How you could sell a car in 2034 without a hefty contract

This article was originally published on LinkedIn as “How I sold my car in 2034“.

En Vauxhall bliver demonstreret af sælgeren

Prologue

Contracts are increasingly complex and difficult to navigate, even with recent efforts to simplify the language we use. Much of this is the result of efforts to express complex and interrelated legal and compliance concepts in words and since every legal writer has his or her individual style, the variations in contracts are staggering.

Recently one of my clients asked me for a single paragraph that somehow encapsulated a vendor contract. My response was that such a thing is extremely risky and not pragmatic. There is simply too much in a contract of that nature to adequately express in a single paragraph. Instead, I suggested a couple of options that streamlined the interface for the complete contract.

Later that night I thought about the request further and what it would take to create a “1 paragraph contract” for my client. I realised that such a thing would look very different to the contracts we have now. In fact, the path to a an effective contract that could be expressed in such a short form could lead to a radical overhaul of the broader legal and compliance environment that underpins almost everything we do.

Imagine that instead of expressing those complex and interrelated legal and compliance concepts in words, we reverse the process and establish a syntax to express those concepts more abstractly and yet in a way that still includes all that stuff the “fine print” is designed to cater for in our every day dealings? We could develop a new way of going about our business that doesn’t require lawyers writing pages of contracts that may still be susceptible to interpretational differences.

Going further, what if the way we contract ties directly into a broader contracts profile we all have from our first contract and which gives assurances as to what we can legitimately contract for? This is just the beginning of what could be possible. Legal frameworks could be developed, implemented and enforced programmatically. It would mean a radical transformation of the legal profession, possibly the end of much of the profession as we know it today. On the other hand, it would mean that people could go about their lives, dealing with each other with more confidence, far less uncertainty and without needing to spend so much on unintelligible legal fees.

The story below is a hypothetical scenario which should give you an idea of how this could work. Whether this scenario becomes a reality one day is another question altogether. I suspect that two developments will be key drivers: the so-called Internet of Things and cognitive systems like IBM’s Watson.

How I sold my car in 2034

I arranged to meet Andre on a sunny Sunday morning, 28 May 2034, to sell him my vintage car. I hadn’t met him in person before but I knew it was him because I received verification of his identity when we shook hands and sat down through an interaction between our CitIdents, the SmartNet and some or other authentication process my contract technician told me happens in the background. We met in a local teahouse and chatted while the waitron delivered our orders. Andre asked me about my run earlier that morning (my best time yet) and I congratulated him on his daughter’s latest masterpiece which he shared the night before. We then turned our attention to the deal we were about to make.

Andre kicked off the discussion with a quick data request to access the car’s entry in my Registry. He reviewed the car’s purchase and service history along with its logged mileage and general condition. It pretty much matched the data representation I posted with my sale ad the week before and he was also able to confirm that I was the car’s owner and entitled to sell it to him in the first place. He didn’t say anything but I suspect he also ran a quick valuation check through SmartNet to confirm my asking price was reasonable. This sounds like a lot but he finished his initial review in the time it took me to empty a sachet of sweetener into my tea and stir it.

He smiled and said he was comfortable with the car’s history and condition as well as my price. We exchanged data requests for access to the relevant portions of our contract profiles in our respective CitIdents (this has become standard practice when contracting these days). We both received confirmation that we had the necessary legal capacity to sell and buy the car (Andre’s verification included confirming with my bank that I have paid my vehicle finance and the bank had transferred ownership to me). Andre’s bank confirmed with me that he had sufficient funds to pay for the car on our agreed terms and established a payment link to my bank account for a one way funds transfer.

We decided, for the sake of tradition, to conclude our contract with a handshake. Our wrist tokens registered each other’s proximity as I said “I, Paul Jacobson, agree to sell you my car for our agreed price today.”. Andre smiled again and, in return, said “I accept your offer to buy your car today.”. With that our respective CitIdent’s registered the details of our agreement: the car being sold, our agreed purchase price, the current date and time as well as our verified identities. The SmartNet quickly polled our CitIdents for the further information it required to complete the legal and logistical aspects of our deal, advised the relevant local authorities so they could update their records and I received a data notification that the car had been removed from my Registry and transferred into Andre’s along with confirmation of the first of Andre’s payments.

We chatted a little more, finished our tea. Andre took a call from his partner and while he was chatting, I took a moment to review the transaction records newly associated with my CitIdent’s contract profile. Sure enough the sale was symbolically represented using the usual cheerful info-icons with the broad parameters of our transaction supplemented with the usual conditions, restrictions and permissions provided by the SmartNet’s latest contracts AI. The latest models finally introduced cross-jurisdictional compatibility between different regions’ contract models.

Andre finished his call, I sent payment to the waitron with a tip and thanked Andre. For a moment I couldn’t understand why the car didn’t respond to my proximity and unlock and then I realised it wasn’t mine any more. Senior moment. Since it was a lovely Autumn morning I decided to take a pod home and spend the rest of the day with my wife and children.

Thinking critically about South Africa’s communications industry

I was invited to attend the Neotel-Mail & Guardian Critical Thinking Forum at the Gordon Institute of Business Science this evening. The evening’s theme was how to create a truly competitive telecommunications market. It proved to be a very interesting debate.

John Holdsworth, ECN Telecoms‘ CEO, feels the only real way to improve competition is through better regulation. The EC Act was intended to create a legal framework supported by regulations. Unfortunately none of the regulations needed to create a more competitive market have been drafted and passed yet. ICASA doesn’t have a “bark, let alone a bite”, he said. The new Department of Communications seems to be our best chance for an improved market. ICASA risks being revamped if it doesn’t perform. What needs to be done is a chapter 10 study in terms of the EC Act. ICASA is composed of political appointees and not people who understand the industry.

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Denis Smit, from BMI-Tech, started by saying that the most important recent development is the introduction of political will in the new administration. We need a “general” to take on powerful vested interests and big corporates in the Communications industry. We have also seen the Competition Commission start to get real teeth at the same time that we see a growing belief that the current business environment is “too cozy” and needs to be shaken up a little. Smit says there is a very strong political will to make substantial changes to the communications industry. This political will is key to dealing with the ICASA bottleneck and these powerful vested interests and big corporates.

Mlindi Kgamedi General Manager in the Department of Communications‘ Director-General’s office was up next. As much as the DOC wants to address the industry, it doesn’t want to stifle competition. It is looking at the necessary resources for bodies like ICASA which will be coupled with new levels of accountability and responsibility to ensure performance. In response to Aki’s question about whether ICASA needs more money, he said money isn’t the only issue. He went further and said that if ICASA could present a compelling business plan, money wouldn’t be an issue.

Zolisa Masiza from MTN was previously an ICASA councillor (that elicited a chuckle from the audience). I didn’t make out much aside from comments about commercial incentives for MTN to invest in a more developed infrastructure.

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Angus Hay differed from Masiza and said we are beginning to see real infrastructure competition starting with international fibre becoming available and competition for international capacity leading to a drop of pricing (80% from about 2 years ago). Neotel sells on the SAT3 and Seacom cable and finds there is real competition in the market and the prices available are substantially lower than they were a few years ago. There are currently 2 national networks (Telkom and Infraco with other networks collaborating on a 3rd network) and the area where there hasn’t been much movement is the local loop which Hay says is a big challenge. Networks find that competition has driven prices down to a point where there is little return. The networks need incentive to build local loop links.

Voice termination rates on mobile networks amount to a “natural monopoly” and active intervention is required here. One example of this is the recent interconnect rates intervention. We also need intervention on issues like geographical number portability, local loop unbundling and more. Neotel has spent a “couple billion” on infrastructure. Its budget for infrastructure is around R10bn.

Masiza responded by saying there is little incentive to build out capacity between national, metro and local network layers. He sees national distance and metro areas as critical but there isn’t enough capacity to support investments to beef up infrastructure.

Holdsworth doesn’t see any real infrastructure competition going forward. We are not going to see another Telkom. What we need is services competition. Telkom has the national copper/fibre network and Vodacom has a massive mobile network. Major networks must be required to share their infrastructures at reasonable rates. Telkom “cooks the food and you have to eat it”. Telkom has no need to innovate on its network so we are stuck with 384kbps/512kbps etc. Instead, if Telkom was forced to share its infrastructure, providers could take advantage of aspects like the local loop to provide faster ADSL 2+, for example.

Smit pointed out that millions of South Africans risk never accessing broadband and this is unacceptable politically.

Hay said that unbundling the local loop is not a panacea. Only around 24% of SA households have a landline. Wireless is increasingly important with 96%-97% of South Africans estimated to be covered by some wireless network. We need a combination of wired and wireless networks to give South Africans better access to communications networks.

Smit raised a concern about current legislation and how portions of it are badly worded. Legal processes are slowing ICASA down. Aki suggested to Denis that it may be time to wipe the slate clean with ICASA and start again. Kgamedi was reluctant to take a stance against ICASA because he sees it as a valuable tool which has positive accomplishments. The DOC is looking at amending current legislation like the ECA and the ICASA Act. Masiza pointed out that ICASA had little time to reorganise itself when the framework shifted to the ECA. It really required far more time to plan for the shift and it didn’t have that time.

ICASA was given a directive to address the local loop in 2007 and hasn’t implemented this directive (together with many others). It sounds like Masiza is saying that a balance needs to be struck between managing ICASA better and not interfering unduly in its processes. Holdsworth pointed out that ICASA could take advantage of the courts where it has good arguments. ICASA needs to grow a backbone and take on the bigger players. Smit reminded the audience that the government is still a major shareholder in Telkom which stands to lose the most from local loop unbundling. This places the government in a very difficult position because its goals to cultivate a more competitive environment and maximise its Telkom interest are incompatible. ICASA runs scared because it keeps getting beaten in the legal system because it is outgunned and its opponents keep dragging ICASA through a sluggish court system.

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An audience member painted a picture of a regulatory system which has a very shaky and problematic foundation beset with conflicts of interest, inadequate regulatory frameworks and powerful and conflicting vested interests. Neotel, as a new entrant to the market, has a degree of uncertainty when dealing with ICASA. That being said, ICASA’s own framework is problematic and needs to be clarified and beefed up to truly empower ICASA as a regulator.

Holdsworth and Smit pointed out that Telkom is recognising that its wholesale business is going to grow in the coming years as its retail business begins to shrink. Aki raised the spectre of Telkom collapsing as the local loop is unbundled but Holdsworth stated that Telkom really has a world class network and implied it would find itself becoming more of a wholesale provider than a retail provider.

Hay raised the issue of spectrum and said spectrum has real limitations and there is no long term planning for spectrum beyond the next decade or two. What we sorely need is a better sense of where South Africa is going and what it needs.

“Deny, defend, delay” is Telkom’s, Vodacom’s and MTN’s strategy, said Holdsworth. Telkom’s results show the impact of VOIP services and other innovations on Telkom’s business model.

The consensus is that the Minister is proving himself to be a breath of fresh air in the South African communications industry. We seem to be on the right track from a political and policy perspective. It comes down to ICASA to regulate the industry. It is also important to have better coordination in governing structures to better implement government’s policy directives. That being said, the politicians also appointed the ICASA board but it does sound like the new administration is going to hold ICASA to account for its performance.

Holdsworth pointed out that it costs ECN three quarters of a cent to route a call from Joburg to Cape Town over Telkom’s network. ECN hands over to MTN/Vodacom/etc which charges ECN R1,25 and the customer R2,00. Very telling!

I had an opportunity to chat with Mlindi Kgamedi after the debate. I mentioned to him Finland’s recent move to give all citizens the right to access to broadband. I have been a believer in a similar right in South Africa for several years. He commented that this is something the Department of Communications is working towards and that is terrific news for South Africa!

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Giving away some of my secrets

One of the ways I keep up to date on developments in online law is by listening to This Week in Law which is a US-centric law podcast running on the TWiT network (run by Leo Laporte and includes other gems such as This Week in Tech and MacBreak Weekly). If you would like to get a sense of what the panel talks about, here is a video of the most recent episode (I listen to the audio version but the show is also captured on video, usually via the TWiT Live site):

TWiL’s focus tends to be on specific US legislation and court cases so its value to me in that respect is limited but where it is valuable to me is that the issues the team (which includes Denise Howell, Colette Vogele, Ernie Svenson and Evan Brown) discusses trends which are almost certainly going to hit South Africa in the near future. We do tend to follow the US and Europe when it comes to many Web trends and with that comes a series of legal issues which are also bound to pop up along the way.

So if you would like to find out what the current news is and the legal perspectives, consider subscribing to this podcast. The US-centric legal references may not make much sense to you but learning more about the legal risks at the cutting edge will be helpful.

Take website terms and conditions seriously

One of the biggest area for concern on the Web today is the paucity of adequate website terms of use and privacy policies. Website proprietors often take a relatively casual approach to these two documents without any regard for the degree to which they could be endangering themselves in the process. There are a substantial number of risks that arise out of publishing content on the Web. These include copyright violations, defamation, improper use of personal information or outright privacy invasions. Terms of use and privacy policies are intended to structure relationships with website visitors and minimise the risk of a dispute arising (and succeeding) due to these risks eventuating. They operate as contracts with and advisories to visitors as well as cater for a range of legislative requirements.

There are a few mistakes that website proprietors make when they prepare terms of use and privacy policies.

  • The first mistake is that they don’t prepare both documents. Websites that have any form of interactions with Internet users require both a terms of use and a privacy policy. They can be part of the same document but both a terms of use and a privacy policy must be published to a website. The terms of use will cater for access to and use of the website (as well as vital provisions dealing with liability concerns, dispute resolution and licensing issues) and the privacy policy will deal with the collection of personal information and its processing (legislation increasingly requires that these policies be in place and impose penalties for non-compliance).
  • The second mistake is to copy and paste terms of use and privacy policy provisions that the website owner finds on the Web and which look impressive enough to use. These imported terms are often taken from websites in other countries and their terms of use and privacy policies are written in the context of foreign legal systems. They include terminology that is foreign to local law (and which probably doesn’t have any real meaning in the local legal system) or provisions which simply don’t apply or just muddy the waters even more.

    Another problem with imported terms of use and privacy policies is that they are often imports themselves, are poorly drafted or are simply inadequate. Cutting and pasting these terms may seem like a good idea and a real time and money saver but they can cost website owners dearly if a dispute ever arises and the terms are either of little assistance or even disadvantage the website owner. It is a little like building your own car based on what you have seen on other cars using dubious spare parts and materials. The car may drive ok, then again you could find yourself in a catastrophic accident.

  • It sounds a little self-serving but another mistake website proprietors make is that they don’t consult with their lawyer when they build and publish a website. There is a diverse range of legal issues that apply to websites and it is really important to speak to a trusted legal advisor who is familiar with these issues and who can guide you around the more common pitfalls. This isn’t to say that consulting with a lawyer will protect you absolutely from any liability (it won’t), but it can help you minimise your risks greatly. It is certainly worth the initial cost making sure that you have a sound legal foundation for what will hopefully become a very successful venture.
  • Yet another mistake is to skimp on terms of use and privacy policy provisions because the end result of a proper drafting process looks like too much text to wade through. Properly drafted terms of use and privacy policies run to many pages because they cater for a substantial number of issues. Cutting back on the page count means cutting out important safety features that are frequently built into these documents. To use the car analogy, this is like taking out the brakes, seatbelts and airbags because it makes the car a little heavier and perhaps a little bigger. The car will be just fine until you need to slow down or protect yourself in the event of a collision. At that point, it will be too late to add these safety features back.

One group of website owners that seems to be overlooked and largely uninformed is the blogging community. It is so easy to publish a blog and post to it that bloggers often overlook the need for the same legal protections more mainstream websites have been using for years. Bloggers potentially attract more liability in certain respects than traditional, static websites and arguably need terms of use and privacy policies even more. Unfortunately bloggers frequently don’t make much money from their blogs and can’t afford the legal advice larger companies take for granted. It is an unfortunate Catch-22.

In order to assist bloggers we have prepared a generic set of terms of use (incorporating a privacy policy) which are available for free to bloggers. This document is licensed under a Creative Commons license so bloggers are free to share it and pass it around. The blog terms of use is a fairly simplified version of the commercial grade terms of use typically required by larger companies and is tailored for use on blogs. The zipfile includes an explanatory note with a little more information about the terms of use. It is important to note that the terms of use do not represent legal advice on any specific blog or set of circumstances and should not be regarded as such. Consult your lawyer if you require specific legal advice.

Update: The blogger terms of use are also available through Scribd although remember that you still need to add your details to the document before you can use it.