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APPENDIX B

Revision of Uniform Commercial Code (extracts)

ARTICLE 2 – SALES

SECTION 2-102. DEFINITIONS.

. . .

(12) “Electronic agent” means a computer programme or other automated means used, selected, or programmed by a party to initiate or respond to electronic messages or performances in whole or in part without review by an individual. [Section 2B-102(a)(12)]

(13) “Electronic” means electrical, digital, magnetic, optical, electromagnetic, or any other form of wave propagation, or by any other technology that entails capabilities similar to those technologies. [Section 2B-102(a)(12)]

(14) “Electronic message” means a record that, for purposes of communication to another person, is stored, generated, or transmitted by electronic, optical, or similar means. The term includes electronic data interchange, electronic or voice mail, facsimile, telex, telecopying, scanning, and similar communications. [Section 2B-102(a)(14)]

(15) “Electronic transaction” means a transaction formed by electronic messages in which the messages of one or both parties will not be reviewed by an individual as a routine step in forming the contract. [Section 2B-102(a)(14)]

. . .

(25) “Receipt”:

(A) with respect to goods, means taking delivery; and

(B) with respect to an electronic record, means when it enters an information processing system in a form capable of being processed by a system of that type and the recipient uses or has designated that system for the purpose of receiving records or information. “Receive has an analogous meaning. [Sections 2-103(1)(c), 2B-102(a)(29)]

(26) “Record” means information that is inscribed on a tangible medium, or that is stored in an electronic or other medium and is retrievable in perceivable form. [Sections 5-102(a)(14), 2B-102(a)(30)]

SECTION 2-210. ATTRIBUTION PROCEDURE.

(a) An attribution procedure is a procedure established by agreement or mutually adopted by the parties for the purpose of verifying that electronic records, messages, or performances are those of the respective parties or for detecting errors in the transmission or informational content of an electronic message, record, or performance, if the procedure is commercially reasonable.

(b) The commercial reasonableness of an attribution procedure is a question of law to be determined by the court in light of the purposes of the procedure and the commercial circumstances at the time of the agreement. An attribution procedure may require the use of algorithms or other codes, identifying words or numbers, encryption, callback procedures, key escrow, or any security devices that are reasonable under the circumstances.

Source: Section 2B-110 (May, 1997).

SECTION 2-211. ATTRIBUTION OF ELECTRONIC RECORD, MESSAGE, OR PERFORMANCE.

(a) As between the parties, an electronic message, record, or performance received by a party is attributable to the party indicated as the sender if:

(1) it was sent by that party, its agent, or its electronic agent;

(2) the receiving party, in good faith and in compliance with an attribution procedure concluded that it was sent by the other party; or

(3) subject to subsection (b), the message or performance:

(A) resulted from acts of a person that obtained access to access numbers, codes, computer programmes, or the like from a source under the control of the alleged sender creating the appearance that it came from the alleged sender;

(B) the access occurred under circumstances constituting a failure to exercise reasonable care by the alleged sender; and

(C) the receiving party reasonably relied to its detriment on the apparent source of the message or performance.

(b) In a case governed by subsection (a)(3), the following rules apply:

(1) The receiving party has the burden of proving reasonable reliance, and the alleged sender has the burden of proving reasonable care.

(2) Reliance on an electronic record or performance that does not comply with an agreed authentication procedure is not reasonable unless authorised by an individual representing the alleged sender.

(c) If an electronic message was transmitted pursuant to an attribution procedure for the detection of error and the message contained an error the following rules apply:

(1) If the sender complied with the attribution procedure and the error would have been detected had the receiving party also complied with the attribution procedure, the sender is not bound if the error relates to a material element of the message or performance.

(2) If the sender receives a notice required by the attribution procedure of the content of the message or performance as received, the sender has a duty to in a commercially reasonable manner review the notice and report any error detected by it.

(d) Except as otherwise provided in subsection (a)(1) and (c), if a loss occurs because a party complies with a procedure for attribution that was not commercially reasonable, the party that required use of the procedure bears the loss unless it disclosed the nature of the risk to the other party or offered commercially reasonable alternatives that the party rejected. The party’s liability under this section is limited to losses that could not have been prevented by the exercise of reasonable care by the other party.

SECTION 2-212. AUTHENTICATION EFFECT AND PROOF; ELECTRONIC AGENT AUTHENTICATION.

(a) An authentication is intended to establish the party’s identity, its adoption and acceptance of a record or a term, and the authenticity of the record or term.

(b) Operations of an electronic agent constitute the authentication of a party if the party designed, programmed, or selected the electronic agent for the purpose of achieving results of that type.

(c) A record or message is authenticated as a matter of law if a party complied with an attribution procedure for authentication. Otherwise, authentication may be proven in any manner including by showing that a procedure existed by which a party necessarily must have executed or adopted a symbol in order to proceed further in the use or processing of the information.

Source: Section 2B-114 (May, 1997).

SECTION 2-213. ELECTRONIC TRANSACTIONS AND MESSAGES: TIMING OF CONTRACT AND EFFECTIVENESS OF MESSAGE.

(a) If an electronic message initiated by a party or an electronic agent evokes an electronic response and the messages reflect an intent to be bound, a contract exists when:

(1) the response signifying acceptance is received; or

(2) if the response consists of electronically furnishing the requested information or notice of access to the information, when the information or notice is received unless the originating message prohibited that form of response.

(b) Subsection [sic] to Section 2-211, an electronic message is effective when received, even if no individual is aware of its receipt.

(c) Subject to subsection (d), operations of one or more electronic agents which confirm the existence of an agreement are effective to form an agreement even if no individual representing either party was aware of or reviewed the action or its results.

(d) In an electronic transaction, the following rules apply:

(1) An agreement is formed by the interaction of two electronic agents if the interaction results in both agents each engaging in operations that signify agreement, such as by engaging in performing the agreement, ordering or instructing performance, accepting performance, or making a record of the existence of an agreement.

(2) An agreement may be formed by the interaction of an electronic agent and an individual. An agreement is formed if an individual has reason to know that the individual is dealing with an electronic agent and performs actions the person should know will cause the agent to perform or to permit further use, or that are clearly indicated as constituting acceptance regardless of other contemporaneous expressions by the individual to which the electronic agent cannot react.

(3) The terms of the contract include terms on which the parties have previously agreed, terms which the electronic agents could take into account, and, terms provided by this article or other law.

Sources: Sections 2B-204, 2B-203(e) and (f) (May, 1997).

SECTION 2-214. ACKNOLWEDGMENT OF ELECTRONIC MESSAGE.

(a) If the originator of an electronic message requests or has agreed with the addressee of the message that receipt of the message must be acknowledged electronically, the following rules apply:

(1) If the originator indicated in the message or otherwise that the message was conditional on receipt of an acknowledgement, the message does not bind the originator until acknowledgement is received and [the message] lapses if acknowledgement is not received in a reasonable time.

(2) If the originator requested acknowledgement but did not state the message was conditional on acknowledgement and acknowledgement has not been received within a reasonable tune [sic] after the message was sent, on notice to the other party, the originator may either retract the message or specify a further reasonable time within which acknowledgement must be received or the message will be treated as not having binding effect. If acknowledgement is not received within that additional time, the originator may treat the message as not having binding effect.

(3) If the originator requested acknowledgement and specified a time for receipt, the originator may exercise the options in subsection (a)(2) if receipt does not occur within that time.

(b) Receipt of acknowledgement establishes that the message was received but does not in itself establish that the content sent corresponds to the content received.

Source: Section 2B-205 (May, 1997).