E-commerce is one of the buzz-words of the new millennium. If you believe the spoutings of the industry pundits, the very future of Oxford Street is at stake. But what is e-commerce? Is it really something to get excited or concerned about, depending on your level of technophobia? This section of our website will give you a brief introduction to the issues and key principles.

Electronic (hence the "e") commerce is basically buying and selling over the Internet. Nowadays, you can buy almost anything you want on-line: insurance, holidays, houses, books, CDs; the list is endless, and growing. There are benefits to both the seller and buyer.

The seller can cut out the middle-man (or distribution chain) and has no need for show-rooms. One of the world's leading car manufacturers intends to be selling all its cars on-line within ten years. All its cars will be made to order, it will not have to build a batch which waits in a car park until chosen by customers.

The buyer has a wider choice of goods. For example, Amazon.com (the major Internet bookseller) has a catalogue of millions of books, far more comprehensive than the local bookstore. Because there is no middle-man, the goods are invariably cheaper, although delivery costs lessen the bargain. Currently, the buyer can also save on tax (though this is likely to change in the near future as Governments like to get their tax!)

So, e-commerce seems to be a winner on both fronts. However, there are legal implications for both the seller and the buyer which should be considered. There follows a brief overview of some of the issues to consider if trading or buying over the Internet.

Issues for the Seller
Jurisdiction
As soon as you trade on-line, you are effectively trading internationally. Your site can be accessed by users in other jurisdictions. The issue here is that different jurisdictions have very different rules and regulations and you will need to ensure you do not fall foul of them. Certain special offers, for example, which are common in the UK, are illegal in continental Europe and elsewhere.

Security
There has been much publicity questioning whether e-commerce is sufficiently secure. It can be, but it is important to take appropriate precautions. A linked point is to ensure you have appropriate virus checks. You don't want your site to contain damaging viruses.

Advertising restrictions
As noted above, by going international, you are subject to different international advertising regulations. Some major companies have fallen foul of these regulations simply by failing to consider the international implications of trading on-line.

Data Protection
It is inevitable that you will be accepting personal information on customers. Consequently if you have a UK base, you will be subject to UK data protection laws, which are (or soon will be) common throughout the EU. You will also need to ensure you have the appropriate registrations.

Libel/defamation
You will need to be careful if you are allowing others to "post" comments or information on your website. A recent case ("Demon") has demonstrated that the website host may be liable for defamatory statements placed on his website.

Governing terms
It will be important to have your terms of trade clearly set out on the website, with the need for the user to read and acknowledge acceptance before proceeding. This is essential to ensure your terms are incorporated into the contract.

New Law
There will be new UK and EC law on e-commerce, particularly relating to electronic signatures and the provision of encryption serves. There are also proposals relating to distance selling and the establishment of e-commerce codes for consumer transactions and an "e-hallmark" for use by recognised/legitimate traders. The Electronic Communications Act finally came into force on 25th May 2000. Please see 'Recent Initiatives' for a summary of the Act, together with consideration of the Regulation of Investigatory Powers Bill and the EC Distance Selling Directive.

Issues for the Buyer
Security
One of the major concerns voiced with regard to e-commerce is on security. The majority of e-commerce financial transactions are by credit card. A number of sites accept telephone purchases but an increasing number are now requiring that credit card details be processed on-line. Is this safe? With the skills of hackers, credit card details can be intercepted and used for fraudulent purposes. There are risks, but there are also risks of fraudulent misuse when details are given in telephone transactions and when cards are taken out of sight for processing in restaurants. In practice, no system is risk-free but the use of encryption (link to cybercrime) minimises the chances of interception.

Jurisdiction
This is the same issue as for the seller. How do you know which country's laws will regulate the trade in the event of a dispute with an overseas supplier? What if it is not even clear from the website in which country the seller is based? Basically, there is the risk (though this is no different from any mail-order service) that you will not receive the goods, or that they are defective, that you cannot trace or identify the seller or that you will not have an effective remedy in an overseas jurisdiction.

Tax
One of the perceived advantages about e-commerce is the avoidance of certain tax charges. However, this is unlikely to remain the case long-term. Changes are likely to be introduced in the near future, and it is likely that consumers will find that tax laws adapt to the new means of trade.

Summary
We hope that this is of some use if you are considering trading or purchasing goods on the Internet. As with all areas of Internet law, the rules regarding e-commerce are constantly evolving and subject to revision and update. At Charles Russell, we have much experience in dealing with e-commerce and can confidently guide you through the problems involved. If you would like further information, please contact David Berry or Robin Bynoe