: Article 847 stipulates that offers between unidentified parties are non-binding.
b. Bids: In all cases of public or private bidding, the bid documents shall serve as a contract proposal and each bid shall involve the execution of a contract, subject to better, more competitive bids.

An acceptance of an offer is the consent of the offeree to enter into the transaction. In the absence of specific legal requirements, an acceptance results in the formulation of the proposed transaction.

As discussed above, implied acceptance, as contemplated by Article 854, is manifest by unequivocal acts on the part of the offeree which demonstrate the offeree's willingness to enter into the transaction. As a general legal rule, silence does not constitute acceptance.

In order for an acceptance to be valid , the offeree must comply with some requirements:

1. Acceptance must be pure and simple. An acceptance which introduces changes to the original offer is considered to be a new offer.
2. Acceptance must be expressed within the legal timeframe. If the term prescribed or agreed upon expires, acceptance is considered a new offer.
3. Acceptance must be manifested in accordance with the rules regarding presence or absence of the offeree.

1 "Mercantile usage shall enjoy the same authority as commercial law, provided it does not actually or tacitly conflict with such law and that the practice in question is public, uniform and generally applied over time in the place where the obligations are to be fulfilled or where the relations which must be regulated arise. In the absence of local usage, the general usage in the country shall be taken into account provided it meets the requirements of the foregoing paragraph." (Informal Translation.)

2 Ospina Fernández, Guillermo, "Teoría General del Contrato y de los Demás Actos o Negocios Jurídicos"; Editorial Temis, 1994. Pg. 13

3 "A verbal proposal for a business transaction in the presence of the intended parties must be accepted or rejected immediately after it is heard. A proposal made by telephone shall be assumed, for acceptance or rejection purposes, to have been made in the presence of the intended parties."

4 "Offers made by merchants in their showcases, counters and other business facilities with indication of price and of the goods being offered, shall be binding upon them as long as such goods continue in public display. The same shall be true of any public offer of one or more specific goods or of a certain item, at a fixed price, until the day following the announcement."

5 "If, at the time of acceptance, the goods publicly offered have been sold out, the offer shall be regarded as reasonably concluded."

6 "The public offer of a service or bonus shall always be obligatory provided its conditions are satisfied."