What are e-commerce contracts, their types, and how to terminate them?

Contracts guarantee the rights of the parties to the contract and avoid disputes between them. God Almighty said: "O you who believe, fulfill contracts." Every merchant (legal or natural person) is obligated to draft the contract between themselves and the other party in legal form to achieve the purpose of the contract. Commercial contracts are contracts based on personal considerations, and therefore, all the terms and guarantees agreed upon between the parties to the contract are stipulated in them, as well as the penalties for violating those terms, such as compensation. Keeping pace with modern technological developments in all fields, the Kingdom of Saudi Arabia has been keen to make contracting and signing electronic using technology and digital transformation, which we will explain below:

A contract is a binding agreement between two or more parties, voluntarily, to establish a legal relationship in accordance with Saudi law. Each party is obligated to fulfill the agreed-upon obligations and bear the penalties for violating them.

A commercial contract is a contract concluded between two or more merchants for a commercial purpose related to the commercial activity engaged in by both parties. It aims to regulate commercial relations, guarantee the rights of the parties, and increase trust between them. In the event of a dispute, the commercial court has jurisdiction over this matter.

An electronic contract is the advanced technological version of a traditional contract.

There are several means of concluding an electronic contract in the Kingdom of Saudi Arabia, including:

Telex and fax
Minatel
Pager
Internet
Modern videophone technology
Legal authority for the legitimacy of an electronic contract:
Royal Decree No. M/18, dated 8/3/1428 AH, conferred legal authority on the conclusion of an electronic contract through electronic platforms, provided that it adheres to the provisions of Islamic Sharia and the provisions of the Saudi system and does not violate public morals.

The basis of contracts is mutual consent. Offer and acceptance may be expressed electronically. A contract is considered valid and enforceable when concluded in accordance with the provisions of the system. A contract does not lose its validity or enforceability simply because it was concluded via one or more electronic records.

Contract Elements: For a contract to be valid, its conditions and elements must be met. It must result from the mutual will of both parties, and be concluded correctly and without invalidity. Traditional and electronic contracts share the same conditions and elements, which are as follows:

1. Mutual consent between the parties to the contract.
The two parties' wills must be met, namely the offer and acceptance. The offer is the definitive and absolute expression of their will to conclude the contract. This is accomplished through an electronic medium using one of the methods mentioned above. Acceptance is the expression of the firm will to accept the contract with the other party. This is accomplished through an electronic medium using one of the methods mentioned above.

2. The legal capacity of the parties to the contract is present.
The parties to a contract must have the legal capacity to conclude it. The contract must be based on a valid and sound will and on a person with legal capacity to act and transact.

3- The contract must be free of any error, coercion, or fraud, and the subject matter of the contract must be determinable.
The contract must be sound and not include any violation of public order and public morals in the Kingdom or the provisions of Islamic Sharia. The subject matter of the contract must exist or be likely to exist in the future. If the subject matter of the contract is a job, the job must be available and present.

4- Determine the reason for the contract.
The reason for the contract must be clearly stated in the text of the contract and fully explained without any error.

Advantages of electronic contracts:
1- Speed ​​in completing business with the electronic medium.

2- There are no direct transactions between the parties to the contract; rather, they are conducted electronically.

3- The presence of an electronic medium and modern technology contributes to the smooth conclusion of contracts, rather than requiring a physical presence at the contracting meeting.

Terms and conditions included in commercial contracts:
1. The reasons for the contract must be clearly stated and explained in detail, as well as the type of contract.

2. Clarify all necessary information to identify the parties to the contract, verify their eligibility to enter into the contract, and detail the roles of each party.

3. Clarify the contract's duration, including its beginning and end, and the impact of its termination on both parties.

4. Record a preamble to the contract, detailing all events prior to the contract and how it was concluded.

5. Methods for resolving disputes, including whether to resort to the judiciary or arbitration.

6. Clarify the subject matter of the contract in detail, the subject matter and location, and the governing law in the event of foreigners.

7. When the parties to the contract withdraw, what obligations apply to them, and specify the reasons for termination.

8. Clarify the financial value of the contract and the delivery dates.

9. Ensure that the contract does not contain any legal violations and does not violate the provisions of Islamic Sharia and public order.

Types of Commercial Contracts:
1. Commercial Sales Contract.

A contract by which the seller undertakes to transfer ownership of the subject matter of the contract to the buyer, whether a financial right or a commodity. The buyer undertakes to pay the agreed-upon financial consideration, and the seller undertakes to transfer ownership of the subject matter of the contract.

2. Commission Agency Contract (Purchase Commission Agency - Sale Commission Agency).

A contract by which the commission agent undertakes to perform a legal transaction in his own name and on behalf of the client in exchange for a fee.

3. Transportation Contract.

A contract by which a person called the "carrier" undertakes to use his own means to transport people and goods to a specific location in exchange for a fee, according to what is agreed upon between the two parties.

4. Brokerage Contract.

A contract by which a person called the broker undertakes to another person called the client to search for a second party to conclude a specific contract and mediate in its conclusion in exchange for a fee.

5. Distribution Contract.

It is a contract concluded between a producer and a distributor, whereby the distributor undertakes the distribution of products or goods in exchange for a fee.

6- Marketing Contract.

It is a commercial contract concluded between two parties, one of which is a company, and the other party undertakes to market the first party's products and services in accordance with the provisions of Islamic Sharia.

7- Management and Operation Contract.

It is a commercial contract concluded between the project owner and the other party, who undertakes to implement and operate the project for the owner in exchange for a fee.

Termination of Commercial Contracts:
The contracting parties have the right to waive the contract voluntarily, and their waiver is subject to the terms of the contract.

The contract may stipulate that both parties have the right to withdraw from the contract, provided that they notify the other party.

If the contract is binding on both parties and one of the contracting parties fails to fulfill their obligation, the other contracting party may, after notifying the defaulting party, request the performance or termination of the contract, with the payment of the due compensation if necessary.

The contract is terminated if it becomes impossible to implement the subject matter of the contract, due to a reason beyond the control of the contracting parties.