by Steven Jacob, Foreign Associate
In traditional contracts, the contract is dependent upon the agreement of the parties. That agreement is reached through a process of contract formation. In the first step, one of the parties makes an offer of providing either goods or services. The other party then will review the offer and accept or reject it. If they accept the offer, that acceptance is deemed as sufficient to create an enforceable contract between the two parties. The offer and acceptance can both be made with certain terms and conditions. There are also restrictions on how an offer and acceptance can be made, when they are deemed to be made, and whether they are effective in whole or in part.
While the above process is generally applicable to most transactions between equally situated parties, there are certain issues raised when one of the parties is a merchant or advertiser. What elements of an advertisement or fixed price for the sale of goods or services constitute an offer? In law school, we studied several legal cases that discussed when an advertisement can be considered an offer sufficient to allow for acceptance and thus form a contract. Retailers and service providers must take care in developing their advertising and in-store displays in order to know when they are making an enforceable offer.
In most jurisdictions, this process was codified prior to the development of electronic media and, more specifically, the development of e-commerce. For e-commerce providers, there is the dual complication of being a merchant making advertising-type offers and the issue of electronic media. In Vietnam, there are specific regulations for the process of entering into a contract between an e-commerce provider selling goods or services online and a consumer. This post will examine the legislation governing the formation of e-commerce contracts in Vietnam.
When an e-commerce provider in Vietnam who has an online ordering function on their website posts an item or service for sale, they normally include the price and introductory details regarding the item or service. There are also the implied terms and conditions that are included elsewhere on the website. According to the regulations governing e-commerce in Vietnam, when such introductory information and terms and conditions are made electronically without specifying a receiving party, then this is not an offer that gives rise to a contract upon acceptance but a notice of the offer. It becomes an offer, however, if the terms and conditions specify what responsibilities will be imputed upon acceptance. This means that it is important to understand that simply posting an item for sale and having a customer offer to pay for it is not enough to form an enforceable contract unless the terms and conditions specify that upon accepting the price and agreeing to pay for it the e-commerce merchant will be bound as if it were an acceptance of the offer. Otherwise, the offer to pay the price for the goods by the consumer will be viewed as an independent offer, and only upon the merchant’s acceptance will a contract be formed. This latter is the normal scheme contemplated by the law, but if the merchant wishes for the display of goods or services to constitute an offer, then special care must be taken. It is an issue that needs to be considered in developing the merchant’s standard terms and conditions.
Normally, then, a customer must create and send an “e-document” via the online ordering function in order to constitute an offer to the merchant for purchase of the goods or services posted on the website. An e-document has very specific features. In order to have the same legal validity as a physical document, the e-document must be capable of having the integrity of the information contained in it assured from the time the information is initially entered, and the e-document must be accessible and usable in its complete form when necessary. The integrity of an e-document is determined by its completeness and unchangeableness. And it is assured by one of the following methods:
- Signing the E-document with a digital signature issued by a legal digital signature certification service provider;
- Storing the E-document in the system of a licensed E-contract certification service provider that the parties have agreed to select;
- There is an assurance from the traders or organizations providing infrastructure for the creation, sending, and storage of the E-document on the integrity of the information contained in the E-document during the sending and storage in the system; or
- Other measures which the parties have agreed upon.
Whether stating a preferred method in the standard terms and conditions of the merchant and then allowing the customer to abide by that method is sufficient to constitute “agreement between the parties” pursuant to item 4 is difficult to say. Technically, there is no agreement between the parties until the contract is formed, and demonstrating this assurance is necessary to have a legally enforceable e-document and thus the offer necessary to form a contract. There is currently no guidance on this issue. C’est la vie.
Assuming, therefore, that the online ordering function of the merchant creates a form in which the customer can fill out his information and satisfy the requirements of an e-document, then the submission of that form will become the offer from the customer to the merchant to buy the goods at the price contained in the notice of offer (the posted introductory information and terms and conditions of the goods or services). Before the customer submits the form, and in order to make the e-document an enforceable offer, the customer must be able to review, supplement, modify, and confirm the contents of the e-document. There are three elements to this review:
- The name of goods or services, their number and type, the method and time of delivery or provision, and the total value of the contract and the payment details must be displayed to the customer. This display must be capable of being stored or printed by the customer;
- The display must include the customer’s chosen method for the merchant to respond to the proposal for contract commitment and the time limit to respond to the proposal for contract commitment; and
- Permit the customer to cancel the transaction or confirm the proposal for contract commitment.
Once these elements have been satisfied, then the e-document may be submitted to the merchant and constitute the official and enforceable offer. Upon acceptance of the offer by the merchant according to the method specified by the customer, a contract will be formed. But how is acceptance made?
Acceptance of the customer’s offer must be in the form specified in the e-document offer from the customer. This form will likely be specified by the merchant and accepted automatically through the standard terms and conditions so there is little need for developing a customized response. The acceptance, however, must be in a form that is capable of being stored, printed, and displayed by the customer upon its receipt. An acceptance must include the following information:
- List of all goods or services that customers have ordered, the number and price of each product, and the total value of the contract;
- Time of delivery or service provision; and
- Contact information for the customer to ask about the status of contract performance when necessary.
The merchant has a limited amount of time to respond to the offer of the customer. If they have specified a time limit in their standard terms and conditions then that time limit will apply. If there is no time limit, then the default is 12 hours. After the time limit expires, any “acceptance” by the merchant becomes a new offer to the customer that is enforceable upon acceptance by the customer. An acceptance is deemed delivered upon receipt by the customer. At that time, and only at that time, is the contract deemed concluded and completely enforceable by both parties. An e-commerce contract in Vietnam will have been formed.
The method for creating a contract in e-commerce is not entirely disconnected from traditional contract formation processes. It is, however, slightly different, and understanding how the offer and acceptance flow is important when preparing the standard terms and conditions for the merchant and in developing the forms and e-documents that will constitute the offer and acceptance between the customer and the merchant. Failure to properly understand these rules when operating in the e-commerce sector in Vietnam will make it difficult to enforce e-commerce contracts in Vietnam.