The Liability arising from breach of Electronic Contracts
Document Type : Original Article
Author
Assistant Professor, Department of Law, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran
Abstract
The advancement of modern communication and information technologies has made electronic contracts an essential tool in contemporary transactions, playing a key role in transforming modern commerce. With features like speed, ease of use, and global accessibility, they have introduced new challenges in the area of civil liability. This paper examines the foundations of civil liability arising from breaches of electronic contracts, focusing on the theories of actual knowledge and implied knowledge.
According to the theory of actual knowledge, the parties to the contract must genuinely be aware of its terms. Liability arises when one party, knowing the facts about the contract, breaches it. On the other hand, implied knowledge refers to an understanding of the contract’s content that, while not explicitly communicated, is expected by prevailing customs and laws governing electronic contracts. Even if one party is not explicitly informed of all details, the law assumes they possess an inherent awareness of its terms and conditions. Civil liability can thus arise from unjustified ignorance of these terms.
This paper explores the impact of these theories on civil liability in electronic contracts, analyzing challenges like the distinction between actual and implied knowledge in virtual environments. It also investigates how liability is enforced in breach cases. The paper advocates for legal reforms to address emerging challenges and protect the rights of contracting parties in the digital environment. The goal is to align laws with evolving issues in civil liability and ensure fair treatment of parties involved in electronic contracts.
According to the theory of actual knowledge, the parties to the contract must genuinely be aware of its terms. Liability arises when one party, knowing the facts about the contract, breaches it. On the other hand, implied knowledge refers to an understanding of the contract’s content that, while not explicitly communicated, is expected by prevailing customs and laws governing electronic contracts. Even if one party is not explicitly informed of all details, the law assumes they possess an inherent awareness of its terms and conditions. Civil liability can thus arise from unjustified ignorance of these terms.
This paper explores the impact of these theories on civil liability in electronic contracts, analyzing challenges like the distinction between actual and implied knowledge in virtual environments. It also investigates how liability is enforced in breach cases. The paper advocates for legal reforms to address emerging challenges and protect the rights of contracting parties in the digital environment. The goal is to align laws with evolving issues in civil liability and ensure fair treatment of parties involved in electronic contracts.
Keywords
- Aaron Schwabach, “Internet and the Law: Technology, Society, and Compromises”, ABC-CLIO Publisher, (2005), 125, available at: https://www.amazon.com/Internet-Law-Technology-Society-Compromises/dp/1851097317#detailBullets_feature_div, (In English)
- Abhari, Hamid, and Mehdi Fallah Khareki. "Unfair Terms in Electronic Commercial Contracts in Iranian and European Laws." Legal Studies, 24, no. 5 (2020): 9-33., Available at: 10.22080/lps.2020.2697 , (In Persian)
- Ahmadzadeh, H., and A. Khushdel Vajari. "Analysis of Civil Liability Arising from Electronic Communications." Legal Studies, 16 (2017): 145-166, Available at: http://noo.rs/bNjm9, (In Persian)
- Amiri, M., and Mohammad Taghi Dashti. "Feasibility of Applying Risk Theory as the Basis of the State’s Civil Liability in Iranian Law." Journal of New Research in Administrative Law, 18 (2024): 345-368, Available at: 10.22034/mral.2023.1999256.1453, (In Persian)
- Andrew Robertson, The Foundations of Implied Terms: Logic, Efficacy and Purpose, University of Melbourne - Law School, S Degeling, J Edelman and J Goudkamp (eds), Contract in Commercial Law (Sydney, LawBook Co, 2016), Number of pages: 24 • Posted: 16 Dec 2016, available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2885860, (In English)
- Antoni Rubi-Puig, Holding ISPS Liable for Online Defamations: The Element of 'Actual Knowledge' in the Spanish Supreme Court Decisions of December 9th 2009 and May 18th 2010, Universitat Pompeu Fabra - Department of Law, InDret, Vol. 4, 2010, Number of pages: 20 • Posted: 12 Jan 2011, (In English)
- Badini, H., and Hamidreza Aghdas Tinat. "Ordinary Life Hazards and Their Role in Civil Liability." Judicial Legal Perspectives, 77-78 (2017): 1-40., Available at: https://jlviews2.ujsas.ac.ir/article-1-966-fa.html, (In Persian)
- Badini, H., Reza Khodkar, and Parviz Rahmati. "The Economic Scope of the Fault Rule and Its Efficiency Under Iranian Law." Private Law Studies, 1 (2016): 21-39,Available at: https://jlq.ut.ac.ir/article_57522.htm, (In Persian)
- Badini, Hassan. Philosophy of Civil Liability. Tehran: Sahami Enteshar, 2005. (In Persian)
- Bahmani, M. "Civil Liability Arising from the Violation of Trade Secret Rights." Journal of Comparative Legal Studies, 36 (2017): 10-20, Available at: https://journals.iau.ir/article_533581.html, (In Persian)
- Bahrami Ahmadi, H. "Global Developments in Civil Liability Towards the Non-Injury Theory." Private Law Studies, 2 (2011): 59-74, Available at: https://jlq.ut.ac.ir/article_29649.html , (In Persian)
- Bananiassari, M. "Contract Formation in Cyberspace: An Introduction to E-Commerce Law." Strategic Management Research, 35 (2005): 51–69, Available at: http://noo.rs/TAfOe, (In Persian)
- Bayat, M., and Sahel Alikhani. "Factors Relieving Civil Liability of Suppliers." Social Sciences Journal of Islamic Azad University, 39 (2017): 287-296. Available at: http://noo.rs/QMxXq , (In Persian)
- Christina L. Kunz, John Ottaviani, Elaine D. Ziff, Juliet M. Moringiello, Kathleen Porter and Jennifer Debrow, Browse-Wrap Agreements: Validity of Implied Assent in Electronic Form Agreements, Business Lawyer, Vol. 59, No. 1, 2003; William Mitchell Legal Studies Research Paper, Number of pages: 35 • Posted: 16 Jul 2010, available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1640185, (In English)
- Elsan, M. "Offer and Acceptance in Electronic Transactions." Legal Studies (Shahid Beheshti University), 43 (2006): 45-75. Available at: https://lawresearchmagazine.sbu.ac.ir/article_105426.html , (In Persian)
- Elsan, M. "Trade Secrets Law in the Age of Information Technology." Journal of Justice Studies, 50–51 (2005): 273–312. Available at: https://www.jlj.ir/article_44526.html , (In Persian)
- Elsan, M. Electronic Commerce Law. Tehran: SAMT Publications, 2013. (In Persian)
- Esmaeili, M., Ebrahim Taghi Zadeh, and Hossein Heydari Monavvar. "Moral Rights for Trade Secret Holders: A Distinction Between Trade Secrets and Intellectual Property." Private Law Studies, 2 (2020): 189-208., Available at: https://jlq.ut.ac.ir/article_77493.html, (In Persian)
- Ghorbanvand, M.-B. "Time and Place in Formation of Electronic Contracts." Public Law Research Journal, 29 (2010): 271-300. Available at: https://qjpl.atu.ac.ir/article_2509.html , (In Persian)
- Hojat Zadeh, A., and Ebrahim Noshadi. "Applicable Law for International Electronic Contracts: A Comparative Study." International Legal Studies Journal, 44 (2011): 263-282., Available at: https://www.cilamag.ir/article_17169.html, (In Persian)
- Hosseinpour, M.-R., and A. Zareh. "National Laws and International Standards in Civil Liability Arising from Disclosure of Trade Secrets." Legal Studies, 4 (2019): 93-125, Available at: https://jls.shirazu.ac.ir/article_5578.html , (In Persian)
- Ihuoma Ilobinso, ‘Formation of Electronic Contracts: Melding the Traditional Contract Law with Contemporary Electronic Commerce’, 2 Commercial and Industrial Law Review (2016) 50-63. ISBN: 978-978-955-349-5, Number of pages: 21 • Posted: 18 Jun 2018, University of Lagos, Faculty of Law, available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3189212, (In English)
- Joan Sethupathy, Undue Influence and the Third Party Creditor: Notice or Knowledge? Independent, Singapore Journal of Legal Studies, pp. 164-170, 1994, Number of pages: 7 • Posted: 09 Jan 2007, available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=956013, (In English)
- Katouzian, N. "The Evolution of the Concept of Fault in Civil Liability Law." Private Law Studies Quarterly, 1 (2008): 189-214. (In Persian)
- Katouzian, N. Civil Law: General Principles of Contracts (Definition, Formation, Validity, and Agreement). Vol. 1, 6th ed. Tehran: Sahami Enteshar in Collaboration with Bahman Barna, 2004. (In Persian)
- Kazemi, M. "Effects of the Victim’s Fault on Civil Liability." Religion & Communication Studies, 28 (2005): 109-142, Available at: https://ensani.ir/fa/article/224736/%D8%A2%D8%AB%D8%A7%D8%B1-%D8%AA%D9%82%D8%B5%DB%8C%D8%B1-%D8%B2%DB%8C%D8%A7%D9%86-%D8%AF%DB%8C%D8%AF%D9%87-%D8%A8%D8%B1-%D9%85%D8%B3%D8%A6%D9%88%D9%84%DB%8C%D8%AA-%D9%85%D8%AF%D9%86%DB%8C (In Persian)
- Khani, K., and Naser Mariwani. "Electronic Contracts in Islamic Jurisprudence and Iranian Law." Foundations of Islamic Jurisdiction & Legal Studies, 17 (2016): 97-128, Available at: https://ensani.ir/fa/article/470735/%D8%B9%D9%82%D9%88%D8%AF-%D8%A7%D9%84%DA%A9%D8%AA%D8%B1%D9%88%D9%86%DB%8C%DA%A9%DB%8C-%D8%AF%D8%B1-%D9%81%D9%82%D9%87-%D8%A7%D8%B3%D9%84%D8%A7%D9%85%DB%8C-%D9%88-%D8%AD%D9%82%D9%88%D9%82-%D9%85%D9%88%D8%B6%D9%88%D8%B9%D9%87-%D8%A7%DB%8C%D8%B1%D8%A7%D9%86 , (In Persian)
- Kolateh, A., and T. Eskandarnezhad. "Trade Secrets Law in Contractual and Non-Contractual Relations in Iranian and U.S. Law." Art & Humanities Studies, 5 (2017): 123-134, Available at: https://ensani.ir/file/download/article/20171231161522-10116-30.pdf, (In Persian).
- Malekooti, R., and Parviz Savaaraei. "An Introduction to Civil Liability in Cyberspace." Private Law Research, 15 (2016): 129-149, Available at; https://doi.org/10.22054/jplr.2016.4456 , (In Persian)
- Margaret P. Gilbert, Reconsidering the 'Actual Contract' Theory of Political Obligation, University of California, Irvine, Ethics: An International Journal of Social, Number of pages: 25 • Posted: 19 May 2009, available at: https://www.jstor.org/stable/10.1086/233895, (In English)
- Rahbari, I. "Restricting Contracts for the Protection of Trade Secrets: A Comparative Study of U.S., UK, France, and Iran." Legal Research Journal, 50 (2009): 531-586, Available at: https://lawresearchmagazine.sbu.ac.ir/article_56286.html, (In Persian)
- Rahmani, H. Civil Liability of Internet Service Providers (ISPs) under E-Commerce Law. 1st ed. Tehran: Majd Publications, 2015 (In Persian)
- Rezaei, R., E. Abdipour, and I. Ne'matollahi. "Intentional Breach of Contract and Its Impact on Compensating Damage." Private Law Research, 26 (2019): 135-160, Available at: https://doi.org/10.22054/jplr.2018.25772.1666 (In Persian)
- Saadat Mostafavi, S., and M.-J. Paykari. "A New Perspective on Foundations of Civil Liability in Iranian Law and Imamieh Jurisprudence." Gavah Legal Teachings, 4 (2017): 161-185, Available at: 10.30497/leg.2017.2644 , (In Persian)
- Sadeghi, M., and H. Badini. "Risk Clauses Analysis in Iranian Commodity Exchange Contracts." Business Research Quarterly, 85 (2017): 27-57, Available at: 20.1001.1.17350794.1396.22.85.2.5 , (In Persian)
- Safaei, S.-H., and Hassanali Ork-Bakhtiari. "A New Look at the Basis of Motor Vehicle Ownership Liability." Private Law Studies, 1 (2014): 31-50, Available at: 10.22059/jlq.2014.50818, (In Persian)
- Yazdani, L., and E. Taqqizadeh. "Foundations of Civil Liability for Advertising Institutions Regarding False or Unreal Advertisements." Proceedings of National Conference on Management and Humanities, Special Issue (2004): 1371-1383, Available at: https://civilica.com/doc/913981/, (In Persian)
- Yazdaniyan, A. "Indivisibility of Contractual and Non-Contractual Obligations in Islamic, Iranian, and French Law." Islamic Legal Studies Journal, 51 (2020): 21-52., Available at: 10.30497/law.2020.2761, (In Persian)
- Yazdaniyan, A. Civil Law: General Principles of Civil Liability. Tehran: Mizan Publications, 2007. (In Persian)
- Yazdaniyan, A. Law of Obligations: General Principles of Civil Liability with Comparative Focus on French Law. Tehran: Mizan Publications, 2021. (In Persian)
- Yusefi Sadeghlou, A., and Zeynab Sarmast Dargah. "Comparative Study of Moral Damage Components in Iranian and French Law." Private and Criminal Law Research Journal, 37 (2018): 115-144., Available at: https://srb.sanad.iau.ir/fa/Article/799106?FullText=FullText , (In Persian)
