UNCITRAL MODEL LAW ON ELECTRONIC COMMERCE (1996) WITH ADDITIONAL
ARTICLE 5 BIS AS ADOPTED IN 1998 AND GUIDE TO ENACTMENT
**********************************************************************

[PRELIMINARY COMMENTS]
----------------------

Extract from the US / Framework for Global Electronic Commerce / 1997:

"Internationally, the United Nations Commission on International Trade
Law (UNCITRAL) has completed work on a model law that supports the
commercial use of international contracts in electronic commerce. This
model law establishes rules and norms that validate and recognize
contracts formed through electronic means, sets default rules for
contract formation and governance of electronic contract performance,
defines the characteristics of a valid electronic writing and an
original document, provides for the acceptability of electronic
signatures for legal and commercial purposes, and supports the
admission of computer evidence in courts and arbitration proceedings.

The United States Government supports the adoption of principles along
these lines by all nations as a start to defining an international set
of uniform commercial principles for electronic commerce. We urge
UNCITRAL, other appropriate international bodies, bar associations,
and other private sector groups to continue their work in this area."

Extract from the EU / Initiative in Electronic Commerce / 1997:

"45. A number of Member States' rules governing the formation and the
performance of contracts are not appropriate for an electronic
commerce environment and are generating uncertainties relating to the
validity and enforceability of electronic contracts (for example the
requirements for written documents, for hand written signatures, or
the rules of evidence that do not take into account electronic
documents). The Commission will take concrete steps to address the
problem of how to eliminate barriers for the legal recognition of
electronic contracts within the Single Market. ..."

RESOLUTION ADOPTED BY THE GENERAL ASSEMBLY
------------------------------------------

[on the report of the Sixth Committee (A/51/628) 16 DECEMBER 1996<br
/> UNCITRAL MODEL LAW ON ELECTRONIC COMMERCE]

51/162 Model Law on Electronic Commerce adopted by the United Nations
Commission on International Trade Law

The General Assembly,

Recalling its resolution 2205 (XXI) of 17 December 1966, by which it
created the United Nations Commission on International Trade Law, with
a mandate to further the progressive harmonization and unification of
the law of international trade and in that respect to bear in mind the
interests of all peoples, in particular those of developing countries,
in the extensive development of international trade,

Noting that an increasing number of transactions in international
trade are carried out by means of electronic data interchange and
other means of communication, commonly referred to as "electronic
commerce", which involve the use of alternatives to paper-based
methods of communication and storage of information,

Recalling the recommendation on the legal value of computer records
adopted by the Commission at its eighteenth session, in 1985,[^1] and
paragraph 5(b) of General Assembly resolution 40/71 of 11 December
1985, in which the Assembly called upon Governments and international
organizations to take action, where appropriate, in conformity with
the recommendation of the Commission,[^2] so as to ensure legal
security in the context of the widest possible use of automated data
processing in international trade,


 [1]: 1. See Official Records of the General Assembly, Fortieth Session,
 Supplement No. 17 (A/40/17), chap. VI, sect. B.


 [2]: 2. Reference materials listed by symbols in this Guide belong to
 the following three categories of documents:

Convinced that the establishment of a model law facilitating the use
of electronic commerce that is acceptable to States with different
legal, social and economic systems, could contribute significantly to
the development of harmonious international economic relations,

Noting that the Model Law on Electronic Commerce was adopted by the
Commission at its twenty-ninth session after consideration of the
observations of Governments and interested organizations,

Believing that the adoption of the Model Law on Electronic Commerce by
the Commission will assist all States significantly in enhancing their
legislation governing the use of alternatives to paper-based methods
of communication and storage of information and in formulating such
legislation where none currently exists,

1. Expresses its appreciation to the United Nations Commission on
International Trade Law for completing and adopting the Model Law on
Electronic Commerce contained in the annex to the present resolution
and for preparing the Guide to Enactment of the Model Law;

2. Recommends that all States give favourable consideration to the
Model Law when they enact or revise their laws, in view of the need
for uniformity of the law applicable to alternatives to paper-based
methods of communication and storage of information;

3. Recommends also that all efforts be made to ensure that the Model
Law, together with the Guide, become generally known and available.

85th plenary meeting

16 December 1996

UNCITRAL Model Law on Electronic Commerce

[Original: Arabic, Chinese, English, French, Russian, Spanish]

PART ONE. ELECTRONIC COMMERCE IN GENERAL
****************************************

CHAPTER I. GENERAL PROVISIONS
=============================

ARTICLE 1. SPHERE OF APPLICATION*
---------------------------------

This Law** applies to any kind of information in the form of a data
message used in the context*** of commercial**** activities.

* The Commission suggests the following text for States that might
wish to limit the applicability of this Law to international data
messages:

"This Law applies to a data message as defined in paragraph (1) of
article 2 where the data message relates to international commerce."

** This Law does not override any rule of law intended for the
protection of consumers.

*** The Commission suggests the following text for States that might
wish to extend the applicability of this Law: "This Law applies to any
kind of information in the form of a data message, except in the
following situations: [...]."

**** The term "commercial" should be given a wide interpretation so as
to cover matters arising from all relationships of a commercial
nature, whether contractual or not. Relationships of a commercial
nature include, but are not limited to, the following transactions:
any trade transaction for the supply or exchange of goods or services;
distribution agreement; commercial representation or agency;
factoring; leasing; construction of works; consulting; engineering;
licensing; investment; financing; banking; insurance; exploitation
agreement or concession; joint venture and other forms of industrial
or business cooperation; carriage of goods or passengers by air, sea,
rail or road

ARTICLE 2. DEFINITIONS
----------------------

For the purposes of this Law:

(a) "Data message" means information generated, sent, received or
stored by electronic, optical or similar means including, but not
limited to, electronic data interchange (EDI), electronic mail,
telegram, telex or telecopy;

(b) "Electronic data interchange (EDI)" means the electronic transfer
from computer to computer of information using an agreed standard to
structure the information;

(c) "Originator" of a data message means a person by whom, or on whose
behalf, the data message purports to have been sent or generated prior
to storage, if any, but it does not include a person acting as an
intermediary with respect to that data message;

(d) "Addressee" of a data message means a person who is intended by
the originator to receive the data message, but does not include a
person acting as an intermediary with respect to that data message;

(e) "Intermediary", with respect to a particular data message, means a
person who, on behalf of another person, sends, receives or stores
that data message or provides other services with respect to that data
message;

(f) "Information system" means a system for generating, sending,
receiving, storing or otherwise processing data messages.

ARTICLE 3. INTERPRETATION
-------------------------

(1) In the interpretation of this Law, regard is to be had to its
international origin and to the need to promote uniformity in its
application and the observance of good faith.

(2) Questions concerning matters governed by this Law which are not
expressly settled in it are to be settled in conformity with the
general principles on which this Law is based.

ARTICLE 4. VARIATION BY AGREEMENT
---------------------------------

(1) As between parties involved in generating, sending, receiv- ing,
storing or otherwise processing data messages, and except as otherwise
provided, the provisions of chapter III may be varied by agreement.

(2) Paragraph (1) does not affect any right that may exist to modify
by agreement any rule of law referred to in chapter II.

CHAPTER II. APPLICATION OF LEGAL REQUIREMENTS TO DATA MESSAGES
==============================================================

ARTICLE 5. LEGAL RECOGNITION OF DATA MESSAGES
---------------------------------------------

Information shall not be denied legal effect, validity or enforce-
ability solely on the grounds that it is in the form of a data
message.

ARTICLE 5 BIS. INCORPORATION BY REFERENCE
-----------------------------------------

(as adopted by the Commission at its thirty-first session, in June
1998)

Information shall not be denied legal effect, validity or
enforceability solely on the grounds that it is not contained in the
data message purporting to give rise to such legal effect, but is
merely referred to in that data message.

ARTICLE 6. WRITING
------------------

(1) Where the law requires information to be in writing, that
requirement is met by a data message if the information contained
therein is accessible so as to be usable for subsequent reference.

(2) Paragraph (1) applies whether the requirement therein is in the
form of an obligation or whether the law simply provides consequences
for the information not being in writing.

(3) The provisions of this article do not apply to the following:
[...].

ARTICLE 7. SIGNATURE
--------------------

(1) Where the law requires a signature of a person, that requirement
is met in relation to a data message if:

(a) a method is used to identify that person and to indicate that
person's approval of the information contained in the data message;
and

(b) that method is as reliable as was appropriate for the purpose for
which the data message was generated or communicated, in the light of
all the circumstances, including any relevant agreement.

(2) Paragraph (1) applies whether the requirement therein is in the
form of an obligation or whether the law simply provides consequences
for the absence of a signature.

(3) The provisions of this article do not apply to the following:
[...].

ARTICLE 8. ORIGINAL
-------------------

(1) Where the law requires information to be presented or retained in
its original form, that requirement is met by a data message if:

(a) there exists a reliable assurance as to the integrity of the
information from the time when it was first generated in its final
form, as a data message or otherwise; and

(b) where it is required that information be presented, that
information is capable of being displayed to the person to whom it is
to be presented.

(2) Paragraph (1) applies whether the requirement therein is in the
form of an obligation or whether the law simply provides consequences
for the information not being presented or retained in its original
form.

(3) For the purposes of subparagraph (a) of paragraph (1):

(a) the criteria for assessing integrity shall be whether the
information has remained complete and unaltered, apart from the
addition of any endorsement and any change which arises in the normal
course of communication, storage and display; and

(b) the standard of reliability required shall be assessed in the
light of the purpose for which the information was generated and in
the light of all the relevant circumstances.

(4) The provisions of this article do not apply to the following:
[...].

ARTICLE 9. ADMISSIBILITY AND EVIDENTIAL WEIGHT OF DATA MESSAGES
---------------------------------------------------------------

(1) In any legal proceedings, nothing in the application of the rules
of evidence shall apply so as to deny the admissibility of a data
message in evidence:

(a) on the sole ground that it is a data message; or,

(b) if it is the best evidence that the person adducing it could
reasonably be expected to obtain, on the grounds that it is not in its
original form.

(2) Information in the form of a data message shall be given due
evidential weight. In assessing the evidential weight of a data
message, regard shall be had to the reliability of the manner in which
the data message was generated, stored or communicated, to the
reliability of the manner in which the integrity of the information
was maintained, to the manner in which its originator was identified,
and to any other relevant factor.

ARTICLE 10. RETENTION OF DATA MESSAGES
--------------------------------------

(1) Where the law requires that certain documents, records or
information be retained, that requirement is met by retaining data
messages, provided that the following conditions are satisfied:

(a) the information contained therein is accessible so as to be usable
for subsequent reference; and

(b) the data message is retained in the format in which it was
generated, sent or received, or in a format which can be demonstrated
to represent accurately the information generated, sent or received;
and

(c) such information, if any, is retained as enables the
identification of the origin and destination of a data message and the
date and time when it was sent or received.

(2) An obligation to retain documents, records or information in
accordance with paragraph (1) does not extend to any information the
sole purpose of which is to enable the message to be sent or received.

(3) A person may satisfy the requirement referred to in paragraph (1)
by using the services of any other person, provided that the
conditions set forth in subparagraphs (a), (b) and (c) of paragraph
(1) are met.

CHAPTER III. COMMUNICATION OF DATA MESSAGES
===========================================

ARTICLE 11. FORMATION AND VALIDITY OF CONTRACTS
-----------------------------------------------

(1) In the context of contract formation, unless otherwise agreed by
the parties, an offer and the acceptance of an offer may be expressed
by means of data messages. Where a data message is used in the
formation of a contract, that contract shall not be denied validity or
enforceability on the sole ground that a data message was used for
that purpose.

(2) The provisions of this article do not apply to the following:
[...].

ARTICLE 12. RECOGNITION BY PARTIES OF DATA MESSAGES
---------------------------------------------------

(1) As between the originator and the addressee of a data message, a
declaration of will or other statement shall not be denied legal
effect, validity or enforceability solely on the grounds that it is in
the form of a data message.

(2) The provisions of this article do not apply to the following:
[...].

ARTICLE 13. ATTRIBUTION OF DATA MESSAGES
----------------------------------------

(1) A data message is that of the originator if it was sent by the
originator itself.

(2) As between the originator and the addressee, a data message is
deemed to be that of the originator if it was sent:

(a) by a person who had the authority to act on behalf of the
originator in respect of that data message; or

(b) by an information system programmed by, or on behalf of, the
originator to operate automatically.

(3) As between the originator and the addressee, an addressee is
entitled to regard a data message as being that of the originator, and
to act on that assumption, if:

(a) in order to ascertain whether the data message was that of the
originator, the addressee properly applied a procedure previously
agreed to by the originator for that purpose; or

(b) the data message as received by the addressee resulted from the
actions of a person whose relationship with the originator or with any
agent of the originator enabled that person to gain access to a method
used by the originator to identify data messages as its own.

(4) Paragraph (3) does not apply:

(a) as of the time when the addressee has both received notice from
the originator that the data message is not that of the originator,
and had reasonable time to act accordingly; or

(b) in a case within paragraph (3)(b), at any time when the addressee
knew or should have known, had it exercised reasonable care or used
any agreed procedure, that the data message was not that of the
originator.

(5) Where a data message is that of the originator or is deemed to be
that of the originator, or the addressee is entitled to act on that
assumption, then, as between the originator and the addressee, the
addressee is entitled to regard the data message as received as being
what the originator intended to send, and to act on that assumption.
The addressee is not so entitled when it knew or should have known,
had it exercised reasonable care or used any agreed procedure, that
the transmission resulted in any error in the data message as
received.

(6) The addressee is entitled to regard each data message received as
a separate data message and to act on that assumption, except to the
extent that it duplicates another data message and the addressee knew
or should have known, had it exercised reasonable care or used any
agreed procedure, that the data message was a duplicate.

ARTICLE 14. ACKNOWLEDGEMENT OF RECEIPT
--------------------------------------

(1) Paragraphs (2) to (4) of this article apply where, on or before
sending a data message, or by means of that data message, the
originator has requested or has agreed with the addressee that receipt
of the data message be acknowledged.

(2) Where the originator has not agreed with the addressee that the
acknowledgement be given in a particular form or by a particular
method, an acknowledgement may be given by

(a) any communication by the addressee, automated or otherwise, or

(b) any conduct of the addressee,

sufficient to indicate to the originator that the data message has
been received.

(3) Where the originator has stated that the data message is
conditional on receipt of the acknowledgement, the data message is
treated as though it has never been sent, until the acknowledgement is
received.

(4) Where the originator has not stated that the data message is
conditional on receipt of the acknowledgement, and the acknowledgement
has not been received by the originator within the time specified or
agreed or, if no time has been specified or agreed, within a
reasonable time, the originator:

(a) may give notice to the addressee stating that no acknowledgement
has been received and specifying a reasonable time by which the
acknowledgement must be received; and

(b) if the acknowledgement is not received within the time specified
in subparagraph (a), may, upon notice to the addressee, treat the data
message as though it had never been sent, or exercise any other rights
it may have.

(5) Where the originator receives the addressee's acknowledgement of
receipt, it is presumed that the related data message was received by
the addressee. That presumption does not imply that the data message
corresponds to the message received.

(6) Where the received acknowledgement states that the related data
message met technical requirements, either agreed upon or set forth in
applicable standards, it is presumed that those requirements have been
met.

(7) Except in so far as it relates to the sending or receipt of the
data message, this article is not intended to deal with the legal
consequences that may flow either from that data message or from the
acknowledgement of its receipt.

ARTICLE 15. TIME AND PLACE OF DISPATCH AND RECEIPT OF DATA MESSAGES
-------------------------------------------------------------------

(1) Unless otherwise agreed between the originator and the addressee,
the dispatch of a data message occurs when it enters an information
system outside the control of the originator or of the person who sent
the data message on behalf of the originator.

(2) Unless otherwise agreed between the originator and the addressee,
the time of receipt of a data message is determined as follows:

(a) if the addressee has designated an information system for the
purpose of receiving data messages, receipt occurs:

(i) at the time when the data message enters the designated
information system; or

(ii) if the data message is sent to an information system of the
addressee that is not the designated information system, at the time
when the data message is retrieved by the addressee;

(b) if the addressee has not designated an information system, receipt
occurs when the data message enters an information system of the
addressee.

(3) Paragraph (2) applies notwithstanding that the place where the
information system is located may be different from the place where
the data message is deemed to be received under paragraph (4).

(4) Unless otherwise agreed between the originator and the addressee,
a data message is deemed to be dispatched at the place where the
originator has its place of business, and is deemed to be received at
the place where the addressee has its place of business. For the
purposes of this paragraph:

(a) if the originator or the addressee has more than one place of
business, the place of business is that which has the closest
relationship to the underlying transaction or, where there is no
underlying transaction, the principal place of business;

(b) if the originator or the addressee does not have a place of
business, reference is to be made to its habitual residence.

(5) The provisions of this article do not apply to the following:
[...].

PART TWO. ELECTRONIC COMMERCE IN SPECIFIC AREAS
***********************************************

CHAPTER I. CARRIAGE OF GOODS
============================

ARTICLE 16. ACTIONS RELATED TO CONTRACTS OF CARRIAGE OF GOODS
-------------------------------------------------------------

Without derogating from the provisions of part one of this Law, this
chapter applies to any action in connection with, or in pursuance of,
a contract of carriage of goods, including but not limited to:

(a) (i) furnishing the marks, number, quantity or weight of goods;

(ii) stating or declaring the nature or value of goods;

(iii) issuing a receipt for goods;

(iv) confirming that goods have been loaded;

(b) (i) notifying a person of terms and conditions of the contract;

(ii) giving instructions to a carrier;

(c) (i) claiming delivery of goods;

(ii) authorizing release of goods;

(iii) giving notice of loss of, or damage to, goods;

(d) giving any other notice or statement in connection with the
performance of the contract;

(e) undertaking to deliver goods to a named person or a person
authorized to claim delivery;

(f) granting, acquiring, renouncing, surrendering, transferring or
negotiating rights in goods;

(g) acquiring or transferring rights and obligations under the
contract.

ARTICLE 17. TRANSPORT DOCUMENTS
-------------------------------

(1) Subject to paragraph (3), where the law requires that any action
referred to in article 16 be carried out in writing or by using a
paper document, that requirement is met if the action is carried out
by using one or more data messages.

(2) Paragraph (1) applies whether the requirement therein is in the
form of an obligation or whether the law simply provides consequences
for failing either to carry out the action in writing or to use a
paper document.

(3) If a right is to be granted to, or an obligation is to be acquired
by, one person and no other person, and if the law requires that, in
order to effect this, the right or obligation must be conveyed to that
person by the transfer, or use of, a paper document, that requirement
is met if the right or obligation is conveyed by using one or more
data messages, provided that a reliable method is used to render such
data message or messages unique.

(4) For the purposes of paragraph (3), the standard of reliability
required shall be assessed in the light of the purpose for which the
right or obligation was conveyed and in the light of all the
circumstances, including any relevant agreement.

(5) Where one or more data messages are used to effect any action in
subparagraphs (f) and (g) of article 16, no paper document used to
effect any such action is valid unless the use of data messages has
been terminated and replaced by the use of paper documents. A paper
document issued in these circumstances shall contain a statement of
such termination. The replacement of data messages by paper documents
shall not affect the rights or obligations of the parties involved.

(6) If a rule of law is compulsorily applicable to a contract of
carriage of goods which is in, or is evidenced by, a paper document,
that rule shall not be inapplicable to such a contract of carriage of
goods which is evidenced by one or more data messages by reason of the
fact that the contract is evidenced by such data message or messages
instead of by a paper document.

(7) The provisions of this article do not apply to the following:
[...].

GUIDE TO ENACTMENT OF THE UNCITRAL MODEL LAW ON ELECTRONIC COMMERCE
(1996)
**********************************************************************

PURPOSE OF THIS GUIDE
---------------------

1. In preparing and adopting the UNCITRAL Model Law on Electronic
Commerce (hereinafter referred to as "the Model Law"), the United
Nations Commission on International Trade Law (UNCITRAL) was mindful
that the Model Law would be a more effective tool for States
modernizing their legislation if background and explanatory
information would be provided to executive branches of Governments and
legislators to assist them in using the Model Law. The Commission was
also aware of the likelihood that the Model Law would be used in a
number of States with limited familiarity with the type of
communication techniques considered in the Model Law. This Guide, much
of which is drawn from the travaux préparatoires of the Model Law, is
also intended to be helpful to users of electronic means of
communication as well as to scholars in that area. In the preparation
of the Model Law, it was assumed that the draft Model Law would be
accompanied by such a guide. For example, it was decided in respect of
a number of issues not to settle them in the draft Model Law but to
address them in the Guide so as to provide guidance to States enacting
the draft Model Law. The information presented in this Guide is
intended to explain why the provisions in the Model Law have been
included as essential basic features of a statutory device designed to
achieve the objectives of the Model Law. Such information might assist
States also in considering which, if any, of the provisions of the
Model Law might have to be varied to take into account particular
national circumstances.

I. INTRODUCTION TO THE MODEL LAW
================================

A. OBJECTIVES
-------------

2. The use of modern means of communication such as electronic mail
and electronic data interchange (EDI) for the conduct of international
trade transactions has been increasing rapidly and is expected to
develop further as technical supports such as information highways and
the INTERNET become more widely accessible. However, the communication
of legally significant information in the form of paperless messages
may be hindered by legal obstacles to the use of such messages, or by
uncertainty as to their legal effect or validity. The purpose of the
Model Law is to offer national legislators a set of internationally
acceptable rules as to how a number of such legal obstacles may be
removed, and how a more secure legal environment may be created for
what has become known as "electronic commerce". The principles
expressed in the Model Law are also intended to be of use to
individual users of electronic commerce in the drafting of some of the
contractual solutions that might be needed to overcome the legal
obstacles to the increased use of electronic commerce.

3. The decision by UNCITRAL to formulate model legislation on
electronic commerce was taken in response to the fact that in a number
of countries the existing legislation governing communication and
storage of information is inadequate or outdated because it does not
contemplate the use of electronic commerce. In certain cases, existing
legislation imposes or implies restrictions on the use of modern means
of communication, for example by prescribing the use of "written",
"signed" or "original" documents. While a few countries have adopted
specific provisions to deal with certain aspects of electronic
commerce, there exists no legislation dealing with electronic commerce
as a whole. This may result in uncertainty as to the legal nature and
validity of information presented in a form other than a traditional
paper document. Moreover, while sound laws and practices are necessary
in all countries where the use of EDI and electronic mail is becoming
widespread, this need is also felt in many countries with respect to
such communication techniques as telecopy and telex.

4. The Model Law may also help to remedy disadvantages that stem from
the fact that inadequate legislation at the national level creates
obstacles to international trade, a significant amount of which is
linked to the use of modern communication techniques. Disparities
among, and uncertainty about, national legal regimes governing the use
of such communication techniques may contribute to limiting the extent
to which businesses may access international markets.

5. Furthermore, at an international level, the Model Law may be useful
in certain cases as a tool for interpreting existing international
conventions and other international instruments that create legal
obstacles to the use of electronic commerce, for example by
prescribing that certain documents or contractual clauses be made in
written form. As between those States parties to such international
instruments, the adoption of the Model Law as a rule of interpretation
might provide the means to recognize the use of electronic commerce
and obviate the need to negotiate a protocol to the international
instrument involved.

6. The objectives of the Model Law, which include enabling or
facilitating the use of electronic commerce and providing equal
treatment to users of paper-based documentation and to users of
computer-based information, are essential for fostering economy and
efficiency in international trade. By incorporating the procedures
prescribed in the Model Law in its national legislation for those
situations where parties opt to use electronic means of communication,
an enacting State would create a media-neutral environment.

B. SCOPE
--------

7. The title of the Model Law refers to "electronic commerce". While a
definition of "electronic data interchange (EDI)" is provided in arti-
cle 2, the Model Law does not specify the meaning of "electronic
commerce". In preparing the Model Law, the Commission decided that, in
addressing the subject matter before it, it would have in mind a broad
notion of EDI, covering a variety of trade-related uses of EDI that
might be referred to broadly under the rubric of "electronic commerce"
(see A/CN.9/360, paras. 28-29), although other descriptive terms could
also be used. Among the means of communication encompassed in the
notion of "electronic commerce" are the following modes of
transmission based on the use of electronic techniques: communication
by means of EDI defined narrowly as the computer-to-computer
transmission of data in a standardized format; transmission of
electronic messages involving the use of either publicly available
standards or proprietary standards; transmission of free-formatted
text by electronic means, for example through the INTERNET. It was
also noted that, in certain circumstances, the notion of "electronic
commerce" might cover the use of techniques such as telex and
telecopy.

8. It should be noted that, while the Model Law was drafted with
constant reference to the more modern communication techniques, e.g.,
EDI and electronic mail, the principles on which the Model Law is
based, as well as its provisions, are intended to apply also in the
context of less advanced communication techniques, such as telecopy.
There may exist situations where digitalized information initially
dispatched in the form of a standardized EDI message might, at some
point in the communication chain between the sender and the recipient,
be forwarded in the form of a computer-generated telex or in the form
of a telecopy of a computer print-out. A data message may be initiated
as an oral communication and end up in the form of a telecopy, or it
may start as a telecopy and end up as an EDI message. A characteristic
of electronic commerce is that it covers programmable messages, the
computer programming of which is the essential difference between such
messages and traditional paper-based documents. Such situations are
intended to be covered by the Model Law, based on a consideration of
the users' need for a consistent set of rules to govern a variety of
communication techniques that might be used interchangeably. More
generally, it may be noted that, as a matter of principle, no communi-
cation technique is excluded from the scope of the Model Law since
future technical developments need to be accommodated.

9. The objectives of the Model Law are best served by the widest
possible application of the Model Law. Thus, although there is
provision made in the Model Law for exclusion of certain situations
from the scope of articles 6, 7, 8, 11, 12, 15 and 17, an enacting
State may well decide not to enact in its legislation substantial
restrictions on the scope of application of the Model Law.

10. The Model Law should be regarded as a balanced and discrete set of
rules, which are recommended to be enacted as a single statute.
Depending on the situation in each enacting State, however, the Model
Law could be implemented in various ways, either as a single statute
or in several pieces of legislation (see below, para. 143).

C. STRUCTURE
------------

11. The Model Law is divided into two parts, one dealing with
electronic commerce in general and the other one dealing with
electronic commerce in specific areas. It should be noted that part
two of the Model Law, which deals with electronic commerce in specific
areas, is composed of a chapter I only, dealing with electronic
commerce as it applies to the carriage of goods. Other aspects of
electronic commerce might need to be dealt with in the future, and the
Model Law can be regarded as an open-ended instrument, to be
complemented by future work.

12. UNCITRAL intends to continue monitoring the technical, legal and
commercial developments that underline the Model Law. It might, should
it regard it advisable, decide to add new model provisions to the
Model Law or modify the existing ones.

D. A "FRAMEWORK" LAW TO BE SUPPLEMENTED BY TECHNICAL REGULATIONS
----------------------------------------------------------------

13. The Model Law is intended to provide essential procedures and
principles for facilitating the use of modern techniques for recording
and communicating information in various types of circumstances.
However, it is a "framework" law that does not itself set forth all
the rules and regulations that may be necessary to implement those
techniques in an enacting State. Moreover, the Model Law is not
intended to cover every aspect of the use of electronic commerce.
Accordingly, an enacting State may wish to issue regulations to fill
in the procedural details for procedures authorized by the Model Law
and to take account of the specific, possibly changing, circumstances
at play in the enacting State, without compromising the objectives of
the Model Law. It is recommended that, should it decide to issue such
regulation, an enacting State should give particular attention to the
need to maintain the beneficial flexibility of the provisions in the
Model Law.

14. It should be noted that the techniques for recording and
communicating information considered in the Model Law, beyond raising
matters of procedure that may need to be addressed in the implementing
technical regulations, may raise certain legal questions the answers
to which will not necessarily be found in the Model Law, but rather in
other bodies of law. Such other bodies of law may include, for
example, the applicable administrative, contract, criminal and
judicial-procedure law, which the Model Law is not intended to deal
with.

E. THE "FUNCTIONAL-EQUIVALENT" APPROACH
---------------------------------------

15. The Model Law is based on the recognition that legal requirements
prescribing the use of traditional paper-based documentation
constitute the main obstacle to the development of modern means of
communication. In the preparation of the Model Law, consideration was
given to the possibility of dealing with impediments to the use of
electronic commerce posed by such requirements in national laws by way
of an extension of the scope of such notions as "writing", "signature"
and "original", with a view to encompassing computer-based techniques.
Such an approach is used in a number of existing legal instruments,
e.g., article 7 of the UNCITRAL Model Law on International Commercial
Arbitration and article 13 of the United Nations Convention on
Contracts for the International Sale of Goods. It was observed that
the Model Law should permit States to adapt their domestic legislation
to developments in communications technology applicable to trade law
without necessitating the wholesale removal of the paper-based
requirements themselves or disturbing the legal concepts and
approaches underlying those requirements. At the same time, it was
said that the electronic fulfilment of writing requirements might in
some cases necessitate the development of new rules. This was due to
one of many distinctions between EDI messages and paper-based
documents, namely, that the latter were readable by the human eye,
while the former were not so readable unless reduced to paper or
displayed on a screen.

16. The Model Law thus relies on a new approach, sometimes referred to
as the "functional equivalent approach", which is based on an analysis
of the purposes and functions of the traditional paper-based
requirement with a view to determining how those purposes or functions
could be fulfilled through electronic-commerce techniques. For
example, among the functions served by a paper document are the
following: to provide that a document would be legible by all; to
provide that a document would remain unaltered over time; to allow for
the reproduction of a document so that each party would hold a copy of
the same data; to allow for the authentication of data by means of a
signature; and to provide that a document would be in a form
acceptable to public authorities and courts. It should be noted that
in respect of all of the above-mentioned functions of paper,
electronic records can provide the same level of security as paper
and, in most cases, a much higher degree of reliability and speed,
especially with respect to the identification of the source and
content of the data, provided that a number of technical and legal
requirements are met. However, the adoption of the
functional-equivalent approach should not result in imposing on users
of electronic commerce more stringent standards of security (and the
related costs) than in a paper-based environment.

17. A data message, in and of itself, cannot be regarded as an
equivalent of a paper document in that it is of a different nature and
does not necessarily perform all conceivable functions of a paper
document. That is why the Model Law adopted a flexible standard,
taking into account the various layers of existing requirements in a
paper-based environment: when adopting the "functional-equivalent"
approach, attention was given to the existing hierarchy of form
requirements, which provides distinct levels of reliability,
traceability and unalterability with respect to paper-based documents.
For example, the requirement that data be presented in written form
(which constitutes a "threshold requirement") is not to be confused
with more stringent requirements such as "signed writing", "signed
original" or "authenticated legal act".

18. The Model Law does not attempt to define a computer-based
equivalent to any kind of paper document. Instead, it singles out
basic functions of paper-based form requirements, with a view to
providing criteria which, once they are met by data messages, enable
such data messages to enjoy the same level of legal recognition as
corresponding paper documents performing the same function. It should
be noted that the functional-equivalent approach has been taken in
articles 6 to 8 of the Model Law with respect to the concepts of
"writing", "signature" and "original" but not with respect to other
legal concepts dealt with in the Model Law. For example, article 10
does not attempt to create a functional equivalent of existing storage
requirements.

F. DEFAULT RULES AND MANDATORY LAW
----------------------------------

19. The decision to undertake the preparation of the Model Law was
based on the recognition that, in practice, solutions to most of the
legal difficulties raised by the use of modern means of communication
are sought within contracts. The Model Law embodies the principle of
party autonomy in article 4 with respect to the provisions contained
in chapter III of part one. Chapter III of part one contains a set of
rules of the kind that would typically be found in agreements between
parties, e.g., interchange agreements or "system rules". It should be
noted that the notion of "system rules" might cover two different
categories of rules, namely, general terms provided by communication
networks and specific rules that might be included in those general
terms to deal with bilateral relationships between originators and
addressees of data messages. Article 4 (and the notion of "agreement"
therein) is intended to encompass both categories of "system rules".

20. The rules contained in chapter III of part one may be used by
parties as a basis for concluding such agreements. They may also be
used to supplement the terms of agreements in cases of gaps or
omissions in contractual stipulations. In addition, they may be
regarded as setting a basic standard for situations where data
messages are exchanged without a previous agreement being entered into
by the communicating parties, e.g., in the context of open-networks
communications.

21. The provisions contained in chapter II of part one are of a
different nature. One of the main purposes of the Model Law is to
facilitate the use of modern communication techniques and to provide
certainty with the use of such techniques where obstacles or
uncertainty resulting from statutory provisions could not be avoided
by contractual stipulations. The provisions contained in chapter II
may, to some extent, be regarded as a collection of exceptions to
well-established rules regarding the form of legal transactions. Such
well-established rules are normally of a mandatory nature since they
generally reflect decisions of public policy. The provisions contained
in chapter II should be regarded as stating the minimum acceptable
form requirement and are, for that reason, of a mandatory nature,
unless expressly stated otherwise in those provisions. The indication
that such form requirements are to be regarded as the "minimum
acceptable" should not, however, be construed as inviting States to
establish requirements stricter than those contained in the Model Law.

G. ASSISTANCE FROM UNCITRAL SECRETARIAT
---------------------------------------

22. In line with its training and assistance activities, the UNCITRAL
secretariat may provide technical consultations for Governments
preparing legislation based on the UNCITRAL Model Law on Electronic
Commerce, as it may for Governments considering legislation based on
other UNCITRAL model laws, or considering adhesion to one of the
international trade law conventions prepared by UNCITRAL.

23. Further information concerning the Model Law as well as the Guide
and other model laws and conventions developed by UNCITRAL, may be
obtained from the secretariat at the address below. The secretariat
welcomes comments concerning the Model Law and the Guide, as well as
information concerning enactment of legislation based on the Model
Law.

International Trade Law Branch

Office of Legal Affairs

United Nations Vienna International Centre

P.O. Box 500

A-1400, Vienna, Austria

Telephone: (43-1) 26060-4060 or 4061

Telefax: (43-1) 26060-5813 or (43-1) 2692669

Telex: 135612 uno a

E-mail: uncitral@unov.un.or.at

Internet Home Page: http://www.un.or.at/uncitral

II. ARTICLE-BY-ARTICLE REMARKS
==============================

PART ONE. ELECTRONIC COMMERCE IN GENERAL<BR />
==============================================

CHAPTER I. GENERAL PROVISIONS
=============================

ARTICLE 1. SPHERE OF APPLICATION
--------------------------------

24. The purpose of article 1, which is to be read in conjunction with
the definition of "data message" in article 2(a), is to delineate the
scope of application of the Model Law. The approach used in the Model
Law is to provide in principle for the coverage of all factual
situations where information is generated, stored or communicated,
irrespective of the medium on which such information may be affixed.
It was felt during the preparation of the Model Law that exclusion of
any form or medium by way of a limitation in the scope of the Model
Law might result in practical difficulties and would run counter to
the purpose of providing truly "media-neutral" rules. However, the
focus of the Model Law is on "paperless" means of communication and,
except to the extent expressly provided by the Model Law, the Model
Law is not intended to alter traditional rules on paper-based
communications.

25. Moreover, it was felt that the Model Law should contain an
indication that its focus was on the types of situations encountered
in the commercial area and that it had been prepared against the
background of trade relationships. For that reason, article 1 refers
to "commercial activities" and provides, in footnote ****, indications
as to what is meant thereby. Such indications, which may be
particularly useful for those countries where there does not exist a
discrete body of commercial law, are modelled, for reasons of
consistency, on the footnote to article 1 of the UNCITRAL Model Law on
International Commercial Arbitration. In certain countries, the use of
footnotes in a statutory text would not be regarded as acceptable
legislative practice. National authorities enacting the Model Law
might thus consider the possible inclusion of the text of footnotes in
the body of the Law itself.

26. The Model Law applies to all kinds of data messages that might be
generated, stored or communicated, and nothing in the Model Law should
prevent an enacting State from extending the scope of the Model Law to
cover uses of electronic commerce outside the commercial sphere. For
example, while the focus of the Model Law is not on the relationships
between users of electronic commerce and public authorities, the Model
Law is not intended to be inapplicable to such relationships. Footnote
*** provides for alternative wordings, for possible use by enacting
States that would consider it appropriate to extend the scope of the
Model Law beyond the commercial sphere.

27. Some countries have special consumer protection laws that may
govern certain aspects of the use of information systems. With respect
to such consumer legislation, as was the case with previous UNCITRAL
instruments (e.g., the UNCITRAL Model Law on International Credit
Transfers), it was felt that an indication should be given that the
Model Law had been drafted without special attention being given to
issues that might arise in the context of consumer protection. At the
same time, it was felt that there was no reason why situations
involving consumers should be excluded from the scope of the Model Law
by way of a general provision, particularly since the provisions of
the Model Law might be found appropriate for consumer protection,
depending on legislation in each enacting State. Foot- note ** thus
recognizes that any such consumer protection law may take precedence
over the provisions in the Model Law. Legislators may wish to consider
whether the piece of legislation enacting the Model Law should apply
to consumers. The question of which individuals or corporate bodies
would be regarded as "consumers" is left to applicable law outside the
Model Law.

28. Another possible limitation of the scope of the Model Law is
contained in the first footnote. In principle, the Model Law applies
to both international and domestic uses of data messages. Footnote *
is intended for use by enacting States that might wish to limit the
applicability of the Model Law to international cases. It indicates a
possible test of internationality for use by those States as a
possible criterion for distinguishing international cases from
domestic ones. It should be noted, however, that in some
jurisdictions, particularly in federal States, considerable
difficulties might arise in distinguishing international trade from
domestic trade. The Model Law should not be interpreted as encouraging
enacting States to limit its applicability to international cases.

29. It is recommended that application of the Model Law be made as
wide as possible. Particular caution should be used in excluding the
application of the Model Law by way of a limitation of its scope to
international uses of data messages, since such a limitation may be
seen as not fully achieving the objectives of the Model Law.
Furthermore, the variety of procedures available under the Model Law
(particularly articles 6 to 8) to limit the use of data messages if
necessary (e.g., for purposes of public policy) may make it less
necessary to limit the scope of the Model Law. As the Model Law
contains a number of articles (articles 6, 7, 8, 11, 12, 15 and 17)
that allow a degree of flexibility to enacting States to limit the
scope of application of specific aspects of the Model Law, a narrowing
of the scope of application of the text to international trade should
not be necessary. Moreover, dividing communications in international
trade into purely domestic and international parts might be difficult
in practice. The legal certainty to be provided by the Model Law is
necessary for both domestic and international trade, and a duality of
regimes governing the use of electronic means of recording and
communication of data might create a serious obstacle to the use of
such means.

REFERENCES[^3]
..............


 [3]: 3. Official Records of the General Assembly, Fifty-first Session,
 Supplement No. 17 (A/51/17), Annex I.

A/50/17, paras. 213-219;

A/CN.9/407, paras. 37-40;

A/CN.9/406, paras. 80-85; A/CN.9/WG.IV/WP.62, article 1;

A/CN.9/390, paras. 21-43; A/CN.9/WG.IV/WP.60, article 1;

A/CN.9/387, paras. 15-28; A/CN.9/WG.IV/WP.57, article 1;

A/CN.9/373, paras. 21-25 and 29-33; A/CN.9/WG.IV/WP.55, paras. 15-20.

ARTICLE 2. DEFINITIONS
----------------------

"DATA MESSAGE"
..............

30. The notion of "data message" is not limited to communication but
is also intended to encompass computer-generated records that are not
intended for communication. Thus, the notion of "message" includes the
notion of "record". However, a definition of "record" in line with the
characteristic elements of "writing" in article 6 may be added in
jurisdictions where that would appear to be necessary.

31. The reference to "similar means" is intended to reflect the fact
that the Model Law was not intended only for application in the
context of existing communication techniques but also to accommodate
foreseeable technical developments. The aim of the definition of "data
message" is to encompass all types of messages that are generated,
stored, or communicated in essentially paperless form. For that
purpose, all means of communication and storage of information that
might be used to perform functions parallel to the functions performed
by the means listed in the definition are intended to be covered by
the reference to "similar means", although, for example, "electronic"
and "optical" means of communication might not be, strictly speaking,
similar. For the purposes of the Model Law, the word "similar"
connotes "functionally equivalent".

32. The definition of "data message" is also intended to cover the
case of revocation or amendment. A data message is presumed to have a
fixed information content but it may be revoked or amended by another
data message.

"ELECTRONIC DATA INTERCHANGE (EDI)"
...................................

33. The definition of EDI is drawn from the definition adopted by the
Working Party on Facilitation of International Trade Procedures (WP.4)
of the Economic Commission for Europe, which is the United Nations
body responsible for the development of UN/EDIFACT technical
standards.

34. The Model Law does not settle the question whether the definition
of EDI necessarily implies that EDI messages are communicated
electronically from computer to computer, or whether that definition,
while primarily covering situations where data messages are
communicated through a telecommunications system, would also cover
exceptional or incidental types of situation where data structured in
the form of an EDI message would be communicated by means that do not
involve telecommunications systems, for example, the case where
magnetic disks containing EDI messages would be delivered to the
addressee by courier. However, irrespective of whether digital data
transferred manually is covered by the definition of "EDI", it should
be regarded as covered by the definition of "data message" under the
Model Law.

"ORIGINATOR" AND "ADDRESSEE"
............................

35. In most legal systems, the notion of "person" is used to designate
the subjects of rights and obligations and should be interpreted as
covering both natural persons and corporate bodies or other legal
entities. Data messages that are generated automatically by computers
without direct human intervention are intended to be covered by
subparagraph (c). However, the Model Law should not be misinterpreted
as allowing for a computer to be made the subject of rights and
obligations. Data messages that are generated automatically by
computers without direct human intervention should be regarded as
"originating" from the legal entity on behalf of which the computer is
operated. Questions relevant to agency that might arise in that
context are to be settled under rules outside the Model Law.

36. The "addressee" under the Model Law is the person with whom the
originator intends to communicate by transmitting the data message, as
opposed to any person who might receive, forward or copy the data
message in the course of transmission. The "originator" is the person
who generated the data message even if that message was transmitted by
another person. The definition of "addressee" contrasts with the
definition of "originator", which is not focused on intent. It should
be noted that, under the definitions of "originator" and "addressee"
in the Model Law, the originator and the addressee of a given data
message could be the same person, for example in the case where the
data message was intended for storage by its author. However, the
addressee who stores a message transmitted by an originator is not
itself intended to be covered by the definition of "originator".

37. The definition of "originator" should cover not only the situation
where information is generated and communicated, but also the
situation where such information is generated and stored without being
communicated. However, the definition of "originator" is intended to
eliminate the possibility that a recipient who merely stores a data
message might be regarded as an originator.

"INTERMEDIARY"
..............

38. The focus of the Model Law is on the relationship between the
originator and the addressee, and not on the relationship between
either the originator or the addressee and any intermediary. However,
the Model Law does not ignore the paramount importance of
intermediaries in the field of electronic communications. In addition,
the notion of "intermediary" is needed in the Model Law to establish
the necessary distinction between originators or addressees and third
parties.

39. The definition of "intermediary" is intended to cover both
professional and non-professional intermediaries, i.e., any person
(other than the originator and the addressee) who performs any of the
functions of an intermediary. The main functions of an intermediary
are listed in subparagraph (e), namely receiving, transmitting or
storing data messages on behalf of another person. Additional
"value-added services" may be performed by network operators and other
intermediaries, such as formatting, translating, recording,
authenticating, certifying and preserving data messages and providing
security services for electronic transactions. "Intermediary" under
the Model Law is defined not as a generic category but with respect to
each data message, thus recognizing that the same person could be the
originator or addressee of one data message and an intermediary with
respect to another data message. The Model Law, which is focused on
the relationships between originators and addressees, does not, in
general, deal with the rights and obligations of intermediaries.

"INFORMATION SYSTEM"
....................

40. The definition of "information system" is intended to cover the
entire range of technical means used for transmitting, receiving and
storing information. For example, depending on the factual situation,
the notion of "information system" could be indicating a
communications network, and in other instances could include an
electronic mailbox or even a telecopier. The Model Law does not
address the question of whether the information system is located on
the premises of the addressee or on other premises, since location of
information systems is not an operative criterion under the Model Law.

REFERENCES
..........

A/51/17, paras. 116-138;

A/CN.9/407, paras. 41-52;

A/CN.9/406, paras. 132-156; A/CN.9/WG.IV/WP.62, article 2;

A/CN.9/390, paras. 44-65; A/CN.9/WG.IV/WP.60, article 2;

A/CN.9/387, paras. 29-52; A/CN.9/WG.IV/WP.57, article 2;

A/CN.9/373, paras. 11-20, 26-28 and 35-36; A/CN.9/WG.IV/WP.55, paras.
23-26;

A/CN.9/360, paras. 29-31; A/CN.9/WG.IV/WP.53, paras. 25-33.

ARTICLE 3. INTERPRETATION
-------------------------

41. Article 3 is inspired by article 7 of the United Nations
Convention on Contracts for the International Sale of Goods. It is
intended to provide guidance for interpretation of the Model Law by
courts and other national or local authorities. The expected effect of
article 3 is to limit the extent to which a uniform text, once
incorporated in local legislation, would be interpreted only by
reference to the concepts of local law.

42. The purpose of paragraph (1) is to draw the attention of courts
and other national authorities to the fact that the provisions of the
Model Law (or the provisions of the instrument implementing the Model
Law), while enacted as part of domestic legislation and therefore
domestic in character, should be interpreted with reference to its
international origin in order to ensure uniformity in the
interpretation of the Model Law in various countries.

43. As to the general principles on which the Model Law is based, the
following non-exhaustive list may be considered: (1) to facilitate
electronic commerce among and within nations; (2) to validate
transactions entered into by means of new information technologies;
(3) to promote and encourage the implementation of new information
technologies; (4) to promote the uniformity of law; and (5) to support
commercial practice. While the general purpose of the Model Law is to
facilitate the use of electronic means of communication, it should not
be construed in any way as imposing their use.

REFERENCES
..........

A/50/17, paras. 220-224;

A/CN.9/407, paras. 53-54;

A/CN.9/406, paras. 86-87; A/CN.9/WG.IV/WP.62, article 3;

A/CN.9/390, paras. 66-73; A/CN.9/WG.IV/WP.60, article 3;

A/CN.9/387, paras. 53-58; A/CN.9/WG.IV/WP.57, article 3;

A/CN.9/373, paras. 38-42; A/CN.9/WG.IV/WP.55, paras. 30-31.

ARTICLE 4. VARIATION BY AGREEMENT
---------------------------------

44. The decision to undertake the preparation of the Model Law was
based on the recognition that, in practice, solutions to the legal
difficulties raised by the use of modern means of communication are
mostly sought within contracts. The Model Law is thus intended to
support the principle of party autonomy. However, that principle is
embodied only with respect to the provisions of the Model Law
contained in chapter III of part one. The reason for such a limitation
is that the provisions contained in chapter II of part one may, to
some extent, be regarded as a collection of exceptions to
well-established rules regarding the form of legal transactions. Such
well-established rules are normally of a mandatory nature since they
generally reflect decisions of public policy. An unqualified statement
regarding the freedom of parties to derogate from the Model Law might
thus be misinterpreted as allowing parties, through a derogation to
the Model Law, to derogate from mandatory rules adopted for reasons of
public policy. The provisions contained in chapter II of part one
should be regarded as stating the minimum acceptable form requirement
and are, for that reason, to be regarded as mandatory, unless
expressly stated otherwise. The indication that such form requirements
are to be regarded as the "minimum acceptable" should not, however, be
construed as inviting States to establish requirements stricter than
those contained in the Model Law.

45. Article 4 is intended to apply not only in the context of
relationships between originators and addressees of data messages but
also in the context of relationships involving intermediaries. Thus,
the provisions of chapter III of part one could be varied either by
bilateral or multilateral agreements between the parties, or by system
rules agreed to by the parties. However, the text expressly limits
party autonomy to rights and obligations arising as between parties so
as not to suggest any implication as to the rights and obligations of
third parties.

REFERENCES
..........

A/51/17, paras. 68, 90 to 93, 110, 137, 188 and 207 (article 10);

A/50/17, paras. 271-274 (article 10);

A/CN.9/407, para. 85;

A/CN.9/406, paras. 88-89; A/CN.9/WG.IV/WP.62, article 5;

A/CN.9/390, paras. 74-78; A/CN.9/WG.IV/WP.60, article 5;

A/CN.9/387, paras. 62-65; A/CN.9/WG.IV/WP.57, article 5;

A/CN.9/373, para. 37; A/CN.9/WG.IV/WP.55, paras. 27-29.

CHAPTER II. APPLICATION OF LEGAL REQUIREMENTS TO DATA MESSAGES
==============================================================

ARTICLE 5. LEGAL RECOGNITION OF DATA MESSAGES
---------------------------------------------

46. Article 5 embodies the fundamental principle that data messages
should not be discriminated against, i.e., that there should be no
disparity of treatment between data messages and paper documents. It
is intended to apply notwithstanding any statutory requirements for a
"writing" or an original. That fundamental principle is intended to
find general application and its scope should not be limited to
evidence or other matters covered in chapter II. It should be noted,
however, that such a principle is not intended to override any of the
requirements contained in articles 6 to 10. By stating that
"information shall not be denied legal effectiveness, validity or
enforceability solely on the grounds that it is in the form of a data
message", article 5 merely indicates that the form in which certain
information is presented or retained cannot be used as the only reason
for which that information would be denied legal effectiveness,
validity or enforceability. However, article 5 should not be
misinterpreted as establishing the legal validity of any given data
message or of any information contained therein.

REFERENCES
..........

A/51/17, paras. 92 and 97 (article 4);

A/50/17, paras. 225-227 (article 4);

A/CN.9/407, para. 55;

A/CN.9/406, paras. 91-94; A/CN.9/WG.IV/WP. 62, article 5 bis;

A/CN.9/390, paras. 79-87;

A/CN.9/WG.IV/WP. 60, article 5 bis;

A/CN.9/387, paras. 93-94.

ARTICLE 5 BIS. INCORPORATION BY REFERENCE
-----------------------------------------

46-1. Article 5 bis was adopted by the Commission at its thirty-first
session, in June 1998. It is intended to provide guidance as to how
legislation aimed at facilitating the use of electronic commerce might
deal with the situation where certain terms and conditions, although
not stated in full but merely referred to in a data message, might
need to be recognized as having the same degree of legal effectiveness
as if they had been fully stated in the text of that data message.
Such recognition is acceptable under the laws of many States with
respect to conventional paper communications, usually with some rules
of law providing safeguards, for example rules on consumer protection.
The expression "incorporation by reference" is often used as a concise
means of describing situations where a document refers generically to
provisions which are detailed elsewhere, rather than reproducing them
in full.

46-2. In an electronic environment, incorporation by reference is
often regarded as essential to widespread use of electronic data
interchange (EDI), electronic mail, digital certificates and other
forms of electronic commerce. For example, electronic communications
are typically structured in such a way that large numbers of messages
are exchanged, with each message containing brief information, and
relying much more frequently than paper documents on reference to
information accessible elsewhere. In electronic communications,
practitioners should not have imposed upon them an obligation to
overload their data messages with quantities of free text when they
can take advantage of extrinsic sources of information, such as
databases, code lists or glossaries, by making use of abbreviations,
codes and other references to such information.

46-3. Standards for incorporating data messages by reference into
other data messages may also be essential to the use of public key
certificates, because these certificates are generally brief records
with rigidly prescribed contents that are finite in size. The trusted
third party which issues the certificate, however, is likely to
require the inclusion of relevant contractual terms limiting its
liability. The scope, purpose and effect of a certificate in
commercial practice, therefore, would be ambiguous and uncertain
without external terms being incorporated by reference. This is the
case especially in the context of international communications
involving diverse parties who follow varied trade practices and
customs.

46-4. The establishment of standards for incorporating data messages
by reference into other data messages is critical to the growth of a
computer-based trade infrastructure. Without the legal certainty
fostered by such standards, there might be a significant risk that the
application of traditional tests for determining the enforceability of
terms that seek to be incorporated by reference might be ineffective
when applied to corresponding electronic commerce terms because of the
differences between traditional and electronic commerce mechanisms.

46-5. While electronic commerce relies heavily on the mechanism of
incorporation by reference, the accessibility of the full text of the
information being referred to may be considerably improved by the use
of electronic communications. For example, a message may have embedded
in it uniform resource locators (URLs), which direct the reader to the
referenced document. Such URLs can provide "hypertext links" allowing
the reader to use a pointing device (such as a mouse) to select a key
word associated with a URL. The referenced text would then be
displayed. In assessing the accessibility of the referenced text,
factors to be considered may include: availability (hours of operation
of the repository and ease of access); cost of access; integrity
(verification of content, authentication of sender, and mechanism for
communication error correction); and the extent to which that term is
subject to later amendment (notice of updates; notice of policy of
amendment).

46-6. One aim of article 5 bis is to facilitate incorporation by
reference in an electronic context by removing the uncertainty
prevailing in many jurisdictions as to whether the provisions dealing
with traditional incorporation by reference are applicable to
incorporation by reference in an electronic environment. However, in
enacting article 5 bis, attention should be given to avoid introducing
more restrictive requirements with respect to incorporation by
reference in electronic commerce than might already apply in
paper-based trade.

46-7. Another aim of the provision is to recognize that
consumer-protection or other national or international law of a
mandatory nature (e.g., rules protecting weaker parties in the context
of contracts of adhesion) should not be interfered with. That result
could also be achieved by validating incorporation by reference in an
electronic environment "to the extent permitted by law", or by listing
the rules of law that remain unaffected by article 5 bis. Article 5
bis is not to be interpreted as creating a specific legal regime for
incorporation by reference in an electronic environment. Rather, by
establishing a principle of non-discrimination, it is to be construed
as making the domestic rules applicable to incorporation by reference
in a paper-based environment equally applicable to incorporation by
reference for the purposes of electronic commerce. For example, in a
number of jurisdictions, existing rules of mandatory law only validate
incorporation by reference provided that the following three
conditions are met: (a) the reference clause should be inserted in the
data message; (b) the document being referred to, e.g., general terms
and conditions, should actually be known to the party against whom the
reference document might be relied upon; and (c) the reference
document should be accepted, in addition to being known, by that
party.

REFERENCES
..........

A/53/17, paras. 212-221;

A/CN.9/450;

A/CN.9/446, paras. 14-24;

A/CN.9/WG.IV/WP.74;

A/52/17, paras. 248-250;

A/CN.9/437, paras. 151-155;

A/CN.9/WG.IV/WP. 71, paras 77-93;

A/51/17, paras. 222-223;

A/CN.9/421, paras. 109 and 114;

A/CN.9/WG.IV/WP.69, paras. 30, 53, 59-60 and 91;

A/CN.9/407, paras. 100-105 and 117;

A/CN.9/WG.IV/WP.66;

A/CN.9/WG.IV/WP.65;

A/CN.9/406, paras. 90 and 178-179;

A/CN.9/WG.IV/WP.55, para. 109-113;

A/CN.9/360, paras. 90-95;

A/CN.9/WG.IV/WP.53, paras. 77-78;

A/CN.9/350, paras. 95-96;

A/CN.9/333, paras. 66-68.

ARTICLE 6. WRITING
------------------

47. Article 6 is intended to define the basic standard to be met by a
data message in order to be considered as meeting a requirement (which
may result from statute, regulation or judge-made law) that
information be retained or presented "in writing" (or that the
information be contained in a "document" or other paper-based
instrument). It may be noted that article 6 is part of a set of three
articles (articles 6, 7 and 8), which share the same structure and
should be read together.

48. In the preparation of the Model Law, particular attention was paid
to the functions traditionally performed by various kinds of
"writings" in a paper-based environment. For example, the following
non-exhaustive list indicates reasons why national laws require the
use of "writings": (1) to ensure that there would be tangible evidence
of the existence and nature of the intent of the parties to bind
themselves; (2) to help the parties be aware of the consequences of
their entering into a contract; (3) to provide that a document would
be legible by all; (4) to provide that a document would remain
unaltered over time and provide a permanent record of a transaction;
(5) to allow for the reproduction of a document so that each party
would hold a copy of the same data; (6) to allow for the
authentication of data by means of a signature; (7) to provide that a
document would be in a form acceptable to public authorities and
courts; (8) to finalize the intent of the author of the "writing" and
provide a record of that intent; (9) to allow for the easy storage of
data in a tangible form; (10) to facilitate control and sub-sequent
audit for accounting, tax or regulatory purposes; and (11) to bring
legal rights and obligations into existence in those cases where a
"writing" was required for validity purposes.

49. However, in the preparation of the Model Law, it was found that it
would be inappropriate to adopt an overly comprehensive notion of the
functions performed by writing. Existing requirements that data be
presented in written form often combine the requirement of a "writing"
with concepts distinct from writing, such as signature and original.
Thus, when adopting a functional approach, attention should be given
to the fact that the requirement of a "writing" should be considered
as the lowest layer in a hierarchy of form requirements, which provide
distinct levels of reliability, traceability and unalterability with
respect to paper documents. The requirement that data be presented in
written form (which can be described as a "threshold requirement")
should thus not be confused with more stringent requirements such as
"signed writing", "signed original" or "authenticated legal act". For
example, under certain national laws, a written document that is
neither dated nor signed, and the author of which either is not
identified in the written document or is identified by a mere
letterhead, would be regarded as a "writing" although it might be of
little evidential weight in the absence of other evidence (e.g.,
testimony) regarding the authorship of the document. In addition, the
notion of unalterability should not be considered as built into the
concept of writing as an absolute requirement since a "writing" in
pencil might still be considered a "writing" under certain existing
legal definitions. Taking into account the way in which such issues as
integrity of the data and protection against fraud are dealt with in a
paper-based environment, a fraudulent document would nonetheless be
regarded as a "writing". In general, notions such as "evidence" and
"intent of the parties to bind themselves" are to be tied to the more
general issues of reliability and authentication of the data and
should not be included in the definition of a "writing".

50. The purpose of article 6 is not to establish a requirement that,
in all instances, data messages should fulfil all conceivable
functions of a writing. Rather than focusing upon specific functions
of a "writing", for example, its evidentiary function in the context
of tax law or its warning function in the context of civil law,
article 6 focuses upon the basic notion of the information being
reproduced and read. That notion is expressed in article 6 in terms
that were found to provide an objective criterion, namely that the
information in a data message must be accessible so as to be usable
for subsequent reference. The use of the word "accessible" is meant to
imply that information in the form of computer data should be readable
and interpretable, and that the software that might be necessary to
render such information readable should be retained. The word "usable"
is not intended to cover only human use but also computer processing.
As to the notion of "subsequent reference", it was preferred to such
notions as "durability" or "non-alterability", which would have
established too harsh standards, and to such notions as "readability"
or "intelligibility", which might constitute too subjective criteria.

51. The principle embodied in paragraph (3) of articles 6 and 7, and
in paragraph (4) of article 8, is that an enacting State may exclude
from the application of those articles certain situations to be
specified in the legislation enacting the Model Law. An enacting State
may wish to exclude specifically certain types of situations,
depending in particular on the purpose of the formal requirement in
question. One such type of situation may be the case of writing
requirements intended to provide notice or warning of specific factual
or legal risks, for example, requirements for warnings to be placed on
certain types of products. Another specific exclusion might be
considered, for example, in the context of formalities required
pursuant to international treaty obligations of the enacting State
(e.g., the requirement that a cheque be in writing pursuant to the
Convention providing a Uniform Law for Cheques, Geneva, 1931) and
other kinds of situations and areas of law that are beyond the power
of the enacting State to change by means of a statute.

52. Paragraph (3) was included with a view to enhancing the
acceptability of the Model Law. It recognizes that the matter of
specifying exclusions should be left to enacting States, an approach
that would take better account of differences in national
circumstances. However, it should be noted that the objectives of the
Model Law would not be achieved if paragraph (3) were used to
establish blanket exceptions, and the opportunity provided by
paragraph (3) in that respect should be avoided. Numerous exclusions
from the scope of articles 6 to 8 would raise needless obstacles to
the development of modern communication techniques, since what the
Model Law contains are very fundamental principles and approaches that
are expected to find general application.

REFERENCES
..........

A/51/17, paras. 180-181 and 185-187 (article 5);

A/50/17, paras. 228-241 (article 5);

A/CN.9/407, paras. 56-63;

A/CN.9/406, paras. 95-101; A/CN.9/WG.IV/WP.62, article 6;

A/CN.9/390, paras. 88-96; A/CN.9/WG.IV/WP.60, article 6;

A/CN.9/387, paras. 66-80; A/CN.9/WG.IV/WP.57, article 6;
A/CN.9/WG.IV/WP.58, annex;

A/CN.9/373, paras. 45-62; A/CN.9/WG.IV/WP.55, paras. 36-49;

A/CN.9/360, paras. 32-43; A/CN.9/WG.IV/WP.53, paras. 37-45;

A/CN.9/350, paras. 68-78;

A/CN.9/333, paras. 20-28;

A/CN.9/265, paras. 59-72.

ARTICLE 7. SIGNATURE
--------------------

53. Article 7 is based on the recognition of the functions of a
signature in a paper-based environment. In the preparation of the
Model Law, the following functions of a signature were considered: to
identify a person; to provide certainty as to the personal involvement
of that person in the act of signing; to associate that person with
the content of a document. It was noted that, in addition, a signature
could perform a variety of functions, depending on the nature of the
document that was signed. For example, a signature might attest to the
intent of a party to be bound by the content of a signed contract; the
intent of a person to endorse authorship of a text; the intent of a
person to associate itself with the content of a document written by
someone else; the fact that, and the time when, a person had been at a
given place.

54. It may be noted that, alongside the traditional handwritten
signature, there exist various types of procedures (e.g., stamping,
perforation), sometimes also referred to as "signatures", which
provide various levels of certainty. For example, in some countries,
there exists a general requirement that contracts for the sale of
goods above a certain amount should be "signed" in order to be
enforceable. However, the concept of a signature adopted in that
context is such that a stamp, perforation or even a typewritten
signature or a printed letterhead might be regarded as sufficient to
fulfil the signature requirement. At the other end of the spectrum,
there exist requirements that combine the traditional handwritten
signature with additional security procedures such as the confirmation
of the signature by witnesses.

55. It might be desirable to develop functional equivalents for the
various types and levels of signature requirements in existence. Such
an approach would increase the level of certainty as to the degree of
legal recognition that could be expected from the use of the various
means of authentication used in electronic commerce practice as
substitutes for "signatures". However, the notion of signature is
intimately linked to the use of paper. Furthermore, any attempt to
develop rules on standards and procedures to be used as substitutes
for specific instances of "signatures" might create the risk of tying
the legal framework provided by the Model Law to a given state of
technical development.

56. With a view to ensuring that a message that was required to be
authenticated should not be denied legal value for the sole reason
that it was not authenticated in a manner peculiar to paper documents,
article 7 adopts a comprehensive approach. It establishes the general
conditions under which data messages would be regarded as
authenticated with sufficient credibility and would be enforceable in
the face of signature requirements which currently present barriers to
electronic commerce. Article 7 focuses on the two basic functions of a
signature, namely to identify the author of a document and to confirm
that the author approved the content of that document. Paragraph
(1)(a) establishes the principle that, in an electronic environment,
the basic legal functions of a signature are performed by way of a
method that identifies the originator of a data message and confirms
that the originator approved the content of that data message.

57. Paragraph (1)(b) establishes a flexible approach to the level of
security to be achieved by the method of identification used under
paragraph (1)(a). The method used under paragraph (1)(a) should be as
reliable as is appropriate for the purpose for which the data message
is generated or communicated, in the light of all the circumstances,
including any agreement between the originator and the addressee of
the data message.

58. In determining whether the method used under paragraph (1) is
appropriate, legal, technical and commercial factors that may be taken
into account include the following: (1) the sophistication of the
equipment used by each of the parties; (2) the nature of their trade
activity; (3) the frequency at which commercial transactions take
place between the parties; (4) the kind and size of the transaction;
(5) the function of signature requirements in a given statutory and
regulatory environment; (6) the capability of communication systems;
(7) compliance with authentication procedures set forth by
intermediaries; (8) the range of authentication procedures made
available by any intermediary; (9) compliance with trade customs and
practice; (10) the existence of insurance coverage mechanisms against
unauthorized messages; (11) the importance and the value of the
information contained in the data message; (12) the availability of
alternative methods of identification and the cost of implementation;
(13) the degree of acceptance or non-acceptance of the method of
identification in the relevant industry or field both at the time the
method was agreed upon and the time when the data message was
communicated; and (14) any other relevant factor.

59. Article 7 does not introduce a distinction between the situation
in which users of electronic commerce are linked by a communication
agreement and the situation in which parties had no prior contractual
relationship regarding the use of electronic commerce. Thus, article 7
may be regarded as establishing a basic standard of authentication for
data messages that might be exchanged in the absence of a prior
contractual relationship and, at the same time, to provide guidance as
to what might constitute an appropriate substitute for a signature if
the parties used electronic communications in the context of a
communication agreement. The Model Law is thus intended to provide
useful guidance both in a context where national laws would leave the
question of authentication of data messages entirely to the discretion
of the parties and in a context where requirements for signature,
which were usually set by mandatory provisions of national law, should
not be made subject to alteration by agreement of the parties.

60. The notion of an "agreement between the originator and the
addressee of a data message" is to be interpreted as covering not only
bilateral or multilateral agreements concluded between parties
exchanging directly data messages (e.g., "trading partners
agreements", "communication agreements" or " interchange agreements")
but also agreements involving intermediaries such as networks (e.g.,
"third-party service agreements"). Agreements concluded between users
of electronic commerce and networks may incorporate "system rules",
i.e., administrative and technical rules and procedures to be applied
when communicating data messages. However, a possible agreement
between originators and addressees of data messages as to the use of a
method of authentication is not conclusive evidence of whether that
method is reliable or not.

61. It should be noted that, under the Model Law, the mere signing of
a data message by means of a functional equivalent of a handwritten
signature is not intended, in and of itself, to confer legal validity
on the data message. Whether a data message that fulfilled the
requirement of a signature has legal validity is to be settled under
the law applicable outside the Model Law.

REFERENCES
..........

A/51/17, paras. 180-181 and 185-187 (article 6);

A/50/17, paras. 242-248 (article 6);

A/CN.9/407, paras. 64-70;

A/CN.9/406, paras. 102-105; A/CN.9/WG.IV/WP.62, article 7;

A/CN.9/390, paras. 97-109; A/CN.9/WG.IV/WP.60, article 7;

A/CN.9/387, paras. 81-90; A/CN.9/WG.IV/WP.57, article 7;
A/CN.9/WG.IV/WP.58, annex;

A/CN.9/373, paras. 63-76; A/CN.9/WG.IV/WP.55, paras. 50-63;

A/CN.9/360, paras. 71-75; A/CN.9/WG.IV/WP.53, paras. 61-66;

A/CN.9/350, paras. 86-89;

A/CN.9/333, paras. 50-59;

A/CN.9/265, paras. 49-58 and 79-80.

ARTICLE 8. ORIGINAL
-------------------

62. If "original" were defined as a medium on which information was
fixed for the first time, it would be impossible to speak of
"original" data messages, since the addressee of a data message would
always receive a copy thereof. However, article 8 should be put in a
different context. The notion of "original" in article 8 is useful
since in practice many disputes relate to the question of originality
of documents, and in electronic commerce the requirement for
presentation of originals constitutes one of the main obstacles that
the Model Law attempts to remove. Although in some jurisdictions the
concepts of "writing", "original" and "signature" may overlap, the
Model Law approaches them as three separate and distinct concepts.
Article 8 is also useful in clarifying the notions of "writing" and
"original", in particular in view of their importance for purposes of
evidence.

63. Article 8 is pertinent to documents of title and negotiable
instruments, in which the notion of uniqueness of an original is
particularly relevant. However, attention is drawn to the fact that
the Model Law is not intended only to apply to documents of title and
negotiable instruments, or to such areas of law where special
requirements exist with respect to registration or notarization of
"writings", e.g., family matters or the sale of real estate. Examples
of documents that might require an "original" are trade documents such
as weight certificates, agricultural certificates, quality or quantity
certificates, inspection reports, insurance certificates, etc. While
such documents are not negotiable or used to transfer rights or title,
it is essential that they be transmitted unchanged, that is in their
"original" form, so that other parties in international commerce may
have confidence in their contents. In a paper-based environment, these
types of document are usually only accepted if they are "original" to
lessen the chance that they be altered, which would be difficult to
detect in copies. Various technical means are available to certify the
contents of a data message to confirm its "originality". Without this
functional equivalent of originality, the sale of goods using
electronic commerce would be hampered since the issuers of such
documents would be required to retransmit their data message each and
every time the goods are sold, or the parties would be forced to use
paper documents to supplement the electronic commerce transaction.

64. Article 8 should be regarded as stating the minimum acceptable
form requirement to be met by a data message for it to be regarded as
the functional equivalent of an original. The provisions of article 8
should be regarded as mandatory, to the same extent that existing
provisions regarding the use of paper-based original documents would
be regarded as mandatory. The indication that the form requirements
stated in article 8 are to be regarded as the "minimum acceptable"
should not, however, be construed as inviting States to establish
requirements stricter than those contained in the Model Law.

65. Article 8 emphasizes the importance of the integrity of the
information for its originality and sets out criteria to be taken into
account when assessing integrity by reference to systematic recording
of the information, assurance that the information was recorded
without lacunae and protection of the data against alteration. It
links the concept of originality to a method of authentication and
puts the focus on the method of authentication to be followed in order
to meet the requirement. It is based on the following elements: a
simple criterion as to "integrity" of the data; a description of the
elements to be taken into account in assessing the integrity; and an
element of flexibility, i.e., a reference to circumstances.

66. As regards the words "the time when it was first generated in its
final form" in paragraph (1)(a), it should be noted that the provision
is intended to encompass the situation where information was first
composed as a paper document and subsequently transferred on to a
computer. In such a situation, paragraph (1)(a) is to be interpreted
as requiring assurances that the information has remained complete and
unaltered from the time when it was composed as a paper document
onwards, and not only as from the time when it was translated into
electronic form. However, where several drafts were created and stored
before the final message was composed, paragraph (1)(a) should not be
misinterpreted as requiring assurance as to the integrity of the
drafts.

67. Paragraph (3)(a) sets forth the criteria for assessing integrity,
taking care to except necessary additions to the first (or "original")
data message such as endorsements, certifications, notarizations, etc.
from other alterations. As long as the contents of a data message
remain complete and unaltered, necessary additions to that data
message would not affect its "originality". Thus when an electronic
certificate is added to the end of an "original" data message to
attest to the "originality" of that data message, or when data is
automatically added by computer systems at the start and the finish of
a data message in order to transmit it, such additions would be
considered as if they were a supplemental piece of paper with an
"original" piece of paper, or the envelope and stamp used to send that
"original" piece of paper.

68. As in other articles of chapter II of part one, the words "the
law" in the opening phrase of article 8 are to be understood as
encompassing not only statutory or regulatory law but also
judicially-created law and other procedural law. In certain common law
countries, where the words "the law" would normally be interpreted as
referring to common law rules, as opposed to statutory requirements,
it should be noted that, in the context of the Model Law, the words
"the law" are intended to encompass those various sources of law.
However, "the law", as used in the Model Law, is not meant to include
areas of law that have not become part of the law of a State and are
sometimes, somewhat imprecisely, referred to by expressions such as
"lex mercatoria" or "law merchant".

69. Paragraph (4), as was the case with similar provisions in articles
6 and 7, was included with a view to enhancing the acceptability of
the Model Law. It recognizes that the matter of specifying exclusions
should be left to enacting States, an approach that would take better
account of differences in national circumstances. However, it should
be noted that the objectives of the Model Law would not be achieved if
paragraph (4) were used to establish blanket exceptions. Numerous
exclusions from the scope of articles 6 to 8 would raise needless
obstacles to the development of modern communication techniques, since
what the Model Law contains are very fundamental principles and
approaches that are expected to find general application.

REFERENCES
..........

A/51/17, paras. 180-181 and 185-187 (article 7);

A/50/17, paras. 249-255 (article 7);

A/CN.9/407, paras. 71-79;

A/CN.9/406, paras. 106-110; A/CN.9/WG.IV/WP.62, article 8;

A/CN.9/390, paras. 110-133; A/CN.9/WG.IV/WP.60, article 8;

A/CN.9/387, paras. 91-97; A/CN.9/WG.IV/WP.57, article 8;
A/CN.9/WG.IV/WP.58, annex;

A/CN.9/373, paras. 77-96;

A/CN.9/WG.IV/WP.55, paras. 64-70;

A/CN.9/360, paras. 60-70; A/CN.9/WG.IV/WP.53, paras. 56-60;

A/CN.9/350, paras. 84-85;

A/CN.9/265, paras. 43-48.

ARTICLE 9. ADMISSIBILITY AND EVIDENTIAL WEIGHT OF DATA MESSAGES
---------------------------------------------------------------

70. The purpose of article 9 is to establish both the admissibility of
data messages as evidence in legal proceedings and their evidential
value. With respect to admissibility, paragraph (1), establishing that
data messages should not be denied admissibility as evidence in legal
proceedings on the sole ground that they are in electronic form, puts
emphasis on the general principle stated in article 4 and is needed to
make it expressly applicable to admissibility of evidence, an area in
which particularly complex issues might arise in certain
jurisdictions. The term "best evidence" is a term understood in, and
necessary for, certain common law jurisdictions. However, the notion
of "best evidence" could raise a great deal of uncertainty in legal
systems in which such a rule is unknown. States in which the term
would be regarded as meaningless and potentially misleading may wish
to enact the Model Law without the reference to the "best evidence"
rule contained in paragraph (1).

71. As regards the assessment of the evidential weight of a data
message, paragraph (2) provides useful guidance as to how the
evidential value of data messages should be assessed (e.g., depending
on whether they were generated, stored or communicated in a reliable
manner).

REFERENCES
..........

A/50/17, paras. 256-263 (article 8);

A/CN.9/407, paras. 80-81;

A/CN.9/406, paras. 111-113; A/CN.9/WG.IV/WP.62, article 9;

A/CN.9/390, paras. 139-143; A/CN.9/WG.IV/WP.60, article 9;

A/CN.9/387, paras. 98-109; A/CN.9/WG.IV/WP.57, article 9;
A/CN.9/WG.IV/WP.58, annex;

A/CN.9/373, paras. 97-108; A/CN.9/WG.IV/WP.55, paras. 71-81;

A/CN.9/360, paras. 44-59; A/CN.9/WG.IV/WP.53, paras. 46-55;

A/CN.9/350, paras. 79-83 and 90-91;

A/CN.9/333, paras. 29-41;

A/CN.9/265, paras. 27-48.

ARTICLE 10. RETENTION OF DATA MESSAGES
--------------------------------------

72. Article 10 establishes a set of alternative rules for existing
requirements regarding the storage of information (e.g., for
accounting or tax purposes) that may constitute obstacles to the
development of modern trade.

73. Paragraph (1) is intended to set out the conditions under which
the obligation to store data messages that might exist under the
applicable law would be met. Subparagraph (a) reproduces the
conditions established under article 6 for a data message to satisfy a
rule which prescribes the presentation of a "writing". Subparagraph
(b) emphasizes that the message does not need to be retained unaltered
as long as the information stored accurately reflects the data message
as it was sent. It would not be appropriate to require that
information should be stored unaltered, since usually messages are
decoded, compressed or converted in order to be stored.

74. Subparagraph (c) is intended to cover all the information that may
need to be stored, which includes, apart from the message itself,
certain transmittal information that may be necessary for the
identification of the message. Subparagraph (c), by imposing the
retention of the transmittal information associated with the data
message, is creating a standard that is higher than most standards
existing under national laws as to the storage of paper-based
communications. However, it should not be understood as imposing an
obligation to retain transmittal information additional to the
information contained in the data message when it was generated,
stored or transmitted, or information contained in a separate data
message, such as an acknowledgement of receipt. More- over, while some
transmittal information is important and has to be stored, other
transmittal information can be exempted without the integrity of the
data message being compromised. That is the reason why subparagraph
(c) establishes a distinction between those elements of transmittal
information that are important for the identification of the message
and the very few elements of transmittal information covered in
paragraph (2) (e.g., communication protocols), which are of no value
with regard to the data message and which, typically, would
automatically be stripped out of an incoming data message by the
receiving computer before the data message actually entered the
information system of the addressee.

75. In practice, storage of information, and especially storage of
transmittal information, may often be carried out by someone other
than the originator or the addressee, such as an intermediary.
Nevertheless, it is intended that the person obligated to retain
certain transmittal information cannot escape meeting that obligation
simply because, for example, the communications system operated by
that other person does not retain the required information. This is
intended to discourage bad practice or wilful misconduct. Paragraph
(3) provides that in meeting its obligations under paragraph (1), an
addressee or originator may use the services of any third party, not
just an intermediary.

REFERENCES
..........

A/51/17, paras. 185-187 (article 9);

A/50/17, paras. 264-270 (article 9);

A/CN.9/407, paras. 82-84;

A/CN.9/406, paras. 59-72; A/CN.9/WG.IV/WP.60, article 14;

A/CN.9/387, paras. 164-168;

A/CN.9/WG.IV/WP.57, article 14;

A/CN.9/373, paras. 123-125; A/CN.9/WG.IV/WP.55, para. 94.

CHAPTER III. COMMUNICATION OF DATA MESSAGES
===========================================

ARTICLE 11. FORMATION AND VALIDITY OF CONTRACTS
-----------------------------------------------

76. Article 11 is not intended to interfere with the law on formation
of contracts but rather to promote international trade by providing
increased legal certainty as to the conclusion of contracts by
electronic means. It deals not only with the issue of contract
formation but also with the form in which an offer and an acceptance
may be expressed. In certain countries, a provision along the lines of
paragraph (1) might be regarded as merely stating the obvious, namely
that an offer and an acceptance, as any other expression of will, can
be communicated by any means, including data messages. However, the
provision is needed in view of the remaining uncertainties in a
considerable number of countries as to whether contracts can validly
be concluded by electronic means. Such uncertainties may stem from the
fact that, in certain cases, the data messages expressing offer and
acceptance are generated by computers without immediate human
intervention, thus raising doubts as to the expression of intent by
the parties. Another reason for such uncertainties is inherent in the
mode of communication and results from the absence of a paper
document.

77. It may also be noted that paragraph (1) reinforces, in the context
of contract formation, a principle already embodied in other articles
of the Model Law, such as articles 5, 9 and 13, all of which establish
the legal effectiveness of data messages. However, paragraph (1) is
needed since the fact that electronic messages may have legal value as
evidence and produce a number of effects, including those provided in
articles 9 and 13, does not necessarily mean that they can be used for
the purpose of concluding valid contracts.

78. Paragraph (1) covers not merely the cases in which both the offer
and the acceptance are communicated by electronic means but also cases
in which only the offer or only the acceptance is communicated
electronically. As to the time and place of formation of contracts in
cases where an offer or the acceptance of an offer is expressed by
means of a data message, no specific rule has been included in the
Model Law in order not to interfere with national law applicable to
contract formation. It was felt that such a provision might exceed the
aim of the Model Law, which should be limited to providing that
electronic communications would achieve the same degree of legal
certainty as paper-based communications. The combination of existing
rules on the formation of contracts with the provisions contained in
article 15 is designed to dispel uncertainty as to the time and place
of formation of contracts in cases where the offer or the acceptance
are exchanged electronically.

79. The words "unless otherwise stated by the parties", which merely
restate, in the context of contract formation, the recognition of
party autonomy expressed in article 4, are intended to make it clear
that the purpose of the Model Law is not to impose the use of
electronic means of communication on parties who rely on the use of
paper-based communication to conclude contracts. Thus, article 11
should not be interpreted as restricting in any way party autonomy
with respect to parties not involved in the use of electronic
communication.

80. During the preparation of paragraph (1), it was felt that the pro-
vision might have the harmful effect of overruling otherwise
applicable provisions of national law, which might prescribe specific
formalities for the formation of certain contracts. Such forms include
notarization and other requirements for "writings", and might respond
to considerations of public policy, such as the need to protect
certain parties or to warn them against specific risks. For that
reason, paragraph (2) provides that an enacting State can exclude the
application of paragraph (1) in certain instances to be specified in
the legislation enacting the Model Law.

REFERENCES
..........

A/51/17, paras. 89-94 (article 13);

A/CN.9/407, para. 93;

A/CN.9/406, paras. 34-41; A/CN.9/WG.IV/WP.60, article 12;

A/CN.9/387, paras. 145-151; A/CN.9/WG.IV/WP.57, article 12;

A/CN.9/373, paras. 126-133; A/CN.9/WG.IV/WP.55, paras. 95-102;

A/CN.9/360, paras. 76-86; A/CN.9/WG.IV/WP.53, paras. 67-73;

A/CN.9/350, paras. 93-96;

A/CN.9/333, paras. 60-68.

ARTICLE 12. RECOGNITION BY PARTIES OF DATA MESSAGES
---------------------------------------------------

81. Article 12 was added at a late stage in the preparation of the
Model Law, in recognition of the fact that article 11 was limited to
dealing with data messages that were geared to the conclusion of a
contract, but that the draft Model Law did not contain specific
provisions on data messages that related not to the conclusion of
contracts but to the performance of contractual obligations (e.g.,
notice of defective goods, an offer to pay, notice of place where a
contract would be performed, recognition of debt). Since modern means
of communication are used in a context of legal uncertainty, in the
absence of specific legislation in most countries, it was felt
appropriate for the Model Law not only to establish the general
principle that the use of electronic communication should not be
discriminated against, as expressed in article 5, but also to include
specific illustrations of that principle. Contract formation is but
one of the areas where such an illustration is useful and the legal
validity of unilateral expressions of will, as well as other notices
or statements that may be issued in the form of data messages, also
needs to be mentioned.

82. As is the case with article 11, article 12 is not to impose the
use of electronic means of communication but to validate such use,
subject to contrary agreement by the parties. Thus, article 12 should
not be used as a basis to impose on the addressee the legal
consequences of a message, if the use of a non-paper-based method for
its transmission comes as a surprise to the addressee.

REFERENCES
..........

A/51/17, paras. 95-99 (new article 13 bis).

ARTICLE 13. ATTRIBUTION OF DATA MESSAGES
----------------------------------------

83. Article 13 has its origin in article 5 of the UNCITRAL Model Law
on International Credit Transfers, which defines the obligations of
the sender of a payment order. Article 13 is intended to apply where
there is a question as to whether a data message was really sent by
the person who is indicated as being the originator. In the case of a
paper-based communication the problem would arise as the result of an
alleged forged signature of the purported originator. In an electronic
environment, an unauthorized person may have sent the message but the
authentication by code, encryption or the like would be accurate. The
purpose of article 13 is not to assign responsibility. It deals rather
with attribution of data messages by establishing a presumption that
under certain circumstances a data message would be considered as a
message of the originator, and goes on to qualify that presumption in
case the addressee knew or ought to have known that the data message
was not that of the originator.

84. Paragraph (1) recalls the principle that an originator is bound by
a data message if it has effectively sent that message. Paragraph (2)
refers to the situation where the message was sent by a person other
than the originator who had the authority to act on behalf of the
originator. Paragraph (2) is not intended to displace the domestic law
of agency, and the question as to whether the other person did in fact
and in law have the authority to act on behalf of the originator is
left to the appropriate legal rules outside the Model Law.

85. Paragraph (3) deals with two kinds of situations, in which the
addressee could rely on a data message as being that of the
originator: firstly, situations in which the addressee properly
applied an authenti- cation procedure previously agreed to by the
originator; and secondly, situations in which the data message
resulted from the actions of a person who, by virtue of its
relationship with the originator, had access to the originator's
authentication procedures. By stating that the addressee "is entitled
to regard a data as being that of the originator", paragraph (3) read
in conjunction with paragraph (4)(a) is intended to indicate that the
addressee could act on the assumption that the data message is that of
the originator up to the point in time it received notice from the
originator that the data message was not that of the originator, or up
to the point in time when it knew or should have known that the data
message was not that of the originator.

86. Under paragraph (3)(a), if the addressee applies any
authentication procedures previously agreed to by the originator and
such application results in the proper verification of the originator
as the source of the message, the message is presumed to be that of
the originator. That covers not only the situation where an
authentication procedure has been agreed upon by the originator and
the addressee but also situations where an originator, unilaterally or
as a result of an agreement with an intermediary, identified a
procedure and agreed to be bound by a data message that met the
requirements corresponding to that procedure. Thus, agreements that
became effective not through direct agreement between the originator
and the addressee but through the participation of third-party service
providers are intended to be covered by para- graph (3)(a). However,
it should be noted that paragraph (3)(a) applies only when the
communication between the originator and the addressee is based on a
previous agreement, but that it does not apply in an open environment.

87. The effect of paragraph (3)(b), read in conjunction with paragraph
(4)(b), is that the originator or the addressee, as the case may be,
is responsible for any unauthorized data message that can be shown to
have been sent as a result of negligence of that party.

88. Paragraph (4)(a) should not be misinterpreted as relieving the
originator from the consequences of sending a data message, with
retroactive effect, irrespective of whether the addressee had acted on
the assumption that the data message was that of the originator.
Paragraph (4) is not intended to provide that receipt of a notice
under subparagraph (a) would nullify the original message
retroactively. Under subparagraph (a), the originator is released from
the binding effect of the message after the time notice is received
and not before that time. Moreover, paragraph (4) should not be read
as allowing the originator to avoid being bound by the data message by
sending notice to the addressee under subparagraph (a), in a case
where the message had, in fact, been sent by the originator and the
addressee properly applied agreed or reasonable authentication
procedures. If the addressee can prove that the message is that of the
originator, paragraph (1) would apply and not paragraph (4)(a). As to
the meaning of "reasonable time", the notice should be such as to give
the addressee sufficient time to react. For example, in the case of
just-in-time supply, the addressee should be given time to adjust its
production chain.

89. With respect to paragraph (4)(b), it should be noted that the
Model Law could lead to the result that the addressee would be
entitled to rely on a data message under paragraph (3)(a) if it had
properly applied the agreed authentication procedures, even if it knew
that the data message was not that of the originator. It was generally
felt when preparing the Model Law that the risk that such a situation
could arise should be accepted, in view of the need for preserving the
reliability of agreed authentication procedures.

90. Paragraph (5) is intended to preclude the originator from
disavowing the message once it was sent, unless the addressee knew, or
should have known, that the data message was not that of the
originator. In addition, paragraph (5) is intended to deal with errors
in the content of the message arising from errors in transmission.

91. Paragraph (6) deals with the issue of erroneous duplication of
data messages, an issue of considerable practical importance. It
establishes the standard of care to be applied by the addressee to
distinguish an erroneous duplicate of a data message from a separate
data message.

92. Early drafts of article 13 contained an additional paragraph,
expressing the principle that the attribution of authorship of a data
message to the originator should not interfere with the legal
consequences of that message, which should be determined by other
applicable rules of national law. It was later felt that it was not
necessary to express that principle in the Model Law but that it
should be mentioned in this Guide.

REFERENCES
..........

A/51/17, paras. 189-194 (article 11);

A/50/17, paras. 275-303 (article 11);

A/CN.9/407, paras. 86-89;

A/CN.9/406, paras. 114-131; A/CN.9/WG.IV/WP.62, article 10;

A/CN.9/390, paras. 144-153; A/CN.9/WG.IV/WP.60, article 10;

A/CN.9/387, paras. 110-132; A/CN.9/WG.IV/WP.57, article 10;

A/CN.9/373, paras. 109-115; A/CN.9/WG.IV/WP.55, paras. 82-86.

ARTICLE 14. ACKNOWLEDGEMENT OF RECEIPT
--------------------------------------

93. The use of functional acknowledgements is a business decision to
be made by users of electronic commerce; the Model Law does not intend
to impose the use of any such procedure. However, taking into account
the commercial value of a system of acknowledgement of receipt and the
widespread use of such systems in the context of electronic commerce,
it was felt that the Model Law should address a number of legal issues
arising from the use of acknowledgement pro- cedures. It should be
noted that the notion of "acknowledgement" is sometimes used to cover
a variety of procedures, ranging from a mere acknowledgement of
receipt of an unspecified message to an expression of agreement with
the content of a specific data message. In many instances, the
procedure of "acknowledgement" would parallel the system known as
"return receipt requested" in postal systems. Acknowledgements of
receipt may be required in a variety of instruments, e.g., in the data
message itself, in bilateral or multilateral communication agreements,
or in "system rules". It should be borne in mind that variety among
acknowledgement procedures implies variety of the related costs. The
provisions of article 14 are based on the assumption that
acknowledgement procedures are to be used at the discretion of the
originator. Article 14 is not intended to deal with the legal
consequences that may flow from sending an acknowledgement of receipt,
apart from establishing receipt of the data message. For example,
where an originator sends an offer in a data message and requests
acknowledgement of receipt, the acknowledgement of receipt simply
evidences that the offer has been received. Whether or not sending
that acknowledgement amounted to accepting the offer is not dealt with
by the Model Law but by contract law outside the Model Law.

94. The purpose of paragraph (2) is to validate acknowledgement by any
communication or conduct of the addressee (e.g., the shipment of the
goods as an acknowledgement of receipt of a purchase order) where the
originator has not agreed with the addressee that the acknowledgement
should be in a particular form. The situation where an acknowledgement
has been unilaterally requested by the originator to be given in a
specific form is not expressly addressed by article 14, which may
entail as a possible consequence that a unilateral requirement by the
originator as to the form of acknowledgements would not affect the
right of the addressee to acknowledge receipt by any communication or
conduct sufficient to indicate to the originator that the message had
been received. Such a possible interpretation of paragraph (2) makes
it particularly necessary to emphasize in the Model Law the
distinction to be drawn between the effects of an acknowledgement of
receipt of a data message and any communication in response to the
content of that data message, a reason why paragraph (7) is needed.

95. Paragraph (3), which deals with the situation where the origin-
ator has stated that the data message is conditional on receipt of an
acknowledgement, applies whether or not the originator has specified
that the acknowledgement should be received by a certain time.

96. The purpose of paragraph (4) is to deal with the more common
situation where an acknowledgement is requested, without any statement
being made by the originator that the data message is of no effect
until an acknowledgement has been received. Such a provision is needed
to establish the point in time when the originator of a data message
who has requested an acknowledgement of receipt is relieved from any
legal implication of sending that data message if the requested
acknowledgement has not been received. An example of a factual
situation where a provision along the lines of paragraph (4) would be
particularly useful would be that the originator of an offer to
contract who has not received the requested acknowledgement from the
addressee of the offer may need to know the point in time after which
it is free to transfer the offer to another party. It may be noted
that the provision does not create any obligation binding on the
originator, but merely establishes means by which the originator, if
it so wishes, can clarify its status in cases where it has not
received the requested acknowledgement. It may also be noted that the
provision does not create any obligation binding on the addressee of
the data message, who would, in most circumstances, be free to rely or
not to rely on any given data message, provided that it would bear the
risk of the data message being unreliable for lack of an
acknowledgement of receipt. The addressee, however, is protected since
the originator who does not receive a requested acknowledgement may
not auto- matically treat the data message as though it had never been
trans- mitted, without giving further notice to the addressee. The
procedure described under paragraph (4) is purely at the discretion of
the orig- inator. For example, where the originator sent a data
message which under the agreement between the parties had to be
received by a certain time, and the originator requested an
acknowledgement of receipt, the addressee could not deny the legal
effectiveness of the message simply by withholding the requested
acknowledgement.

97. The rebuttable presumption established in paragraph (5) is needed
to create certainty and would be particularly useful in the context of
electronic communication between parties that are not linked by a
trading-partners agreement. The second sentence of paragraph (5)
should be read in conjunction with paragraph (5) of article 13, which
establishes the conditions under which, in case of an inconsistency
between the text of the data message as sent and the text as received,
the text as received prevails.

98. Paragraph (6) corresponds to a certain type of acknowledgement,
for example, an EDIFACT message establishing that the data message
received is syntactically correct, i.e., that it can be processed by
the receiving computer. The reference to technical requirements, which
is to be construed primarily as a reference to "data syntax" in the
context of EDI communications, may be less relevant in the context of
the use of other means of communication, such as telegram or telex. In
addition to mere consistency with the rules of "data syntax",
technical requirements set forth in applicable standards may include,
for example, the use of procedures verifying the integrity of the
contents of data messages.

99. Paragraph (7) is intended to dispel uncertainties that might exist
as to the legal effect of an acknowledgement of receipt. For example,
paragraph (7) indicates that an acknowledgement of receipt should not
be confused with any communication related to the contents of the
acknowledged message.

REFERENCES
..........

A/51/17, paras. 63-88 (article 12);

A/CN.9/407, paras. 90-92;

A/CN.9/406, paras. 15-33; A/CN.9/WG.IV/WP.60, article 11;

A/CN.9/387, paras. 133-144; A/CN.9/WG.IV/WP.57, article 11;

A/CN.9/373, paras. 116-122; A/CN.9/WG.IV/WP.55, paras. 87-93;

A/CN.9/360, para. 125; A/CN.9/WG.IV/WP.53, paras. 80-81;

A/CN.9/350, para. 92;

A/CN.9/333, paras. 48-49.

ARTICLE 15. TIME AND PLACE OF DISPATCH AND RECEIPT OF DATA MESSAGES
-------------------------------------------------------------------

100. Article 15 results from the recognition that, for the operation
of many existing rules of law, it is important to ascertain the time
and place of receipt of information. The use of electronic
communication techniques makes those difficult to ascertain. It is not
uncommon for users of electronic commerce to communicate from one
State to another without knowing the location of information systems
through which communication is operated. In addition, the location of
certain communication systems may change without either of the parties
being aware of the change. The Model Law is thus intended to reflect
the fact that the location of information systems is irrelevant and
sets forth a more objective criterion, namely, the place of business
of the parties. In that connection, it should be noted that article 15
is not intended to establish a conflict-of-laws rule.

101. Paragraph (1) defines the time of dispatch of a data message as
the time when the data message enters an information system outside
the control of the originator, which may be the information system of
an intermediary or an information system of the addressee. The concept
of "dispatch" refers to the commencement of the electronic
transmission of the data message. Where "dispatch" already has an
established meaning, article 15 is intended to supplement national
rules on dispatch and not to displace them. If dispatch occurs when
the data message reaches an information system of the addressee,
dispatch under paragraph (1) and receipt under paragraph (2) are
simultaneous, except where the data message is sent to an information
system of the addressee that is not the information system designated
by the addressee under paragraph (2)(a).

102. Paragraph (2), the purpose of which is to define the time of
receipt of a data message, addresses the situation where the addressee
unilaterally designates a specific information system for the receipt
of a message (in which case the designated system may or may not be an
information system of the addressee), and the data message reaches an
information system of the addressee that is not the designated system.
In such a situation, receipt is deemed to occur when the data message
is retrieved by the addressee. By "designated information system", the
Model Law is intended to cover a system that has been specifically
designated by a party, for instance in the case where an offer
expressly specifies the address to which acceptance should be sent.
The mere indication of an electronic mail or telecopy address on a
letterhead or other document should not be regarded as express
designation of one or more information systems.

103. Attention is drawn to the notion of "entry" into an information
system, which is used for both the definition of dispatch and that of
receipt of a data message. A data message enters an information system
at the time when it becomes available for processing within that
information system. Whether a data message which enters an information
system is intelligible or usable by the addressee is outside the
purview of the Model Law. The Model Law does not intend to overrule
provisions of national law under which receipt of a message may occur
at the time when the message enters the sphere of the addressee,
irrespective of whether the message is intelligible or usable by the
addressee. Nor is the Model Law intended to run counter to trade
usages, under which certain encoded messages are deemed to be received
even before they are usable by, or intelligible for, the addressee. It
was felt that the Model Law should not create a more stringent
requirement than currently exists in a paper-based environment, where
a message can be considered to be received even if it is not
intelligible for the addressee or not intended to be intelligible to
the addressee (e.g., where encrypted data is transmitted to a
depository for the sole purpose of retention in the context of
intellectual property rights protection).

104. A data message should not be considered to be dispatched if it
merely reached the information system of the addressee but failed to
enter it. It may be noted that the Model Law does not expressly
address the question of possible malfunctioning of information systems
as a basis for liability. In particular, where the information system
of the addressee does not function at all or functions improperly or,
while functioning properly, cannot be entered into by the data message
(e.g., in the case of a telecopier that is constantly occupied),
dispatch under the Model Law does not occur. It was felt during the
preparation of the Model Law that the addressee should not be placed
under the burdensome obligation to maintain its information system
functioning at all times by way of a general provision.

105. The purpose of paragraph (4) is to deal with the place of receipt
of a data message. The principal reason for including a rule on the
place of receipt of a data message is to address a circumstance
characteristic of electronic commerce that might not be treated
adequately under existing law, namely, that very often the information
system of the addressee where the data message is received, or from
which the data message is retrieved, is located in a jurisdiction
other than that in which the addressee itself is located. Thus, the
rationale behind the provision is to ensure that the location of an
information system is not the determinant element, and that there is
some reasonable connection between the addressee and what is deemed to
be the place of receipt, and that that place can be readily
ascertained by the originator. The Model Law does not contain specific
provisions as to how the designation of an information system should
be made, or whether a change could be made after such a designation by
the addressee.

106. Paragraph (4), which contains a reference to the "underlying
transaction", is intended to refer to both actual and contemplated
underlying transactions. References to "place of business", "principal
place of business" and "place of habitual residence" were adopted to
bring the text in line with article 10 of the United Nations
Convention on Contracts for the International Sale of Goods.

107. The effect of paragraph (4) is to introduce a distinction between
the deemed place of receipt and the place actually reached by a data
message at the time of its receipt under paragraph (2). That
distinction is not to be interpreted as apportioning risks between the
originator and the addressee in case of damage or loss of a data
message between the time of its receipt under paragraph (2) and the
time when it reached its place of receipt under paragraph (4).
Paragraph (4) merely establishes an irrebuttable presumption regarding
a legal fact, to be used where another body of law (e.g., on formation
of contracts or conflict of laws) require determination of the place
of receipt of a data message. However, it was felt during the
preparation of the Model Law that introducing a deemed place of
receipt, as distinct from the place actually reached by that data
message at the time of its receipt, would be inappropriate outside the
context of computerized transmissions (e.g., in the context of
telegram or telex). The provision was thus limited in scope to cover
only computerized transmissions of data messages. A further limitation
is contained in paragraph (5), which reproduces a provision already
included in articles 6, 7, 8, 11 and 12 (see above, para. 69).

REFERENCES
..........

A/51/17, paras. 100-115 (article 14);

A/CN.9/407, paras. 94-99;

A/CN.9/406, paras. 42-58; A/CN.9/WG.IV/WP.60, article 13;

A/CN.9/387, paras. 152-163; A/CN.9/WG.IV/WP.57, article 13;

A/CN.9/373, paras. 134-146; A/CN.9/WG.IV/WP.55, paras. 103-108;

A/CN.9/360, paras. 87-89; A/CN.9/WG.IV/WP.53, paras. 74-76;

A/CN.9/350, paras. 97-100;

A/CN.9/333, paras. 69-75.

PART TWO. ELECTRONIC COMMERCE IN SPECIFIC AREAS
-----------------------------------------------

108. As distinct from the basic rules applicable to electronic
commerce in general, which appear as part one of the Model Law, part
two contains rules of a more specific nature. In preparing the Model
Law, the Commission agreed that such rules dealing with specific uses
of electronic commerce should appear in the Model Law in a way that
reflected both the specific nature of the provisions and their legal
status, which should be the same as that of the general provisions
contained in part one of the Model Law. While the Commission, when
adopting the Model Law, only considered such specific provisions in
the context of transport documents, it was agreed that such provisions
should appear as chapter I of part two of the Model Law. It was felt
that adopting such an open-ended structure would make it easier to add
further specific provisions to the Model Law, as the need might arise,
in the form of additional chapters in part two.

109. The adoption of a specific set of rules dealing with specific
uses of electronic commerce, such as the use of EDI messages as
substitutes for transport documents does not imply that the other
provisions of the Model Law are not applicable to such documents. In
particular, the provisions of part two, such as articles 16 and 17
concerning transfer of rights in goods, presuppose that the guarantees
of reliability and authenticity contained in articles 6 to 8 of the
Model Law are also applicable to electronic equivalents to transport
documents. Part two of the Model Law does not in any way limit or
restrict the field of application of the general provisions of the
Model Law.

CHAPTER I. CARRIAGE OF GOODS
----------------------------

110. In preparing the Model Law, the Commission noted that the
carriage of goods was the context in which electronic communications
were most likely to be used and in which a legal framework
facilitating the use of such communications was most urgently needed.
Articles 16 and 17 contain provisions that apply equally to
non-negotiable transport documents and to transfer of rights in goods
by way of transferable bills of lading. The principles embodied in
articles 16 and 17 are applicable not only to maritime transport but
also to transport of goods by other means, such as road, railroad and
air transport.

ARTICLE 16. ACTIONS RELATED TO CONTRACTS OF CARRIAGE OF GOODS
-------------------------------------------------------------

111. Article 16, which establishes the scope of chapter I of part two
of the Model Law, is broadly drafted. It would encompass a wide
variety of documents used in the context of the carriage of goods,
including, for example, charter-parties. In the preparation of the
Model Law, the Commission found that, by dealing comprehensively with
contracts of carriage of goods, article 16 was consistent with the
need to cover all transport documents, whether negotiable or
non-negotiable, without excluding any specific document such as
charter-parties. It was pointed out that, if an enacting State did not
wish chapter I of part two to apply to a particular kind of document
or contract, for example if the inclusion of such documents as
charter-parties in the scope of that chapter was regarded as
inappropriate under the legislation of an enacting State, that State
could make use of the exclusion clause contained in paragraph (7) of
article 17.

112. Article 16 is of an illustrative nature and, although the actions
mentioned therein are more common in maritime trade, they are not
exclusive to such type of trade and could be performed in connection
with air transport or multimodal carriage of goods.

REFERENCES
..........

A/51/17, paras. 139-172 and 198-204 (draft article x);

A/CN.9/421, paras. 53-103; A/CN.9/WG.IV/WP.69, paras. 82-95;

A/50/17, paras. 307-309;

A/CN.9/407, paras. 106-118; A/CN.9/WG.IV/WP.67, annex;
A/CN.9/WG.IV/WP.66, annex II;

A/49/17, paras. 198, 199 and 201;

A/CN.9/390, para. 155-158.

ARTICLE 17. TRANSPORT DOCUMENTS
-------------------------------

113. Paragraphs (1) and (2) are derived from article 6. In the context
of transport documents, it is necessary to establish not only
functional equivalents of written information about the actions
referred to in article 16, but also functional equivalents of the
performance of such actions through the use of paper documents.
Functional equivalents are particularly needed for the transfer of
rights and obligations by transfer of written documents. For example,
paragraphs (1) and (2) are intended to replace both the requirement
for a written contract of carriage and the requirements for
endorsement and transfer of possession of a bill of lading. It was
felt in the preparation of the Model Law that the focus of the
provision on the actions referred to in article 16 should be expressed
clearly, particularly in view of the difficulties that might exist, in
certain countries, for recognizing the transmission of a data message
as functionally equivalent to the physical transfer of goods, or to
the transfer of a document of title representing the goods.

114. The reference to "one or more data messages" in paragraphs (1),
(3) and (6) is not intended to be interpreted differently from the
reference to "a data message" in the other provisions of the Model
Law, which should also be understood as covering equally the situation
where only one data message is generated and the situation where more
than one data message is generated as support of a given piece of
information. A more detailed wording was adopted in article 17 merely
to reflect the fact that, in the context of transfer of rights through
data messages, some of the functions traditionally performed through
the single transmission of a paper bill of lading would necessarily
imply the transmission of more than one data message and that such a
fact, in itself, should entail no negative consequence as to the
acceptability of electronic commerce in that area.

115. Paragraph (3), in combination with paragraph (4), is intended to
ensure that a right can be conveyed to one person only, and that it
would not be possible for more than one person at any point in time to
lay claim to it. The effect of the two paragraphs is to introduce a
requirement which may be referred to as the "guarantee of
singularity". If procedures are made available to enable a right or
obligation to be conveyed by electronic methods instead of by using a
paper document, it is necessary that the guarantee of singularity be
one of the essential features of such procedures. Technical security
devices providing such a guarantee of singularity would almost
necessarily be built into any communication system offered to the
trading communities and would need to demonstrate their reliability.
However, there is also a need to overcome requirements of law that the
guarantee of singularity be demonstrated, for example in the case
where paper documents such as bills of lading are traditionally used.
A provision along the lines of paragraph (3) is thus necessary to
permit the use of electronic communication instead of paper documents.

116. The words "one person and no other person" should not be
interpreted as excluding situations where more than one person might
jointly hold title to the goods. For example, the reference to "one
person" is not intended to exclude joint ownership of rights in the
goods or other rights embodied in a bill of lading.

117. The notion that a data message should be "unique" may need to be
further clarified, since it may lend itself to misinterpretation. On
the one hand, all data messages are necessarily unique, even if they
duplicate an earlier data message, since each data message is sent at
a different time from any earlier data message sent to the same
person. If a data message is sent to a different person, it is even
more obviously unique, even though it might be transferring the same
right or obligation. Yet, all but the first transfer might be
fraudulent. On the other hand, if "unique" is interpreted as referring
to a data message of a unique kind, or a transfer of a unique kind,
then in that sense no data message is unique, and no transfer by means
of a data message is unique. Having considered the risk of such
misinterpretation, the Commission decided to retain the reference to
the concepts of uniqueness of the data message and uniqueness of the
transfer for the purposes of article 17, in view of the fact that the
notions of "uniqueness" or "singularity" of transport documents were
not unknown to practitioners of transport law and users of transport
documents. It was decided, however, that this Guide should clarify
that the words "a reliable method is used to render such data message
or messages unique" should be interpreted as referring to the use of a
reliable method to secure that data messages purporting to convey any
right or obligation of a person might not be used by, or on behalf of,
that person inconsistently with any other data messages by which the
right or obligation was conveyed by or on behalf of that person.

118. Paragraph (5) is a necessary complement to the guarantee of
singularity contained in paragraph (3). The need for security is an
overriding consideration and it is essential to ensure not only that a
method is used that gives reasonable assurance that the same data
message is not multiplied, but also that no two media can be
simultaneously used for the same purpose. Paragraph (5) addresses the
fundamental need to avoid the risk of duplicate transport documents.
The use of multiple forms of communication for different purposes,
e.g., paper-based communications for ancillary messages and electronic
communications for bills of lading, does not pose a problem. However,
it is essential for the operation of any system relying on electronic
equivalents of bills of lading to avoid the possibility that the same
rights could at any given time be embodied both in data messages and
in a paper document. Paragraph (5) also envisages the situation where
a party having initially agreed to engage in electronic communications
has to switch to paper communications where it later becomes unable to
sustain electronic communications.

119. The reference to "terminating" the use of data messages is open
to interpretation. In particular, the Model Law does not provide
information as to who would effect the termination. Should an enacting
State decide to provide additional information in that respect, it
might wish to indicate, for example, that, since electronic commerce
is usually based on the agreement of the parties, a decision to "drop
down" to paper communications should also be subject to the agreement
of all interested parties. Otherwise, the originator would be given
the power to choose unilaterally the means of communication.
Alternatively, an enacting State might wish to provide that, since
paragraph (5) would have to be applied by the bearer of a bill of
lading, it should be up to the bearer to decide whether it preferred
to exercise its rights on the basis of a paper bill of lading or on
the basis of the electronic equivalent of such a document, and to bear
the costs for its decision.

120. Paragraph (5), while expressly dealing with the situation where
the use of data messages is replaced by the use of a paper document,
is not intended to exclude the reverse situation. The switch from data
messages to a paper document should not affect any right that might
exist to surrender the paper document to the issuer and start again
using data messages.

121. The purpose of paragraph (6) is to deal directly with the
application of certain laws to contracts for the carriage of goods by
sea. For example, under the Hague and Hague-Visby Rules, a contract of
carriage means a contract that is covered by a bill of lading. Use of
a bill of lading or similar document of title results in the Hague and
Hague-Visby Rules applying compulsorily to a contract of carriage.
Those rules would not automatically apply to contracts effected by one
or more data message. Thus, a provision such as paragraph (6) is
needed to ensure that the application of those rules is not excluded
by the mere fact that data messages are used instead of a bill of
lading in paper form. While paragraph (1) ensures that data messages
are effective means for carrying out any of the actions listed in
article 16, that provision does not deal with the substantive rules of
law that might apply to a contract contained in, or evidenced by, data
messages.

122. As to the meaning of the phrase "that rule shall not be
inapplicable" in paragraph (6), a simpler way of expressing the same
idea might have been to provide that rules applicable to contracts of
carriage evidenced by paper documents should also apply to contracts
of carriage evidenced by data messages. However, given the broad scope
of application of article 17, which covers not only bills of lading
but also a variety of other transport documents, such a simplified
provision might have had the undesirable effect of extending the
applicability of rules such as the Hamburg Rules and the Hague-Visby
Rules to contracts to which such rules were never intended to apply.
The Commission felt that the adopted wording was more suited to
overcome the obstacle resulting from the fact that the Hague-Visby
Rules and other rules compulsorily applicable to bills of lading would
not automatically apply to contracts of carriage evidenced by data
messages, without inadvertently extending the application of such
rules to other types of contracts.

REFERENCES
..........

A/51/17, paras. 139-172 and 198-204 (draft article x);

A/CN.9/421, paras. 53-103; A/CN.9/WG.IV/WP.69, paras 82-95;

A/50/17, paras. 307-309

A/CN.9/407, paras. 106-118 A/CN.9/WG.IV/WP.67, annex;
A/CN.9/WG.IV/WP.66, annex II;

A/49/17, paras. 198, 199 and 201;

A/CN.9/390, para. 155-158.

III. HISTORY AND BACKGROUND OF THE MODEL LAW
============================================

/ [HISTORY AND BACKGROUND] /
----------------------------

123. The UNCITRAL Model Law on Electronic Commerce was adopted by the
United Nations Commission on International Trade Law (UNCITRAL) in
1996 in furtherance of its mandate to promote the harmonization and
unification of international trade law, so as to remove unnecessary
obstacles to international trade caused by inadequacies and
divergences in the law affecting trade. Over the past quarter of a
century, UNCITRAL, whose membership consists of States from all
regions and of all levels of economic development, has implemented its
mandate by formulating international conventions (the United Nations
Conventions on Contracts for the International Sale of Goods, on the
Limitation Period in the International Sale of Goods, on the Carriage
of Goods by Sea, 1978 ("Hamburg Rules"), on the Liability of Operators
of Transport Terminals in International Trade, on International Bills
of Exchange and International Promissory Notes, and on Independent
Guarantees and Stand-by Letters of Credit), model laws (the UNCITRAL
Model Laws on International Commercial Arbitration, on International
Credit Transfers and on Procurement of Goods, Construction and
Services), the UNCITRAL Arbitration Rules, the UNCITRAL Conciliation
Rules, and legal guides (on construction contracts, countertrade
transactions and electronic funds transfers).

124. The Model Law was prepared in response to a major change in the
means by which communications are made between parties using
computerized or other modern techniques in doing business (sometimes
referred to as "trading partners"). The Model Law is intended to serve
as a model to countries for the evaluation and modernization of
certain aspects of their laws and practices in the field of commercial
relationships involving the use of computerized or other modern
communication techniques, and for the establishment of relevant
legislation where none presently exists. The text of the Model Law, as
reproduced above, is set forth in annex I to the report of UNCITRAL on
the work of its twenty-ninth session.[^4]


 [4]: 4. "Legal aspects of automatic trade data interchange"
 (TRADE/WP.4/R.185/Rev.1). The report submitted to the Working Party
 is reproduced in A/CN.9/238, annex.

125. The Commission, at its seventeenth session (1984), considered a
report of the Secretary-General entitled "Legal aspects of automatic
data processing" (A/CN.9/254), which identified several legal issues
relating to the legal value of computer records, the requirement of a
"writing", authentication, general conditions, liability and bills of
lading. The Commission took note of a report of the Working Party on
Facilitation of International Trade Procedures (WP.4), which is
jointly sponsored by the Economic Commission for Europe and the United
Nations Conference on Trade and Development, and is responsible for
the development of UN/EDIFACT standard messages. That report suggested
that, since the legal problems arising in this field were essentially
those of international trade law, the Commission as the core legal
body in the field of international trade law appeared to be the
appropriate central forum to undertake and coordinate the necessary
action.[^5] The Commission decided to place the subject of the legal
implications of automatic data processing to the flow of international
trade on its programme of work as a priority item.[^6]


 [5]: 5. Official Records of the General Assembly, Thirty-ninth Session,
 Supplement No. 17 (A/39/17), para. 136.


 [6]: 6. Official Records of the General Assembly, Fortieth Session,
 Supplement No. 17 (A/40/17), para. 360.

126. At its eighteenth session (1985), the Commission had before it a
report by the Secretariat entitled "Legal value of computer records"
(A/CN.9/265). That report came to the conclusion that, on a global
level, there were fewer problems in the use of data stored in
computers as evidence in litigation than might have been expected. It
noted that a more serious legal obstacle to the use of computers and
computer-to-computer telecommunications in international trade arose
out of requirements that documents had to be signed or be in paper
form. After discussion of the report, the Commission adopted the
following recommendation, which expresses some of the principles on
which the Model Law is based:

"THE UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW,
..........................................................

"Noting that the use of automatic data processing (ADP) is about to
become firmly established throughout the world in many phases of
domestic and international trade as well as in administrative
services,

"Noting also that legal rules based upon pre-ADP paper-based means of
documenting international trade may create an obstacle to such use of
ADP in that they lead to legal insecurity or impede the efficient use
of ADP where its use is otherwise justified,

"Noting further with appreciation the efforts of the Council of
Europe, the Customs Co-operation Council and the United Nations
Economic Commission for Europe to overcome obstacles to the use of ADP
in international trade arising out of these legal rules,

"Considering at the same time that there is no need for a unification
of the rules of evidence regarding the use of computer records in
international trade, in view of the experience showing that
substantial differences in the rules of evidence as they apply to the
paper-based system of documentation have caused so far no noticeable
harm to the development of international trade,

"Considering also that the developments in the use of ADP are creating
a desirability in a number of legal systems for an adaptation of
existing legal rules to these developments, having due regard,
however, to the need to encourage the employment of such ADP means
that would provide the same or greater reliability as paper-based
documentation,

"1. RECOMMENDS TO GOVERNMENTS:
..............................

"(a) to review the legal rules affecting the use of computer records
as evidence in litigation in order to eliminate unnecessary obstacles
to their admission, to be assured that the rules are consistent with
developments in technology, and to provide appropriate means for a
court to evaluate the credibility of the data contained in those
records;

"(b) to review legal requirements that certain trade transactions or
trade related documents be in writing, whether the written form is a
condition to the enforceability or to the validity of the transaction
or document, with a view to permitting, where appropriate, the
transaction or document to be recorded and transmitted in
computer-readable form;

"(c) to review legal requirements of a handwritten signature or other
paper-based method of authentication on trade related documents with a
view to permitting, where appropriate, the use of electronic means of
authentication;

"(d) to review legal requirements that documents for submission to
governments be in writing and manually signed with a view to
permitting, where appropriate, such documents to be submitted in
computer-readable form to those administrative services which have
acquired the necessary equipment and established the necessary
procedures;

"2. Recommends to international organizations elaborating legal texts
related to trade to take account of the present Recommendation in
adopting such texts and, where appropriate, to consider modifying
existing legal texts in line with the present Recommendation."[^7]


 [7]: 7. Resolution 40/71 was reproduced in United Nations Commission on
 International Trade Law Yearbook, 1985, vol. XVI, Part One, D.
 (United Nations publication, Sales No. E.87.V.4).

127. That recommendation (hereinafter referred to as the "1985
UNCITRAL Recommendation") was endorsed by the General Assembly in
resolution 40/71, paragraph 5(b), of 11 December 1985 as follows:

"THE GENERAL ASSEMBLY,
......................

"... Calls upon Governments and international organizations to take
action, where appropriate, in conformity with the Commission's
recommendation so as to ensure legal security in the context of the
widest possible use of automated data processing in international
trade; ...".[^8]


 [8]: 8. Official Records of the General Assembly, Forty-third Session,
 Supplement No. 17 (A/43/17), paras. 46 and 47, and ibid.,
 Forty-fourth Session, Supplement No. 17 (A/44/17), para. 289.

128. As was pointed out in several documents and meetings involving
the international electronic commerce community, e.g. in meetings of
WP. 4, there was a general feeling that, in spite of the efforts made
through the 1985 UNCITRAL Recommendation, little progress had been
made to achieve the removal of the mandatory requirements in national
legislation regarding the use of paper and handwritten signatures. It
has been suggested by the Norwegian Committee on Trade Procedures
(NORPRO) in a letter to the Secretariat that "one reason for this
could be that the 1985 UNCITRAL Recommendation advises on the need for
legal update, but does not give any indication of how it could be
done". In this vein, the Commission considered what follow-up action
to the 1985 UNCITRAL Recommendation could usefully be taken so as to
enhance the needed modernization of legislation. The decision by
UNCITRAL to formulate model legislation on legal issues of electronic
data interchange and related means of communication may be regarded as
a consequence of the process that led to the adoption by the
Commission of the 1985 UNCITRAL Recommendation.

129. At its twenty-first session (1988), the Commission considered a
proposal to examine the need to provide for the legal principles that
would apply to the formation of international commercial contracts by
electronic means. It was noted that there existed no refined legal
structure for the important and rapidly growing field of formation of
contracts by electronic means and that future work in that area could
help to fill a legal vacuum and to reduce uncertainties and
difficulties encountered in practice. The Commission requested the
Secretariat to prepare a preliminary study on the topic.[^9]


 [9]: 9. Ibid., Forty-fifth Session, Supplement No. 17 (A/45/17), paras.
 38 to 40.

130. At its twenty-third session (1990), the Commission had before it
a report entitled "Preliminary study of legal issues related to the
formation of contracts by electronic means" (A/CN.9/333). The report
summarized work that had been undertaken in the European Communities
and in the United States of America on the requirement of a "writing"
as well as other issues that had been identified as arising in the
formation of contracts by electronic means. The efforts to overcome
some of those problems by the use of model communication agreements
were also discussed.[^10]


 [10]: 10. It may be noted that the Model Law is not intended to provide
 a comprehensive set of rules governing all aspects of electronic
 commerce. The main purpose of the Model Law is to adapt existing
 statutory requirements so that they would no longer constitute
 obstacles to the use of paperless means of communication and storage
 of information.

131. At its twenty-fourth session (1991), the Commission had before it
a report entitled "Electronic Data Interchange" (A/CN.9/350). The
report described the current activities in the various organizations
involved in the legal issues of electronic data interchange (EDI) and
analysed the contents of a number of standard interchange agreements
already developed or then being developed. It pointed out that such
documents varied considerably according to the various needs of the
different categories of users they were intended to serve and that the
variety of contractual arrangements had sometimes been described as
hindering the development of a satisfactory legal framework for the
business use of electronic commerce. It suggested that there was a
need for a general framework that would identify the issues and
provide a set of legal principles and basic legal rules governing
communication through electronic commerce. It concluded that such a
basic framework could, to a certain extent, be created by contractual
arrangements between parties to an electronic commerce relationship
and that the existing contractual frameworks that were proposed to the
community of users of electronic commerce were often incomplete,
mutually incompatible, and inappropriate for international use since
they relied to a large extent upon the structures of local law.

132. With a view to achieving the harmonization of basic rules for the
promotion of electronic commerce in international trade, the report
suggested that the Commission might wish to consider the desirability
of preparing a standard communication agreement for use in
international trade. It pointed out that work by the Commission in
this field would be of particular importance since it would involve
participation of all legal systems, including those of developing
countries that were already or would soon be confronted with the
issues of electronic commerce.

133. The Commission was agreed that the legal issues of electronic
commerce would become increasingly important as the use of electronic
commerce developed and that it should undertake work in that field.
There was wide support for the suggestion that the Commission should
undertake the preparation of a set of legal principles and basic legal
rules governing communication through electronic commerce.[^11] The
Commission came to the conclusion that it would be premature to engage
immediately in the preparation of a standard communication agreement
and that it might be preferable to monitor developments in other
organizations, particularly the Commission of the European Communities
and the Economic Commission for Europe. It was pointed out that
high-speed electronic commerce required a new examination of basic
contract issues such as offer and acceptance, and that consideration
should be given to legal implications of the role of central data
managers in international commercial law.


 [11]: 11. Official Records of the General Assembly, Forty-sixth Session,
 Supplement No. 17 (A/46/17), paras. 311 to 317.

134. After deliberation, the Commission decided that a session of the
Working Group on International Payments would be devoted to
identifying the legal issues involved and to considering possible
statutory provisions, and that the Working Group would report to the
Commission on the desirability and feasibility of undertaking further
work such as the preparation of a standard communication
agreement.[^12]


 [12]: 12. Ibid., Forty-seventh Session, Supplement No. 17 (A/47/17),
 paras. 141 to 148.

135. The Working Group on International Payments, at its twenty-fourth
session, recommended that the Commission should undertake work towards
establishing uniform legal rules on electronic commerce. It was agreed
that the goals of such work should be to facilitate the increased use
of electronic commerce and to meet the need for statutory provisions
to be developed in the field of electronic commerce, particularly with
respect to such issues as formation of contracts; risk and liability
of commercial partners and third-party service providers involved in
electronic commerce relationships; extended definitions of "writing"
and "original" to be used in an electronic commerce environment; and
issues of negotiability and documents of title (A/CN.9/360).

136. While it was generally felt that it was desirable to seek the
high degree of legal certainty and harmonization provided by the
detailed provisions of a uniform law, it was also felt that care
should be taken to preserve a flexible approach to some issues where
legislative action might be premature or inappropriate. As an example
of such an issue, it was stated that it might be fruitless to attempt
to provide legislative unification of the rules on evidence that may
apply to electronic commerce massaging (ibid., para. 130). It was
agreed that no decision should be taken at that early stage as to the
final form or the final content of the legal rules to be prepared. In
line with the flexible approach to be taken, it was noted that
situations might arise where the preparation of model contractual
clauses would be regarded as an appropriate way of addressing specific
issues (ibid., para. 132).

137. The Commission, at its twenty-fifth session (1992), endorsed the
recommendation contained in the report of the Working Group (ibid.,
paras. 129-133) and entrusted the preparation of legal rules on
electronic commerce (which was then referred to as "electronic data
interchange" or "EDI") to the Working Group on International Payments,
which it renamed the Working Group on Electronic Data
Interchange.[^13]


 [13]: 13. The notion of "EDI and related means of communication" as used
 by the Working Group is not to be construed as a reference to
 narrowly defined EDI under article 2(b) of the Model Law but to a
 variety of trade-related uses of modern communication techniques that
 was later referred to broadly under the rubric of "electronic
 commerce". The Model Law is not intended only for application in the
 context of existing communication techniques but rather as a set of
 flexible rules that should accommodate foreseeable technical
 developments. It should also be emphasized that the purpose of the
 Model Law is not only to establish rules for the movement of
 information communicated by means of data messages but equally to
 deal with the storage of information in data messages that are not
 intended for communication.

138. The Working Group devoted its twenty-fifth to twenty-eighth
sessions to the preparation of legal rules applicable to "electronic
data interchange (EDI) and other modern means of communication"
(reports of those sessions are found in documents A/CN.9/373, 387, 390
and 406).[^14]


 [14]: 14. Official Records of the General Assembly, Fiftieth Session,
 Supplement No. 17 (A/50/17), para. 306.

139. The Working Group carried out its task on the basis of background
working papers prepared by the Secretariat on possible issues to be
included in the Model Law. Those background papers included
A/CN.9/WG.IV/WP.53 (Possible issues to be included in the programme of
future work on the legal aspects of EDI) and A/CN.9/WG.IV/WP.55
(Outline of possible uniform rules on the legal aspects of electronic
data interchange). The draft articles of the Model Law were submitted
by the Secretariat in documents A/CN.9/WG.IV/WP.57, 60 and 62. The
Working Group also had before it a proposal by the United Kingdom of
Great Britain and Northern Ireland relating to the possible contents
of the draft Model Law (A/CN.9/WG.IV/WP.58).

140. The Working Group noted that, while practical solutions to the
legal difficulties raised by the use of electronic commerce were often
sought within contracts (A/CN.9/WG.IV/WP.53, paras. 35-36), the
contractual approach to electronic commerce was developed not only
because of its intrinsic advantages such as its flexibility, but also
for lack of specific provisions of statutory or case law. The
contractual approach was found to be limited in that it could not
overcome any of the legal obstacles to the use of electronic commerce
that might result from mandatory provisions of applicable statutory or
case law. In that respect, one difficulty inherent in the use of
communication agree- ments resulted from uncertainty as to the weight
that would be carried by some contractual stipulations in case of
litigation. Another limitation to the contractual approach resulted
from the fact that parties to a contract could not effectively
regulate the rights and obligations of third parties. At least for
those parties not participating in the contractual arrangement,
statutory law based on a model law or an international convention
seemed to be needed (see A/CN.9/350, para. 107).

141. The Working Group considered preparing uniform rules with the aim
of eliminating the legal obstacles to, and uncertainties in, the use
of modern communication techniques, where effective removal of such
obstacles and uncertainties could only be achieved by statutory
provisions. One purpose of the uniform rules was to enable potential
electronic commerce users to establish a legally secure electronic
commerce relationship by way of a communication agreement within a
closed network. The second purpose of the uniform rules was to support
the use of electronic commerce outside such a closed network, i.e., in
an open environment. However, the aim of the uniform rules was to
enable, and not to impose, the use of EDI and related means of
communication. Moreover, the aim of the uniform rules was not to deal
with electronic commerce relationships from a technical perspective
but rather to create a legal environment that would be as secure as
possible, so as to facilitate the use of electronic commerce between
communicating parties.

142. As to the form of the uniform rules, the Working Group was agreed
that it should proceed with its work on the assumption that the
uniform rules should be prepared in the form of statutory provisions.
While it was agreed that the form of the text should be that of a
"model law", it was felt, at first, that, owing to the special nature
of the legal text being prepared, a more flexible term than "model
law" needed to be found. It was observed that the title should reflect
that the text contained a variety of provisions relating to existing
rules scattered throughout various parts of the national laws in an
enacting State. It was thus a possibility that enacting States would
not incorporate the text as a whole and that the provisions of such a
"model law" might not appear together in any one particular place in
the national law. The text could be described, in the parlance of one
legal system, as a "miscellaneous statute amendment act". The Working
Group agreed that this special nature of the text would be better
reflected by the use of the term "model statutory provisions". The
view was also expressed that the nature and purpose of the "model
statutory provisions" could be explained in an introduction or
guidelines accompanying the text.

143. At its twenty-eighth session, however, the Working Group reviewed
its earlier decision to formulate a legal text in the form of "model
statutory provisions" (A/CN.9/390, para. 16). It was widely felt that
the use of the term "model statutory provisions" might raise
uncertainties as to the legal nature of the instrument. While some
support was expressed for the retention of the term "model statutory
provisions", the widely prevailing view was that the term "model law"
should be preferred. It was widely felt that, as a result of the
course taken by the Working Group as its work progressed towards the
completion of the text, the model statutory provisions could be
regarded as a balanced and discrete set of rules, which could also be
implemented as a whole in a single instrument (A/CN.9/406, para. 75).
Depending on the situation in each enacting State, however, the Model
Law could be implemented in various ways, either as a single statute
or in various pieces of legislation.

144. The text of the draft Model Law as approved by the Working Group
at its twenty-eighth session was sent to all Governments and to
interested international organizations for comment. The comments
received were reproduced in document A/CN.9/409 and Add.1-4. The text
of the draft articles of the Model Law as presented to the Commission
by the Working Group was contained in the annex to document
A/CN.9/406.

145. At its twenty-eighth session (1995), the Commission adopted the
text of articles 1 and 3 to 11 of the draft Model Law and, for lack of
sufficient time, did not complete its review of the draft Model Law,
which was placed on the agenda of the twenty-ninth session of the
Commission.[^15]


 [15]: 15. Ibid., para. 307.

146. The Commission, at its twenty-eighth session,[^16] recalled that,
at its twenty-seventh session (1994), general support had been
expressed in favour of a recommendation made by the Working Group that
preliminary work should be undertaken on the issue of negotiability
and transferability of rights in goods in a computer-based environment
as soon as the preparation of the Model Law had been completed.[^17]
It was noted that, on that basis, a preliminary debate with respect to
future work to be undertaken in the field of electronic data
interchange had been held in the context of the twenty-ninth session
of the Working Group (for the report on that debate, see A/CN.9/407,
paras. 106-118). At that session, the Working Group also considered
proposals by the International Chamber of Commerce
(A/CN.9/WG.IV/WP.65) and the United Kingdom of Great Britain and
Northern Ireland (A/CN.9/WG.IV/WP.66) relating to the possible
inclusion in the draft Model Law of additional provisions to the
effect of ensuring that certain terms and conditions that might be
incorporated in a data message by means of a mere reference would be
recognized as having the same degree of legal effectiveness as if they
had been fully stated in the text of the data message (for the report
on the discussion, see A/CN.9/407, paras. 100-105). It was agreed that
the issue of incorporation by reference might need to be considered in
the context of future work on negotiability and transferability of
rights in goods (A/CN.9/407, para. 103). The Commission endorsed the
recommendation made by the Working Group that the Secretariat should
be entrusted with the preparation of a background study on
negotiability and transferability of EDI transport documents, with
particular emphasis on EDI maritime transport documents, taking into
account the views expressed and the suggestions made at the
twenty-ninth session of the Working Group.[^18]


 [16]: 16. Ibid., Forty-ninth Session, Supplement No. 17 (A/49/17), para.
 201.


 [17]: 17. Ibid., Fiftieth Session, Supplement No. 17 (A/50/17), para.
 309.


 [18]: 18. Ibid., para. 306.

147. On the basis of the study prepared by the Secretariat
(A/CN.9/WG.IV/WP.69), the Working Group, at its thirtieth session,
discussed the issues of transferability of rights in the context of
transport documents and approved the text of draft statutory
provisions dealing with the specific issues of contracts of carriage
of goods involving the use of data messages (for the report on that
session, see A/CN.9/421). The text of those draft provisions as
presented to the Commission by the Working Group for final review and
possible addition as part II of the Model Law was contained in the
annex to document A/CN.9/421.

148. In preparing the Model Law, the Working Group noted that it would
be useful to provide in a commentary additional information concerning
the Model Law. In particular, at the twenty-eighth session of the
Working Group, during which the text of the draft Model Law was
finalized for submission to the Commission, there was general support
for a suggestion that the draft Model Law should be accompanied by a
guide to assist States in enacting and applying the draft Model Law.
The guide, much of which could be drawn from the travaux
préparatoires of the draft Model Law, would also be helpful to users
of electronic means of communication as well as to scholars in that
area. The Working Group noted that, during its deliberations at that
session, it had proceeded on the assumption that the draft Model Law
would be accompanied by a guide. For example, the Working Group had
decided in respect of a number of issues not to settle them in the
draft Model Law but to address them in the guide so as to provide
guidance to States enacting the draft Model Law. The Secretariat was
requested to prepare a draft and submit it to the Working Group for
consideration at its twenty-ninth session (A/CN.9/406, para. 177).

149. At its twenty-ninth session, the Working Group discussed the
draft Guide to Enactment of the Model Law (hereinafter referred to as
"the draft Guide") as set forth in a note prepared by the Secretariat
(A/CN.9/WG.IV/WP.64). The Secretariat was requested to prepare a
revised version of the draft Guide reflecting the decisions made by
the Working Group and taking into account the various views,
suggestions and concerns that had been expressed at that session. At
its twenty-eighth session, the Commission placed the draft Guide to
Enactment of the Model Law on the agenda of its twenty-ninth
session.[^19]


 [19]: 19. Ibid., Fortieth Session, Supplement No. 17 (A/40/17), paras.
 354 - 360.

150. At its twenty-ninth session (1996), the Commission, after
consideration of the text of the draft Model Law as revised by the
drafting group, adopted the following decision at its 605th meeting,
on 12 June 1996:

"THE UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW,
..........................................................

"Recalling its mandate under General Assembly resolution 2205 (XXI) of
17 December 1966 to further the progressive harmonization and
unification of the law of international trade, and in that respect to
bear in mind the interests of all peoples, and in particular those of
developing countries, in the extensive development of international
trade,

"Noting that an increasing number of transactions in international
trade are carried out by means of electronic data interchange and
other means of communication commonly referred to as 'electronic
commerce', which involve the use of alternatives to paper-based forms
of communication and storage of information,

"Recalling the recommendation on the legal value of computer records
adopted by the Commission at its eighteenth session, in 1985, and
paragraph 5(b) of General Assembly resolution 40/71 of 11 December
1985 calling upon Governments and international organizations to take
action, where appropriate, in conformity with the recommendation of
the Commission[^20] so as to ensure legal security in the context of
the widest possible use of automated data processing in international
trade,


 [20]: 20. Ibid., Fifty-first Session, Supplement No. 17 (A/51/17), para.
 209.

"Being of the opinion that the establishment of a model law
facilitating the use of electronic commerce, and acceptable to States
with different legal, social and economic systems, contributes to the
development of harmonious international economic relations,

"Being convinced that the UNCITRAL Model Law on Electronic Commerce
will significantly assist all States in enhancing their legislation
governing the use of alternatives to paper-based forms of
communication and storage of information, and in formulating such
legislation where none currently exists,

"1. Adopts the UNCITRAL Model Law on Electronic Commerce as it appears
in annex I to the report on the current session;

"2. Requests the Secretary-General to transmit the text of the
UNCITRAL Model Law on Electronic Commerce, together with the Guide to
Enactment of the Model Law prepared by the Secretariat, to Governments
and other interested bodies;

"3. Recommends that all States give favourable consideration to the
UNCITRAL Model Law on Electronic Commerce when they enact or revise
their laws, in view of the need for uniformity of the law applicable
to alternatives to paper-based forms of communication and storage of
information."

A/50/17 and A/51/17 are the reports of UNCITRAL to the General
Assembly on the work of its twenty-eighth and twenty-ninth sessions,
held in 1995 and 1996, respectively;

A/CN.9/... documents are reports and notes discussed by UNCITRAL in
the context of its annual session, including reports presented by the
Working Group to the Commission;

A/CN.9/WG.IV/... documents are working papers considered by the
UNCITRAL Working Group on Electronic Commerce (formerly known as the
UNCITRAL Working Group on Electronic Data Interchange) in the
preparation of the Model Law.

ENDNOTES
--------

DOCUMENT INFORMATION
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DC Date: _1998_

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======================================================================

	title:  UNCITRAL Model Law on Electronic Commerce (1996) with
               additional article 5 bis as adopted in 1998 and Guide
               to Enactment

	date:  1998

	creator:  http://www.un.org/ United Nations (UN)

	source:  UNCITRAL, United Nations

	subject:  electronic commerce

	type:  model law

	structure:  Part; Chapter; none; Article;

======================================================================


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