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The
Impact of XML on Contract Law and the
Volume of Contract Litigation
Jane K. Winn
Shidler Center for Law,
Commerce & Technology Director & Professor
law.washington.edu/faculty/winn
jkwinn1@u.washington.edu
XML 2005 Conference
Atlanta, Georgia
November 17, 2005
Relationship
between Contract Technology & Contract
Disputes
Why don00 most business
lawyers know about B2B electronic contracting?
What is the difference between
Formalism & Realism?
What is the relationship between
contract law and the use of EDI for B2B contracts?
What is the relationship between
contract law and the use of Web interfaces for B2C contracts?
What is the relationship between
contract law and the use of XML for B2B contracts?
Emerging issues?
Legal perspectives on
B2B electronic contracting
What kind of people choose
to study law?
How do most lawyers learn
about new commercial practices?
What were the issues raised
by 1990s electronic contracting?
Is there a writing?
Are digital signatures required?
What should a trading partner
agreement require?
Did the end user use the graphical
interface to manifest assent?
Formalism v. Realism
Formalism
Predictability in law rewards
business planning
Limited, certain enforcement
Abstract rules easy to learn
and apply ex ante
Realism
Accommodate reality, including
actual lack of planning
Flexible, contextualized interpretation
to resolve disputes ex post
Relational contract based
on relationship not contract
B2B Contracts & EDI
Litigation rate seems to be
lower than for B2B contracts in other forms, may be zero
Formalist explanation
Absolute number of errors
declines
Thorough planning means parties
know how to resolve disputes without outside
Realist explanation
No investment in EDI in absence
of long-term relationship to manage risk of holdup or failure
Investment in EDI reinforces
strength of relationship and incentives to resolve disputes informally
B2C Contracts & Web
Interface
B2C 00tandard form contracts00
are based on internal business standards, not consumer standards so
huge variations in interface designs and terms
Should courts promote innovation
in marketing channels by lowering standards for contract enforcement?
Is the US suffering from excessive
litigation?
Terms specifying out of court
resolution growing in popularity in consumer contracts
B2C Contracts & Web
Interface II
What does higher rate of litigation
for B2C mean? Variations in legal standards applied by courts
Formalist explanation
Courts should strictly
enforce contract as written by business to reward planning
Assume consumer and business
expectations similar
Realist explanation
Looking at context of dispute
reveals impact of bad interface design on end user
Assume consumer and business
expectations differ
B2B Contracts & XML
Lower barriers to entry to
sophisticated B2B contracting systems means less sophisticated players,
long term relationships not a prerequisite
Formalist hypothesis
Few disputes like EDI due
to decline in absolute number of errors, more planning by participants
Realist hypothesis
More disputes unlike EDI
due to diversity in participants, divergent perceptions, lower level
of commitment
Emerging issue:
IT as a source of self-regulation?
Can B2B contracting technology
make lawyers irrelevant to businesses?
Is no news good news?
Should lawyers agree to get
out of the way?
Dupont + Exxon
Walmart + Small supplier
Even if it seems fair for
businesses to opt out of the legal system, is if fair for business to
take consumers with them?
Emerging Issue:
Extrinsic Aids to Contract Interpretation?
What is chicken?
Young roasting chicken or
old stewing chicken?
Can industry custom resolve
this dispute?
XML makes implicit context
explicit
How can lawyers access understanding
of context that went into the registry or schema?
Hand written on the front
of the P.O. and preprinted on the back?
Transaction data versus narrative
Emerging Issue:
Battle of the forms
Each business has a lawyer
draft a paper standard form that says 00 always win, you always lose,
and if you don00 agree, no deal00/font>
Contracting parties exchange
preprinted forms, perform contract
In rare event of dispute,
which writing governs?
Last Shot Rule
Knockout Rule
Contract formation conditional
on acceptance and not material?
Would using XML force parties
to agree ex ante, eliminating ex post disputes over terms?
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