It's lost in the [e-]mail

The question being asked by ISPs and web hosts is, will they become liable for lost emails the same way that a delivery company may be liable for losing a parcel or a supplier may be liable for faulty goods?

Imagine you have just been offered a classic car at a great price. You collect classic cars and realise this is a good investment. All you need to do is email the seller and it’s yours. You type your acceptance, click send and …

The next day you discover the car has been sold to someone else. The seller never knew you were interested, because your email didn’t arrive. You have lost a good bargain. What can you do?

This situation has been generating discussion recently because of Parliament’s consideration of the Consumer Protection (Definitions of Goods and Services) Bill. Among other things, this bill will define electricity as “goods” under the Consumer Guarantees Act. This has led to ISP and web host concerns that, by implication, emails will also be deemed as goods.

The question being asked by ISPs and web hosts is, will they become liable for lost emails the same way that a delivery company may be liable for losing a parcel or a supplier may be liable for faulty goods? The question for consumers is, does this give them extra rights in the event of their ISP “losing” their emails?

The first issue is what rights a consumer currently has against their ISP.

The main source of rights for personal consumers is the Consumer Guarantees Act. This act gives personal consumers rights against suppliers and service providers when goods and services fall below certain standards. It only applies to goods and services that are for personal/domestic use. A personal ISP account is such a service and consumers may have a claim against their ISP if the services are not provided to a reasonable standard.

Businesses' rights are governed by the contract with their ISP.

The occasional mysterious disappearance of an email is certainly not an unusual thing, and it would be extremely difficult to successfully claim against an ISP for isolated occurrences of email loss. Put another way, it is reasonable that some data loss will occur from time to time on the internet. This can be contrasted with a courier company, where any loss of a package would not be reasonable.

The second issue is to consider the effect of the proposed Consumer Protection Bill. It does not set out to define emails as goods, only electricity. The reason for the bill dates back to a 1998 court case that ruled electricity was neither a good nor a service. As our laws tend to assume things are either a good or a service, the case created some loopholes. The bill proposes to close these loopholes by defining electricity as a good (for the purposes of the Consumer Guarantees Act, the Sale of Goods Act and the Fair Trading Act).

If electricity is to be deemed as goods, does it follow that emails must also be goods?

In our opinion to say “because electricity is a good, email must be a good” is a misunderstanding of the issue.

Email and other internet services are services based on transmission of data. Simply because the conduit relies on electricity does not make the conduit a good or the data electricity.

The proposed bill does not create new rights for consumers against ISPs “losing” emails. ISPs and consumers do not “buy” and “sell” emails. What is paid for is a service, namely data transmission. It is a separate issue as to what are the obligations of an ISP to consumers. Consumers are entitled to assume that data transmission should be provided to reasonable (or for businesses, contractual) standards. This must take into account the workings of the internet, which is essentially a best-efforts system.

David Russell of the Consumers Institute is absolutely correct when he says an ISP has no right to claim special status outside that of any other trader and has to abide by the same consumer laws.

However, ISPs cannot be expected to take on impossible roles. It is hoped that, instead of raising concerns, upcoming legislation will clarify the ongoing issue of ISP liability.

Horrocks is a partner and Burgess a solicitor in Clendon Feeney’s technology law team. This article, together with further background comments and links to other websites, can be downloaded from Clendon Feeney's website. Questions and comments are welcome to techlaw@clendons.co.nz.

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