Over the past few years, global trade has expanded due to the explosive growth of electronic commerce. Simply put, Electronic Commerce is buying and selling of goods and or availing services over the internet. E-commerce is understood to mean the production, distribution, marketing, sale or delivery of goods and services by electronic means. The Asia Pacific Economic Co-operation (“APEC”) defines e-commerce as all business activity conducted using a combination of electronic communication and information processing technology. The United Nations Economic and Social Commission for Asia and the Pacific (“UNESCAP”) defined ecommerce as “the process of using electronic methods and procedures to conduct all forms of business activity.”
One of the basic questions relate to how electronic contracts can be formed, performed and enforced as parties paper documents with electronic equivalents.
E-contracts like all other contracts are governed by the basic principles governing contracts in India, i.e., the Indian Contracts Act, 1872 (“Contract Act”). The Information Technology Act, 2000 (“IT Act”) deals with contractual aspects of use of electronic records such as attribution, acknowledgement, time and place of dispatch and receipt.
Unless expressly prohibited under any statute, e-contracts like click-wrap agreements would be enforceable and valid if the requirements of a valid contract as per the Indian Contract Act are fulfilled. Consequently the terms and conditions which are associated with an e-commerce platform are of utmost importance in determining and ensuring that e-commerce transactions meet with the requirements of a valid contract.
Though the internet eliminates the need for physical contact, it does not do away with the fact that any form of contract transaction would have to be authenticated. There are some issues that need to be considered by companies.
Digital Signatures as authentication tools: The IT Act stipulates that digital signatures should be used for the purposes of authenticating an electronic contract. The digital signature must follow the Public Key infrastructure (“PKI”).
The very nature of e-commerce is that it is virtually impossible to check the age of anyone who is transacting online. This may pose problems and liabilities for ecommerce platforms. The position under Indian law is that a minor is not competent to enter into a contract and such a contract is not enforceable against the minor. The age of majority is 18 years in India.
An instrument that is not appropriately stamped may not be admissible as evidence before a competent authority unless the requisite stamp duty and the prescribed penalty have been paid. In some instances criminal liability is associated with intentional evasion of stamp duty. However, the manner of paying stamp duty as contemplated under the stamp laws is applicable in case of physical documents and is not feasible in cases of e-contracts
One of the foremost considerations that any company intending to commence ecommerce activities should bear in mind is the protection of its intellectual property rights (“IP” or “IPR”) which is a challenge and a growing concern amongst most ebusinesses. Some of the significant issues that arise with respect to protecting IPRs in e-commerce are discussed hereunder:
Some of the most common forms of liability for infringement in India would be:
In addition to the civil remedies, some of the IP laws contain stringent criminal provisions relating to offenses and penalties such as imprisonment of up to three years for applying for a false trademark, knowingly infringing a copyright and for applying for a false geographical indication.
While traditionally there are several restrictions placed on the content of information that is distributed, the challenge lies in evolving similar parameters to regulate the content of information on the Internet. Some of the important statutes which deal with content regulation are as follows:
In India, there are number of statutes that provide for regulation relating to obscenity:
When an e-commerce website merely provides a platform and acts as an intermediary between different parties, the question that then arises is – what is the extent of liability of such e-commerce companies for acts of third parties? Section 79 of the IT Act provides for exemptions to the liability of intermediaries subject to fulfilment of certain requirements. Further section 81 of the IT Act provides that nothing contained in the IT Act will restrict any person from exercising the rights granted to them under the Copyright Act, and the Patents Act, 1970.
In e-commerce transactions, if a business derives customers from a particular country as a result of their website, it may be required to defend any litigation that may result in that country. As a result, any content placed on an e-commerce platform should be reviewed for compliance with the laws of any jurisdiction where an organization wishes to market, promote or sell its products or services as it may run the risk of being sued in any jurisdiction where the goods are bought or where the services are availed of
In the case of Cybersell Inc v CyberSell Inc, the plaintiff, Cybersell AZ, was an Arizona corporation that provided Internet advertising and marketing services. The defendant, Cybersell FL, was a corporation run from Florida by a father and son team that offered web marketing and advertising consulting services. Cybersell FL did no advertising in Arizona, and had no offices, employees, or clients in the state. Cybersell AZ discovered the existence of the Cybersell FL, and informed them of the existence of their registered service mark. Cybersell AZ initially filed suit in the District Court of Arizona. Cybersell FL moved to dismiss for lack of personal jurisdiction, and the courts granted their motion holding that the defendant’s web site was “essentially passive” and that it did not “deliberately” direct its efforts towards Arizona residents.
The rapid pace of growth of the ecommerce industry is not only indicative of the increasing receptiveness of the public but has also brought to the fore the issues that the legal system of the country has been faced with. The rapid pace of growth of the e-commerce industry is not only indicative of the increasing receptiveness of the public but has also brought to the fore the issues that the legal system of the country has been faced with.
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