Electronic and Mobile Commerce Law: An Analysis of Trade, Finance, Media and Cybercrime in the Digital Age

By Charles Wild, Stuart Weinstein, Neil MacEwan and Neal Geach

The rapid, commercially-driven evolution of the Internet has raised concomitant legal concerns that have required responses from both national and international law. This unique text offers a complete analysis of electronic and mobile commerce, exploring the law relating to online contracts and payment systems, electronic marketing, and various forms of cybercrime as well as the regulation of electronic communications networks and services. Written by specialists, this account also provides insights into emerging areas such as internet libel, online gambling, virtual property, cloud computing, smart cards, electronic cash, and the growing use of mobile phones to perform tasks previously carried out by computers.

• Language: English
• Publisher: University of Hertfordshire Press
• Release date: Apr 1, 2011
• ISBN: 9781907396205

Book preview

Section 1:

Electronic Commerce

Chapter 1: Contractual Aspects of Electronic Commerce

If someone wishes to enter into a contract over the Internet, the immediate question they will ask is whether such an agreement reached ‘online’ is enforceable. To look to the answer to this question, we must examine the well-established legal principles which apply to traditional written contracts. Under such traditional principles, a contract entered into online will be enforceable if the two (or more) parties entering into the contract mutually assent to its terms and the contract itself must be supported by some consideration. We will also examine how European law and its implementation within the UK have over the past decade and a half changed the nature of selling online to consumers. We shall briefly touch on jurisdiction aspects of the Internet to the extent they relate to selling to consumers online. Finally, we will examine the current status of taxation of Internet sales in the US and UK.

Contractual aspects of Electronic Commerce

E-commerce is generally about the making of contracts using the Internet. It does not form any special branch of English law and is to be dealt with by normal rules of the law of contract.¹ Some academics and practitioners have questioned whether English law as it stands is capable of coping with this new phenomenon because of the special attributes of online contracting. Online contracts are no different to paper contracts, what is unique is the contracting process.

Contracts are formed in the world of the Internet as easily as they are off-line. Under English law for a contract to be valid several conditions must be satisfied:

• offer

• acceptance

• consideration

• intention to create legal relations.

These conditions apply whether the contract is an ‘e-contract’² or a straightforward online contract.

In the e-contract scenario, often it is the case that the parties do not meet and use distance-selling methods to enter into an agreement. This may not be so unique. After all, this happens frequently in the world of non-e-commerce contracts as well. Similarly, in the case of a contract enabling Electronic Commerce, for instance, a contract for the creation of a website, the contract may be formed by the parties meeting one another or not. The e-contract will relate to the object of the contract rather than its form. For example, a hosting contract enabling a website to be hosted by a professional and made available for customers to access over the Internet.

Offer

An offer is the clear indication of the party to be bound by the terms of the offer. This can be communicated in a number of ways, including by electronic communications. An invitation to treat offers is not intended to be legally binding but unfortunately might be construed by the customer as such. Hence, the cyber-trader will need to ensure that his or her online communications are set out and framed in such a way so as not to cause uncertainty. He or she must also ensure that the communications are not construed as unilateral offers: Carlill v. Carbolic Smoke Ball Co [1893] 1 QB 256.

It is necessary to distinguish an offer from what the law classifies as an invitation to treat. The intention of the parties is important. The law has laid down various general rules covering standard commercial situations such as display of goods in a shop - Fisher v. Bell [1961] 1 QB 394, Pharmaceutical Society of G.B. v. Boots [1953] 1 QB 401 and advertisements of goods and services for sale - Partridge v. Crittenden [1968] 2 All ER 421. It is not yet settled how these general rules, which can be excluded by the contrary intention of the parties, will apply to common e-contract situations.

Consider for instance, the Argos case:

A telly for under a fiver? You’d have to be either insane or just back from the updated Argos website, where a Sony TV was on sale for a mere £3.00. The price has now been changed, but the company says it has received a number of multiple orders from online customers. Argos has just updated its site for the autumn season. Over 500 new products - including the bargain TV - were added to the site yesterday. The official line is that there was a ‘transcription error’ somewhere between Argos and the company that maintains its website. However, the exact source of the error has yet to be tracked down. Those who spotted the mistake and ordered the Sony television will be disappointed, as Argos has no plans to actually sell the TVs for £3.00. Until money has changed hands, Argos has no contract with its customers, and is under no obligation to fulfil the orders. Which is just as well, since the people who spotted the bargain, put in orders for ten or fifteen TVs. The television is now advertised at the correct price of £299.99. A spokeswoman for Argos commented: ‘We cannot fulfil the orders we have received -even as a gesture of goodwill. It would simply be too expensive.’ She was not sure how many orders had been received, but assured The Register that it was a significant number. Expect some disgruntled would-be buyers to sue. The courts maybe take a different view on consumer contracts than Argos.³

Withdrawing an offer

Generally, an offer can be withdrawn before a valid acceptance is made. However, a revocation must be received before it is effective. An offer can also be terminated by a counteroffer (see Hyde v. Wrench [1840] 3 Beav. 334). In Hyde, the defendant’s offer to sell his farm for £1,000 was in-effect rescinded by the claimant’s counter-offer at a lower price. Consider also the problem with battle of the forms (see Butler Machine Tool v. Ex-Cell-O Co [1979] 1 All ER 965). In Butler, the buyer accepted the offer of the seller but substituted its own terms and conditions for those furnished by the seller. Where the seller had accepted the differing terms, it was bound by such terms and not the original offer.

Acceptance

Acceptance is to be distinguished from a counter-offer, Hyde v. Wrench [1840] 3 Beav. 334. Commercial parties usually prefer to deal on their own ‘standard terms’. Where two business are negotiating with each other, each insisting that the contract be on its own set of terms this can result in the so-called ‘battle of the forms’, Butler Machine Tool Co v. Ex-Cell-O Co [1979] 1 All ER 965. If each side responds to the other by issuing its own standard terms this has the legal effect of making a counter-offer.

Communicating acceptance

Acceptance has to be communicated in order to be effective. Acceptance in online transactions has the potential to be extremely controversial. Usually the acceptance is communicated to a machine (the computer) or is made by a machine. This raises the question as to whether English law recognises a computer as a proper contracting party. In general, the law will attribute acts and omissions of a machine to the person who executes it. In Thornton v. Shoe Lane Parking [1971] 2 QB 163, the court had to consider the contractual implications in the use of an automated car park. Denning LJ (as he then was) held that the customer was committed at the very moment when he put his money into the machine:

The contract was thus concluded at that time. It can be translated into offer and acceptance in this way: the offer is made when the proprietor of the machine holds it out as being ready to receive the money. The acceptance takes place when the customer puts his money into the slot.⁴ The owner or person in control of the computer is bound by the legal communications made by the computer if such communications had been programmed into the computer by the owner or person in control. It would therefore appear that English law would treat a web server as a mere agent of the cyber-trader or cyber-consumer and can make contracts on their behalf provided the relevant communications were pre-programmed by the natural or legal persons concerned.

Query: Does the ‘browse-wrap’ licence work the same way as the parking lot machine in Thornton? With a browse-wrap agreement, there is no direct way of signalling assent. Any acceptance of the agreement, if it comes, must be read into the mere act of browsing the site.

Unless specifically stipulated, the method of acceptance can be made by any communication method that is reasonable. According to the Electronic Commerce Directive⁵ (as implemented by the Electronic Commerce (EC Directive) Regulations 2002)⁶ in the case of consumer contracts concluded over the Internet the service provider will need to specify clearly, comprehensibly and unambiguously and prior to the order being placed by the recipient of the service:

•   the different technical steps to follow to conclude the contract;

•   whether or not the concluded contract will be filed by the service provider and whether it will be accessible;

•   the technical means for identifying and correcting input errors prior to the placing of the order; and

•   the languages offered for the conclusion of the contract.⁷

Member States must ensure that the service provider indicates any relevant codes of conduct to which he or she subscribes and the information on how those codes can be consulted electronically.⁸ It is also incumbent on the trader to ensure that the terms displayed online can be downloaded and saved for reproduction by the customer.⁹ It should be noted that these provisions do not apply where the contract is made exclusively by the exchange of emails or equivalent individual communications.¹⁰ They only apply to contracts made over the Internet (usually by a ‘click-wrap’ method). A click-wrap agreement is one whereby a customer enters into a binding contract by agreeing online via the click of a mouse to be bound by the terms of the contract.¹¹ The term comes from the ‘shrink-wrap’ licences found in boxes containing software - in essence, once you have removed the shrink-wrap, you are considered to have accepted the terms of the licence contained in the box unless you manifest refusal to be bound by such terms by returning the software to the seller.

For guidance on how to interpret ‘click-wrap’ licenses in England and Wales, we must look to the United States (‘US’) for guidance because like so many other things this concept originated there. First, we have the controversial Uniform Computer Information Transactions Act (‘UCITA’), a draft law prepared and recommended for enactment by the National Conference of Commissioners on Uniform State Law at its 1999 Annual Conference.¹² Of course the US has 50 states and each state has to adopt its own law in areas that are not controlled by federal law. Generally, contract law is one of those areas that is reserved for the state legislatures. UCITA attempts to bring a level of certainty to information technology transactions that the Uniform Commercial Code¹³ did for the sale of goods. UCITA has had a ‘rocky’ reception to say the least. In fact, it has only been passed in Virginia and Maryland. Efforts to pass the law in other states have been defeated or met with anti-UCITA legislation, e.g., Iowa and Vermont. Given that UCITA is not the success its drafters had hoped, it is largely seen today as a tool for academic shop talk.

Given this, we must see what the case law in the US on ‘click-wrap’ licences is to draw some guidance for those of us in England and Wales. First, there is ProCD, Inc. v. Zeidenberg, 86 F 3d 1447 (7th Cir., 1996). Although this case involved a ‘shrink wrap license’ and not a ‘click wrap’ licence, it is still informative. Judge Easterbrook in writing the opinion for the 7th Circuit Court of Appeals (overturning the trial court decision) ruled among other issues before it that the shrink wrap licence was valid and enforceable. More significantly, there is the case of Hotmail Corporation v. Van Money Pie Inc., et al. C98-20064, 1998 WL 388389 (ND Ca., April 20, 1998). This case concerns the use of free Hotmail email accounts. To open a Hotmail account, one must agree to the Hotmail terms of service which expressly prohibit the use of Hotmail accounts for sending spam. Users agree to the terms of service through a click-wrap licence. In this case, the defendants used third parties to send spam altering the return addresses of this spam to falsely indicate that it was sent from a Hotmail account. As a result of this, the recipients of the spam responded with complaints which were sent to accounts defendants had set up at Hotmail for the receipt of e-mail. This had the effect of utilising much of the finite capacity of Hotmail’s computer network. Hotmail sought an injunction to prevent defendants from sending spam which falsely stated it came from Hotmail’s service and from using Hotmail accounts as mail boxes for ‘spam’ reply. The court agreed and issued the preliminary injunction. Significantly, the court view the clicking of an ‘I agree’ button at the bottom of the Hotmail terms of service as sufficient to form a binding contract.

In Specht v. Netscape Communications Corp., 306 F 3d 17 (2002), the US Court of Appeals for the 2nd Circuit weighed in with the strong view that it is essential that a consumer ‘click’ his or her acceptance of the terms they are being asked to offer their assent and that absent this ‘click’ no agreement exists:

Principally, we are asked to determine whether plaintiffs-appellees (‘plaintiffs’), by acting upon defendants’ invitation to download free software made available on defendants’ webpage, agreed to be bound by the software’s license terms (which included the arbitration clause at issue), even though plaintiffs could not have learned of the existence of those terms unless, prior to executing the download, they had scrolled down the webpage to a screen located below the download button. We agree with the district court that a reasonably prudent Internet user in circumstances such as these would not have known or learned of the existence of the license terms before responding to defendants’ invitation to download the free software, and that defendants therefore did not provide reasonable notice of the license terms. In consequence, plaintiffs’ bare act of downloading the software did not unambiguously manifest assent to the arbitration provision contained in the license terms.¹⁴

The enforceability of shrink-wrap agreements under Scots law in Beta Computers v. Adobe Systems¹⁵ was confirmed by Lord Penrose who ruled that a shrink-wrap agreement per se was enforceable. Beta Systems ordered software from Adobe Systems by telephone. When the software arrived, on the outside of the packaging was a message stating that by opening the software the user was agreeing to the terms and conditions which were to be found inside the software case. Not wishing to be bound by unseen terms and conditions, Beta Computers returned the software to Adobe Systems without opening the packaging. Nonetheless, Adobe Systems then issued a claim against the defendant for the price of the software. The judge in this case referred to ProCD and concluded that in general the principle that a shrink-wrap agreement was legal per se. The court did not enforce the shrink-wrap conditions against Adobe because the wrapping had not been removed. If the wrapping were opened and the software used then, on Lord Penrose’s reasoning, the terms of the licence would have been incorporated into the contract between the supplier and the end user.

Emails are to be treated differently¹⁶ because they are not ‘real-time’ communications in that they are not instantaneous. They must be accessed by the receiver from the ‘mail-box’. An Internet web click-wrap contract on the other hand is received and processed almost instantaneously by the receiver’s computer.¹⁷ This raises other implications under English law. It would appear that the ‘postal rule’¹⁸ will apply to e-mail acceptances but not click-wrap acceptances. Click-wrap acceptances will be treated as an ‘instantaneous communication’¹⁹, and will be treated as effective only when it is received. On the other hand, an email acceptance will probably be treated as effective once it is sent, regardless of whether it has been received or read (Adams v. Lindsell [1818] 1 B&Ald 681; Byrne v. Van Tienhoven [1880] 5 CPD 344). One commentator, Amelia Rawls, has argued that the ‘twenty-first century communication has created a world in which there is no room for indifference between the dispatch and receipt rules.’²⁰ She suggests that applying the Adams v. Lindsell rule to email acceptances is outdated:

Electronic technology has redistributed the risks of contracting between offerors and offerees; at the same time, it has dramatically reduced the import of the meeting of the minds doctrine and mitigated the primary evidentiary and practical reasons for application of the mailbox rule. As a result, our world is now one in which substantially instantaneous acceptances should be valid at receipt.²¹

Offer and acceptance procedure online

The Electronic Commerce Regulations allow a seller to sell products and services online as well as to accept payment for them by credit or debit card while not actually entering into a contract on line. This is a significant advantage for online retailers. By structuring the online customer experience in such a way that the customer is making the offer on the site and so that the contract will be formed once the customer’s order is accepted, the seller has an advantage in that it determines when acceptance occurs. This could be useful in the scenario that we have seen whereby it turns out that the website incorrectly prices something, i.e., Argos above. It must be noted that taking payment from the customer’s credit card is not acceptance because online merchant accounts can easily refund a customer’s credit or debit card after the same card has been charged for a transaction. In any case, the written terms which must be provided to the consumer before the transaction is completed must state that even though payment may be taken a contract is not formed until the seller accepts the buyer’s order.

We have all ordered goods and services online. As such, we are all familiar with the online order procedure whereby a consumer indicates the quantity of goods he or she wants and the delivery details. Online retailers offer three choices when ordering online, namely, ‘submit’, ‘clear’ and ‘cancel’. Under the Electronic Commerce Regulations, consumers must be offered a means to correct any order errors before proceeding further. At the bottom of the page for terms and conditions, most online retailers require the customer to scroll down and check a tick box at the bottom of page to indicate that they have read, understood and accepted the terms and conditions. This tick box must be filled before the ‘accept’ button will work. While there is no obligation for the retailer to ensure that the customer has in fact read the terms and conditions, a retailer’s position could be defended by showing that steps have been taken to make customers aware of the terms and conditions governing the transaction. The terms and conditions must be in a format that can be printed or saved so they must be easily printable and readable by all. A typical online ‘accept’ button contains language such as:

•   By clicking the ‘Accept’ button you agree to these terms and conditions.

•   By completing and submitting the following electronic order form you are making an offer to purchase goods which, if accepted by us, will result in a binding contract.

Once a customer clicks ‘accept’, they are taken to a secure server page where credit or debit card details are taken. Language to the effect that a customer’s credit card will be debited the amount of the purchase should also indicate that this same purchase price will be refunded if the offer is rejected. When the card details are validated (which may involve a further online verification process from PayPal or the credit or debit card issuer), the Electronic Commerce Regulations require the customer to be sent an immediate online acknowledgement from the website (usually in the form of a pop-up or new webpage). This must be followed-up by a confirming email. Usually, this email confirms that the order has been received and that the order will be processed with acceptance to be provided by subsequent email.

The Distance Selling Regulations require the seller to provide the customer (in writing) confirmation of the information provided before concluding the contract as well as information with respect to cancellation rights. A seller may not contract out of the Distance Selling Regulations and as such any sales term that is inconsistent with them will be unenforceable. A consumer generally has a ‘cooling off’ period of seven working days within which they may cancel the contract. The only cost the consumer would incur if they decide to return the goods in this cooling off period is the postage and handling costs involved in shipping the goods back. Where the supplier has to provide a service prior to the end of the customer’s cancellation period, the customer will be estopped from cancelling the contract once the supplier has begun to provide the services to the customer. This information, however, must be made clear to the customer in advance. Many Internet retailers provide that there is no acceptance of the offer until despatch of goods ordered. This scenario (under which acceptance does not happen until goods are shipped) provides the retailer with the greatest protection and the only correspondence required from the seller with the customer after the customer’s credit or debit card is charged is merely an acknowledgement.

Verification of authenticity of contracting party: electronic signatures

As will be seen later in the section on e-finance, the fact that the parties may never meet presents unique problems. First, there is the risk from the consumer’s point of view that he or she may pay for something but never receive the products ordered. This is plain old-fashioned fraud and will be covered in the e-crimes section. From the point of view of the seller, the problem of ‘repudiation’ is a real concern. At common law, the repudiation of a traditional signature may occur if the signature is a forgery; or, if the signature is a non-forgery, but was obtained through unconscionable conduct by a party to a transaction or fraud or unconscionable conduct by a third party to the transaction²² – and: ‘it is submitted that the law should not in the electronic commerce environment alter this position as regards to the legal rights of parties to repudiate a digital signature.’²³

Assuming that you can get beyond the writing requirement of an actual hand-made signature to bind an individual to an actual contract, other questions arise. Even though not all contracts concluded between a vendor and a consumer will require a written and signed document, other issues may give rise to situations where one party to an Internet transaction may have reasonable grounds to be uncertain about the other party’s identity, but, nonetheless will be legally bound by the contract or the date of conclusion of the contract that is normally included in paper versions.

An electronic signature is ‘a means of identifying a person by computer-generated code rather than a hand-written signature. This code, usually generated through the use of encryption keys²⁴, is attached to an electronic document as a means of signing the document’.²⁵ The Electronic Signatures Regulations 2002²⁶ which implements Directive 1999/93/EC of the European Parliament and of the Council on a Community framework for electronic signatures defines an ‘electronic signature’ to mean ‘data in electronic form which are attached to or logically associated with other electronic data and which serve as a method of authentication.’²⁷ The use of digital signatures²⁸ and encryption²⁹ can alleviate the concerns highlighted above regarding the risks of repudiation and the requirement of writing. A digital signature fixes the identity of the contracting parties by removing doubts as to the authority of the parties contracting with each other. It also confirms the identity of the individual that has accepted the terms offered. Finally, a digital signature confirms the date the contract was formed confirming the exact time of formation. This is a function that cannot be performed by written documents.

In addition to the Electronic Signatures Regulations 2002, the Electronic Communications Act 2000³⁰ transposed the Directive 1999/93/EC of the European Parliament and of the Council on a Community framework for electronic signatures into UK law. It emphasises the need: to clarify the status of electronic signatures; to remove legal barriers to electronic communication and transaction; and to build confidence in public key cryptography. In order to achieve these aims, the Act provides for the legal recognition of electronic signatures, removes legal obstacles to the use of electronic documents instead of paper documents and suggests a statutory voluntary approvals scheme for suppliers of cryptographic services. Instead of the UK Government establishing an approvals scheme, the tScheme has been established by the Alliance for Electronic Business to facilitate the approvals and standards for cryptographic services and operates as a non-statutory voluntary approvals regime for trust service providers.³¹

Contract formation

The point at which the acceptance is communicated is also important for determining when and where the contract is formed. In a face-to-face transaction, these points do not usually give rise to difficulty but where parties are dealing at a distance, as in e-contracts, the exact point at which the contract is concluded can be controversial. The exact point at which the contract is concluded is important because it establishes when a negotiating party’s right to unilaterally withdraw is lost; which acceptance is first in time if there are competing acceptances for a limited number of contractual opportunities; and where the contract is concluded which, in cross-border transactions, can help to determine which jurisdiction’s law applies to the contract.

As a rule, if there has been an instantaneous communication between the parties (whether in person or by telephone) the contract would be completed at the time that acceptance was heard by the offeror. This was extended to a telex communication in Entores Limited v. Miles Far East Corporation [1955] 2 QB 327. In 1981, the House of Lords reviewed Entores Limited v. Miles Far East Corporation when the appeal in Brinkibon Ltd v. Stahag Stahl GmBH [1983] 2 AC 34 came before them. Lord Wilberforce noted that just because an acceptance has been received by a telex machine, it does not follow that the offeror is immediately aware that his offer has been accepted:

Since 1955 the use of Telex communication has been greatly expanded, and there are many variants on it. The senders and recipients may not be the principals to the contemplated contract. They may be servants or agents with limited authority. The message may not reach, or be intended to reach, the designated recipient immediately: messages may be sent out of office hours, or at night, with the intention, or on the assumption that they will be read at a later time. There may be some error or default at the recipient’s end which prevents receipt at the time contemplated and believed in by the sender. The message may have been sent and/or received through machines operated by third persons. And many other variants may occur. No universal rule can cover all such cases; they must be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a judgement where the risks should lie.³²

Most recently, the question raised by Lord Wilberforce arose in a case involving email acceptance of a contractual offer. In Thomas & Anor v. BPE Solicitors [2010] EWHC 306 (Ch)³³, 19 February 2010, the question for Blair J was whether the email acceptance of the contractual offer was effective when it arrived or at the time when the offeror could reasonably have been expected to have read it. In Thomas v. BPE Solicitors, the facts were that an email had been sent between solicitors acting for the respective parties at 6pm on a Friday night of a bank holiday weekend. The defendant solicitors submitted that the email was not effective from the moment it was received because it was sent after working hours. They argued that the acceptance could not have been effective until it came to the recipient’s eye on the following Tuesday. The claimant, however, submitted that the email was effective from 6pm Friday evening by analogy to the postal rule in that acceptance is effective at the moment of dispatch. A professional negligence claim hinged over this difference: whether the share purchase transaction had been completed on the Friday of the bank holiday weekend and not the Tuesday after the bank holiday weekend. Working with Lord Wilberforce’s guidance in Brinkibon, Blair J concluded that in the context in which the email had been sent (i.e., a transaction which all had agreed could have been completed that evening), then the email was not outside working hours:

Once one sets aside the ‘postal rule’ as inapplicable to email communications, the question whether an email acceptance is effective when it arrives, or at the time when the offeror could reasonably be expected to have read it, is not a straightforward one, and does not appear to be settled by authority. On the basis that it must be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a judgment where the risks should lie (Brinkibon at page 42), the answer does however appear to me to be clear in the present case. In the context in which the 18:00 email was sent – that is a transaction which (as the earlier emails show) could have been completed that evening - I do not consider that 18:00 was outside working hours. The email was available to be read within working hours, despite the fact that Mr Cusack had in fact gone home. For that reason, I would have held that were the defendants to have accepted the Rickerbys [the solicitors involved] undertaking by Mr Dew’s email, then as a matter of law such acceptance would have been effective upon the receipt of the email at or about 18:00. However, as I have held, they did not do so, nor were they negligent in that regard.³⁴

Special Regulation affecting Electronic Commerce Transactions

Similarly in Electronic Commerce there are specific rules as to how an order placed online is deemed accepted. These are set forth in the Electronic Commerce Directive as implemented by the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013). The Electronic Commerce Directive also makes provision for the principles to be applied by Member States to ensure that consumers who place online orders (namely make online acceptances) are protected.

Article 11(1) defines these principles as:

•   the service provider must acknowledge the receipt of the recipient’s order without undue delay and by electronic means (this does not apply where the contract was concluded exclusively through the exchange of emails); and

•   the order and the acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them.

Article 11(2) requires Member States to require that ‘the service provider makes available to the recipient of the service appropriate, effective and accessible technical means allowing him to identify and correct errors prior to the placing of the order’. Article 11(2) does not apply where the contract was made exclusively by exchange of emails.

As far as business-to-business transactions are concerned, parties are free to derogate from these provisions by agreement.³⁵ This approach has been criticised as failing to take into account the interests of SMEs³⁶ whose bargaining leverage is not always as strong as the law presumes it to be.

The Electronic Commerce Regulations require that all commercial websites make the following information directly and permanently available to consumers via the website without regard to whether the site sells online:

•   the company’s name, postal address (and registered office address if this is different) and email address;

•   the company’s registration number;

•   any Trade or Professional Association memberships; and

•   the company’s VAT number.

The Electronic Commerce Regulations³⁷ also require that all prices must be clear and unambiguous, and websites must state whether the prices are inclusive of taxes and delivery costs. When it comes to actually going through the contractual process the requirements for information increase once again and the consumers must be told:

•   the steps involved in completing the contract online;

•   whether the contract will be stored by the retailer and/or permanently accessible;

•   the technical means the site uses to allow consumers to spot and correct errors made while inputting their details prior to the order being placed;

•   the languages offered to conclude the contract;

•   the website must also provide links to any relevant codes of conduct to which the retailer subscribes; and

•   set out the retailer’s terms and conditions in a way that allows users to save and print them.

All of this information must be given before the potential purchaser selects the product and starts the contractual process. Furthermore, the Consumer Protection (Distance Selling) Regulations 2000³⁸ require that the seller give consumers in writing clear information including details of the goods or services offered, delivery arrangements and payment, the supplier’s details and the consumer’s cancellation right before they buy (known as ‘prior information’) and that the consumer has a cooling-off period of seven working days in which to cancel the transaction afterwards.

There have been problems with the UK implementation of the Electronic Commerce Directive by the Electronic Commerce (EC Directive) Regulations 2002. As Malcolm Hutty, Head of Public Affairs, for LINX³⁹ writes:

One flaw in the UK implementation is that these Regulations only apply to laws passed before the date of the Regulations. In consequence, every new law must be analysed for compliance with the Electronic Commerce Directive and, where a potential liability is created, special exceptions for network operators and hosting companies must be added ... Finally [in February 2010], the [then] responsible Minister [for Business] Stephen Timms has written to ISPA UK to say that they will not be introducing prospective effect for the Regulations. The reasons given are that prospective effect would cause unintended consequences and reduce certainty of applications of the law. However, inasmuch as the consequences of continuing on a case-by-case basis might differ from granting prospective effect, that would place the UK in breach of European law.⁴⁰

It should be noted that the Electronic Commerce Regulations adapt a ‘country of origin’ principle which means that a UK business must comply with UK laws when it operates as a online retailer. However, the Electronic Commerce Regulations do not apply the country of origin principle to the terms of consumer contracts. Thus, a UK-based Electronic Commerce website’s terms and conditions must meet the laws of every Member State in which consumers can buy its products, not just UK laws! As you can imagine this creates a major headache in that the consumer rules across the EU differ from country to country. While each EU country complies as a baseline minimum with all applicable EU Electronic Commerce and distance selling requirements, most EU countries require their consumers to have additional rights beyond these which may make selling across Europe online a far more complicated exercise in compliance.

Jurisdiction and the Internet

For the most part, we have been talking about Electronic Commerce within the UK. However, we all know that more and more the Internet involves crossing-borders. What are the legal implications of cross-border commercial transactions in the context of the Internet? Are there differences to note when entering into an e-contract with a business outside the EU? To put some legal certainty in place, several pieces of legislation exist in the EU to deal with jurisdictional disputes arising therein. We will touch on them briefly here to provide you a fuller comprehension of the complexity of selling across the EU. However, a much fuller discussion of these issues is to be found in Chapter 2.

Brussels Regulation (EC) 44/2001

Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters⁴¹ is the key regulation concerned herein. It replaces the Brussels Convention.⁴² The Brussels Regulation was adopted with Electronic Commerce in mind and it is geared towards making the regulations a framework usable for Electronic Commerce. The rationale behind the Brussels Regulation is to achieve the European Community goal of a free market where goods, services, capitals and persons move freely from one Member State to another. Recital 1 of the Brussels Regulation states that to achieve such freedom, the measures relating to judicial cooperation in civil matters are necessary for the sound operation of the internal market. The Brussels Regulations apply to all Member States except Denmark and it applies to ‘civil and commercial matters’ only. They exclude from their scope matters relating to: revenue, customs or administrative matters; status or legal capacity of natural persons, matrimonial matters, wills and successions; bankruptcy; social security; and arbitration.⁴³

General jurisdiction

Article 2 sets out the principle of general jurisdiction - namely, that a person may be sued in whatever Member State he or she is domiciled in without regard to their citizenship. Article 59(1) states that to determine if a party is domiciled in the Member State whose courts are hearing the matter, the court shall apply its own internal law. Thus, in a matter before an English court, Schedule 4 to the Civil Jurisdiction and Judgement Act 1982⁴⁴ would apply:

•   an individual is domiciled in the UK if he is resident in the UK and the nature and circumstance of such residence indicate that he has a substantial connection with the UK;

•   the substantial connection is presumed if has been resident in the UK for the last 3 months or more; and

•   an individual is a resident in a particular part of the UK if that place is where he is settled or has his usual place of abode.

Article 59(2) requires that if the individual is not domiciled in the forum state according to its law, the court of that state needs to decide if he is domiciled in another Member State using the law of such other Member State to determine this point. In the case of a company or other legal person, Article 60(1) provides that such company or other legal person is domiciled at the place where it has a statutory seat or its central administration or principal place of business.

Special jurisdiction

In certain situations, the general jurisdiction rules are sometimes put aside where particular types of contract gives rise to a disregard of the general jurisdiction rules. For instance: insurance matters (Arts 8–14), consumer contracts (Art. 15), employment contracts (Arts 18–21) would be treated by special jurisdiction rules. The starting point for the application of special jurisdiction is Article 5.

Article 5 provides that a person domiciled in one Member State may be sued in another Member State in relation to several different types of matters:

•   matters relating to contracts (excluding employment);

•   matters relating to maintenance;

•   matters relating to tort;

•   civil claims for damages or restitution following an infringement;

•   the operations of a branch, agency or other establishment; and

•   payment of remuneration claimed in respect of the salvage of a cargo or freight.

The rules in Article 5 do not render inoperable the rules based on domicile (Art. 2). Rather, in those cases where the courts of a Member State have special jurisdiction, the claimant can choose to sue the defendant where he is domiciled or where the special jurisdiction arises.

Article 5(1): contracts

Article 5(1) gives rise to special rules concerning contracts. First, a person domiciled in one Member State can be sued in another Member State other than the one in which he is domiciled. For instance, a contracting party may be sued in the courts for the place of performance of the obligation in question. This will apply to disputes between professionals mainly. If the jurisdiction issue is not dealt with contractually, Article 5 of the Brussels Regulations would apply. Once again, the concept of what is a contract is an autonomous concept, namely, it is to be decided by reference to the Brussels Regulation and related European Court of Justice case law and not by looking at national law concepts. See SPRL Arcado v. SA Havilland [1988] ECR 1539. Article 5(1)(b) defines ‘place of performance of the obligation’. For contracts involving the sale of goods, the place of performance is where the goods are delivered or should have been delivered. In the case of services, the place of performance is where the service was provided or was supposed to have been provided. In the context of the Internet, there may be several jurisdictions to consider.

Article 5(3): torts

According to Article 5(3) the rule of jurisdiction with regards to tort is as follows. A person domiciled in one Member State may be sued in the courts of the Member State where the harmful event occurred or may occur. For most torts, the correct jurisdiction is that where the harmful event took place. In libel, it is usually the place of publication. With the Internet it is possible to have materials downloaded to several jurisdictions. If a person has a reputation in such jurisdictions there is a cause of action in each of them. This problem is explored fully in Chapter 5.

Articles 15–17: jurisdiction over consumer contracts

Some rules have been established to protect consumers. Consumers when suing have a choice to bring proceedings in a place where the defendant is domiciled or where they are domiciled. This goes only one way, however, as proceedings against consumers may only be brought in the country where the consumer is domiciled. To benefit from the consumer protective rules, the following conditions must be fulfilled:

•   a consumer contract must be involved;

•   for the sale of goods on instalment credit terms; or

•   for a loan repayable by instalments or for any other form of credit, made to finance the sale of goods; or

•   in all other cases, if the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or directs such activities to that Member State.⁴⁵

A consumer contract is defined as one made by a person for a purpose outside its trade or profession; this definition is a concept to be interpreted autonomously.⁴⁶

With regard to the Internet, the notion of ‘directed activity’ can cause real problems. Websites, of course, are posted for the entire world to see. Yet, essentially, this means that a website may be sued in any country in the world where this website may be accessed. A potential problem with regards to defining the term ‘directed’ would appear to be the fact that whilst the Regulation introduces this concept in an effort to cater for the new Electronic Commerce environment, there is in reality no legal definition of the term in the Brussels Regulation. Perhaps, one way to make sense of what ‘directed’ means is to look at the rationale behind the concept of active or passive websites:

The concept of activities pursued in or directed towards a Member State is designed to make clear that point (3) applies to consumer contracts concluded via an interactive website accessible in the State of the consumer’s domicile. The fact that a consumer simply had knowledge of a service or possibility of buying goods via a passive website accessible in his country of domicile will not trigger the protective jurisdiction.⁴⁷

In certain situations, the parties in advance can agree to decide which court will have jurisdiction to resolve a dispute between the parties. This can be done if such agreement is:

•   in writing or can be evidenced in writing (including electronic communications);

•   in a form that conforms with practices where the parties have established themselves; and

•   in international trade or commerce, in a form which accords with a usage of which the parties are or ought to be aware of and that is regularly observed by parties to the same particular types of trades.⁴⁸

However, for consumer contracts, the applicable provision is Article 17 of the Brussels Regulation which strictly limits the options in terms of choosing a jurisdiction. Interestingly, contracts with consumers on the Internet that impose a jurisdiction on the consumer other than his or her actual domicile may, therefore, be contrary to the Brussels Regulation.⁴⁹ The European Commission has been urging the use of alternative dispute resolution mechanisms, e.g., use of mediation panels as opposed to litigation, etc., in the consumer area as a way to increase consumer confidence and allow, cheaper and faster ways of resolving disputes. For instance, Article 17 of the Electronic Commerce Directive requires that Member States shall avoid obstacles to the use of alternative dispute resolution mechanisms. In the online world, we have seen how organisations such as the Internet Corporation for Assigned Names and Numbers (ICANN) and the World Intellectual Property Organisation (WIPO) have sponsored alternative dispute resolution mechanisms to resolve domain name disputes without the need for parties to go to court.

Finally, it should be noted that in a cross-border dispute it is necessary to determine not only which country’s courts have jurisdiction but also which law is to be applied to the resolution of the dispute. These two questions are distinct from each other: the fact that jurisdiction resides with one country does not necessarily mean that the law of that country is the applicable law although it often will be. This issue, however, is complex and is beyond the subject area of this text. For more on this point, see Christine Riefa, ‘Article 5 of the Rome Convention on the Law Applicable to Contractual Obligations of 19 June 1980 and Consumer E-contracts: The Need for Reform’, JCTL, vol. 13, No. 1, 2004.

It is hoped that in this brief introduction to jurisdiction and choice of law that some sense for the complexity of this issue is obtained. Whilst in the Internet context, the general assumption is that the domicile of the consumer is the first place to look for where a dispute should be heard, in more complicated matters such as Internet libel or disputes between businesses different rules will apply. Finally, note that choice of jurisdiction in which to hear the case does not mean automatically that that jurisdiction’s law will apply. This is a separate, second step analysis, that must be undertaken apart from the one that determines which court will hear the case.

Taxation

On 26 November 1999, the Inland Revenue and HM Customs and Excise (now HMRC) published ‘Electronic Commerce: The UK’s Taxation Agenda’.⁵⁰ This paper set out the taxation principles that the UK would follow with respect to the Internet. In essence, the UK Government emphasised that tax must not interfere with the growth of Electronic Commerce and that tax policy should be neutral in its treatment of Electronic Commerce as opposed to more traditional means of commerce. What this means is that the Government does not tax disproportionately transactions concluded over the Internet as opposed to through other means. In general, the Government has taken the position that it ‘does not believe that it is necessary at this stage to make any major changes to existing tax legislation and regulations or to introduce new taxes.’⁵¹ However, given the current economic crisis, it is not certain for how long this moratorium on imposing a specific tax on Internet transactions will survive. In the United States, Congress passed an Internet Tax Moratorium that prohibits (1) new taxes on Internet access services and (2) multiple or discriminatory taxes on Internet commerce. The moratorium was created by the Internet Tax Freedom Act (ITFA) of 1998 (112 Stat. 2681) and has been extended twice. The original moratorium expired on 21 October 2001. Congress extended the moratorium to 1 November 2003, with the Internet Tax Nondiscrimination Act, P.L. 107–75. The moratorium was extended for an additional four years, to 1 November 2007, by the Internet Tax Nondiscrimination Act, P.L. 108–435. On October 31, 2007, P.L. 110–108, the Internet Tax Freedom Act Amendments Act of 2007 was passed extending the moratorium to 1 November 2014. Generally, taxes on Internet access that have continued in place since before 1 October 1998, are protected by a ‘grandfather clause’.⁵²

1. For a discussion of English contract law, see C. Wild and S. Weinstein, Smith & Keenan’s English Law: Text and Cases, 16th edn (London, 2010).

2. E-contract is any kind of contract formed in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, the interaction of an individual with an electronic agent, such as a computer program, or the interaction of at least two electronic agents that are programmed to recognise the existence of a contract.

3. Lucy Sheriff, ‘Argos welshes on three quid TV Net offer‘, The Register, 7 September 1999, available at: http://www.theregister.co.uk/1999/09/07/argos_welshes_on_three_quid.

4. 2 QB 163, 169.

5. Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce), OJ L178, 17 July 2000, went into effect on 21 August 2002.

6. Electronic Commerce (EC Directive) Regulations 2002 (SI2002/2013).

7. Electronic Commerce Directive, Art. 10(1) (a)–(d).

8. Electronic Commerce Directive, Art. 10(2).

9. Electronic Commerce Directive, Art. 10(3).

10. Electronic Commerce Directive, Art. 10(4).

11. See David Callan, ‘How click-wrap contracts benefit over shrink-wrap contracts’, 2004, available online at: http://www.akamarketing.com/click-wrap-shrink-wrap-contracts.html and Martin Samson, ‘Internet Law – Click Wrap Agreement’, 10 June 2004, available online at: http://www.phillipsnizer.com/library/topics/click_wrap.cfm.

12. http://www.law.upenn.edu/bll/archives/ulc/ucita/ucita200.htm.

13. http://www.law.cornell.edu/ucc/ucc.table.html.

14. 396 F. 3d 17 at 18.

15. 1996 SLT 604; 1996 SCLR 587. See S.J.A. Robertson, ‘The Validity of Shrink-Wrap Licences in Scots Law Beta Computers (Europe) Ltd v. Adobe Systems (Europe) Ltd’, Case Note, 1998 (2) The Journal of Information, Law and Technology (JILT) available at: http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/1998_2/Robertson.

16. Brinkibon Ltd v. Stahag Stahl und Stahlwarenhandel GMBH [1982] 1 All ER 293 where the House of Lords dealt with the analogous technological issue of acceptance by telex machine.

17. See Electronic Commerce Directive, Art. 11, which concerns placing of an order over the Internet. Once again, we are not referring to transactions entered into by e-mail but rather Internet ‘click-wrap’ agreements.

18. Where acceptance by post has been requested (or where it is appropriate and reasonable means of communication between the parties), then acceptance is complete immediately upon posting of acceptance letter. Household Fire and Carriage Insurance Co v. Grant (1879) 4 Ex D 219.

19. See Entores Ltd v. Miles Far East Corpn [1955] 2 All ER 493 for a discussion of instantaneous communication. Where technology allows instantaneous communication, a contract is concluded when acceptance received not when sent.

20. A. Rawls, ‘Contract Formation in an Internet Age’, 10 Colum. Sci. & Tech. L. Rev. 200 (2009) (15 May 15 2009) available at: http://www.stlr.org/cite.cgi?volume=10&article=5.

21. Ibid.

22. Adrian McCullagh and William Caelli, ‘Non-Repudiation in the Digital Environment’, available at: http://www.firstmonday.org/issues/issue5_8/mccullagh.

23. Ibid.

24. ‘Encryption is a form of security that turns information, images, programs or other data into unreadable cipher by applying a set of complex algorithms to the original material. These algorithms transfer the data into streams or blocks of seemingly random alphanumeric characters. An encryption key might encrypt, decrypt, or perform both functions, depending on the type of encryption software being used’ quoting What is an Encryption Key? (24 August 2010), available at: http://www.wisegeek.com/what-is-an-encryption-key.htm.

25. Fraser Morel and Richard Jones, ‘De-mystifying Electronic Signatures and Electronic Signatures Law from a European Union Perspective’, World Data Protection Report, October 2002, BNA International Inc.

26. Electronic Signatures Regulations 2002 (SI 2002/318).

27. G.C. Parry, M. James-Moore, A.P. Graves and O. Altinok, ‘Legal aspects of electronic signatures’, University of Bath School of Management Working Paper Series 2008.02 available at: http://www.bath.ac.uk/management/research/pdf/2008-02.pdf (16 June 2010).

28. A digital signature is a narrower subset of electronic signature. Although these terms are used interchangeably, a digital signature is a method of using encryption to certify the source and integrity of a particular electronic document. Electronic signature is the legal term of art.

29. ‘Encryption’ is the process of obscuring information to make it unreadable without special knowledge. Please see the following website for a full explanation of encryption in stunningly non-technical language: http://www.wisegeek.com/what-is-an-encryption-key.htm (24 August 2010).

30. 2000 Ch. 7 available at: http://www.opsi.gov.uk/acts/acts2000/ukpga_20000007_en_1 (16 June 2010).

31. http://www.tscheme.org/about/index.html#intro (16 June 2010).

32. Brinkibon Ltd v. Stahag Stahl GmBH [1983] 2 AC 34.

33. http://www.bailii.org/ew/cases/EWHC/Ch/2010/306.html.

34. Ibid.

35. Article 11.1.2 of the Electronic Commerce Directive.

36. Small to medium-sized enterprises.

37. http://www.opsi.gov.uk/si/si2002/20022013.htm.

38. http://www.opsi.gov.uk/si/si2000/20002334.htm.

39. LINX is a mutually owned membership association for operators of Internet Protocol networks providing a neutral interconnection facility and peering platform known as an internet exchange point. Its website is https://http://www.linx.net.

40. https://publicaffairs.linx.net/news/?p=1308.

41. OJ L12 of 16 January 2001, http://www.europa.eu.int/scadplus/leg/en/lvb/133054.htm.

42. Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters, as amended by the Convention on the Accession of New Member States to that Convention, 27 September 1968.

43. Brussels Regulation, Art. 1.

44. Civil Jurisdiction and Judgement Act 1982, ss. 41–6 et seq.

45. Brussels Regulation, Art. 15(1)(a)(b)(c).

46. Brussels Regulation, Art. 15(1)(c).

47. ‘Proposal for a Council Regulation (EC) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (presented by the Commission)’, COM (1999) 348 final 99/0154 (CNS).

48. Brussels Regulation, Art. 23.

49. For more on this point, see C. Wild, S. Weinstein and C. Riefa, ‘Council Regulation (EC) 44/2001 and Internet Consumer Contracts: Some Thoughts on Article 15 and the Futility of Applying In the Box Conflict of Law Rules to the Out of the Box Borderless World’, BILETA conference 24–25 March 2004, http://www.bileta.ac.uk.

50. http://www.hmrc.gov.uk/bulletins/tb44.htm#5.

51. Ibid.

52. S. Maguire and N. Noto, ‘Internet Taxation: Issues and Legislation’, Congressional Research Service for Congress RL 336231, Updated 12 February 2007 available at: http://www.ipmall.info/hosted_resources/crs/RL33261-070212.pdf (17 June 2010). A grandfather clause is an exception that allows an old rule to continue to apply to some existing situations, when a new rule will apply to all future situations. It is often used as a verb: to grandfather means to grant such an exemption.

Chapter 2: Commercial Conflict of Laws

The concept of jurisdiction

There are inevitably disputes that concern parties and matters that are only remotely connected to England and the English legal system that the English courts may not necessarily have the right to decide. In this chapter we will endeavour to determine which cases the English courts have the right to decide. The topic is crucial to any consideration of the Internet, as problems of jurisdiction generally only arise in cases with an international element, and, unless the court has jurisdiction, there is no reason in progressing with the determination of other issues.

This chapter will focus on jurisdiction in personam, i.e. jurisdiction that is exercised against a particular person¹ and not with the jurisdiction in rem.² It is important to note at the outset that English law always exercises jurisdiction over persons rather than things.³ In line with the fact that the law focuses on persons, the concept of ‘domicile’ is central. However, it must be noted at the outset that the concept of ‘domicile’ used in the Brussels regime and the Civil Jurisdiction and Judgments Act 1982 is not the same as the concept of domicile used for other issues such as Family Law. The meaning of ‘domicile’ for the purposes of jurisdiction will be discussed more fully later in this chapter; for the present it is sufficient to note the short-hand that it means residence for about three months.

It is also important to note that when considering the bases on which the English courts may exercise jurisdiction in personam, one needs to distinguish those cases that are governed by the traditional common law rules and those which fall within the scope of the Brussels regime. This chapter looks at these two parallel systems and notes when a case will fall to be determined by either the traditional rules or the Brussels regime.

The traditional common law rules

The law of jurisdiction in personam in England was until recently liberal and relatively simple. It was, and still is under the ‘traditional rules’, liberal in the sense that the English courts would exercise jurisdiction over a wide range of persons in circumstances in which the courts of most other countries would deny that they had jurisdiction. The basic proposition was that the English courts had jurisdiction over anyone who was present within the country, and in practice this meant that the High Court had jurisdiction over anyone who was validly served with a claim form⁴ within England. It was not necessary that the matter in dispute should have anything to do with England or English law; nor was it necessary that either of the parties should be resident or domiciled in England: they simply had to be in England when the claim form was served. Most other legal systems require that there should either be some substantial link between the defendant and the forum (in the form of residence or domicile) or between the dispute and the forum (in that crucial events in the dispute took place within the forum) before the courts of the forum have jurisdiction. They do not consider mere presence within the jurisdiction as a sufficient link to give the courts jurisdiction.⁵

The liberality of this principle may be illustrated by the case of Maharanee of Baroda v. Wildenstein [1972] 2 QB 283. Here the claimant was an Indian princess resident in France and the defendant was an international art dealer. The dispute was over a sale (whose proper law was French) of a picture reputed to have been painted by the French artist Bouchier. Neither of the parties nor the dispute had anything to do with England. However, the defendant came to England briefly in order to attend the Ascot races and he was served with a claim form while at the racecourse. It was held that the English court had jurisdiction.⁶

Two further principles apply. First of all, in instances where the parties submit to the jurisdiction of the English courts, the courts generally have jurisdiction even if the dispute and the parties have nothing to do with England. Secondly, where the defendant is outside England⁷ the claimant may apply to the court for leave (under CPR 6) to serve the claim form outside the jurisdiction. This is frequently referred to as ‘exorbitant’ or ‘long-arm’ jurisdiction.⁸ Whether leave is granted is at the discretion of the court, though subject to complex rules. However, if the court is inclined to grant leave, and the claim form is served outside the jurisdiction then, once again, the English court has jurisdiction.

The impact of the European Union

The simplicity of the English common law rules was stripped away by the coming into force of the Civil Jurisdiction and Judgments Act 1982, the prime purpose of which was to implement the Brussels Convention of 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters as amended by the Accession Convention of 1978. This has now been replaced by the Brussels I Regulation, (Council Regulation (EC) No 44/2001), which came into force on 1 March 2002.

The history of the Brussels regime can appear a little confusing so a brief history of the various conventions is useful. The Brussels Convention was agreed between the original six members of the EEC, who were bound by Article 220 of the Treaty of Rome (the treaty that set up the EEC) to enter into such a convention in regard to the recognition of foreign judgments. However, the Brussels Convention went further than this and extended considerably into the area