CONTRACTUAL & OTHER LEGAL ISSUES IN E-COMMERCE TRANSACTIONS

INTRODUCTION Common legal issues relating to E-Commerce FORMING A CONTRACT AB Makes an offer Accepts the offer A Contract is Made

Business Model Type A: Shopkeeper Paste Price Tag Customer Accepts Price Payment At Cashier Type B: SupplierPurchaser Send details and quotation Accepts and send purchasing order for confirmation

How Contracts Are Formed on the Internet? Note: Usually, the website would be programme to give an automated response of confirmation and a binding contract would have been made at that point. Put Goods Up for Sales on Website Visitor access Website Add to Shopping Cart Submit for Processing At Clearing Bank Sum Accounted Upon Approval Fill in Credit Card Details

ARE GOODS DISPLAYED ON THE WEBSITE AN OFFER OR AN INVITATION TO TREAT For an attractive B2C model: –You would be deemed to have made an Offer to sell your products at the prices stated and on the terms and conditions if you do not stipulate otherwise. For a B2B transaction: –Contractual relationships are maintained between companies and often times, availability of supplies is a real concern and non-delivery could well mean a legal liability and damages may be suffered. –Therefore, it may be to your advantage to structure the system of concluding a contract as “Invitation to Treat” to your corporate customers. This essentially means that you reserves your right to accept the “offer” from your customers.

INVITATION TO TREAT OR AN OFFER TO SUPPLY? Companies who wish to reserve their rights to refuse to supply should provide that: –The information posted on the website constitutes only an “offer to treat” and not an offer to supply the products. –The offer by a visitor to their website will be deemed accepted by the company only after it has replied with a sales order number specific to the order made. –An Offer to Treat is in law only an invitation to the visitors of a website to make an offer to buy the product.

Sequence of Presentation of pages on Website Terms and Conditions must be deemed accepted by the purchaser before he is asked to submit his purchase order. Different Methods: Tedious task - Clicking on ‘I Agree’ boxes for each and every term and condition. Simple task - Clicking on ‘I Agree to the above terms and conditions’.

ONE PECULIAR ASPECT OF SALE OF CERTAIN GOODS ON THE INTERNET Is the sale of a software technology a sale of goods ? Refer to: St. Albans V ICL (1996) 4 All ER 481 : Case involves the sale of software technology programme by a contract in writing (on paper).

WHEN DOES A CONTRACT FORM IN TIME ? There may be 2 positions to consider: Postal Rule Instantaneous Communication Rule Acceptance is at time message of acceptance is sent to the ISP chosen by your company to host your website Acceptance is at time it is received by your company

How Data Is Sent on the Internet? Sent in Packets (Internet Message) - Send Separately - System Design to Max. Traffic Reassembled by Server Computer Of ISP Singapore’s Position - Our Electronics Transaction Act, Sections 13, 14, 15  clarified the position by stipulating that the despatch of an electronic record occurs when it enters into an information system designated by the receiver. - Means: - an ISP hosts your website, acceptance of message receive is when electronic record is receive into the address - for own server: all message are captured within your own information system - if website hosted by ISP, receipt of message is with an ASP, the receipt is at the time the message are receive at your ASP site.

WHAT IF THE INFORMATION SYSTEM CRASH ? By virtue of Section 15 of the Electronic Transactions Act, –If your company designed the information system to receive messages, then it is deemed received by your company once it enters the system. –If your information system becomes corrupted or crashes, you would still be deemed to have received the message.

COPYRIGHT ISSUES You infringe copyrights of the owner when you do any of the below without permission of the copyright owner, and the rights of a copyright owner are: 1.To reproduce the work 2.To create derivatives of the original work by adaptation 3.To include the work in a cable programme service 4.To perform the work in public 5.Broadcast the work in the media The unique characteristics of digital information are : 1.Exact facsimiles can be made quickly and easily, at a click away 2.Edition, manipulation and derivative forms of the original can be made without detection 3.Ease of distribution - capability to instantaneously distribute and on a worldwide basis, at virtually no costs

PROTECTING COPYRIGHT IN THE INTERNATIONAL ARENA 3 elements need to be established for protection : 1.Originality; 2.Medium : reduced to material form, idea expressed in a material form; 3.Connection : connection with the country of claim by residency or citizenship or by proof of publication. Procedure to protect copyrights by Owners : 1.Execute a Statutory Declaration; 2.Lodge a complaint with the Network Service Providers operating the system where infringement is alleged; 3.If the NSP fails to remove or block access, the NSP can no longer avail himself of protection of immunity afforded by Section 193C(2), Copyright Act.

COMMON ACTS OF INFRINGEMENTS 1.Hyperlinks: - When you provide a hyperlink to another website, you have infringe the copyrights of the contents of the materials on that website. 2.Downloading materials from other Websites: - if the downloads were made for purposes of research and private study or news reporting, you would have the defence of “fair dealing” Section 35, Copyright Act. - if the downloads were made for purposes of retrieving databases that were compiled by the other website, that would be infringement.

CREDIT CARD FRAUD -The most common payment requirements by companies conducting e-commerce is through the use of credit cards. -Payment is almost immediate. -However, most e-commerce sites do provide an option to the customer to change their minds within a certain number of days. -The company still retains the right not to accept the offer despite the fact that payment has essentially been effected. -And that is basically why e-commerce would require much promotion and the public would need to be educated on the transactions made over the internet. -Much reassurances would have to be provided by your company in terms of encryption of information of the customers, primarily with regard to his credit card information.

MERCHANTS SHOULDER CREDIT CARD FRAUD You should be aware that as merchants accepting payments via presentation of a credit card number, the risks of fraud rests with your company. When a customer informs his credit card company that the item reflected on his bill is for an item he did not purchase, your company would have to repay the sum of money which was paid to you earlier for the e-commerce transaction, (known as chargeback). For this reason, online merchants have been forced to develop sophisticated security protections that go far beyond the normal security approval process by the credit card companies. At present, credit card companies only verify if a credit card number is correct and then match the number against the customer's billing address.

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