First published in Business Life May 2019

Legal certainty following the Electronic Transactions (Electronic Agents) (Guernsey) Ordinance, 2019

Guernsey’s States passed the above Ordinance at its sitting on 27 February in response to global uncertainty over the status of electronically concluded transactions. Whilst the Electronic Transactions Law is arguably sufficiently widely drafted, the growing adoption of AI has led to calls for greater certainty around “electronic agents” and their ability to bind others to the terms of transactions.

An “electronic agent” is:

“a computer program or electronic or other automated means used independently to initiate an action or to respond in whole or in part to information or actions in electronic form or communicated by electronic means, without review or action by a natural person.”

In other words, computer code which will carry out a task or series of tasks, in response to information it receives, without further input from a human. For example, programming a computer to purchase an item online once it has scanned the web for the lowest priced item. The Ordinance confirms that the creation, formation, execution and performance of binding contracts can be effected by computers without human intervention.

Reliance on technology has raised awareness of the associated risks and the complex legal issues that arise. This has driven an interest in ensuring certainty where possible. We anticipate that the Ordinance will encourage innovation and businesses to rely on technology solutions to automate routine processing, where possible.

This is primarily a piece of “facilitative” legislation. Those businesses who are interested in this space should review their terms of business and processes to ensure that the consequences of such concluded transactions are as intended. Similarly, the programming of “electronic agents” should be reviewed to ensure there are no bugs or errors which might have (unintended) binding consequences or cause confusion.

There will be a presumption that the person utilising the electronic agent wished to form a binding contract through that agent, so be careful with that programming – ensure the instructions are clear!

It may take a little time for use cases to become common, but the certainty provided by the Ordinance will be welcomed by businesses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.