Regulating the form and substance of online contracts : South African and foreign perspectives

Van Deventer, Susanna Maria (2020-03)

Thesis (LLD)--Stellenbosch University, 2020.

Thesis

ENGLISH ABSTRACT: This dissertation focuses on the procedural and substantive problems which arise in the context of online contracts, i.e. standard form contracts appearing in electronic form. Although standard form contracts are not a new phenomenon, the study identifies certain attributes of online contracts which justify specific consideration of this contracting form. The aims of this dissertation are two-fold: it first determines how online contracting fits into existing legal principles in South African law, and secondly analyses and evaluates this outcome from a comparative perspective. It is argued that the unique characteristics of online contracts – such as their length and ubiquity – render it more difficult to establish assent to these contracts. This concern has featured prominently in American jurisprudence. Central to this issue is the fact that it is not reasonable for consumers to study online contracts, because the cost of reading (in the form of time spent) outweighs the potential benefit. Consequently, the dissertation analyses the formation of online contracts in the South African context. A comparative evaluation with primarily the American legal system – which draws on case law, the provisions of the Draft Restatement of the Law, Consumer Contracts and criticism by American jurists – is used to assess this outcome. It is found that both legal systems subscribe to fairly lenient formation requirements. The possibility of recognising more stringent assent-related requirements, such as imposing specific disclosure requirements, is investigated. The conclusion is reached that there is little to be gained by insisting on stricter formation requirements for online contracts in general, because consumers rationally choose not to read these contracts. A possible exception in the form of voluntary, opt-in consent, as recognised in the European General Data Protection Regulation, is examined and found advisable for specific clauses. It is further argued that, in the South African context, the unexpected terms doctrine can provide important protection to consumers’ reasonable expectations, and can encourage suppliers to identify surprising terms and bring them to the attention of consumers. This requires courts to recognise that consumers reasonably decide not to read online contracts, and that consumers’mistakes about surprising terms in online contracts must almost always be reasonable. The dissertation further identifies and considers specific substantive problems that are affected by uniquely online risks. These include clauses relating to the use of personal information and consumer-generated content, clauses affected by the ongoing nature of online contracts (such as unilateral variation and unilateral termination clauses) and clauses affected by the global nature of online contracts (such as choice-of-law and choice-of-forum clauses). These clauses are evaluated in the light of current measures of substantive control recognised in South African law. The discussion also includes a consideration of procedural issues which could impact the evaluation of the substantive fairness of terms, such as the inequality of bargaining power and possibility of deception. It is found that current measures are inadequate to ensure proper protection for online consumers. Taking guidance from European law, the dissertation suggests legislative amendments to address these issues.

AFRIKAANSE OPSOMMING: Hierdie proefskrif fokus op die prosedurele en substantiewe probleme wat ontstaan in die konteks van aanlynkontrakte, m.a.w. standaardvorm-kontrakte wat in ‘n elektroniese formaat verskyn. Alhoewel standaardvormkontrakte nie ‘n nuwe verskynsel is nie, identifiseer die studie sekere eienskappe van aanlynkontrakte wat spesifieke oorweging van hierdie kontraksvorm regverdig. Die doelwitte van hierdie proefskrif is tweeledig: dit bepaal eerstens hoe aanlynkontraktering binne die bestaande beginsels van die Suid-Afrikaanse reg inpas, en ontleed en evalueer tweedens hierdie uitkoms vanuit ‘n regsvergelykende perspektief. Daar word aangevoer dat die unieke eienskappe van aanlynkontrakte – soos hulle lengte en alomteenwoordigheid – dit moeiliker maak vas te stel of ‘n verbruiker ingestem het tot kontraksluiting, ‘n kwessie wat heelwat aandag in die Amerikaanse regstelsel geniet. Sentraal tot hierdie kwessie is die feit dat dit nie redelik vir verbruikers is om aanlynkontrakte te bestudeer nie, aangesien die koste (in die vorm van tyd spandeer) die potensiële voordeel oorskadu. Gevolglik ontleed die proefskrif die vorming van aanlynkontrakte in die Suid-Afrikaanse konteks. ‘n Regsvergelykende studie van hoofsaaklik die Amerikaanse regstelsel – wat steun op regspraak, die bepalings van die Draft Restatement of the Law, Consumer Contracts en kritiek deur Amerikaanse juriste – word gebruik om hierdie uitkoms te evalueer. Daar word bevind dat beide regstelses redelik toegeeflike vormingsvereistes onderskryf. Die moontlikheid om strenger vormingsvereistes te erken, soos spesifieke openbaarmakingsvereistes, word ondersoek. Daar word aangevoer dat min voordeel te verkry is deur strenger vormingsvereistes vir aanlynkontrakte in die algemeen op te lê, aangesien verbruikers rasioneel kies om nie hierdie kontrakte te lees nie. ‘n Moontlike uitsondering in die vorm van vrywillige, “opt-in” toestemming, soos erken in die Europese General Data Protection Regulation, word ondersoek en toepaslik bevind vir spesifieke klousules. Daar word verder aangevoer dat die leerstuk van verrassende bedinge in die Suid-Afrikaanse konteks belangrike beskerming kan verleen aan die redelike verwagtinge van verbruikers, asook verskaffers kan aanmoedig om verrassende bedinge te identifiseer en onder die aandag van verbruikers te bring. Dit vereis dat howe erken dat verbruikers redelikerwys verkies om nie aanlynkontrakte te lees nie, en dat hulle dwaling oor verrassende bedinge in ‘n aanlynkontrak byna altyd redelik moet wees. Die proefskrif identifseer en oorweeg verder spesifieke substantiewe probleme wat geraak word deur unieke aanlyn-risikos. Dit sluit in klousules met betrekking tot die gebruik van persoonlike inligting en verbruiker-gegenereerde inhoud, klousules wat deur die deurlopende aard van aanlynkontrakte geraak word (soos klousules wat eensydige wysiging of eensydige kansellasie magtig) en klousules wat deur die globale aard van aanlynkontrakte geaffekteer word (soos klousules wat ‘n vreemde regstelsel of forum aanwys). Hierdie klousules word oorweeg aan die hand van meganismes van substantiewe beheer wat tans in die Suid-Afrikaanse reg erken word. Die bespreking sluit ook ‘n oorweging in van prosedurele kwessies, soos ongelyke bedingingsmag en die moontlikheid van misleiding, wat die evaluering van die substantiewe billikheid van bedinge kan beïnvloed. Daar word bevind dat huidige maatreëls onvoldoende is om behoorlike beskerming van aanlynverbruikers te verseker. Statutêre wysigings, hoofsaaklik deur Europese instrumente geïnspireer, word voorgestel om hierdie kwessies aan te spreek.

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