Guernsey States approves proposals for Electronic Agents Legislation

1 November2018


Proposals for the preparation of new legislation regarding the use of “electronic agents” have been approved by Guernsey’s local government (the States). The new provisions (to be enacted via Ordinance made under the Electronic Transactions (Guernsey) Law, 2000 (the Electronic Transactions Law), will bring certainty regarding the legal effects of transactions undertaken by or via “electronic agents”.

Whilst the Electronic Transactions Law was drafted with a degree of “future proofing” in mind, and is arguably sufficient to encompass many of the uses of technology that exist today, the certainty that the new legislation will bring is to be welcomed.

In today’s digital economy, with the growing adoption of AI and distributed ledger technology (amongst others), it is vital that Guernsey remains innovative. Given the notorious difficulties inherent in the law keeping pace with technological developments, a broadly-drafted, permissive legislative regime is vital. However, there has to be certainty in order for businesses to be confident that their use of technology and automated processes will be validated. The new legislation is intended to bring that certainty, whilst retaining mechanisms for resolving issues should “unintended consequences” flow from the actions of such electronic agents.

Electronic Agent

An “electronic agent” is defined in the Electronic Transactions Law as:

“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 websites looking for the lowest price. Alternatively, paying funds to purchase goods automatically to a third party once confirmation has been received that the goods have been delivered.

Why now?

There has been a significant amount of commentary and academic legal debate about the interaction between the use of electronic agents and traditional contract law. Many jurisdictions do not have laws which address these issues, or give limited guidance. Whilst this does not prevent the use of electronic agents, it does create uncertainty.

Given the increasing reliance on technology, its growing commercial viability and its use in high-value transactions, the legal effects of using such agents have to be clear, both in order to encourage adoption of the technology and retain confidence in e-commerce more generally.

Guernsey wishes to build on its existing legislation to provide express confirmation that such transactions will be recognised, which is intended to boost confidence and enable adopters of technology solutions to utilise Guernsey as a “test bed” for their implementation and development. The proposal is also consistent with the aims of the States’ Digital Sector Strategic Framework, to develop and encourage innovation in technology and the growth of the digital sector on the island.

What does it do?

The proposals involve expressly confirming that transactions entered into by electronic agents will not be denied legal effect, validity or enforceability by virtue of them being created or delivered by electronic agents. Similarly, valid contracts may be formed between electronic agents without human intervention, or between humans and electronic agents.

There will be a rebuttable presumption that by using an electronic agent to form a contract, the person intended a binding contract to be formed. The important part there is “rebuttable”, which will enable parties to argue that “unintended consequences” (perhaps resulting from faulty coding or a malfunction in the operating system) should not bind them, should such eventualities arise.

Parties will still be at liberty to choose the law governing any contracts entered into, which will itself prove challenging given the borderless nature of a growing portion of the digital economy.

What’s next?

Draft legislation will be prepared and is likely to be subject to consultation before being finalised. Watch this space…..

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