> Mark,
> I apologise for not copying you in on the original transmission of this
> email.
> regards
>
> Tim
>
> Timothy Hughes
> Clifford Chance
> 200 Aldersgate St
> EC1A 4JJ London UK
> +44 171 282 7046 (direct)
> +44 171 600 1000 (switch)
> +44 171 600 5555 (fax)
> timothy.hughes@cliffordchance.com
>
>
> -----Original Message-----
> From: Hughes, Timothy (MCC)
> Sent: Tuesday, July 27, 1999 11:51 AM
> To: 'Justin Boyd'
> Cc: 'Scott Sefton'; 'Edmund Cooper'; 'Elena Kapralova'; Wilkinson,
> Andrew JY (MCC); Huggard, Patrick (MCC); Millard, Christopher (MCC);
> 'Louise Kitchen'
> Subject: Internet Trading
>
> Dear Justin
> We refer to our meeting with you and the rest of the project team of 23
> July 1999 and our subsequent phone call of 27 July 1999.
> We thought it may be useful for us to set out in writing our advice in
> relation to a number of the issues that we discussed at the above meeting
> and conference call.  On that basis, please find below the following
> advice on the following issues:
> 1. Legal and Privacy Statement.
> We believe that the Legal and Privacy statement should be available on the
> first entry page for the Enron website and on each of the main trading
> pages in the same form and style as the other navigational links.
> The Legal and Privacy statement contains important legal protections for
> Enron that we think should be displayed at the earliest opportunity and in
> a prominent fashion.  The more prominent the display, the easier it will
> be for Enron to argue that a user of the website was aware of this
> statement and therefore that it is binding on them.
> 2. Bid Box
> When a trader clicks on a bid or offer price in the trading section of the
> website a bid box appears.  It is important that this box contains wording
> that indicates that at the underlying legal level the trader is making an
> offer that Enron is free to accept or reject.  On that basis, we recommend
> that the main wording in the bid box be "I want to buy [quantity]" or "I
> want to sell [quantity]".
> 3. Availability of PA and ETA
> There is little case law to guide us as to the best approach for ensuring
> that agreements formed online are sufficiently executed to be enforced by
> courts in England.  To improve Enron's argument that the ETA has been
> sufficiently executed and agreed to by the counterparty, we advise that
> the ETA be available for viewing and printing at all times through a
> hotlink in the trading section of the website. This will assist our
> argument that the ETA is incorporated by reference when a counterparty
> signs the PA.  If, for some reason, (for example, the ETA is not available
> at the time of signing the PA), the direct incorporation of the ETA
> argument fails, the hotlink to the ETA may help to establish a course of
> dealing argument.  That is an argument that over time the counterparty has
> been trading on the same terms and conditions for each trade and has,
> therefore, affirmed its initial acceptance of those terms and conditions.
> 4. Registration Forms
> We look forward to an opportunity to review the online registration form
> for new customers.  We also look forward to reviewing the online
> registration form for view only users of the website.  Prior to our review
> of the view only registration form, can you please confirm whether or not
> Enron will be vetting view only applications.  If view only users are
> issued passwords automatically, without a confirmation of identity or
> other verification or clearance by Enron, then we should discuss the
> possible risks and legal issues that may arise.
> 5. Master Agreements
> We understand that Enron is internally discussing the relationship between
> Master Agreement, NBP terms and NBP side letters.  The conclusion of these
> discussion may require an amendment to the ETA, in particular clause 3(a).
> 6. Changes to the GTCs and ETA
> It is clear from an English law perspective and the bulk of overseas
> jurisdictions consulted by us that an change to the GTCs or ETA will
> require the counterparty to accept the change by executing a new version
> of the agreement.  Three issues have arisen in implementing this process:
> (a) Marking up Changes:  From a legal as well as a public relations
> perspective it is preferable that amended agreements contain a process for
> indicating what changes have been made.  This process could take the form
> of a list of changes or double underline or other mark-up procedure.
> Changes should be indicated against the previous version. All versions
> should be dated.  Similarly, the ticker tape screen should indicate that
> there is a new version until that new version is accepted.
> That said, this position is advisable only if Enron can be certain that
> all changes to amended agreements are identified.  If amended agreements
> are presented for execution that are improperly marked-up or do not
> mark-up certain changes, then Enron would have a lesser chance of
> enforcing these unmarked changes than if no marking-up was shown.
> Therefore, this process is advisable only if Enron can ensure that all
> changes are identified.
> (b) Notice of changes: We have previously discussed with you what
> procedure should be adopted by Enron to notify counterparties of the
> change in the ETA or GTCs.  To improve any argument that a counterparty
> has freely consented to an amended agreement, we would advise that Enron
> adopt a procedure for notifying counterparties of the altered agreements
> in advance of them taking effect.  This notice should not be a contractual
> obligation, rather an internal Enron procedure.  That said, we understand
> from our meeting that there may be emergency situations requiring an
> immediate change to an agreement, with the result that trading is
> suspended under the old agreement.  If those circumstances are likely to
> be the bulk of cases when amendments are to be made, then the notice
> process may not necessarily be appropriate.  If notice is not given, then
> Enron would be relying on the following elements as asserting that a
> counterparty freely accepted the amended agreement:
> (i) that the counterparty was prompted that the agreement had been amended
> (and if mark-ups are provided, that the changes were indicated); and
> (ii) that the counterparty is a professional organisation with experience
> in the speed and pace of the commodities trading industry.
> These elements are not conclusive but would give Enron an argument that
> the counterparty is bound to any accepted amended agreement.
> (c) Overseas Counsel: Advice from overseas counsel on amendment of the ETA
> and GTCs did not specify that Enron would not be giving the counterparty a
> period of notice of changes to the agreements, during which the
> counterparty could continue to trade.  Therefore, if it is ultimately
> decided that no notice period will be used, then we may need to seek
> further advice from overseas counsel.
> 7. ETA Termination
> Under your recent instructions we have amended the ETA so that it can only
> be terminated for convenience by Enron.  That is, there is no express
> termination for convenience right for a counterparty.  We have previously
> noted that this means that an ETA may continue to be in force with a
> counterparty that has ceased to trade or wishes to cease trading with
> Enron.  Advice from overseas counsel on the drafting of the ETA and GTCs
> was sought based on a reciprocal right to terminate with notice. We will
> seek further advice from overseas counsel on this issue.
> 8. Website Text Review
> We look forward to an opportunity to review the text and layout of the
> website to assess the final impact of the layout and text on the
> contractual obligations formed using the website.
> 9. Data Protection
> Since our meetings and conference call, we have discussed further our
> recent advice to you on data protection.  We are currently seeking the
> further advice of overseas counsel of this issue and will provide further
> advice to you shortly.
> 10. German digital signatures
> Further advice is being sought from German counsel.  We will provide you
> with a response on this issue shortly.
>
> We hope the above provides a useful summary of our advice on a number of
> issues.  Please do not hesitate to contact us to discuss any aspect of
> this matter.
> Regards
> Timothy Hughes/Andrew Wilkinson
>




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