Electronic Contracting - Essay Example

Electronic Contracting: A Look into the Future This essay will address the implications, both positive and negative, of states such as California adopting and implementing legislation allowing for the use of electronic contracting in commercial transactions. The sheer volume of long-term business profits that are forecasted must be balanced against a variety of potential pitfalls. As an initial matter, the amount of commerce which takes place electronically continues to increase at significant levels.

The United States Commerce Department “forecasts Internet retailing will exceed $50 billion within the next two years, and business-to-business e-commerce will top $1 trillion” (Electronic Contracting: np). These estimates assume a lack of access by many of the world’s consumers to electronic contracting and a continuing effort to develop electronic infrastructure in order to extend this access to more people. The long-term impacts are quite attractive for businesses. Commercial contracts can in many ways be confined to cyberspace, thus allowing businesses to cut expenses by trimming redundant overhead.

In addition, recordkeeping functions can be streamlined and operated more cost effectively. There are also greater opportunities for collaboration. Indeed, “Engineers, product designers and managers from different corners of the globe can collaborate to develop and manufacture new products in an efficient and effective manner” (Businesses and Consumers Prepare: np). In sum, profits can be increased, more customers can be reached, business processes can be delivered more efficiently, and businesses can coordinate more effectively through electronic contracting.

There are, however, many potential pitfalls. These pitfalls may be characterized as legal, regulatory, and more practical considerations involving the identity of parties to a contract and intent with respect to the particular details of an electronic transaction. First, as demonstrated by the California law, there are many exceptions to the electronic contracting framework. Certain types of commercial transactions are explicitly exempted from the law. Where transactions are dependent or interrelated, for example, there may be problems deciding the extant to which the electronic contracting law or some other commercial transaction legislation prevails.

There are also very real regulatory issues. Securities brokers, to illustrate, may attempt to consummate commercial transactions in jurisdictions where they are not licensed to conduct business. These regulatory issues can lead to confusion regarding the proper regulatory authority, the jurisdiction entitled to enforce the law, and the very source of the law itself. There very well may also be prolonged litigation to decide whether particular schemes for contracting electronically constitute a writing and whether and when to apply state schemes for electronic contracting and when to apply the older uniform commercial codes.

Finally, there are more practical potential pitfalls. Though some have hailed the advent of digital signatures, there remains a very real risk that consumer and business identities may be misrepresented and abused. The electronic environment, at the present time, would appear in some ways to be less secure than traditional face-to-face methods of contracting. Another potential difficulty is defining and interpreting the intent of parties to a transaction whom have different cultural backgrounds, different first languages, and different understandings of commercial transactions.

The potential for misunderstandings and conflict would see to be inevitable. In the final analysis, the benefits of electronic contracting have proven too attractive for businesses and politicians to ignore. The real issues involve the potential pitfalls. Thus, the technology should proceed alongside a careful identification of these potential pitfalls and the articulation of methods to minimize or eliminate these potential pitfalls.ReferencesBusinesses and Consumers Prepare for Electronic Contracting.

Washington Technology, 04/10/97; Vol. 12 No. 1. Retrieved 7 September 2006. Available: http://www.washingtontechnology.com/news/12_1/news/11974-1.htmlCalifornia Is First State In Nation To Adopt Electronic Contracting Law. (18 November 1999). Thelen Reid Report, Thelen Reid & Priest LLP. Available: http://www.thelenreid.com/index.cfm?section=articles&function=ViewArticle&articleID=1081Electronic Contracting. Pearson Prentice Hall. Retrieved 7 September 2006. Available: http://myphlip.

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