UK: Technology Neutral Contracting

Last Updated: 15 October 2001

Article by Zoe Fahy and Nick Rudgard

The Government stated in its March 1999 Consultation document that 'as far as possible the law is technology neutral in its application'. In short, its intention was to create a level playing field to ensure the risks associated with on-line contracting are not too far removed from those arising from traditional paper based contracts. Unfortunately, this assumption is flawed. The reality is that contracting on-line presents different challenges for modern business.

Pre-contract considerations

Before contracting online, businesses should establish any restrictions on their potential customer base. Once a business launches its website, there are no geographic boundaries - unless blocking technology or passwords are employed. Theoretically anyone with access to the Internet can access the website.

There are several reasons why businesses may choose to restrict their activities either geographically or to a particular market. Many have long established distribution networks, both in their home territory and abroad and they may be reluctant to encroach upon existing arrangements.

Also, many countries have in place mandatory laws, (for example prohibiting the sale of certain products such as alcohol or services such as gambling), or standards which may apply to any contract with a party based in that country. Whilst a business cannot practically investigate laws world-wide, it can address such issues, either in its terms and conditions, or by placing notices on its website.

Another difficulty is ascertaining the identity of the customer, and ensuring that any communications remain secret and confidential. How can you be sure that the individual/company with whom you are contracting is who they actually say they are, that they actually sent the communication, or that it hasn’t been intercepted by an unauthorised person, or even altered by them?

The use of digital signatures (now admissible in court pursuant to the Electronic Communications Act 2000) can alleviate such risks. A common misconception is that a digital signature is actually some form of signature, when in fact it is really a form of technology. The originator of a communication uses a "private key" (a piece of software based on mathematical algorithms) to scramble the communication and send it to the recipient. The scrambled communication is actually the "digital signature". By using the public key, the recipient can unscramble the message, verify that the communication was actually sent by the sender, and that it has not been altered by anyone else. However, the risk of forged or stolen public keys remains, and even the use of a digital signature does not guarantee the sender’s actual identity.

Formation of the contract

Any business that traditionally contracts on its standard terms and conditions is likely to want to contract in the same way on-line. However it is not as simple as merely posting existing terms and conditions on the web-site.

Regulatory requirements: A business should refer to the Distance Selling Regulations 2000 ("the Regulations"), and the EU Electronic Commerce Directive 2000 ("the Directive").

The Regulations apply to "distance contracts", i.e. contracts concerning goods or services between suppliers and consumers under an organised distance selling sales scheme. Suppliers must provide consumers with certain information and give them the right to cancel contracts within a seven day cooling off period. Businesses who fail to comply, run the risk that their contracts are unenforceable, and injunctions may be used to enforce compliance.

The Directive (to be implemented in the UK by 17 January 2002), requires that suppliers give consumers additional information prior to an order being placed with the supplier (for example, the steps required to conclude the contract), and to acknowledge receipt of orders without undue delay. Implementing UK Regulations are awaited, but businesses should now note the more general provisions of the Directive, some of which apply whether or not the other party is a consumer (for example, details of name and address).

Incorporation: Businesses' terms and conditions should form the basis of any contracts formed on-line. To achieve this, they must have been brought to the attention of the other party. The website might, for example, require a buyer to click on an acknowledgement that it has read and accepts the terms and conditions, before proceeding to place an order. Even if a buyer doesn’t read the terms and conditions, he would not be able to argue that they weren’t brought to his attention. Alternatively, a hypertext link might link the buyer to the full text of the terms and conditions, although the danger here is that there is no guarantee that the buyer will click on the link.

Formation: Existing case law demonstrates the difficulty of determining the point at which a contract is concluded, and on-line guidance is minimal.

In advertising goods/services for sale via a website, there is a danger that a contract is formed once a buyer places his order. If the contract is formed in this way, the business may find itself with vast quantities of orders but insufficient stock to fulfil them. It may also find itself a party to a contract with a party whose identity it has not had the opportunity to verify.

In order to avoid these problems, businesses can construct their websites like a "shop window". Offering goods/services for sale via the website is then likely to constitute an "invitation to treat", and any order subsequently placed is likely to constitute an offer to buy.

Any acceptance of an offer needs to be communicated to the buyer/other party before a contract is formed. The difficulty is determining at what point the acceptance is actually communicated – acceptance could be via email or simply clicking on a button/icon on the website. Whilst technology has certainly advanced, it is not 100% reliable - transmission of the acceptance may fail or be incomplete. Unlike post or faxed communications, e-mail needs to be collected by the recipient.

What happens if it goes wrong?

As the on-line environment knows no boundaries, a dispute could arise with a party based in a country other than that where the business is established. The contract between the parties should specify which country has jurisdiction. If the contract is silent, the Brussels Convention provides that defendants must be sued in their own domicile, with certain exceptions.

For businesses contracting with parties domiciled in the EU, a new Regulation is due to come into force in March 2002 which increases the uncertainty in this area for online traders. The Regulation amends the Brussels Convention in a number of areas, but one of the most contentious amendments is in relation to consumer contracts. Under both the Convention and Regulation, consumers can choose (regardless of what the contract says) to sue either in their home courts, or in those of the business. However, the difference is that the Regulation applies to contracts formed with suppliers who "direct [their] activities to [a consumer’s] member state".

It is not entirely clear what is meant by "directing…activities". The online environment now means that businesses have the opportunity to offer their goods/services for sale worldwide, without specifically targeting a particular country, market or customer. Surely "directing" one’s business activities would seem to imply more than being able to access the website?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.