UN Convention to help make business contracts electronically

The draft convention, comprising 14 articles, is aimed at enhancing legal certainty and commercial predictability where electronic communications are used to form international contracts.

Among other things, the provisions deal with: how to determine a party’s location in an electronic environment; the time and place of dispatch and receipt of electronic communications; and the use of automated message systems for contract formation.

Other provisions contain criteria establishing functional equivalence between electronic communications and paper documents – including “original” paper documents – as well as between electronic authentication methods and hand-written signatures.

The negotiations will take place within the UN Commission on International Trade Law (UNCITRAL), which is the core legal body of the UN system in the field of international trade law.

The European Commission's Internal Market and Services Commissioner, Charlie McCreevy, said:

“Two things are certain. More and more companies of all sizes are active internationally and more and more business is being done electronically. We want EU businesses to be as well placed as possible to benefit. Giving Europe a strong voice in drawing up this Convention will contribute to making sure e-contracts can be drawn up with a minimum of fuss.”

The Commission intends to ensure compatibility between the draft Convention and the EU's E-commerce Directive of 2000, which includes provisions on contracts concluded by electronic means. The Commission noted: "Such compatibility between EU and international rules would create better legal clarity and security for European companies active outside the EU."