E-Commerce: Origin and Legal Perspective

Introduction:

E-commerce covers all kinds of business transactions via computer networks. It mirrors a change in outlook driven by two essentials that is a wide reach of converging development in technology and the development of the knowledge economy. E-commerce is perceived as the creation, appropriation, promotion, deal, or conveyance of products and enterprises by electronic means[1].

Nonetheless, there’s no exact standard definition for the term and unique organizations have characterized it differently. Late advances have moved computer networks to the focal point of the worldwide monetary framework and everybody with the internet and a computer has become an expected player and a possible market for the e-business visionary. This new worldview, which is now having a critical effect in transit in which individuals lead their lives is hard to characterize but it can be seen as an accentuation on the human brain as opposed to just automation physically, being data instead of energy, manageability via networks, supporting dissemination instead of ‘centralized intelligence’, requiring different abilities and persistent learning, supplanting lifetime work with labor market adaptability, customize products, being empowered by ICTs (information and communications technologies) while driving the advancements in it.

It very well may be contended that web-based business, alongside the advancements and information needed to influence it, is the primary genuine indication of the knowledge society. By far most of these e-commerce exchanges to date have occurred in nations with cutting-edge economies and frameworks. For nations that are developing it offers huge chances, internet business lessens existing preferences of price, data, communication and may make enormous new business sectors for native items and administrations. While numerous organizations and networks are starting to exploit the capability of e-commerce, basic difficulties stay to be defeated before its potential can be completely acknowledged to help every individual.

 Setting the Rules for E-Commerce

A few organizations add to the advancement of worldwide e-commerce law at the global level on various issues:

1. United Nations Commission on International Trade Law (UNCITRAL): Assumed the main task of creating model laws for transaction in e-commerce
2. Organization for Economic Co-operation and Development (OECD): Spearhead of Internet tax assessment, privacy, security, and e-commerce
3. World Intellectual Property Organization (WIPO): The worldwide pioneer on copyright, brand name issues, and domain name issues digitally
4. The Internet Corporation for Assigned Names and Numbers (ICANN): Executed the Uniform Domain Name Dispute Resolution Policy
5. The Hague Conference on Private International Law dealt with jurisdictional disputes arising through the internet
6. World Trade Organization (WTO): Trade barriers in e-commerce were considered

However, the legal framework for e-commerce varies with the country at the national level. NGOs assume a basic part in the improvement of web-based business law and strategy on specific issues such as jurisdictional guidelines and customer security as they are regularly spotted at the drafting and negotiating tables. On different occasions, NGOs are more receptive by reacting to new propositions and campaigning for consumer interest and business.

UNCITRAL Model Law On Electronic Commerce

It was adopted in 1996 to encourage the utilization of present-day methods for correspondence and capacity of data like the Electronic Data Interchange (EDI), email, and telecopy regardless of the support and utilization of the Internet. It depends on the foundation of the functional equivalent such as originals, signatures, and writings as in a paper-based communication. The notion of electronic equivalence in Article 5 of the Model Law is the underlying principle. Even though the Model Law doesn’t consider e-communications valid as compared to paper format but still provides that data or records won’t be denied lawful impact or enforcing exclusively due to their e-form. A progression of rules of functional equivalency indicate what conditions should be met for electronic correspondence to establish a lawfully viable substitute for a regular, paper-based correspondence. For instance, in Article 6, a lawful prerequisite to give document or data in writing is fulfilled by its equivalent electronic form in the event that it is in a structure that can be accordingly accessed to and utilized.

Article 8 expresses that e-documents will fulfill a legitimate prerequisite for original and unique document if there is a dependable assurance concerning the integrity of the data and that the data is fit for presentation. Whether or not an affirmation is solid is to be resolved in the light of the multitude of conditions including the reason for which it’s made. The measures for evaluating integrity will be whether the data has stayed total and unaltered aside from any additional endorsements and any change that emerges in the ordinary course of correspondence, displaying, and storage. Article 9 states that evidentiary principles will not deny the suitability of an electronic correspondence exclusively because it is in e-format and Article Ten tends to retention of data issues. The most intriguing segment of the Model Law center around online agreements. Even though many agreements are made through Internet, the parties stay dubious of the lawful ramifications of tapping the “I agree” button on a site. Article 11 eliminates any uncertainty that this well-known type of online assent is substantial by specifying that except if they concur otherwise.

Electronic Signature

1. Article 1 of the Model Law: Expresses that it’s applicable where e-marks are utilized with regards to business exercises. It doesn’t abrogate any standard of law planned for the protection or insurance of buyers.
2. Article 2 of the Model Law: Characterizes electronic signature as data in e-form coherently connected with an information message which might be utilized to distinguish the signatory and show the signatory’s endorsement of the data in the message.
3. Article 6 of the Model Law: Where a person’s signature is required by law then the prerequisite is met according to the data message if an e-signature is utilized, given that the sign is reliable as for which the information message was produced or imparted. Reliability is resolved with a relative multitude of conditions together with any agreement relevant. The criteria for reliability are:
4. connected exclusively to the signatory.
5. under the signatory’s sole control.
6. any alterations made in the wake of the sign are perceptible.
7. where the motive is to give affirmation with respect to the integrity of the basic data, any modification of that data should be noticeable. 
8. Article 8: Signatories should utilize sensible consideration to keep away from unapproved utilization of their electronic mark. In the event of being aware that their security of e-signature has been undermined then they should inform any individual that may be influenced immediately.

Electronic Certificate

A certificate is an information message that affirms a connection between the signatory creation information and the signatory. It confirms that the individual who electronically marked a record is who they state they are. Article 11 provides for the legal consequences of the party’s inability to find a way to check the dependability of an electronic mark or to notice any constraints that might be set on a certificate has to be done by the relying party. A person who issues certificates and who offers different types of assistance identified with electronic signatures is a certification service provider. Article 9 builds up a few direct prerequisites for such a person, that is to act in compliance with the practices and policies of the state, while ensuring the exactness of any data in the certificates reasonable care should be taken, reasonable access methods whereby parties depending on the certificate can affirm certain data relating to the certificate and to use trust-able and dependable frameworks. Although the Model Law doesn’t make firm guidelines, it still provides for accompanying elements that should be viewed while deciding reliability:

1. HR and financial of the provider
2. software and hardware quality
3. accessibility to the parties
4. certificate processing procedures
5. Regulation and degree of autonomous reviews and audits
6. license by government authorities.

Legal Issues

Contracts

At the core of e-commerce is the requirement of a legally binding valid contract between parties for transactions. The essential inquiries on e-contracts would be on how to frame, perform and enforce it after replacing paper reports with electronic reciprocals. The basic requirement for the formation of a contract is an offer, an acceptance, and consideration and these are pertinent to e-contracts as well. Nonetheless, the question in law that frequently emerges is how would we know whether the offer was accepted by the offeree or not?

Furthermore, Internet correspondence doesn’t comprise an immediate line of correspondence between the sender and receiver of email as in customary methods for correspondence. The question of whether the terms of a contract would be binding on an individual without reading the terms fully or negotiating it arises in the case of click-wrap contracts[2], where a simple subscribe option is clicked by a party without even reading. A portion of the issues that should be tended in such cases are with regards to what might be the details of the agreement and is the acknowledgment of the Subscriber’s Contract qualified as a valid acceptance.

Online Identity

Internet transactions, especially buyer-related, regularly happen between parties having no prior relationship which may raise identity concerns of an individual regarding issues of competency, authority, and authenticity of the individual to enter into a contract. One of the strategies to determine the individual’s identity is the digital signature.

Security

Internet security is vital to advance online business. Organizations that keeps private and sensitive data on their sites should guarantee that they have sufficient safety efforts to defend their sites from any unapproved interruption. An organization could confront security dangers both internally and externally. Remotely, the organization could confront issues from viruses and hackers, and internally, the organization should guarantee protection from its specialized staff and representatives. Security can be kept up by utilizing different security devices such as biometric, virus scans, passwords or access codes, firewalls, and encryption. This was evident in a case where an individual sued Nike in light of the fact that the website of Nike was hacked[3] and the organization was likewise held liable for insufficient security systems on its site.

Authentication

Although the Internet removes the requirement for physical contact but it still doesn’t get rid of the authentication and certainty, that any type of agreement or exchange would need to be verified. Extraordinary verification advancements have developed throughout the time frame to guarantee the party’s identity in e-commerce. In any case, there are a few issues that should be considered by organizations such that the laws of various nations give diverse standards for authentication and in some cases indicating a reasonable innovation bias in technology. These diverse authentication principles should be compatible with other nations in order to encourage cross-border e-commerce which would require a serious level of cooperation among nations and technology providers. For instance, an online organization that utilizes the technology of PKI authentication for e-contracts with one nation’s purchasers may utilize different types of technology with purchasers in other nations then these e-contracts with foreign buyers may not be perceived in that nation as the technology utilized for authentication isn’t PKI. Such e-contracts might be enforceable relying on the laws of that nation with a foreign jurisdiction.

Privacy

The utilization of novel technologies and the absence of secure frameworks makes it simple to get confidential and private data about people and companies. The cookies on the web likewise faces the danger of annihilation under a proposal. However, the “Save our cookies” campaigns raised awareness of losses for companies in the event that web-treats are banned.[4]

Intellectual Property Rights

While there exist laws in India for IPR protection in the actual world, the viability of these laws to defend these rights in online business is dubious. Issues on subject matter like combining software with physical objects and its publication in e-form will rise. The Internet duplicates or spreads IPR secured works simple and prompt and its anonymity makes it essentially difficult to recognize the infringer. Besides, encroaching

material might be accessible in a specific area for just a brief time of time.[5] Courts in numerous nations are wrestling with issues concerning the encroachment of IPRs emerging from meta tagging and hyperlinking exercises and in certain cases held trademark infringement through meta-tagging and copyright infringement through deep-linking.

Unfair Competition

Up until this point, electronic business has not been dependent upon explicit guidelines managing subjects of unfair competition. Organizations need to continually adjust to and utilize the specific features of the Internet, for example, its intuitiveness and supports of applications in multimedia for practices in their marketing. Issues may emerge as to immersive marketing, spamming, interactive practices in marketing, and also territorial applicability.

Domain Names

An organization commencing e-commerce exercises would from the start needs the domain name enrolled. While enlisting domain names if the organization picks a domain name that’s similar to an existing domain name or the trademark of a third party then on the ground of cybersquatting, the organization can be held liable. This happened in the “.info” high-level domain which was open to register and in no time the WIPO already go two dispute settlement cases.[6] And then the “.biz” domain was restricted from dissemination by a US Company, NeuLevel Inc, then was permitted to do as such as the offended parties declined to post a bond that could have kept the organization from dealing new domain names.[7] As of late, the ICANN affirmed that it finalized an agreement with Museum Domain Management Association where the “.museum” has likewise been included as a conventional high-level domain in the system.[8]

Jurisdiction

Notwithstanding the idea of corporate structure, choices with regard to the corporate structure’s jurisdiction, as it will decide the degree of any risk that may emerge against the site. As indicated by the conventional standards of private international law, a country’s jurisdiction applies to people within the country or to the cause of action that happens inside the normal boundaries of the country.[9] But in the case of e-commerce, if a transaction gets clients from a specific nation because of their site then it could be required to safeguard any prosecution that results in that nation. Therefore, contents put on a site should be surveyed for consistency with the laws of the jurisdiction where a company wishes to advertise, advance, or sell its items or administrations as it might risk being sued under the jurisdiction where the merchandise is purchased or where the administrations are benefited of.

Liability

Proprietors of sites should prepare for the likely wellsprings of obligation which could lead to lawful cases against them such as infringement or non-compliance of laws of practically any nation. Risks mainly may emerge because of different exercises

hyperlinking, framing[10], extortion, defamation[11], privacy concerns, copyright, and trademark encroachment.

a. contractual liability

b. statutory liability

c. tortious liability

Tax Assessment

The huge development of e-commerce transactions is not concealed from the taxation authority. Understanding the capability of procuring revenues that are taxable from such sources, the taxing authority all over the world is inspecting the expense ramifications of online business exchanges and settling components to duty such exchanges.

Conclusion

E-commerce has an open framework as the internet does not operate with a particular territorial limit. This makes potential inquiries regarding the applicable state laws for a transaction that might be started by a customer in one state but in subsequent state makes installment to beneficiaries situated in other different states via computers at some obscure area. These difficulties are significantly more prominent at the global level. The blasting of the dot-com bubble has caused a few organizations to understand that e-commerce through the Internet isn’t as simple as it sounds. Without a doubt, the capability of the Internet to outreach any place in the world holds huge potential for improving global exchange furthermore, boosting the worldwide economy. Notwithstanding it, the Internet likewise has liabilities and legitimate issues related to it. The quick speed of internet business advancement has commonly left the overall set of laws battling to keep up and panting for breath. Similarly, as organizations doing online business should implement new business methods and rules, the general system of law is also attempting to adjust the existing laws to be compatible where it’s vague how these laws will apply. Amid-st this lawful unrest, India is one of only a handful of nations across the world to enact and sanction legislation for e-commerce, though substantially much more is expected to successfully direct the twisted web. It has to be remembered that the web is a goldmine but without sufficient safeguards and protections legally it could turn into a landmine.

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References:

[1] The Work Programme on Electronic Commerce; Background Note by the Secretariat, Council for Trade-Related Aspects of Intellectual Property Rights, WTO

[2] ProCD v. Zeidenberg, 908 F. Supp. 640 (W.D. Wis. 1996)

[3] “Whom to Sue for Nike.com Hack?”, WIRED Jun 29, 2000

[4] Europe Goes After the Cookie”, October 31, 2001

[5] “Hosts” and web page creators can delete files within a matter of hours or days after their posting.

[6] http://www.it.mycareer.com.au/breaking/2001/10/22/FFX18I063TC.html

[7] New York Stock Exchange, Inc. v Manuela Lemmel, Case No. DBIZ2001-00044

[8] http://www.washtech.com/news/regulation/13217-1.html

[9] “Private International Law”, Cheshire and North, 11th Ed. pg. 188

[10] Washington Post Co. v TotalNews, 97 Civ. 1190 cited from Richard D. Harroch, Esq. Start-up and

Emerging Companies: Planning, Financing, and Operating the Successful Business (Vol 2 Revised Ed.)

[11] New York Times Co. v Sulllivan, 376 US 254 (1964) cited from Richard D. Harroch, Esq. Start-up and

Emerging Companies: Planning, Financing, and Operating the Successful Business (Vol 2 Revised Ed.)

Others:

• Ministry of Finance of India, Central Board of Direct Taxes, E-commerce and Taxation (New Delhi: Government of India, Ministry of Finance, 2001)

• “Private International Law”, Cheshire and North, 11th Ed

• “The Work Programme on Electronic Commerce; Background Note by the Secretariat”, Council for Trade-Related Aspects of Intellectual Property Rights, WTO.

• “A Separate Jurisdiction For Cyberspace”, Juliet M. Oberding, Terje Norderhaug, First published: June 1996

• https://www.researchgate.net/publication/248982867

• https://www.legalbites.in/uncitral-model-law-on-e-commerce

• https://blog.ipleaders.in/model-law-on-electronic-commerce