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In the era of global digitalization, e-commerce has become a key driver of modern economic development. The emergence and widespread adoption of electronic contracts not only help businesses save time and costs but also open up cross-border business opportunities.
However, this transformation also presents new challenges, from legal frameworks to information security and the protection of stakeholders’ rights. As a crucial legal tool, electronic contracts continue to evolve to meet the demands of the times and ensure transparency and security in commercial transactions.
Pioneering in the New Technological Era
The world is experiencing rapid advancements across various fields, particularly in technology and science. As an active participant in global development, Vietnam is no exception. To navigate these major waves of change and emerge as a pioneer in this new era, businesses must stay updated in real-time with the latest developments.
Several emerging technologies have been introduced, implemented, and developed at an extraordinary pace, and they are expected to serve as pillars of the global economy for decades to come. These include:
- Artificial Intelligence (AI): AI enables machines to learn and process data independently, performing human-like tasks without direct intervention. AI excels in analyzing vast amounts of data quickly and is applied in e-commerce to collect customer insights, predict shopping behaviors, optimize inventory, and enhance product recommendations. According to a newly released forecast by PwC, AI could boost global GDP by 14% by 2030.
- Virtual Reality (VR): VR creates simulated environments through smart devices, providing immersive interactive experiences. In e-commerce, VR allows customers to explore virtual stores, test products digitally, and enjoy a shopping experience akin to visiting a physical store, thereby enhancing user engagement.
- Big Data: Big Data refers to massive and complex datasets that exceed traditional processing capabilities. Characterized by volume, velocity, and variety, Big Data enables businesses to forecast demand, optimize costs, prevent fraud, and analyze customer behavior. IDC predicts that by 2025, global data volume will reach 163 zettabytes, unlocking numerous opportunities for e-commerce, especially in international transactions.
- Blockchain Technology: Blockchain operates on a decentralized ledger system, where data blocks are securely linked to create a transparent and tamper-proof network. In international e-commerce, Blockchain facilitates transaction management and smart contracts, ensuring transparency and accuracy. This is particularly beneficial when transactions involve parties from different countries.
To stay ahead and integrate cutting-edge technology in this new era, businesses should consider adopting and implementing these technologies in their operations.
Overview of Electronic Contracts in Commerce
According to Clause 16, Article 3 of the 2023 Electronic Transactions Law (Law No. 20/2023/QH15), an electronic contract is a contract established in the form of data messages, in which parties agree on the establishment, modification, or termination of civil rights and obligations. This type of contract has several key features, including its existence in electronic data form, allowing parties to store and transmit information via email, websites, or software.
Electronic contracts offer a significantly faster execution speed than traditional contracts, enabling parties to conclude agreements in minutes, thereby saving time and costs. Moreover, electronic contracts transcend geographical boundaries, facilitating transactions between parties in different countries, expanding markets, and enhancing international integration.
In Vietnam, electronic contracts can be classified based on their form:
- B2B Contracts (Business-to-Business): Typically used in the supply of goods, services, or commercial partnerships between enterprises.
- B2C Contracts (Business-to-Consumer): Transactions between businesses and individual consumers, commonly seen on e-commerce platforms such as Shopee, Tiki, and Lazada.
- C2C Contracts (Consumer-to-Consumer): Agreements between individuals conducted via intermediary platforms such as social networks or online marketplaces like Chợ Tốt.
Alternatively, electronic contracts can also be classified based on the technology used to establish them:
- Uploaded Contracts: These contracts are originally written on paper, signed manually, and then uploaded to a website in PDF format. Users can confirm agreement through an “Accept/Decline” button. This type is common among individuals and small businesses that do not use contract management software.
- Auto-Generated Contracts through Online Transactions: These contracts are not pre-drafted but are automatically generated during transactions based on customer-provided information. Once created, both buyer and seller confirm the contract via email, phone, or fax. This format is widely used in e-commerce transactions and online platforms.
- Email-Based Contracts: These contracts are signed and exchanged via email instead of being signed in person. The process mirrors traditional paper contracts but utilizes the Internet and email for communication. They are commonly used by individuals and organizations without dedicated contract management software.
- Third-Party Platform Contracts: These contracts offer the highest level of security and are created and managed through third-party platforms such as VNPT eContract. Parties involved must have a digital or electronic signature. This type of contract is ideal for businesses that use professional electronic contract management solutions.
Additionally, based on their purpose, electronic contracts can be categorized into electronic labor contracts, electronic sales contracts, electronic franchise agreements, and more.
The diversification in characteristics and types of electronic contracts in this new technological era underscores their critical role in modern commercial transactions. Electronic contracts contribute significantly to the robust growth of e-commerce in Vietnam, reinforcing their importance in the contemporary digital economy.
The Benefits of Electronic Contracts in Commerce
Electronic contracts have been delivering outstanding advantages in modern commerce, particularly in optimizing transaction efficiency. With the support of digital technology, the time required to conclude contracts has been significantly reduced.
Parties no longer need to meet in person but can negotiate through online platforms such as email, contract management systems, or e-commerce marketplaces. This not only saves time but also maximizes flexibility in negotiations and contract execution.
In addition to reducing transaction time, electronic contracts help cut significant costs, especially those related to printing and document storage. Traditional contracts require substantial storage space and incur printing and transportation expenses, whereas electronic contracts allow data to be stored digitally or on cloud services. This not only reduces costs but also facilitates easier and more convenient information management for businesses.
Nevertheless, businesses should consider maintaining multiple storage methods, including both electronic and physical archives, to mitigate potential risks.
Another key advantage of electronic contracts is their ability to expand commercial operations, particularly in cross-border transactions. With their borderless nature, electronic contracts enable businesses to access international markets more easily and effectively. This, in turn, enhances business cooperation opportunities, deeper participation in global supply chains, and increased competitiveness in the international market.
Furthermore, electronic contracts enhance transparency and security in transactions. Advanced technologies such as digital signatures, data encryption, and blockchain ensure contract integrity and protect the information of involved parties. Electronic storage systems also allow for the recording of complete transaction histories, facilitating verification and resolution in case of disputes.
In summary, electronic contracts are not merely transactional tools but strategic elements that help businesses enhance operational efficiency, reduce costs, and expand business opportunities. Their exceptional benefits affirm their irreplaceable role in driving the growth of modern commerce, especially in the rapidly advancing digital economy.
For the legal sector, lawyers and legal assistants can leverage AI to maximize time efficiency by automating repetitive tasks such as contract template creation and legal error detection during drafting. This allows legal professionals to focus on more complex and strategic tasks.
Secondly, AI technology can analyze large datasets, enabling lawyers to access legal precedents, standard clauses, and relevant information easily, thereby improving contract accuracy and efficiency. However, it is important to note that existing AI tools cannot guarantee 100% accuracy as they rely on various data sources, some of which may be unverified or AI-generated.
Additionally, AI aids in identifying potential risks in contracts through natural language processing (NLP), minimizing errors and legal disputes. Ultimately, technological integration enables lawyers to work more flexibly, drafting and editing contracts remotely, aligning with modern work trends.
Legal Framework for Electronic Commercial Contracts
Despite its many advantages and widespread implementation in Vietnam, replacing common physical contracts, certain drawbacks of electronic contracts must be considered. This is particularly relevant in a country where the legal framework remains inconsistent, and the digital infrastructure is still under development.
Currently, regulations on electronic signatures, online payments, and e-commerce website credibility assessments in Vietnam are still being refined and do not fully meet international standards. This may lead to legal and validity risks for electronic contracts, especially in cross-border transactions. Additionally, Vietnam’s digital infrastructure has limitations that may cause disruptions in contract execution, particularly for small businesses or individuals without access to advanced technology.
A minor issue with fiber optic transmission could potentially jeopardize multi-million-dollar deals.
Furthermore, the rapid growth of e-commerce on social media platforms presents challenges related to information security, identity verification, and dispute resolution. Without effective management and protection measures, electronic contracts could become tools for fraudulent activities, undermining consumer and business trust in online transactions.
While the era of e-commerce presents an opportunity for Vietnam to catch up with leading nations and enter the global market on equal footing, it is crucial to ensure the necessary infrastructure for this new playing field. This begins with a solid legal framework for electronic contracts and a secure, robust digital network system.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top-tier Vietnam law firm for Contract Reviewing and Drafting. If you need any advice, please contact us for further information or collaboration.
