It can easily be said that of all the technological developments in the last ten to fifteen years that have changed the manner in which business is conducted, the Internet has proved to be the most lucrative and innovative. The advent of Internet contracting has provided consumers with access to goods and services that would otherwise have been too costly or too arduous to be viable. However, along with this ease of contract, comes the requirement that the law must develop in such a way that protects both consumers and sellers. This article proposes to deal with the protection offered to the purchaser in respect of the deliverability of virtual intangible goods, and whether or not existing contractual protection applies in the realm of the "virtual". 

In order to effectively elucidate this topic, a few principles and concepts need to be addressed. This article is not dealing with the protection offered to the creators of Intellectual Property, in the sense of goods as sold on the internet, which may constitute IP. The focus shall be on the contractual elements that exist in respect of the normal legal protection afforded the purchaser regarding breach by the seller.

What does the term "Virtual Intangible Goods" mean? For purposes of this article, virtual goods refers to any goods as sold through electronic means, either via email or via automated contracts or any other form of electronic contracting, as defined by the Electronic Communications and Transactions Act of 2002. "Virtual Intangible Goods" are those goods which are created electronically, for primary use in a virtual environment, such as the Internet, or other electronic medium. An example of such a good would be an "animated graphic", "application" or "program" which is bought by the purchaser, from the creator, and will be used primarily in a virtual environment.

The reason that the abovementioned "graphics, applications and programs" have not been described as services is because, even if these concepts exist virtually, they remain property which can be subject to the legal sovereignty of a legal subject for whom it has use and value. As stated above, the protection of the creator will no doubt be protected through copyright or other forms of IP protection, but how are purchasers of these virtual goods protected? In all the transactions mentioned below, it can also be assumed that the purchaser has paid the full purchase price for the virtual intangible goods.

If we move into the realm of commerce, it is obvious that worldwide, the Internet is being used to facilitate the sale of goods, whether corporeal, intangible or virtual. Agreements and contracts are fashioned between parties, money exchanged and goods delivered. It is easy to understand this concept of internet sale, when the discussion revolves around tangible goods (books or electronic appliances), or even "goods in potentia", which one could understand as goods yet to be produced such as jewellery made to order. In both of these above cases, where websites such as "Amazon.com" and "Kalahari.net" operate, delivery can be easily defined, as "actual delivery" in that the movable object was actually capable of being handed over in such a manner so as to ensure that the purchaser is able to exercise physical control thereof.

However, what happens, when the "goods" are not capable of being "handed over" physically? This is the situation that exists for "virtual intangible goods". These virtual goods do not even exist in potentia, in that they have been produced, but do not exist other than on a website or in an electronic form. It is trite that virtual goods such as these still require delivery, but in what manner will such delivery occur? How can it be defined? In South African law, we retain four other delivery constructs, being symbolic delivery, "traditio longa manu", "traditio brevi manu" and "constitutum possessorium". Without defining same, it is clear that neither of "traditio longa manu", "traditio brevi manu", nor "constitutum possessorium" provide any answers to the question of delivery of an intangible virtual good. It is submitted that some form of symbolic delivery will be required in order to prove delivery, allowing for legal recourse in the case of breach of contract.

In South African law, contractants are provided with two remedies in the case of a breach of contract, namely "Specific Performance" and "Cancellation", both of which include the option to claim damages (which is arguably a third remedy). Once again, these remedies, when applied to normal contracts of sale, provide substantial executable relief when a seller has failed to deliver the goods purchased. If the seller fails to deliver any corporeal item, the purchaser can claim specific performance and subsequently force the seller to comply with the terms of the contract. It is this remedy which provides us with difficulty however, when determining the nature and essentially the deliverability of virtual intangible goods.

How does one go about forcing the seller to comply with the terms of the contract, when essentially the very nature of a virtual intangible good, is that it exists in a virtual world, with no recourse to "reality". There is no doubt that these "goods" exist, and that they constitute property, but when can one say that a virtual intangible good has been delivered? Is it at the time the virtual goods can be used by the purchaser, or rather when the goods arrive on the computer of the purchaser?

The basis for the sale transaction lies in that a contract for the sale of property is extant whereby both parties need perform. However, it would appear that delivery cannot be enforced when it comes to virtual intangible goods. How does one ensure that the creator or seller of such goods provides for delivery? Assuming the contract stated that delivery will be provided electronically, through email or through such electronic medium as exists at the time, how will a purchaser ensure specific performance in South African law?

It is submitted that there are two options that can be provided to resolve this situation. Firstly, one could suggest that due to the fundamental nature of the virtual goods, and especially with regards to the difficulty regarding delivery, the purchaser should simply rely on cancellation of the contract, and potentially damages thereon.

Secondly, though, I submit that there could potentially be a way in which specific performance as a legal remedy could be used in the case of breach of contract by failing to deliver virtual intangible goods. If sellers of such virtual intangible goods were required to draft a document (electronic or hard-copy) which provides the "electronic coding" of the virtual item purchased, this document could be executed upon, and provide the purchaser with a right of recourse against the seller. All the normal evidentiary rules would apply in respect of the proof of such document, but by claiming the document as specific performance, the purchaser would acquire the "code" which allows for the uninhibited use and enjoyment of the goods that should have been transferred as provided for in the contract between the parties.

Some may argue that the production of a document as mentioned above would infringe the seller's rights, in that they are providing sensitive information to the purchaser, which is confidential to the seller's work. In rebuttal of this, one must break down what virtual intangible goods are at the basic level. Virtual goods at their core are nothing more than code, put together by a computer programmer or programme designer, and by allowing for the documentation of such code, and the delivery of the individual code as regards the product of purchase, one is simply providing in hard copy, what the seller failed to provide electronically.

In conclusion, the arena of commercial contracting over the Internet still requires some thought in regard to the protection of consumers, using the contractual remedy of specific performance. It remains important however, that when consumers wish to purchase goods of any nature over the internet, they must be aware that at this stage, the only remedy against breach which is viable is that of cancellation. When it comes to the Internet the phrase "caveat emptor" (let the buyer beware) has never been more essential.