Legal Issues in E-Commerce by Snigdha Mohapatra @LexCliq

No matter whether enlarging the existing e-commerce or starting a brand new business on the internet, an online entrepreneur must have a panoramic perspective over the legal framework and a detailed look over the traditional and specific legal issues of internet law. The creation of a website is neither the beginning nor the end of the chain of questions for consideration and resolution. The website is only the shop window of the business.  This article does not describe comprehensively all legal aspects of the online business. The idea is to mark the main questions upon startup and organization of the e-commerce.

  1. The Domain Name: The choice of a domain name in e-commerce is a difficult process requiring the assessment of many factors. Except for the considerations for association a domain with the name of a brand and the meaning of the domain in the process of the website optimization, there are also legal aspects whose neglecting or ignorance can have serious consequences in the future. The chosen name must not be similar or like the name of registered trademarks, especially of well-known trademarks. Registering a domain that is close or similar to the name brand is considered an offence and is known as “cybersquatting”. On the Internet, there are different databases, where domains can be checked for similarity with registered trademarks. On the website of the World Intellectual Property Organization, a public database can be found facilitating searching into registered trademarks.
  2. Website: The well optimized and functional website with a friendly user interface plays a key role in the success of e-commerce. The contract for its creation should cover a wide range of legal issues. Firstly, the contract or the enclosed Terms of reference should set out clearly, in details, the company’s requirements regarding the website – functional and performance requirements and in terms of whole visible content ( video, images, music or text referred to as components of design). Other important issues in the contract are clauses for tests and warranty period for debugging, assigning rights and responsibility for the actions of subcontractors (if any) provisions for disclosure of confidential information made known to the contractor in connection with the creation of the website, clauses for warranties and liability for failure, and others depending on the specifics of the contract.
  3. Rights of Intellectual Property: By creating an e-commerce website emerged a new object of intellectual property and all copyrights and related rights with regard to their use in the website must be clearly stipulated in the contract. The owner of the website should receive the right to use the website without restriction in time and scope, to make changes in it, the right to update and improve the website without limitations, depending on the changing business needs and conditions. Last but not least, the contract must provide a warranty by the contractor that with the creation of the website no copyrights and other rights of the intellectual property of third parties are violated.
  4. Terms and conditions required information: E-commerce site must contain certain information that is expressly referred to the Law on Consumer Protection. These duties include providing information to the user regarding the name and the address of the provider, the general characteristics of the commodities/services, the price of the commodities/services, including all taxes and fees, the cost of postal or transport charges, which are not included in the price of the commodities/services, related to their delivery, the cost of using a mean of communication from a distance, when it is calculated in a way, different from the one indicated in the general tariff, the way of payment, delivery and implementation of the contract, the right of the customer to withdraw from the contract and the conditions in which the commodity may be returned, the period for which the particular offer or price shall be valid, the minimal duration of the contract for contracts of constant or periodical delivery of commodities/services. Those who not perform the legal obligation for providing required user information can be fined.

    5.Privacy and security: Data protection is becoming an increasingly important issue for customers in e-commerce. Collection and the storage of personal data of the costumers should be made lawfully, with the implementation of adequate measures and modern technical resources for the protection of the personal data of the costumers. The Law on Personal Data Protection requires the trader to be registered as a data administrator into the register of the Personal Data Protection Commission. The law describes in details the obligations of the administrators of personal data. E-commerce websites must have a policy for personal data protection that is available and posted in a conspicuous place on the site. Published rules for the protection of personal data must be drafted in compliance with the law.

The legal framework for e-commerce is increasingly becoming complex even in one single jurisdiction. Things become more and more complicated when you are faced simultaneously with hundreds of potentially applicable legislation because you are entering agreements with customers located anywhere in the world.  The Internet provides many new sales and marketing opportunities and online business must adapt to this changing commercial environment.

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