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Online Contracts One of the great strengths of the internet, and in particular the World Wide Web, is the ability to make information available to large numbers of people at low cost. Ever increasing numbers of businesses and consumers have cheap and easy access to the web, representing a vast potential market which is tempting more and more businesses into having a 'web presence'. By its nature the internet is international, but the majority of laws and regulations have effect and are enforced country-by-country. It is impractical to ensure full compliance with the laws and regulations of every country, which creates potential liability for a business. It is a declared aim of the UK Government to make the UK the best and safest place to do electronic commerce.
The internet is now an integral part of most companies' marketing strategy. However, advertising regulations differ from one jurisdiction to the next. There may be special regulations within a territory for certain industry sectors, such as the financial services industry or the legal profession; for certain services, such as gambling and lotteries; and for certain products, for example alcohol, cigarettes or pharmaceuticals. In the UK, you are open to sanctions for false descriptions of products or services, for example under the Trade Descriptions Act 1968. There is also a self-regulatory framework which governs misleading advertisements, in particular the Advertising Standards Authority Codes of Practice. The codes require that advertisements are legal, decent, honest and truthful.
Through several EU Directives the laws of EU Member States have been brought to a common minimum standard. Advertisers should ensure that their materials on the internet are accurate, kept up to date and conform to regulations in their target markets. In some cases it may be necessary to target websites specifically at certain countries and / or in different languages, or state that a website is not intended for viewers in certain countries. Legally binding contracts are entered into all the time, for example when buying a newspaper or a theatre ticket. In most cases no formalities are required (such as writing) but certain elements must be present.
In English law, these are: an offer, an acceptance, 'consideration' and an intention to create legal relations. 'Consideration' has a technical meaning and basically requires the parties to exchange an obligation for a benefit, for example handing over a newspaper in return for payment. Control of the moment the contract is made can ensure that an online seller enters into contracts only when it wishes and is satisfied with the terms of the contract. This can avoid uncertainty as to whether or not a seller is contractually bound to fulfill an order. For example, a seller may prefer not to fulfill an order if an incorrect price has been posted on the website.
The ordering mechanism, together with the associated terms and conditions, should ensure that a potential customer is the one making the 'offer' which can be 'accepted' at the discretion of the seller, for example by providing that all customer orders are subject to approval by the seller. A contract's terms and conditions are fixed at the moment it is formed. Contractual provisions will be incorporated in a contract only if the other party had reasonable notice of the provisions before conclusion of the contract. 'Reasonable' notice for unusual and onerous provisions requires greater notice than for normal provisions. To achieve this online, a customer should have access to the terms and conditions before making an order, for example by a requirement for the customer to scroll through the terms and conditions and click a button to accept them before being able to proceed, and unusual terms should be brought to their notice specifically. The operation of law automatically includes some terms into contracts, for example a term that goods will be of satisfactory quality is implied by the Sale of Goods Act 1979.
Further, even if properly incorporated into a contract, certain terms (such as unreasonable limitations of liability) are not enforceable against consumers or others who signed up to standard terms (Unfair Contract Terms Act 1977). To enhance transparency and the confidence of those buying online the EU Electronic Commerce Directive (which is soon to have legal effect in the UK) will regulate all providers of services provided electronically for payment, which will include online sellers of goods and services. Online businesses will need to provide information including name, address and email address, and any prices must clearly state whether tax and delivery costs are included. Prior to an order being placed, the seller must clearly provide details of: The steps required to conclude a contract.
Whether or not the contract will be filed by the seller and whether or not it will be accessible. The languages offered for the conclusion of the contract. Which codes of conduct the seller subscribes to and how they can be consulted electronically. Further, the seller must: If terms and conditions are provided, allow the customer to store and reproduce them. Provide the technical means for identifying and correcting input errors prior to placing the order. Acknowledge receipt of an order without undue delay.
Several security issues arise when contracting over the internet. There can be doubt about the identity of the person sending a communication (authenticity), its content (integrity) and preventing a party from denying they sent the communication (non-repudiation). This is of particular importance if the transaction value is high. On a technical level these issues are being addressed through encryption services administered by trusted third parties, and on a legal level through legislation such as the EU Electronic Signatures Directive (implemented in part in the UK by the Electronic Communications Act 2000 which gives electronic signatures legal effect) and the principles being developed in the Uniform Rules on electronic signatures and certification authorities by UNCITRAL (the United Nations Commission on International Trade Law). In the UK, the Government has proposed that cryptography service providers be self-regulated, subject to the success of the self-regulation.
Among users there is understandable concern about releasing payment details on the internet although increasingly internet sellers accept payment by debit or credit card, often using Secure Sockets Layer (SSL) security. To allow credit card payments, a business will need to enter into a merchant agreement with a bank or credit card company. The application process is more rigorous when sales are to be made over the internet ('cardholder not present') rather than face-to-face. Various systems of electronic money and micro payments have been proposed principally for low value transactions, but none is yet in wide use. For example, the EU has proposed an e-purse system for small payments. From the legal side, the EU Electronic Money Directive establishes a framework for the regulation and supervision of electronic money institutions which may issue electronic money.
Once a contract is made (or a party believes a contract is made) disagreements can arise, for example regarding the terms of the contract or whether obligations have been properly performed. If there is an international element, resolution of the dispute requires determination of the applicable law and the country whose courts have jurisdiction over the dispute. There are significant exceptions in favour of consumers. In the European Economic Area, the basic principle is that the parties can choose the governing law and the forum for dispute resolution (i.
e. courts of a particular country, arbitration etc. ). The Rome Convention rules decide which law applies although certain mandatory rules in a purchaser's country will always apply, for example for financial services or consumer protection. Similarly, in the EU jurisdiction of disputes is determined by reference to the Brussels Regulation (which has superseded the Brussels Convention). If the parties have not agreed jurisdiction, the basic rule is that a defendant may be sued where it is domiciled or in the place of performance of the contractual obligation.
Consumers on the other hand may invoke consumer protection laws either in their home jurisdiction or the supplier's jurisdiction, but almost always may only be sued in their home jurisdiction. Therefore online businesses dealing with consumers must be prepared to comply with consumer protection regulations in each market to which they sell. To reduce uncertainty and costs in the event of a dispute, it is strongly recommended that online businesses specify in their terms and conditions the governing law and jurisdiction for disputes. English law is a popular choice for international trade and is often chosen by parties with no other connection to the UK. Although contracting online brings legal uncertainties and risks, innumerable transactions are carried out every day. In order to trade safely, legally and profitably a combination of commercial considerations, technical methods, legal awareness and common-sense must be deployed.
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Free research essays on topics related to: laws and regulations, credit card, terms and conditions, electronic commerce, consumer protection
Research essay sample on Terms And Conditions Laws And Regulations
