Consumer Protection in E-commerce Transactions: a First Comparison between European Law and Islamic Law

• Author: Salvatore Mancuso
• Position: University of Macau
• Pages: 1-8

A version of this paper was published in Complex 3/06 - Sylvia M. Kierkegaard (ed.): Legal, privacy and security issues in information technology

Salvatore Mancuso¹

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1. Introduction

The Internet, born and first used as means to exchange knowledge and information between institutions and research centres, or between cultural and research centres, has become also a major instrument for business activities through the exchange of tangible and intangible assets and services. Therefore we are witnessing a progressive placement side by side of a virtual market and the traditional market.

Figures are significant: according to a rough estimate, "Starting from basically zero in 1995, total (global) electronic commerce is estimated at some $26 billion for 1997; it is predicted to reach $330 billion in 2001-02 and $1 trillion in 2003-05"². In the European Union, similar estimates are in line with such predicted growth calculating an on-line revenue from € 3.5 billion in 1999 to about €45 billion in 2002³. While at the beginning around 85% of the e-commerce transactions were business to business, the ratio is rapidly changing in favour of the business to consumer transactions, as purchasing goods and services on-line can benefit consumers through a wider choice and lower prices, while suppliers, and in particular small and medium-sized businesses, can have access to greater market opportunities relatively cheaply⁴.

Different product sectors earned great success in electronic distribution. The success of the electronic transactions using internet is based on the opportunity for the customer to approach a wide range of offer without the constraint of business hours, the ease of comparing simultaneously different sites which offer identical or interchangeable services, and also the opportunity to survey and find adequate information to make a satisfactory choice without direct relations with sales representatives.

The different sectors where the electronic transaction has been developed have elaborated a wide operational area as a result of the possibilities given by the use of internet. The legal implications in the various sectors of electronic transactions are characterized by the peculiarities of the use of e-commerce instruments from one side, and the object of the legal transaction performed through the internet.

The conclusion of contracts through internet has represented a real innovation in the area of the traditional law contract. The main issue has been considered the lack of the instruments traditionally used to express the contractual will.

Even though the "electronic will" lacks verbal or para-linguistic exteriorization, it represents a "language"⁵different from the traditional one but suitable to validly express the declarer's intention in legal form. Therefore, either in the real or in the virtual world, the process for the conclusion of a contract is closed by the meeting of proposal and acceptance, but the peculiarity of the latter exists in the fact that the parties are not present in the same place but are in locations often extremely different, the only instrument of contact being the use of the internet.

The peculiarities of these kinds of agreements and the difference in terms of contractual strength between the two parties of the contract has encouraged legal scholars to consider the consumer protection issues as particularly relevant in this area of activity.

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The consumer contracts are today the meeting point of the contrast between the traditional sufficiency of the formal equality between the contractual parties and the necessity of a more comprehensive control over the real contractual balance. For this reason, the electronic negotiation highlights the need of consumer protection at the highest level. In brief, it can be recalled that the consumer position at the conclusion of the contract needs to be strengthened against the one of the supplier: the consumer agrees to a non-modifiable fixed contractual proposal by the supplier and very often - especially when he is negotiating from home, at a distance - he has no possibility to obtain the adequate information about the goods or services for which the contract was concluded, that would normally be necessary to create his full intention to enter into the contract.

2. The European Law Approach

As it has been just seen, two aspects are particularly critical in the area of consumer contracts: the usual impossibility to negotiate the content of the agreement and the possible lack of opportunity for reflection by the consumer at the time of his declaration of will.

The first one is characterized by a high level of strictness, standardization being an essential feature of mass contracts. However, to avoid any detrimental effects of standardization for the consumer, an effective compromise is provided by the European Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts by providing that "A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer"⁶.

Consequently, the European lawmaker requests "that unfair terms used in a contract concluded with a consumer by a seller or a supplier shall [...] not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms"⁷.

Such Directive does not make any difference with reference to the type of conclusion of the contract, and therefore it will be necessary to verify if in the standard terms and conditions of the e-contract prepared by the supplier and that shall be provided to the consumer, any term or condition that is unfair according to the provisions of the Directive is present or not.

With reference to the second aspect, the one of the full liberty and awareness of the consumer in his decision making process to enter into a certain agreement, when a negotiation is absent and it is substituted by a simple assent to a standard and non-modifiable proposal as is the case in the electronic consumer contracts, it is more efficient and appropriate to offer a protection subsequent to the conclusion of the contract by giving the option to reconsider the contract he entered into. This necessity has been recognized by the European lawmaker, in general, through the European Directive 97/7/EEC of 20 May 1997 on the protection of consumers in respect of distance contracts and through the various European Directives referred to specific sectors.

Moreover, the European lawmaker already enacted the Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises creating a consumer protection regulation imposing special duties of information on the supplier and recognizing the right of withdrawal from the contract he entered into for the consumer⁸. By the way, Directive 97/7/EEC on the protection of consumer in respect of distance contracts has given rise to some harmonization problems with Directive 85/577/EEC.

The model that was kept into consideration for this Directive is that of the sales without any kind of negotiation, when the consumer "suffers" the terms and conditions of the contract without having any possibility to weigh it up. This is the reason why the core of such discipline is represented by the right of withdrawal and by the duty of the supplier to inform the consumer about the existence of such right.

The e-commerce is not expressly mentioned by Art. 1 of the Directive 85/577/EEC among its fields of application, but Art. 1, n. 4 of the Directive 85/577/EEC provides that "This Directive shall also apply to offers made contractually by the consumer under conditions similar to those described in paragraph 1 or paragraph 2 where the consumer is bound by the offer" and in principle this could be the case of the e-commerce transactions. Furthermore, e-commerce contracts are undoubtedly contracts negotiated away from the supplier's business premises, and there should be no question about the possibility to extend the application of such Directive to the electronic contracts, also if concluded by e-mail.

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In any case there is no doubt on the possibility to extend the application of the European Directive 97/7/EEC on the protection of consumer in respect of distance contracts to the e-commerce transactions.

E-commerce contracts are undoubtedly distance contracts: the electronic conclusion of contracts sets these kind of contracts in the area of contracts entered into using a distance communication device - internet - and therefore in the area of distance contracts⁹. Besides, the European Directive on e-commerce expressly safeguards the application of the Directive on distance contracts, as it will be considered later more in detail.

With specific reference to electronic contracts, reference shall therefore be made to the European Directive 2000/31/EEC of 8 June 2000 on electronic commerce¹⁰, enacted to create a legal framework for electronic commerce with the purpose of achieving a balance between business interests and the need to protect consumer rights¹¹. This Directive contains specific provisions in terms of information to be provided (Art. 10) and transparency in which the customers will give their full and informed consent (Art. 11) and be fully aware of means of redress (Art. 18 and 20)¹².

With particular reference to the duty of information, Article 10 of the said directive lists the minimum requirements in terms of information to be given to the consumers. The following paragraph 3 is particularly important: as it has been underlined, one of...