Legal Question in Business Law in Pennsylvania

malware called Mouabad.p waits until the phone is idle and the lock screen activates. It then dials a premium rate number owned by the distributor of Mouabad, who receives money for every call. If the user unlocks the phone, the call is immediately terminated.

Jim Fooley signed up for cell service with CellSense, a mobile provider, and received an Android phone for $0.99. He visited Google Play and downloaded an android app to his phone. He did not know (and Google did not know) that the app had been infected with Mouabad.p. After one month, his phone bill was $2537, of which only $37 represented legitimate phone calls. He never had any idea these calls were being made. If he were to pay the bill, the malware distributor would get $1250.

When Fooley got the bill, he immediately called CellSense and explained that he did not make or authorize the calls, he did not intend to be bound to pay the charges and that he would not pay the bill. CellSense cut off his mobile service and sued him to collect the $2537. Fooley wants to find a defense.

The Pennsylvania version of the Uniform Electronic Transactions Act (UETA) has been effective since 2007. Here are some relevant provisions:

Electronic Transactions Act, 73 P.S. �2260.310

In an automated transaction, the following rules apply:

(1) A contract may be formed by the interaction of electronic agents of the parties, even if no individual was aware of or reviewed the electronic agents' actions or the resulting terms and agreements.

(2) A contract may be formed by the interaction of an electronic agent and an individual, acting on the individual's own behalf or for another person, including by an interaction in which the individual performs actions which the individual is free to refuse to perform and which the individual knows or has reason to know will cause the electronic agent to complete the transaction or performance.

(3) The terms of the contract are determined by the substantive law applicable to it.

There is also a section �2260.306. Effect of change or error:

If a change or error in an electronic record occurs in a transmission between parties to a transaction, the following rules apply:

(1) If the parties have agreed to use a security procedure to detect changes or errors and one party has conformed to the procedure but the other party has not, and the nonconforming party would have detected the change or error had that party also conformed, the conforming party may avoid the effect of the changed or erroneous electronic record.

(2) In an automated transaction involving an individual, the individual may avoid the effect of an electronic record that resulted from an error made by the individual in dealing with the electronic agent of another person if the electronic agent did not provide an opportunity for the prevention or correction of the error and, at the time the individual learns of the error, the individual:

(i) promptly notifies the other person of the error and that the individual did not intend to be bound by the electronic record received by the other person;

(ii) takes reasonable steps, including steps which conform to the other person's reasonable instructions, to return to the other person or, if instructed by the other person, to destroy the consideration received, if any, as a result of the erroneous electronic record; and

(iii) has not used or received any benefit or value from the consideration, if any, received from the other person.

(3) If neither paragraph (1) nor paragraph (2) applies, the change or error has the effect provided by other law, including the law of mistake, and the parties' contract, if any.

The statute also includes some definitions in �2260.103:

�Agreement.� The bargain of the parties in fact, as found in their language or inferred from other circumstances and from rules, regulations and procedures given the effect of agreements under laws otherwise applicable to a particular transaction.

�Automated transaction.� A transaction conducted or performed, in whole or in part, by electronic means or electronic records, in which the acts or records of one or both parties are not reviewed by an individual in the ordinary course in forming a contract, performing under an existing contract or fulfilling an obligation required by the transaction.

�Contract.� The total legal obligation resulting from the parties� agreement as affected by this act and other applicable law.

�Electronic agent.� A computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances, in whole or in part, without review or action by an individual.

�Electronic record.� A record created, generated, sent, communicated, received or stored by electronic means.

�Record.� Information which is inscribed on a tangible medium or is stored in an electronic or other medium and which is retrievable in perceivable form.

�Security procedure.� A procedure employed for the purpose of verifying that an electronic signature, record or performance is that of a specific person or for detecting changes or errors in the information in an electronic record. The term includes a procedure which requires the use of algorithms or other codes, identifying words or numbers, encryption or callback or other acknowledgment procedures.

�Transaction.� An action or set of actions occurring between two or more persons relating to the conduct of business, commercial or governmental affairs.

Fooley�s contract with CellSense states: �You are responsible for any call made from your phone regardless of who makes the call.�

CellSense takes the position that it provided the requested service (connecting to the

premium number) and that if Fooley installed malware it became his electronic agent

because he voluntarily downloaded the app. CellSense will testify truthfully that it had

no knowledge of Mouabad.p. The distributor of Mouabad is not a CellSense customer.

CellSense says that it has a legal obligation to pay the phone company that operates the

premium rate number.

Fooley raises the following defenses:

a. When Fooley�s agent (the malware) interacted with the agent of CellSense (to make

the calls), CellSense did not provide an opportunity for prevention or correction of the

error.

b. Fooley promptly notified CellSense that he did not intend to be bound by making the

calls and he received no benefit from them.

QUESTION 1: Analyze the arguments of Fooley and CellSense and explain fully,

based on UETA, whether the Court should force Fooley to pay the bill.

You can find the entire UETA statute here if you feel you need to consult it.

1 Answer from Attorneys

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