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EDI Agreement

EDI consists of standard business messages being transmitted from one computer to another computer. If differs from the use of regular e-mail in that it is based on standard or code that is agreed upon by two parties, enabling the automated processing of the content of a message without human intervention. Over time, a variety of EDI standards have been developed, at industry, national and international levels, including the United Nations UN/EDIFACT standard. 

Since the parties to an EDI transaction must rely on using the same EDI messaging standard, parties generally enter into a "trading partner agreement", in which they agree on the EDI standard and additional provisions regarding the treatment and validity of the data messages being exchanged. The trading partner agreement may be a separate agreement or may be integrated into a master purchase agreement containing the substantive provisions of the sales-purchase relationship between the parties.

Since the 1990s, a number of model trading partner agreements have been developed on a national, regional or international level. In 2000, e.g., the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) adopted a model Electronic Commerce Agreement. 

The appropriate way to document the details of a trading arrangement between electronic trading partners is an EDI Interchange Agreement. The agreement makes clear the trading intentions of both parties, the technical framework for the transactions and the procedures to be followed in the event of a dispute. The EDI Agreement is a document, normally on paper, and signed by both trading partners before electronic trading begins. 

The agreement specifies: 
1) The point in its transmission and processing at which a message will be deemed to be legally binding 'document' achieves legal status when it arrives at the receiving party, the 'reception rule'. the usually accepted standard is that the

2) The timescale for processing EDI messages. One purpose of EDI is to speed- up the trade cycle and this is not achieved if messages are not reliably processed within an agreed timescale.
 
3) The time that copies of the message will be retained (a default of three years is provided for by the EU-IA but many member states require longer periods, e.g., seven or ten years).
 
4) The procedure for settling any disputes. The EU-IA suggests a choice between arbitration by a named organisation, e.g., a chamber of commerce appointed arbitration chamber, or by recourse to the judicial process.
 
5) The legal jurisdiction in which any disputes should be settled.

In addition to the legal (or legalistic) aspects of the agreement it is important to specify the technical requirements. These requirements include: 
1) The coding systems that will be used for identifying entities such as organisations and products and attributes such as quantities.
 
2) The EDI standard that is to be employed and, within that, the messages and data segments that will be used. Updating of message standards as new versions are released is an issue that also needs to be covered.
 
3) The network that is to be used - including details of scheduling and protocol where a post and forward network is not to be employed.

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