Project No.: 5003-054544 01.07.98-31.12.99

Project leader: Prof. Beat Schmid, Institut für Medien- und Kommunikationsmanagement, University of St. Gallen
e-mail: beat.schmid@mcm.unisg.ch

Name of project: Secure electronic contracts

Partners:
Prof. Rolf Weber, Rechtswissenschaftliches Institut, University of Zurich
Dr. Otto Müller, Zurich Chamber of Commerce
Peter Müller, Electronic Mail Bodensee Management AG, University of St. Gallen

Funding: Sfr 269,241.-

Summary:
The multimedia Internet will be used more and more by companies including small and medium-sized enterprises (SMEs) to present their products and services worldwide and establish contacts with business partners. An essential prerequisite for business relations is mutual trust. Existing bodies of legislation and standardization like Incoterms (International Commercial Terms) are of only limited use. The International Chamber of Commerce is currently setting up an Eterms repository in which business, contract and law documents can be deposited. Business partners will be able to deposit agreed-on contracts, or parties who are about to set up a business relationship will be able to reference deposited documents. From this basic starting-point, the project will analyse the fundamental requirements on secure electronic contracts and incorporate the definition and drafting of secure electronic contracts in a special scenario.

The business case featured in this project concerns the sale over the Internet of objects of information such as software and services (Virtual Software House Project 5003-52210, Schmid) and comprises the following steps:

• A wishes to improve its logistics through the use of modern production planning and control (PPC) software. It finds modules of the well-known SAP R/3 and Baan standard packets in the Virtual Software House.
• A now buys the basic SAP R/3 modules electronically. As A does not have its registered place of business in Europe, it gets a contract proposal with all relevant clauses.
• As A does not like the terms of payment, it negotiates. The two partners agree new terms. Consultancy fees for the choice of new modules are also incorporated into the contract.

After a while, the user is dissatisfied because the lead time for introduction of the standard software is too long and demands compensation. The dispute is settled by arbitration electronically.

The goal of the project is to analyse the requirements on a secure electronic contract and design a secure electronic contract for this particular business case.