The treatment of errors in automated transactions under the ETEC Bill 2013

• Published date: 01 January 2016
• DOI: 10.10520/EJC196791
• Date: 01 January 2016
• Author: L.L. Ramokanate
• Pages: 99-132

THE TREATMENT OF ERRORS IN AUTOMATED

TRANSACTIONS UNDER THE ETEC BILL 2013

Ramokanate, L.L.*

Abstract

Being a species of electronic commerce, automated commerce

is emerging as the most preferable form of business. This fact

is evidenced amongst others by a worldwide increase in the

number of internet traders such as Amazon.com and

Kalahari.com who use computer systems to process and accept

purchase orders from the public. The transactions concluded

between online customers and the computer systems of online

traders are known in law as automated transactions. Apart

from the common problems of electronic contracts, it has come

to be realised that there is a uniquely higher than usual risk of

errors in automated transactions. These errors equally affect

both online buyers and online traders. Therefore, electronic

commerce legislation around the world has demonstrated a

keen interest in addressing legal issues arising from these

errors in an effort to promote online commerce. In this paper,

the author critically discusses the treatment of the various

types of errors in automated transactions under the Lesotho

Electronic Transactions and Electronic Commerce Bill 2013.

The paper also includes recommendations on how the

legislature, and the courts of law, can improve the position of

the law under this legislation.

Introduction

Errors will inevitably occur in the course of electronic contracting.1

The risk of electronic errors is even higher in automated

* LLB (NUL), LLM in Import and Export Law (NWU), LLD Candidate in

Trade and Business Law (NWU), ramokanatel@gmail.com.

1 Leng, T.K. “Website Pricing Errors: Who Bears the Risk of Mistakes” 2004 (20)

100 LLJ Vol. 24 NO. 1

transactions.2 An automated transaction is an electronic contract in

which at least one party is represented by an electronic device, e.g. a

communication system, as his “agent.”3 A distinguishing feature of

automated transactions is the absence of a human and the presence

of an electronic agent on at least one side.4 These errors may be

typological errors committed by the one who interacts with the

automated message system, by the user of the automated message

system while uploading information on the system, or errors

resulting from the malfunction of the system.

Computer Law & Security Report, pg 399.

2 Gabriel, H.D. “The United Nations Convention on the Use of Electronic

Communications in International Contracts: an Overview and Analysis” 2006

(11) Uniform Law Review Nova Scotia, pg 302.

3 Although these devices are referred to as electronic agents in legal

discourses, it is common cause that they are not agents proper, and

furthermore that the principles of the law of agency do not apply in their

instance because they are not humans, see UN, United Nations Convention

on the Use of Electronic Communications in International Contracts, United

Nations Publications, New York, 2007, pg 69 para [212], stating that “while

the expression “electronic agent” had been used for purposes of

convenience, the analogy between an automated message system and a

sales agent was not appropriate. General principles of agency law (for

example, principles involving limitation of liability as a result of the faulty

behaviour of the agent) could not be used in connection with the operation

of such systems.” For those who hold a contrary view, see generally

Fischer, J.P. “Computers as Agents: A Proposed Approach to the Revised U.C.C.

Article 2” 1996-1997 (72) Indiana Law Journal, pgs 545-570.

4 See UN, United Nations Convention on the Use of Electronic Communications

in International Contracts Ibid, pg 40 para [104]. The standard definition of

an electronic agent, also known in law as an automated message system is

“…a computer program or an electronic or other automated means used to

initiate an action or respond to data messages or performances in whole or

in part, without review or intervention by a natural person each time an

action is initiated or a response is generated by the system.” See Article 4

(g) of the United Nations Convention on the Use of Electronic Communication

in International Contract (2005).

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The high chance of errors in automated transactions has been

attributed to two main causes, namely the instantaneous nature of

these transactions and lack of human review. Automated

transactions are instantaneous in the sense that, when dealing with

an automated message system, “[o]ne may mistakenly press the

“yes, I accept” button which makes him involved in a contractual

relationship that he did not intend to make.”5 The mere click of this

button, whether accidental or otherwise, results in the originator

instantly losing control over his message, and thus in turn losing a

chance to correct any errors therein. As most automated message

systems are not programmed to identify or pick out errors in

communications which they receive, these systems will often just go

ahead and conclude agreements despite these errors. Some of these

errors will be so glaring that had the contract been concluded

between human beings on both sides, they would have been easily

identified and corrected before the contract is concluded. As

UNCITRAL6 explains “…in a transaction between individuals there

is a greater ability to correct the error before parties have acted on

it. However, when an individual makes an error while dealing with

the automated message system of the other party, it may not be

possible to correct the error before the other party has shipped or

taken other action in reliance on the erroneous communication.”7 It

is not only those who contract by means of automated message

systems who are at the risk of errors, ―on the other side of the coin,

even the users of these systems stand a high chance of errors. It is

5 Masedeh, A. and Bashayreh, M. Contemporary Legal Issues of Contract

Formation by Online Orders, available at

http://sljournal.uaeu.ac.ae/issues/31/docs/6.swf (last accessed on 10

December 2015).

6 United Nations Convention on International Trade Law.

7 UN, United Nations Convention on the Use of Electronic Communications in

International Contracts Ibid, pg 73 para [227].