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Part 2. UNCID - Chapter 4. Annex

ANNEX 

MODEL INTERCHANGE AGREEMENT FOR THE INTERNATIONAL COMMERCIAL USE OF ELECTRONIC DATA INTERCHANGE

TABLE OF CONTENTS

  • Preface
  • An Introduction to Interchange Agreements
  • The Model Interchange Agreement
  • The Commentary
  • Technical Annex Checklist

 


PREFACE

The Model Interchange Agreement for the International Commercial Use of Electronic Data Interchange has been developed as a part of a project under the Action Programme on the Legal and Commercial Aspects of Electronic Data Interchange adopted by the United Nations Economic Commission for Europe Working Party on Facilitation of International Trade Procedures ("WP.4") in 1991. That Programme is set forth in United Nations Document No. TRADE/WP.4/R.697. The Programme emphasizes legal issues which can be readily defined and aims at developing guidance on those legal issues, and recommending appropriate solutions in the form of legal instruments or tools or changes in commercial practices.

The Model Interchange Agreement is a product of one of the main projects of the Programme. Objectives of that project are to ensure the reasonable harmonization of interchange agreements used in international trade and to develop an internationally accepted version for optional use. Under the operating procedures of WP.4, the Model Interchange Agreement is recommended for consideration by all commercial trading partners wishing to use Electronic Data Interchange in international trade.

The Model Interchange Agreement has been prepared by a group of international practitioners in law or related matters with knowledge and expertise in EDI and international trade. These practitioners, representing a number of countries all over the world, are convened regularly under the auspices of WP.4 through the Legal Rapporteurs Team, which is organized by two Rapporteurs on Legal Questions elected by the members of WP.4. This work, achieved also in close collaboration with other teams of experts on EDI, reflects a multidisciplinary approach, the relevance of which is essential in the area of EDI. It also takes into account the similarities and differences among the various legal systems. [March, 1995]


AN INTRODUCTION TO INTERCHANGE AGREEMENTS

What is an interchange agreement?

An interchange agreement is made between trading partners setting out the rules they will adopt for using Electronic Data Interchange (EDI). Electronic Data Interchange is the electronic transfer from computer to computer of commercial or administrative transactions using an agreed standard to structure the transaction or message data. The agreement also details the individual roles and legal responsibilities of the trading partners for transmitting, receiving and storing electronic messages. Because of differences which are involved with the use of EDI in commerce, addressing these topics as they relate to a new electronic trading environment reduces the legal uncertainty that electronic trading might raise and enhances the confidence with which the technology is employed.

Why are Interchange Agreements developed and used?

EDI is developing rapidly as an effective business tool for international trade. The use of EDI for business and administration purposes is already well established within several major industries in Europe, North America, Australia/New Zealand and Asia.

The increasing use of EDI is fundamentally changing international trading practices by replacing traditional paper based trading with electronic alternatives. Instead of sending and receiving original written documents with handwritten signatures, traders transfer structured business data from one computer system to another by electronic means, including the increasing use of electronic signatures.

However, the extent to which national and international law accepts that an electronic message can perform the same function as a paper document differs considerably. Many of the conventions and agreements relating to international trade do not anticipate the possible use of EDI. This is largely because EDI simply did not exist when these international conventions and agreements were drafted and the necessary modifications to them have yet to be carried out. Many national laws also introduce uncertainty regarding the legal validity of EDI based transactions or are inconsistent in their treatment of the new technologies. As well, few courts have had the opportunity to rule on the validity of electronic documents, messages or signatures.

From early in the use of EDI, these types of legally focused agreements have been employed by businesses in different industries, in different economic or geographic regions and for different levels of technology sophistication.

Why should a company use an interchange agreement?

In the absence of clear governing legal rules and principles, an interchange agreement provides a company with a readily available solution for formalising the EDI relationship between it and its trading partners.

For example, the Model Agreement, when properly relied upon, seeks to provide EDI messages with a legal binding effect across different national legal systems. This goal is pursued by addressing all of the basic legal issues needing to be covered before a company uses EDI to communicate with its national or international trading partners. Thus, once a company decides it will use EDI, it will require agreement with its trading partners on at least the following issues, the priorities of which will vary based upon the specific needs of that company:

  1. selection of EDI messages, message standards and methods of communication;
  2. responsibilities for ensuring that the equipment, software and services are operated and maintained effectively;
  3. procedures for making any systems changes which may impair the ability of the trading partners to communicate;
  4. security procedures and services;
  5. the points at which EDI messages have legal effect;
  6. the roles and contracts of any third party service providers;
  7. procedures for dealing with technical errors;
  8. the needs (if any) for confidentiality;
  9. liabilities in the event of any delay or failure to meet agreed EDI communications requirements;
  10. the laws governing the interchange of EDI messages and the arrangements of the parties; and
  11. methods for resolving any possible disputes.

Interchange agreements between trading partners are an entirely voluntary arrangement. However, as the fairly extensive list above indicates, a company will need to consider a number of very important issues before starting to use EDI to communicate with trading partners. An interchange agreement gives a structured framework for considering and formalizing these basic issues.

The failure to gain a reliable and binding agreement on the rules governing a business' EDI communications presents the risk for unnecessary and costly disputes among trading partners, and, in the worst case, may result in litigation.

What model interchange agreements exist?

A number of model interchange agreements have been developed for both national and regional use. These include interchange agreements published by national EDI organizations, professional bar associations and public administrations. However, at the time of this publication, no global model exists other than the Model Interchange Agreement.

In the absence of an existing model for international commercial trade transactions, conflicts among the existing national or regional models were also believed to inhibit the deployment of EDI in international trade. The various models consulted by the Legal Rapporteur Team varied widely in length, substance and content; the Model Interchange Agreement seeks to reconcile and find common ground in order to enhance the ease of international trade use of EDI.

How does this Model Interchange Agreement differ from other model agreements?

This Model Interchange Agreement is particularly suitable for international trade. It has been developed taking into account the differing national legal systems and offers practical solutions for overcoming any difficulties these might cause. It is intended to be sufficiently flexible to meet the requirements of all of the business sectors involved in international trade. Users may also find it useful for preparing interchange agreements relating to purely national or regional EDI commercial activity.

If a company decides to use the international model set out in this Model Interchange Agreement as a basis for deciding the rules governing the use of EDI between it and its trading partners, one can be reasonably confident that a tool has been selected which:

- addresses the recognized legal issues arising from the commercial use of EDI in international trade; and,

- provides a strong legal and practical framework for considering and recording the necessary business decisions.


THE MODEL INTERCHANGE AGREEMENT FOR THE INTERNATIONAL COMMERCIAL USE OF ELECTRONIC DATA INTERCHANGE

This Model Interchange Agreement publication consists of three parts:

THE MODEL INTERCHANGE AGREEMENT.

THE COMMENTARY, WHICH PROVIDES CERTAIN EXPLANATIONS AND ADDITIONAL GUIDANCE.

A CHECKLIST FOR TECHNICAL ANNEX, SUMMARIZING CERTAIN CONTENT REQUIREMENTS FOR A TECHNICAL ANNEX TO BE ATTACHED TO ANY ACTUAL AGREEMENT.

The Model Interchange Agreement has been prepared for use among commercial trading partners. In order to be used with administrative or official agencies or for consumer transactions, appropriate revisions will be required.

MODEL INTERCHANGE AGREEMENT

This Interchange Agreement (the "Agreement") is concluded by and among {insert names and addresses of the parties} (hereinafter referred to as "the parties") as of _______, 19__. By this agreement, the parties, intending to be legally bound, hereby agree as follows:

SECTION 1: SCOPE AND STRUCTURE

1.1. Scope.
 This Agreement governs any electronic transfer of Messages between the parties. Except as expressly provided, this Agreement does not govern any other relationships, contractual or not, in the context of which Messages are communicated. A Message means data structured in accordance with the UN/EDIFACT Standards as provided in Section 2.

1.2. Technical Annex.
 The attached Technical Annex sets forth the specifications agreed upon by the parties for certain technical and procedural requirements. In the event of a conflict between the terms of this Agreement and the Technical Annex, the terms of this Agreement shall prevail.

SECTION 2: COMMUNICATIONS AND OPERATIONS

The parties shall communicate Messages in accordance with the following :

2.1. Standards.
 The "UN/EDIFACT Standards" are those standards established for Electronic Data Interchange (together with related recommendations), as approved and published in the United Nations Trade Data Interchange Directory (UN/TDID). The parties shall use those versions of the UN/EDIFACT Standards identified in the Technical Annex.

2.2. System Operations.
 Each party shall test and maintain their respective equipment, software, and services necessary to effectively and reliably transmit and receive Messages.

2.3. System Changes.
 No party shall make any changes in systems operations which impair the mutual capabilities of the parties to communicate as contemplated by this Agreement without providing prior notice of the intended change.

2.4. Communications.
 The parties shall specify in the Technical Annex the methods of communication, including the requirements for telecommunication or the use of third party providers.

2.5. Security Procedures and Services.
 Each party shall implement and maintain security procedures and services, including any specified in the Technical Annex, to protect Messages and their records against untoward events or misuse including improper access, alteration or loss.

2.6. Record Storage.
 The parties shall store and retain records and the Messages communicated under this Agreement as may be specified in the Technical Annex.

SECTION 3: MESSAGE PROCESSING

3.1. Receipt.
 Any Message transmitted in compliance with this Agreement shall be deemed received when accessible to the receiving party in the manner designated in the Technical Annex. Until so received, no transmitted Message shall have any legal effect unless applicable law mandates legal effect to such Message upon transmission, whether or not received.

3.2. Acknowledgement.

3.2.1. Unless otherwise designated in the Technical Annex, the receipt of a Message need not be acknowledged by the receiving party. A requirement for acknowledgement in the Technical Annex shall include the methods and types of acknowledgements (including any Messages or procedures) and the time periods, if any, in which acknowledgement must be received.

3.2.2. An acknowledgement will be prima facie evidence that the related Message was received. A party receiving a Message requiring acknowledgement shall not act upon that Message until the acknowledgement is sent. If a receiving party is not able to send the acknowledgement, it shall not act upon the Message without further instructions from the sender of the Message. The failure of a receiving party to acknowledge a Message will not deprive the Message of its legal effect, except when the originating party is not identifiable from the Message.

3.2.3. In the event that the originating party has not received, for a properly transmitted Message, a required acknowledgement and no further instructions have been provided, the originating party may declare the Message null and void by so notifying the receiving party.

3.3. Technical Errors.
 A receiving party must give notice to the originating party of circumstances, including technical errors in a received transmission, which prevent the further processing of a Message.

SECTION 4: VALIDITY AND ENFORCEABILITY

4.1. Validity. 
The parties agree that valid and enforceable obligations may be created by the communication of Messages in compliance with this Agreement. The parties expressly waive any rights to object to the validity of a transaction solely on the ground that communication between the parties occurred through the use of Electronic Data Interchange.

4.2. Evidence.
Without regard to the absence of any writings and written signatures, to the extent permitted by law, the records of Messages maintained by the parties shall be admissible and may be used as evidence of the information contained therein.

4.3. Contract Formation.
A contract concluded through the use of Electronic Data Interchange under this Agreement shall be deemed to be formed when the Message sent as acceptance of an offer has been received in accordance with Section 3.1.

SECTION 5: DATA CONTENT REQUIREMENTS

5.1. Confidential Status.
 No information contained in any Message communicated under this Agreement shall be considered confidential unless by operation of law or by designation in the Technical Annex or the Message.

5.2. Legal Compliance.

5.2.1. Each party shall ensure that the content of any Message is transmitted, received or stored in compliance with all legal requirements to such party.

5.2.2. In the event that the receipt or the storage of any element of a Message would constitute a contravention of the applicable law, the receiver shall without undue delay give notice of such non-compliance.

5.2.3. Until the receiver is aware of non-compliance of the Message, its rights and obligations under this Agreement shall not be affected.

5.2.4. Upon giving notice of non-compliance to the sender, the receiver shall be under no obligation to respond to any further non-complying Message. Upon receipt of the notice the sender shall refrain from transmitting any further non-complying Message.

SECTION 6: LIABILITY

6.1. Force Majeure.

No party shall be liable for any delay or other failure in performing its obligations under this Agreement where such delay or failure is caused by any event beyond the party's control (a) which could not be reasonably expected to have been taken into account at the time this Agreement was signed or (b) the consequences of which could not be avoided or overcome.

6.2. Excluded Damages.

 No party shall be liable for any special, consequential, indirect or exemplary damages arising from any breach of this Agreement.

6.3. Provider Liability.

6.3.1. A party using the services of a third party provider in the communication or processing of Messages shall be responsible under this Agreement for any acts, failures or omissions of that provider in the provision of said services.

6.3.2. Any party instructing any other party to use a specified third party provider shall be responsible for any acts, failures or omissions of the provider.

SECTION 7: GENERAL PROVISIONS

7.1. Governing Law.

 This Agreement shall be governed by the national laws of _______. In the event of a conflict in law between the laws governing a transaction and the laws governing this Agreement, the laws governing this Agreement shall prevail.

7.2. Severability.

Should any provision of this Agreement be invalid or unenforceable for any reason, all other provisions of the Agreement shall remain in full force and effect.

7.3. Termination.

Any party may terminate this Agreement upon not less than [30] days prior written notice of the termination. No termination shall affect any communications occurring prior to the termination, or the performance of any related transactions. The provisions of Sections 2.5, 2.6, 4, 5.1, 6, 7.1 and 7.5 shall expressly survive any termination and remain binding upon the parties.

7.4. Entire Agreement.

This Agreement, including the Technical Annex, constitutes the complete agreement of the parties on the subject matters of this Agreement and becomes effective when signed by the parties. The Technical Annex may be amended by the parties or by a person authorized by a party to sign on its behalf. Each party shall provide to the other a written and signed record of every amendment agreed. Each amendment shall enter into force upon exchange of the written and signed records. The Technical Annex and each amendment then in force shall constitute the agreement between the parties.

7.5. Headings and Sub-headings.

 The headings and sub-headings of this Agreement shall be read as part of the clause or sub clause in which it appears.

7.6. Notice.

Excluding acknowledgements and notices under Section 3, every notice required to be given under this Agreement or under the Technical Annex shall be treated as properly given if provided to the other party in writing and signed by an authorized person for the party giving notice or an electronic equivalent of which a record can be produced. Each notice shall have effect from the day following that upon which it is received to the above mentioned address of the other party.

7.7. Dispute Resolution.

Alternative 1: Arbitration Clause

Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by the arbitration of a {or three} person[s] to be agreed by the parties, or failing agreement, to be nominated by _______ in accordance with and subject to the rules of procedure of _______.

Alternative 2: Jurisdiction Clause

Any dispute arising out of or in conjunction with this Agreement shall be referred to the courts of ______, which shall have sole jurisdiction.

The parties have signed this Agreement as of the date first above written.

Name of Party : 
Authorized Officer : 
Signature :

Name of Party : 


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