1. Essentials Of Business Law Chapter 27 Conducting Business In Cyberspace McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

2. Essentials of Business LawChapter 27-2 Securities Act Of 1933 Covers the sale of securities in the primary market Issuers of securities must register the securities with the Securities and Exchange Commission A registration statement must be filed that includes  Information on the securities offered  Historical and current data about the issuing company  How the company plans to use the proceeds from the offer Issuers must provide a prospectus Primary market  Place where a corporation sells its securities to the public

3. Essentials of Business LawChapter 27-3 Securities And Exchange Act Of 1934 Covers the trading of securities in the secondary market Requires companies to release important business information to the public Requires insiders to file a statement disclosing any equity securities they may hold Secondary market  The place where one member of the public sells securities to another member of the public

4. Essentials of Business LawChapter 27-4 Securities And Exchange Commission The SEC oversees selling securities electronically, and requires:  Electronic information must be substantially equivalent to what the prospective investors would have received in paper form  There must be timely and adequate notice to prospective investors of the availability of this information  The electronic delivery must afford access to the information that is comparable to that afforded by paper copies  There must be evidence to demonstrate that delivery of the information to prospective investors was successful

5. Essentials of Business LawChapter 27-5 Securities And Exchange Commission The SEC requires that investors do not violate anti- touting rules Touting  When an investor posts notices online that indicate that the value of the stock will increase  Influences other investors and increases the value of the stock Insider trading  Purchasing stock based on confidential information and selling at a profit upon release of information to the general public  Manipulative and deceptive practice which is illegal under the 1934 act

6. Essentials of Business LawChapter 27-6 Advertising On The Web Federal Trade Commission  The federal agency responsible for ensuring that advertising in the United States is truthful Deceptive advertisement  Contains a material misrepresentation, omission, or practice  Likely to mislead a consumer who acts reasonably under the circumstances

7. Essentials of Business LawChapter 27-7 Advertising On The Web When a Web-based ad is deceptive, the FTC can:  Issue a cease and desist order  Order an affirmative disclosure  Require corrective advertising  Seek fines, and other forms of civil remedies  Ask the federal Justice Department to file criminal charges

8. Essentials of Business LawChapter 27-8 Digital Millennium Copyright Act Provides that ISPs are not liable for copyright infringements by their subscribers if they:  Adopt and implement a policy of terminating the accounts of subscribers who are repeat infringers  Accommodate, and do not interfere with, the identification or protection of copyrighted works  Did not have knowledge of the infringing activity  Did not receive financial benefit directly attributable to the infringing activity  Block access to the infringed material upon receiving proper notification of claimed infringement

9. Essentials of Business LawChapter 27-9 Contracts On The Web Accepting offers  Website offers typically include a button to be clicked by the user indicating acceptance Contracts of adhesion  Contracts are formed without there being any real negotiating or bargaining by the parties  Valid unless they contain terms that are unreasonable

10. Essentials of Business LawChapter 27-10 Electronic Signatures Electronic Signatures in Global and National Commerce Act  Electronic signatures are just as enforceable as those that are printed on paper  Clicking on the “I agree” button constitutes an electronic signature  Satisfies the writing requirement of the Statute of Frauds

11. Essentials of Business LawChapter 27-11 Alternative Dispute Resolution Contract disputes are resolved by using means other than a lawsuit Mediation  Neutral third party meets with the disputants to have them come to a settlement agreement Arbitration  A neutral third party actually decides a case as if he or she were a judge and jury The advantages to ADR include:  Speed  Finality  Informality  Privacy  Financial savings

12. Essentials of Business LawChapter 27-12 Paying Taxes On Internet Sales A location must have a link or tie to a sale in order for the location to collect sales tax Buyers and sellers must reside in the same state for states to collect sales tax Internet Tax Freedom Act  Established a moratorium on taxing ISPs on the services they provide to computer users