E-Commerce

Basic Information

John Lambert

Last Updated 8 July 2004

The term "electronic" or "e-commerce" means different things to different people in different contexts. Some use the term loosely to refer to any transaction concluded remotely through automated data processing equipment regardless of whether it is a business transaction or involves businesses. Others use the term more narrowly to refer to refer to contracts concluded on line in contrast to "e-business" which includes other business activities such as customer relations management, logistics and stock control and "information society services" (a term apparently coined by Eurocrats) which includes non-commercial services such as those delivered by governments as well. On this page, the term is used in the wider sense to include electronic business and electronic government as well.

The GAP
The acronym stands for "global", "automated" and "paperless" which are the characteristics of "e-commerce." E-commerce results from the convergence of the following technologies:

	electronic fund transfer systems and, in particular, payments card clearing systems;
	the internet and, in particular, the world wide web; and
	such consumer electronic equipment as desk top and portable personal computers and mobile phones.

None of those technologies is new. Payments cards have been around in one form or another for most of the second half of the 20th century. The internet protocol was developed in the early 1970s and personal computers have been marketed since 1980. The convergence, however, has produced something new, namely a global market place for all sorts of goods and services where transactions are automated and paperless.

The Legal Issues
The GAP gives rise to many legal issues and this selection should not be regarded as exhaustive:

	jurisdiction and choice of law;
	enforcement;
	authentication;
	security;
	validity;
	intellectual property;
	competition; and
	tax.

Jurisdiction and Choice of Law
Because electronic commerce is global a recurrent issue is which law applies. A website may be accessed anywhere in the world. Should its owner be subject to the laws of every state and territory in which it may be accessed and, if not, why not?

Enforcement
This is a related issue. Many consumer claims are for small amounts that do not justify the costs of cross-border litigation but consumers are unlikely to purchase off the net unless they are sure that they can obtain swift and cost-effective redress if things go wrong.

Authentication
The Internet is global and users are anonymous. How can a trader be sure that the person with whom he is dealing over the Internet is the person with whom he intends to deal?

Security
Governments have a number of conflicting interests such as protecting technical and business secrets, the privacy of individuals, preventing and detecting crime and anti-social behaviour. It is clearly necessary to strike a balance between these imperatives but the question is where.

Validity
Ever since the Statute of Frauds 1677 Parliament has required certain transactions, such as contracts for the sale of land, guarantees and indemnities, to be made or evidenced in writing and signed by on behalf of the person to be bound. E-commerce transactions are made and recorded as electronic impulses. Provision has to be made for admission of electronic records in evidence and verification of such transactions by electronic personal identifiers.

Intellectual Property
Intellectual property, and in particular, copyrights and trade marks are essential for the development of electronic commerce, but these rights are essentially territorial while the Internet is global. Some countries provide remedies that are unknown in others. A good example is the action for groundless threats which is to be found in the patent, trade marks and design legislation of several Commonwealth countries but which is unknown in the USA.

Competition
National and regional markets were regulated by national anti-trust laws, such as the US Sherman and Clayton Acts and arts. 81 and 82 of the Treaty of Rome. As the Internet is global concerted action between national anti-trust authorities will be essential. 

Tax
Direct and indirect taxation will be in issue. How far can tax authorities take into account revenues generated electronically by an off-shore subsidiary? Should value added tax be levied on cross-border sales and if so how is it to be collected? How should digitized goods such as music or software downloaded from a website be taxed?

Bridging the GAP
Legislation to tackle those issues has been initiated by The United Nations Commission on International Trade Law ("UNCITRAL") and implemented at European and national levels. UNCITRAL has adopted model laws on Electronic Commerce and Electronic Signatures. The EU Council of Ministers has adopted directives on distance selling, electronic signatures and electronic commerce. In the UK Parliament has passed The Electronic Communications Act 2000 and The Regulation of Investigatory Powers Act 2000. Just as the technologies referred to above are not entirely new neither are all the legal problems. Many existed or were anticipated before the technologies converged and contractual solutions found such as the arrangements that subsist between the financial institutions that belong to international; payments systems.

Risk Areas
These are many and various. The following are selected examples. Unless very great care is taken in drafting contract terms traders may be liable to civil action and administrative proceedings under cultural content or sumptuary laws they never knew existed. Agreements that they enter in good faith may prove to be unenforceable or interpreted in a way that they could not anticipate by foreign legal systems. Their brands and images may be pirated on the other side of the world. Consumers on the other hand, may find that they have no redress for goods and services bought on the net.
 

 

 

 

Presentations
John Lambert	E-Commerce Seminar
	Presentation Handout
	Nov 2002

Case Law
Direct Marketing by Political Parties
New John Lambert	Scottish National Party v Information Commissioner
Spam
John Lambert	1267623 Ontario Inc. and Another v Nexx Online, Inc

 

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