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With the growth of e-commerce and its emergence as an indispensable element of commercial life, the number of contracts concluded over the internet is increasing day by day. This article explains the concept of the electronic contract, examines its legal characteristics and how it is formed, and, focusing on the legal structure of electronic contracts, considers when they produce their provisions and consequences and whether they are valid.
Introduction
With the growth of e-commerce and its emergence as an indispensable element of commercial life, the number of contracts concluded over the internet is increasing day by day. Through the relevant articles of the Turkish Code of Obligations (TCO), the Law on Consumer Protection and the Law on the Regulation of Electronic Commerce, electronic contracts have found a place in our legislation, and regulations are being made in our law in parallel with developments around the world.
This article explains the concept of the electronic contract and addresses its legal characteristics and the manner of its formation. It then examines contracts concluded by electronic mail and contracts concluded through web pages, in terms of when they are deemed to have been formed, when they produce their provisions and consequences, and their validity.
What Is an Electronic Contract?
A contract is a legal transaction consisting of reciprocal and mutually corresponding declarations of intent by the parties, aimed at producing a particular legal consequence (TCO Article 1). Electronic contracts, in turn, are contracts in which the declaration of intent of both parties, or of one of them, is made by digitising text, images, sound and other data, and is communicated to the other party in that form. The difference between electronic contracts and classical contracts is that the parties’ declarations of intent are conveyed to one another via the internet.
Whether a contract is called an electronic contract does not depend on its being concluded over the internet. Contracts concluded by means of electronic communication tools such as the telephone, fax, television and computer are called electronic contracts. Today, however, most electronic contracts are concluded over the internet. Contracts concluded over the internet may be formed through websites, by electronic mail, through electronic data interchange systems and similar methods. It is possible to exchange declarations of intent and to conclude a contract even through internet telephony, teleconferencing and internet chat conducted in chat rooms (Internet Relay Chat – IRC).
Apart from this difference, the elements of the electronic contract differ little from those of classical contracts. For this reason, in addition to the legislative provisions directly relating to electronic contracts, they are also subject to the contractual principles set out in the law of obligations.
Legal Nature and Formation of Electronic Contracts
Legal Nature of Electronic Contracts:
Contracts may be divided into two groups: contracts between persons present and contracts between persons not present. Contracts between persons present are those in which the parties make their declarations concerning the formation of the contract face to face. Contracts between persons not present are those in which there is a time interval between the declaration of the intentions relating to the formation of the contract and their reaching the addressee.
Although it is disputed in legal doctrine whether electronic contracts are contracts between persons present or between persons not present, the relevant legislative provisions show that this distinction is to be assessed by determining in what manner and at what time the electronic tools used at the stage of formation transmit the parties’ declarations to the other party. For example, while contracts concluded by e-mail and through websites are regarded as contracts between persons not present within the scope of TCO Article 11, contracts concluded through social media sites may, depending on the nature of the communication, be contracts between persons present.
In some cases, electronic contracts also take the nature of contracts of adhesion (katılmalı / iltihaki sözleşme). The concept of the contract of adhesion denotes contracts that are prepared on the basis of terms and conditions determined in advance by one of the parties and are therefore concluded by the other party without the possibility of discussing or altering this pre-prepared content unilaterally. In short, contracts of adhesion are contracts in which one of the parties determines the content and terms of the contract in advance and the other party can only choose between entering into the contract on those terms or not entering into it.
Almost all electronic contracts concluded over the internet are contracts of adhesion that have been prepared in advance by one of the parties, constitute standard terms and offer the addressee no possibility of negotiation. The other party can become a party to the contract only on condition that it accepts these predetermined terms and, in some cases, even provides the requested information and states its preferences.
Furthermore, pursuant to Article 48 of the Law on Consumer Protection No. 6502, since the parties conclude electronic contracts without being physically present in the same place, such contracts are also assessed within the scope of the concept of the distance contract.
Formation of Electronic Contracts
Under the Turkish Code of Obligations, for a valid contract to be formed, at least two parties must reciprocally make mutually corresponding declarations of intent. The Code calls one of the declared intentions an offer and the other an acceptance.
The declaration of intent that contains the essential points of the contract and carries the intention to be bound is called an offer, whereas acceptance is the declaration of intent that does not alter the offer and is in conformity with it.
Electronic contracts, too, are formed by the parties’ reciprocal and mutually corresponding declarations of intent. In electronic contracts, as in classical contracts, the contract is formed when a procedurally valid offer is accepted by the addressee. The addressee must accept the offer made to it, and the declaration of intent relating to the acceptance must reach the offeror. Declarations of acceptance that alter the terms of the offer now constitute a new offer.
The question to be discussed at this stage is how the parties’ declarations of intent are to be understood. As a rule, a declaration of intent is not subject to any form. The user may declare his or her intention by filling in a form on websites, by clicking on ‘I accept’, ‘I do not accept’ and similar buttons, or by sending the addressee an e-mail on the subject.
bb. Contracts Concluded by Electronic Mail
Although there are disputes as to how the addressee’s sphere of control is to be determined in respect of declarations of acceptance transmitted by electronic mail, there are views in legal doctrine to the effect that the declaration of acceptance is deemed to have been received at the moment the e-mail reaches the server or at the moment the e-mail is transferred to the addressee’s computer. For us to be able to say that the declaration of acceptance has entered the addressee’s sphere of control, the addressee must be able to be expected to become aware of the declaration.
Individual e-mails are messages sent to specific persons and are regarded in legal terms as similar to communications made by letter. Accordingly, when the sending of a message by e-mail satisfies the conditions required for the existence of a legally valid offer, it has the same legal status as sending it by ordinary post. Advertisements sent by e-mail for commercial purposes to a large number of persons without the recipients’ request may be regarded as an invitation to make an offer; however, the generally accepted view is that e-mails sent to more than one person are characterised as an offer.
A declaration of acceptance sent by e-mail is deemed to have been received at the moment it is recorded in the recipient’s mailbox, and the contract is thereby formed. In this case, however, the offeror’s e-mail address must have been open to, or permitted for, use by the recipient.
Since communication by electronic mail takes place between persons not present, an offer and an acceptance made by electronic mail can be withdrawn; however, for there to be a valid withdrawal, the declaration of withdrawal must reach the recipient before, or at the same time as, the offer or declaration of acceptance made previously. The coexistence of both the offer and the declaration of withdrawal in a person’s e-mail account poses no problem; in that case, however, the declaration that will prevail is the last message sent, provided that the person has not learned the content of the first message.
bbb. Contracts Concluded through a Website
Transactions made on websites are transactions in which the parties have no possibility of negotiating, asking questions or bargaining, and in which the addressee can only order, or decline to order, a product whose features it sees on the page. The buyer may make an offer by proposing to purchase a product it likes on the terms presented, or may form the contract by accepting an existing offer. However, in contracts made over the internet, it may be possible for certain provisions to be altered. Such alterations can be chosen by the party joining the contract only from among the alternatives presented by the website provider.
Although there are views that declarations made through a website are an invitation to make an offer, that view is not rigid. The generally accepted position is that whether declarations made on web pages are an offer or an invitation to make an offer must be determined by assessing the content of the website, the rules of good faith and all other circumstances.
In contracts formed through a website, the contract is deemed to be formed when the offer or acceptance sent reaches the addressee’s computer, or another device capable of accessing the internet, in a manner that allows the addressee to become aware of it. In other words, declarations sent through web pages must be deemed to have been received at the moment they are recorded on the addressee’s device. In this context, where the declaration on the website is regarded as an offer, the contract will be formed at the moment the addressee’s declaration of acceptance reaches the offeror; where the declaration on the website is regarded as an invitation to make an offer, the contract will be formed at the moment the declaration of acceptance reaches the offeror.
Our legislation permits contracts concluded over the internet to be formed by way of declarations of intent being made by electronic devices. There is no difference between electronic declarations of intent being made through direct human participation and their being made in a pre-programmed manner; in any event, the declared intention is regarded as the intention of a person.
Since contracts made through a website are formed between persons not present, the possibility of withdrawing offers and declarations of acceptance, although very limited in practice, exists in theory. Because of the speed of transactions made over the internet, this possibility diminishes in practice. However, the opportunity for a final review offered to the buyer immediately before the order is completed, for example, may be assessed within this scope.
Validity of the Electronic Contract
Under the Turkish Code of Obligations, contracts may in general be made freely, save in exceptional cases. However, where a formal requirement is prescribed for contracts concluded in the internet environment, it is necessary to ensure the validity of the contracts, to verify the identities of the parties and to secure the safety of legal transactions. While the identities of the parties can easily be established in classical contracts, in contracts concluded over the internet it is quite difficult to establish the parties’ identities, since the internet is a global, borderless e-commerce environment. In this regard, however, the accuracy of the identity details provided by the parties can be verified, in transactions made by credit card, by means of the credit card number, and by means of a digital signature or e-signature.
In addition to reciprocal and mutually corresponding declarations of intent, for a valid contract to be formed the legislator also requires conditions such as that the parties have capacity, that the contract does not contravene mandatory provisions, that its subject matter is not impossible and that it is not contrary to public morals.
In order to have legal capacity to act, which is an element of the validity of a contract, the parties must have full capacity. Since the vast majority of electronic contracts concluded over the internet are distance contracts having the nature of contracts between persons not present, it is difficult to establish whether the parties have capacity. In such cases, electronic contracts made by minors and persons under guardianship without the approval of their legal representatives will be deemed invalid.
Preservation and Storage of Electronic Contracts:
In order for electronic contracts to be valid and for disputes to be resolved, the communication between the parties must be verifiable and traceable. Electronic signatures, log records and timestamps can provide important evidence for proving the validity of contracts and resolving disputes. For this reason, when concluding contracts in the electronic environment, it is important that electronic signing is carried out and that log records and timestamps are correctly created and stored.
Electronic Signature: As set out in the Electronic Signature Law No. 5070, an electronic signature denotes electronic data that is attached to other electronic data or is logically linked to electronic data and is used for the purpose of authentication. An electronic signature confirms that the parties have given their approval to a particular document or contract and therefore proves the validity of the contract.
Log Records: Log records are files that record all activities in a system or network. These records may include users’ access information, transactions and other important events. Log records may constitute important evidence for proving the validity of contracts made in the electronic environment. For example, log records may be used to determine on what date and at what time a contract was accepted.
Timestamp: A timestamp is a digital marker that verifies the date and time at which a particular event occurred. This marker records the time of the event in a manner that cannot be altered or is difficult to alter. Timestamps are used to prove that contracts accepted in the electronic environment were concluded on time. A timestamp may be used to determine when a contract was signed or accepted.
Many countries have legally recognised technological tools such as electronic signatures and timestamps and have regulated their use within certain standards. For example, in our country the Electronic Signature Law, and in the European Union the Electronic Signature Directive, ensure the legal recognition and use of electronic signatures.
It is important for companies to select secure and appropriate storage methods and to retain electronic contracts in a manner that complies with legal requirements. With measures such as security protocols, encryption and access control, they can carry out secure storage on secure servers or in the cloud.
Conclusion
Just like classical contracts, electronic contracts concluded using the internet through the parties’ mutually corresponding and reciprocal declarations of intent are a major part of our daily lives. Although there are exceptions as regards their legal nature, electronic contracts are regarded as distance contracts, contracts between persons not present and contracts of adhesion.
In electronic contracts, as in classical contracts, the contract is formed when a procedurally valid offer is accepted by the addressee. The addressee must accept the offer made to it, and the declaration of intent relating to the acceptance must reach the offeror. Declarations of acceptance that alter the terms of the offer now constitute a new offer.
In a contract between persons present, the formation of the contract and the arising of its provisions occur at the moment the addressee declares acceptance, and the offer and the acceptance cannot be withdrawn. In a contract between persons not present, however, the moment of formation of the contract is the moment the addressee’s declaration of acceptance enters the offeror’s sphere of control, while the moment at which the contract produces its effects is the moment the declaration of acceptance is sent by the addressee. In a contract between persons not present, the offer and the acceptance may also be withdrawn.
Although it is accepted that, in contracts formed in the electronic environment as in contracts in general, there is freedom of form, methods such as the electronic signature are used for identification. However, for a valid contract to be formed, if the parties do not have legal capacity to act, the contract will in any event be deemed invalid.
The proof of the validity of electronic contracts and companies’ storage processes are also important matters in the modern business world. Technological tools such as electronic signatures, timestamps and log records may be used to prove the validity of contracts. By selecting secure and appropriate storage methods and retaining electronic contracts in a manner that complies with legal requirements, companies will be helped to manage their electronic contracts effectively and securely.
