Electronic Commerce

This article is written by Ananya Garg and further updated by Priyanka Jain. This article analyses the objectives fulfilled by Model Law on E-commerce. It gives a brief history of how MLEC came to be and discusses all the key provisions of the Model Law. Lastly, it talks about the implementation of Model Laws with the help of various judicial interpretations. 

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Over the last two decades, there has been a huge shift in the nature of commercial transactions. Now, transactions have been carried out using computers, commonly known as “electronic commerce”. It includes the transactions without paper, i.e, paperless transactions. Even storage of information by the use of memory cards or database management systems in place of heavy paper-files. This also removes data redundancy and enhances accuracy, efficiency, credibility. The United Nations Commission on International Trade Law (UNCITRAL), through the Model Law on Electronic Commerce (MLEC), sought to provide  rules that are acceptable among the international community to eradicate hindrances both mercantile and legal and enhance smoothness for e-commerce. It has paved the way for both paperless and paper bound transactions, thereby removing any discrimination of more validity and acceptance of paper bound transactions over paperless transactions which arose due to non-acceptance of electronic documents. It has enhanced the trustworthiness of international trade by ease of choosing between paper-based or electronic information, thus enabling the use of paperless communication. 

The international community has given fruitful consideration to the Model law while enacting or revising their domestic laws so that consonance of the law can be met by giving equal protection to electronic transactions. This article throws light on the history and adoption and implementation of the Model Law of E-commerce to understand the objectives of Model Law of Electronic Commerce and how they are achieved. 

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History and evolution of UNCITRAL Model Law on electronic commerce

With the advent of globalisation and the rapid increase in the digitization of work, a major change in the mode and method of communication between businesses was witnessed. This was the commencement of the electronic culture of information exchange and information storage. UNCITRAL decided to prepare the Model law in response to such change, thus, giving the nations an internationally acceptable set of rules for the interpretation and adaptation of their domestic laws and practices in the realm of businesses involving the use of computers as a mode of communication. 

It also helped in the establishment of relevant legislation where none existed and the promotion of harmonisation and unification of international trade laws. Thus, the UNCITRAL Model Law of E-commerce was adopted by the United Nations Commission on International Trade Law on June 12, 1996. The Additional Article 5 Bis was adopted in 1998.

Events which paved way for the creation of the Model Law

In 1984, “The Commission on International Trade Law” at its seventeenth session took into its notice a report of the Secretary-General regarding legal aspects of data processing.

The report of year 1984  entitled “Legal Value of Electronic Records” identified several legal issues related to the legal value of computer records and the requirement of written authentication, general conditions, liability, bills of lading, etc. A need was felt to assess the legal challenges in international trade transactions. All the challenges were found in international trade legal compliances. So, research on legal repercussions regarding data processing on international trade set into motion.

In 1985, a report by the Secretariat noted that the legal obstacles to the use of computers in international trade arose due to the requirement of written and signed documents. After this, the Commission adopted a recommendation to review the legal requirements of written form of trade documents and transactions, handwritten signature and authentication requirements, written form of the documents being submitted to the government, and the requirement of such provisions relating to the written form of documents as a condition for enforceability, etc. 

Yet, little progress was made in the removal of provisions in national legislation requiring the use of written documents and authentication. In 1988, the Commission proposed to delve deep into the concern to provide for legal principles necessary for the formation of international commercial agreements by way of electronic means.

After perusal of the reports  regarding “Preliminary study of legal issues related to the formation of contracts by electronic means” and “Electronic data interchange” it was concluded that problems existed due to the following of local laws by different parties, which prevented uniformity and functionality in the legal perspective and practices. This is how model law was adopted.

Structure of the UNCITRAL Model Law for electronic commerce

There are two parts to the UNCITRAL Model law. Part I discusses the general provisions relating to e-commerce, by legislating the principles of “non-discrimination”, “technological neutrality”, and “functional equivalence”. Following are the principles of Model law on e-commerce:

  • The principle of non-discrimination– It ensures that any document would not be denied its legal validity, effect, and enforceability solely on the basis that it is in electronic form. 
  • The principle of technological neutrality– It mandates the adoption of such provisions that are neutral with respect to the technology used. This will further enhance the pace up of international monetary transactions with the advancement in technology.
  • The functional equivalence principle-  Functional equivalence, as the name suggests, is equal treatment to all on the service front. It means both the transactions, traditional as well as technological, that means, paper bound and electronic cannot be challenged on their validity or effectiveness.

Besides establishing uniformity in the laws regarding e-commerce and legal relevance for data communicated through electronic mode, Model Law for Electronic Commerce also establishes rules for the formation and validity of e-contracts, for data message attribution, for receipt acknowledgment, and for determining receipt of data messages, etc. 

The Part II of the Model law relates to contracts of carriage of goods. These actions may include furnishing the marks, number, quantity, or weight of goods. Part II of the Model law deal with stating or declaring the nature or value of goods, issuing a receipt for goods, confirmation that the goods have been loaded, notifying a party of terms and conditions of the contract, providing instructions to a carrier, claiming delivery of goods, authorising the release of goods, giving notice of loss of goods, giving notice about the damage to goods, giving any other notice or statement in connection with the performance of the contract, undertaking to convey goods to a named person or a person authorised to claim shipment, granting, acquiring, renouncing, surrendering, transferring or negotiating any of the rights in goods, obtaining or giving rights and obligations under the Contract.

Objectives of UNCITRAL Model law on electronic commerce 

Following are the objectives of UNCITRAL Model Law:

  • To enable and provide help in popularity of commercial transactions using electronic means;
  • To provide different countries with a set of rules which are accepted internationally to remove all hurdles in its execution;
  • To enhance legal predictability for commerce using electronic means;
  • To overcome any obstacle in domestic laws regarding commercial transactions to provide equal treatment to both paper bound and paperless transactions. This will enhance efficiency in international trade.

Key provisions of UNCITRAL Model Law for electronic commerce

There are two parts in UNCITRAL Model law, part 1 and part 2. Part 1 deals with e-commerce in general and Part 1 deals with e-commerce in specific areas. Part 1 has three chapters and fifteen articles and Part 2 has one chapter on carriage of goods consisting of two articles; articles 15 and 16. 

Applicability and interpretation of Model law

The sphere of application that Article 1 talks about, is for the information in the form of data messages, in the context of commercial activities. A data message is information generated, sent, received, or stored by electronic, optical, or similar means. This definition has been attributed after taking into consideration the future technological developments as well, which is the reason for inclusion of the term similar means.

The Model Laws give the interpretational tools (Article 3) that call for a standard of international origin and uniformity in the application of general principles of law. While formulating the domestic laws, international uniformity needs to be kept in mind. E-commerce transactions are global in nature, and domestic laws require conformity with international usage and behaviour for its acceptance on global platforms.

Anything; issue or a dispute should be settled as per the general principles of non-discrimination, technological neutrality, and functional equivalence.

Important definitions

Article 2 of the UNCITRAL Model Law of E-commerce prescribes important definitions for the interpretation of the law. 

  1. Data message”  refers to any information that is generated, transmitted, received, or stored by any mode of electronic or optical communication or any mode of communication similar to electronic or optical communication. Which includes email, electronic data interchange, telecopy, telex, etc.
  2. Electronic Data Interchange” as the name suggests is any exchange among computer devices under an agreed standard for information exchange.
  3. Originator” means who transmits data for the first time. It cannot be any intermediary. It can be any person who has generated or sent the information prior to storage.
  4. Addressee” means who has been sent the message or information or data packet. It is that person who will receive the information to store. Again, it cannot be any intermediary.
  5. Intermediary” is any person on behalf of either the originator or the addressee who sends, stores, and receives data for further use. Or he may provide other data services concerning that data message.
  6. Information System” is any system to generate, transmit/send, store, receive or process the data message.

Legal requirements for validity of data messages

All the electronic transactions take place through electronic devices; which includes, transfer of electronic messages, i.e, “exchange of data messages”. As per article 5 of the Model law on electronic commerce, data messages should be legally validated or recognized as per the principle of non-discrimination against the use of electronic means. These popular electronic means are email, electronic data interchange, short message service, fax, microblogging apps etc. Following are the legal requirements for the validity of data messages:

Legal recognition of digital information

The principle of non-discrimination has been enforced by the means of Article 5 which specifies that the information communicated via electronic mode, i.e., in the form of data messages, cannot be denied legal validity and effect. Article 5 of the model law talks about the legal validity of the information communicated. Just because the information is in the form of a “data message” it should not be denied of its validity, enforceability, and effect in legal sense.

Information by the way of reference has also been given legal validity (Article 5 bis) and thus, the application of this law has been considerably widened. Article 5 bis  was adopted by the Commission on its thirty-first session in June 1998. It says that the information stays valid, enforceable, and effective even if it is not contained in a data message, just referred to in that data message.

Recognition to digital document and digital signature

Generally, law requires the documents to be in writing, and validation was only given to the handwritten signature as a form of authentication. Article 6 says that information is required to be in writing as per the law. It can be any photocopy of the document or scanned image. If the law says that the information must be in writing than it can be satisfied by using digital message, so long it is accessible and secured for future reference.

Article 7 says same thing for the signatures that their scanned image is acceptable so long  they can be verified by the concerned person or anyone who has authority to verify as per the law time being in force. By the means of provisions in Articles 6 & 7, the Model has done away with both of the above obstacles. Accessibility of data messages does not require the document to be in writing, and recognition of digital signature marks the approval of the full structure of the contract. This provision is termed relevant for every circumstance, including a relevant agreement.

When a data message if recognized as original 

The notion of originality is defined in Article 8 which provides that data messages can fulfill the legal requirement of presentation and retention of information in its original form subject to the assurance of integrity and presentability of data messages. Presentability meaning the ability to display the information where required. 

Evidentiary values of data message 

Article 9 specifies that the data messages cannot be denied admissibility in the court of law solely on the basis that the information is in the form of a data message. Thus, evidentiary value, that means, which can be adduced as evidence to rebut or support the fact or transaction in question, has been granted to data messages.  Article 9 throws light on the admissibility and evidentiary value of data messages during legal proceedings. It says that data messages have admissibility, and it cannot be denied just because they are not in paper form. Evidentiary value is based on the process of generation, storage and transfer of data message, that means, reliability of server.

If it is established that there was some alteration or change with the  data message, then its evidentiary value, or in simple terms, its credibility goes down. For the credibility , identification and authentication of the originator is important.

Retention of information

Retention means to hold back. Retention of information means holding back or keeping the information for further use for any purpose. Article 10 discusses retention of information. If any document, photo ID, any paper that is in digital form, scanned copy, camera picture, need to be retained then this is permitted under the Model law when the said digital message satisfies these conditions:

  1. This information is accessible so that it can be used after some time or anytime;
  2. The format of its retention should be accurate and there should not be any  tempering;
  3. The retained information enables to identify its source and destination, along with date and time of both;

The requirement of retention of information is also met by retention of information in the form of data messages subject to the accessibility, accuracy, and originality of format and identity of origin.

Communication of data messages

Communication of data messages means transfer of digital information or any information in digital form from one electronic device to another. This information can be structured, unstructured, audio file, video, scanned copies of documents, electronic signatures or documents, text messages etc. It is done through communication protocols like TCP/IP, HTTP etc. It involves data sharing among various devices on a network.

Formation and validity of electronic contract

A contract is formed when one person signifies his willingness to do or abstain from doing anything to the other person to receive his assent, and is said to make a proposal. When that other receives it, and signifies his assent, it is acceptance. Then there is the element of consideration, which is the price for a promise. Then it became an agreement. A legally enforceable agreement is a contract.

Article 11 says that the offer, when manifested in the form of a data message, stays effective, valid and enforceable even if it is not in writing. It cannot be denied because it is in data form. The same principle applies to communication of the acceptance also that if the acceptance is put into transmission in the form of a data message it is legally valid, enforceable, and effective. In India, validity to offer and acceptance in the form other than written form was upheld a log ago even before formulation of UNCITRAL Model law on e-commerce. In the case of Bhagwandas Goverdhandas Kedia v. M/S. Girdharilal Purushottamdas and Co.(1965) Supreme Court validated the agreement using telephone. Telephone predecessor of today’s world mobile phones, cell phones and other digital means.

A contract starts with an offer, i.e., a willingness to receive the assent of the other to do or not to do something. Here, formation of a contract was made easy by way of data packets. Under Section 10-A of the Information Technology Act, 2000, e-contracts have legal recognition.

Types of e-contracts 

E- Contracts are of three types:

  1. Shrink wrap agreement: Under this type of electronic agreements, users or visitors can read “terms and conditions” of the site after logging in to the website. It is helpful as user read all the terms and conditions regarding his liability, platform’s liability, benefits or services offered by the platform. However, one cannot negotiate on the terms of agreement.
  2. Click wrap agreement: The user or the other signifies his acceptance by clicking on the “I agree” button. It is done by clicking on the “I agree” button. It is like when a user opens a package they agree to terms and services even if they haven’t gone through a single word. These terms include terms regarding use of software, liability of platform, users. But user initially is unaware of these terms. Like in, shrink wrap agreement, click wrap agreement also does not allow negotiation.
  3. Browse wrap agreement: In these agreements visiting the web page, mere  browsing signifies the consent of the visitor. Browsing means logging in to the website or visiting the homepage of the website. If a user has visited any commercial web-page by clicking on any link, so he has given his consent only by clicking the page. Downloading of any such app is also akin to giving valid consent.

Data message in electronic contract will be valid 

Electronic contracts are those which are entered in digital form, not in paper pen mode. These include exchange of digital information. Electronic contracts are more convenient and easy to enter. Electronic contracts can be made by the exchange of emails, text messages where offer and acceptance was not in oral or paper mode.

So, Article 11 of the UNCITRAL Model law on e-commerce protects such contracts that are entered by way of data messages. E-contracts are the heart of e-commerce. Without the contract, commerce has no existence. Hence, the legal validity and enforceability of the contracts which have been made by the exchange of data messages and in the form of data messages have equal validity and enforceability as traditional paper contracts.

Article 12 of Model law acknowledgment the validity of data message send from the originator to the addressee. It states that the form of receipt of data messages has also been granted legal effect, validity and enforcement under law. Article 12 elaborates on the legal validity of data messages. Data messages may include text messages, emails, WhatsApp chats, etc. Under the purview of this article, they are accepted modes of communication.

Attribution of data message 

Under Article 13  attribution of data messages is discussed. Attribution means cause or source, in simple words, where does this message come from? Attribution points towards origin or factor of something. If the message is sent by server A then it belongs to server A.  If the originator has authorised someone else to send the data message then it belongs to the originator. It is linked to responsibility and accountability regarding data messages, that determines that whoever sends the data message either directly or under an agency or any authorisation like any agreed system between originator and the addressee, power of attorney, shall be held accountable for such data message.

Acknowledgment of receipt 

Criminal litigation

Under Article 14, parties are free to maintain any terms and conditions regarding electronic communication among themselves. Originator and the addressee can agree upon the terms regarding receipt and acknowledgment of data messages before the electronic transaction. If there is no agreement between the originator and addressee regarding acknowledgment of the data message then it can be done as per the communication by the addressee or conduct of the addressee, so to indicate the originator that data message is received by the addressee.

If the originator has signified that the receipt of the data message is conditional on the acknowledgment of the data message, until the data message is acknowledged, it will not be deemed received till acknowledgment.

If the data message is not subject to the receipt of its acknowledgment, then the originator within the agreed time or reasonable time may give any notice to the addressee to send its acknowledgment. Else it may be taken as not sent by the originator.

When the originator receives the acknowledgement, it is presumed that the addressee has received the data message.

In a nutshell, both the originator and the addressee can create a framework to regulate the receipt of the data messages and the acknowledgement of data messages. This is important for ease among the parties, efficiency, clarity, and speedy transactions.

If transactions are cross-border and involve hefty payments, then terms can be made stringent enough to make it fully compliant with all the governing laws.

Time and place of dispatch of receipt

Article 15 determines where these transactions commence and where they conclude. A transaction begins when it goes beyond the control of the sender or transmitter of a data message. Place of dispatch is the physical location of where the computer is kept. This can be determined by the IP address of the device from which the message was dispatched. This transaction is complete when the intended device receives the acceptance. It can be the original sender or someone else on his behalf as per the agreed terms under Article 14.

Electronic commerce in specific area: Carriage of goods

Articles 16 & 17 talk about the carriage of goods and transport documents. They enforce the ability to achieve carriage of goods by means of data messages and fulfilment of the requirement of transport documents through the same as well. It is mandatory for the  furtherance of international trade. This part has been complemented by other legislative texts such as the Rotterdam Rules which provides for liability standards for loss or damage during sea transport of goods.

Implementation and judicial interpretations of  UNCITRAL Model Law on electronic commerce across the globe

UNCITRAL Model Law on Electronic Commerce brought into existence the aim of encouraging international trade through various electronic, magnetic, and other technological modes of communication. It opened the door for national legislators to adopt a set of globally acceptable rules regulating E-Commerce. Various jurisdictions promulgated their laws based on the principles of the Model Law. 

Khoury v. Tomlinson (2016) is an authority decided by the Court of Appeal, Texas. The issue with the Hon’ble court was whether a name or email address in the “from” field of the email page can be taken to be executed or adopted by the user, here Mr. Tomlinson, with the intent to sign the electronic record. In this case, an agreement was made via email which was not signed, but only the name of the originator appeared in the ‘from’ section of the email page. Referring to the principles in Article 7 of the Model Law, the court agreed that a signature bar in an email page satisfies the requirement of the law in consideration, and hence, it satisfies the requirement of the signature for the purpose of authentication of the record sent via email. 

In the matter of  Chwee Kin Keong and others the Singapore High Court delved deep into the issue of unilateral mistake as the different price was shown on the seller’s website for a product. The server of the seller by itself  sent a confirmation mail regarding the purchase when the buyers placed an order. All the essentials of a valid contract were established except the misquotation of price that eliminated consensus ad idem which means arriving at the same terms and conditions after negotiation and giving valid consent. Referring to the Singapore Electronic Transactions Act, 2010, this Act is  based on UNCITRAL Model law, the court held that the contract entered between the parties is not valid because of a pricing mistake. This contract is not binding.

Implementation of Model Law in India

Our country hasn’t fully implemented the Model law on electronic commerce in its entirety, but the Government of India has taken various measures or welcome steps to pave the way for electronic governance.

Statutes protecting the rights of e-commerce customer

E-commerce is a way of doing business by electronic devices rather than physical means. Following is a list of some important laws and regulatory policies that apply to E-Commerce in India:

  1. Information Technology Act, 2000
  2. Information Technology (Intermediaries Guidelines and Digital), media Ethics Code) 2021
  3. Consumer Protection Act, 2019 read with Consumer Protection(e-commerce law) rules, 2020
  4. Foreign Exchange Management Act, 1999
  5. The Companies Act, 2013
  6. Payment and Settlement Systems Act, 2007
  7. Legal Metrology Act, 2009
  8. Foreign Direct Investment Policy
  9. The Sale of Goods Act, 1930
  10. General Data Protection Rules (GDPR India)

Information Technology Act, 2000

The Information Technology Act, 2000 is based on the UNCITRAL Model Law. It commenced on October 17, 2000. It gave a sharp boost to electronic commerce in our country. It defines “digital signature” as authentication of electronic record by a subscriber by affixing his digital signature.

This is the first legislation in the history of India that provides for legal validity for electronic commerce and is based on the UNCITRAL Model Law and gives impetus to Electronic Commerce in the territory of India. Electronic commerce involves the use of electronic, optical, and magnetic alternatives to paper-based methods of communication and storage of information, such as keeping hefty paper files, to facilitate the electronic filing of documents with Government agencies and further to amend the Indian Penal Code,1860, the Indian Evidence Act, 1872, the Banker’s Books Evidence Act, 1891 and the Reserve Bank of India Act, 1934. This Act not only covers electronic commerce but also covers any other matter ancillary regarding the regulation of information technology, data interchange, electronic record, digital signature, data protection, or any other matter that may arise with the passage of time or in the near future or otherwise. 

It provides for authentication of electronic records by using an asymmetric crypto system and hash function under chapter two. A subscriber can authenticate electronic records using electronic signature as given under Section 4.

IT (Intermediaries Guidelines and Digital Media Ethics Code) Rule, 2021

The Information Technology (Intermediaries Guidelines and Digital Media Ethics Code) Rules, 2021  was introduced by the Government of India so as to make various intermediaries including social media to act in a manner consistent with the international scenario as contemplated by the UNCITRAL Model law on e-commerce. UNCITRAL Model law has suggested a dispute redressal method. So, it has come up with due diligence by various intermediaries’ viz., social media intermediary, significant social media intermediary, and online gaming intermediary. The intermediary shall publish on its social media platform, the rules and regulations, privacy policy, and user agreement either in English language or any of the languages of the Eighth Schedule of the Constitution of India. The intermediary will ensure due diligence, privacy, and transparency. They will also respect the fundamental rights promised under Articles 14, 19, and 21 of the Constitution of India.

The intermediary shall also provide a link for the Grievance Redressal Mechanism by clearly writing the name of the Grievance Officer and his contact details so that the user or the victim can reach for Grievance Redressal.

Consumer Protection Act, 2019 read with Consumer Protection (e-commerce law) Rules, 2020

This law protects the consumer requirements from store-bought goods to online-ordered goods. Consumer Protection Act, 2019 establishes a Central Consumer Protection Authority (CCPA) in addition to the existing consumer grievance redressal mechanism. Consumer Protection (e-commerce) rules, 2020 govern online electronic interfaces for e-commerce that are referred to as “Platform” which include any website, any fragment or part of the website, or any mobile application or web application.

Foreign Exchange Management Act, 1999

Foreign Exchange Management Act, 1999 provides a legal framework for E-Commerce activities across borders. It governs transactions in international trade that cross national borders. It governs rules regarding currency conversion, and electronic payments gateways that deal with transactions in international scenarios. 

Companies Act, 2013

The Companies Act, 2013 provides for a framework for incorporation of companies. E-commerce essentially requires the formation of companies to carry on mercantile transactions. It also provides for punishment for fraud, false statements, false evidence, repeated default, and wrongful withholding of property. 

Payment and Settlement Systems Act,2007

The Payment and Settlement Systems Act, 2007 discusses payment systems. It discusses the regulation and supervision of payment systems in India and appoints the Reserve Bank of India as an authority for all payment-related operations, and transactions. Under the Act the “payment system” has been defined as a system that enables payment to be effected between a payer and a beneficiary, involving clearing, payment, or settlement service either any of them or all of them. “Payment System” does not include a stock exchange.

Further, the “payment system” includes the software, apps, and payment gateways that enable credit card, debit card, smart card operations, money transfer operations, or similar operations. It means it governs any platform providing for money transfers.

Regulating e-commerce through other statutes 

Reserve Bank of India is the central bank of India which is a statutory body under the Reserve Bank of India Act, 1934

The Legal Metrology Act, 2009 along with Legal Metrology (Packaged Commodity) Rules 2011 make it mandatory for any e-commerce platform to display information about the product. The product description should provide for its weight and other measurements as per the units of measurement suggested in the Act.

Sale of Goods Act, 1930, and E-commerce Guidelines for Consumer Protection, 2019 lay down comprehensive guidelines and regulations for e-commerce entities operating in India. It mandates that all such entities must be registered legal entities under Indian law and submit a self-declaration of compliance. Key personnel must have clean records, and compliance with the  Information Technology rules is obligatory. Payment processes should align with Reserve Bank of India guidelines, and sellers’ details, including identity and product information, must be prominently displayed. E-commerce entities are prohibited from influencing prices, adopting unfair trade practices, or misrepresenting products. They must ensure transparency in contracts, advertisements, and consumer information, including payment methods and data protection. Sellers are required to have written agreements, transparent pricing, and compliance with regulations, while also bearing responsibility for warranties and delivery terms. Grievance redressal mechanisms, including a designated Grievance Officer, are mandatory, ensuring timely resolution of consumer complaints and convergence with the National Consumer Helpline. These regulations foster transparency, fairness, and consumer protection in India’s e-commerce plane. 

Foreign Direct Investment Policy is a document that discusses investment by foreign companies in India. A foreign company is any company registered outside the territory of India. Foreign companies have to follow the guidelines of the Reserve Bank of India through its master circular to understand the entry route to India to invest in any Indian company by direct or government route, also Foreign Direct Investment Policy shows the path for foreign investments discussing all possibilities, restrictions, and regulatory mechanisms with legal compliances.

Recommendation and analysis 

Many countries have demanded for international convention for uniformity of the legal rules to be followed while drafting their domestic laws regarding e-commerce. However, it is a slow process, but it will yield deep reliance and formal acceptance towards these rules. Convention or model law have a great impact, specially if it is on particular topics like electronic business covering online platforms, or a valid set of norms for electronic signatures to remove doubts and difficulties regarding validity of contracts. However, there are certain loopholes or shortcoming attached to the Model law at hand. These are discussed under this heading. 

Firstly, electronic commerce has not been defined anywhere in the law. It is left to the executive or interpreter to give it meaning. This creates confusion as to which transaction qualifies as electronic commerce. The case of Amazon.com, Inc. v. Comm’r (2010), threw light on the development of commercial transactions on an online platform. It stated that not every monetary exchange is commerce. Commerce is also a comprehensive term to understand. 

Secondly, electronic commerce has various terms that are scientific, like “electronic data interchange”, “data messages”. These terminologies are meant only for tech-savvy strata. Everyone doesn’t know these technological terms, as these are global terms and commonplace or everyday wisdom is not sufficient for the understanding and comprehension of such terms. So, masses with ordinary education can be taken advantage of by tech-savvy people, preferably fraudsters, to steal away their money by way of identity theft or posing as an expert.

Thirdly, there should be a code of ethics and professionalism appended to UNCITRAL model law to enhance self-regulation and discipline, and ethical behaviour, and it will further facilitate grievance redressal mechanism as it will provide the guidance to all stakeholders to decide right and wrong among a myriad of international transactions.


In a nutshell, the UNCITRAL Model Law on E-commerce was adopted in 1996  and has played a significant role in shaping the legal landscape of electronic commerce globally. This legislative framework, developed in response to the challenges posed by the increasing digitization of business transactions, has provided various nations with a set of internationally acceptable rules for interpreting and adapting their domestic laws in consonance with cross-border transactions to the realm of e-commerce.

The development and execution of the Model Law was necessitated by the recognition of legal issues arising from the use of computers and electronic communication in international trade. Also, challenges such as the requirement of written documentation and authentication put hurdles before the seamless flow of transactions. The Model Law aimed to address these challenges by establishing principles of non-discrimination, technological neutrality, and functional equivalence, thereby promoting harmonization, balance, and unification of international trade laws.

Key provisions of the Model Law include definitions of important terms such as “data message” and “electronic data interchange,” as well as provisions ensuring the legal validity and enforceability of electronic contracts and data messages. Additionally, the Model Law provides for the acknowledgment of receipt of data messages and determines the responsibilities of parties involved in electronic transactions.

The implementation of the Model Law has been widespread, with many jurisdictions incorporating its principles into their national legislation. Judicial interpretations, such as the Khoury v. Tomlinson case in Texas and the Chwee Kin Keong case in Singapore, have provided further clarity on the application of electronic commerce laws in specific contexts.

In India, the Information Technology Act  2000, based on the UNCITRAL Model Law, has been pivotal in providing legal recognition for electronic commerce and facilitating its growth since its execution. Various other laws and regulatory policies complement the Model Law, addressing issues such as consumer protection, foreign exchange management, and payment systems.

However, challenges remain, particularly regarding the definition of electronic commerce and the need for greater awareness and education among the general masses. Clear guidelines and regulations, along with robust enforcement mechanisms, are essential to ensure the integrity and security of electronic transactions.

All in all, the UNCITRAL Model Law on E-commerce has laid a solid foundation for the development of electronic commerce laws globally, facilitating international trade and fostering economic growth in the current digital age.

Frequently Asked Questions (FAQs)

What is the distinction between model law and convention?

 A model law as the name suggests is a framework based on the opinion of lawmakers to get it on books as their enacted law, while a convention is an agreement that is to be signed on the table of the United Nations office.

 What is the aim of UNCITRAL?

UNCITRAL was established to formulate and honor modern and fair rules for all cross-border commercial transactions.

 What are the challenges before the UNCITRAL model law?

 Following are the challenges:

UNCITRAL model law has to be implemented in different jurisdictions with variations regarding cultures, development, education, preferences, and crime rates. So, its execution in various geographies is not quick and without impediments.

This model law is technology-based. It is desired by tech-savvy countries over under-developed and developing countries where there is a lack of such robust infrastructure comprising good internet connectivity, use of updated computers, and secure and proper network.


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