Subject: FW: Internet Trading
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Tue, 27 Jul 1999 07:02:00 -0700 (PDT)

> 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)
> [email-masked]
>
>
> -----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
>

***********************************************************************

The information in this email and in any attachments is confidential and 
intended solely for the attention and use of the named addressee(s). This 
information may be subject to legal professional or other privilege or may 
otherwise be protected by work product immunity or other legal rules.  It 
must not be disclosed to any person without our authority.
If you are not the intended recipient, or a person responsible for delivering 
it to the intended recipient, you are not authorised to and must not 
disclose, copy, distribute, or retain this message or any part of it.