1

E-Commerce Law

2

Parts of Study

• Law

• Commercial

• Electronic Dealings

3

Law

• Law can be defined as:

• The body of compulsory general rules that regulate the conduct of individuals in a society and which individuals must obey and follow subject to sanctions by the competent public authority.

4

Characteristics of Legal Rules:

1. Rules of conduct

2. They are social

3. They are Abstract & General

4. They Must be accompanied by Sanctions

5

1 .Rules of Conduct

• Legal Rules embody orders to individuals

• Legal Rules are concerned with external conduct

• Legal Rules are NOT concerned with thoughts, dreams and imaginations of individuals

• Legal Rules are not concerned with intentions and motives

6

2 .Legal Rules are Social

• The absence of Socity leads to the fact that law is not needed.

• The Law should reflect the society’s traditions, values and religious beliefs. Therefore, Law differ from country to another and differ from to time to time in the same country.

7

3 .Law must be abstract & General

• Law must be made to all members of society

• Law should not give exceptions to certain inviduals

8

Legal Rules must be accompanied by Sanctions

• If a person violates the conduct prescribed by the legal rule the must be sanctioned.

• Sanctions are of different kind:1. Criminal Sanctions, such as fines and

imprisonment

2. Civil Sanctions, such as compensation

3. Administrative Sanctions, such as disciplinary measures.

9

Sources of Law

1. Legislation

2. Custom

3. Equity

4. Judicial Precedents

5. Jurisprudence/ Legal Opinion

10

Legislation

• Law

• Temprory Law

11

Customs

• Customs to be considered a source of Law they Must be general, ancient, continuous, stable and not contravene the law and public morals.

12

Courts in Jordan

13

Types of Courts

1. Ordinary Courts

2. Religious Courts

3. Administrative Courts

4. Special Courts

14

Ordinary Courts

• First Litigation Level:

1. Magistrate Courts

2. Courts of First Instance

3. Court of Felonies

• Second Litigation Level:

1. Court of Appeal

2. Court of Cassation

15

RELIGIOUS COURTS

1. Sharia Court

2. Council of Religious Sects (non-Muslims)

3. Sharia Court of Appeal

16

Administrative Courts

1. Administrative Court of Fist Instance

2. Administrative Court of Appeal (High Court of Justice)

17

Special Courts

Such As:

• State Security Court

• Tax Court

18

Commercial Activities

19

Commercial Activities under Jordanian Law

• Buying movable property for the purpose of selling for profit

• Leasing movable property for the purposes of leasing for profit

• Buying movable property for the purpose of leasing for profit

20

Commercial Activities under Jordanian Law

• Buying immovable property for the purpose of selling for profit

• Transport

• Insurance

• Mining

• Commercial Agencies & Middlemen

• Commercial Services

21

Commercial Activities under Jordanian Law

• Print and Publication (except for Scientific Purposes)

• Storage Services

• General Viewing Services (Cinemas & Theater)

• Construction

22

E-Commerce Laws

23

E- Commerce

• Definition:

“Performing commercial transactions through communication that the parties make by means of data messages; which the information is generated, sent, received or stored by electronic, magnetic, optical or similar means”

24

Advantages

• Opening new markets

• The possibility to work 24/7

• The decrease in expenditures

• Non-geographic confinement of place of business

• Relatively fast process.

25

Disadvantages

• The inability to check the goods

• Cannot identify the other party

• Lack of privacy

• Fear of hacking

26

The Importance of Regulating Commercial Activity

• It promotes the interests of the consuming public, the merchants and the authorities (e.g. tax revenue)

27

The Importance of E-Com. Regulation

• To promote and sustain an open and competitive market

28

How Can The Market be Developed and Sustained

• By providing certainty and predictability in the regulation (so that both businesses and consumers know their respective rights and obligations)

• by providing adequate consumer protection (to enhance consumer confidence in the market)

• by providing technology neutral regulations (to provide a level playing field as well as to futureprove any

regulation).

29

1- Legal Certainty

30

The Importance of Legal Certainty

• First, it enables market players (businesses and consumers) to make investment decisions with confidence, knowing their rights and obligations before entering into commercial transactions.

• Second, commercial parties have always required that the law provides clear solutions to the problems that might occur in commercial transactions and deals with their disputes speedily, and ideally allows them to avoid costly and time consuming litigation.

• Finally and more generally, certainty of legal rules is an inherent part of any legal rule – an ever-changing rule is no rule at all. Thus certainty and predictability is an essential part of the rule of law.

31

2 -Technology Neutrality

32

The Importance Of Technology Neutral Regulations

• First, it is designed to create a level playing between comparable market players. For example, providers of services should be in the same legal position regardless of whether they sell a music video electronically via an SMS message, over the internet or on a CD in a shop.

• Second, and related to the above discussion on flexibility, technological neutrality helps to create relative futureproof regulation. Futureproof regulation is regulation that withstands the test of time i.e. newer technological developments, and thereby dispenses with the need for regulatory reform and pre-empts over-frequent revisions. Futureproof regulation also means that the law does not hinder the future development of technology.

33

3-Consumer Protection

34

• providing adequate consumer protectionis needed (to enhance consumer confidence in the E-market),

35

E-Contracts

36

• Establishing if and when the parties have entered into a contract is essential in commercial transactions, because:

1. It is when the parties have reached an agreement, that their rights and liabilities become binding

2. no further terms to the contract can be introduced

3. The parties would then also know that they have entered into a binding contract and when their obligations start and what their rights are

37

• To determine if the parties have reached an agreement there has to be an offer and a corresponding acceptance.

38

Offer

• An offer is: an undertaking by one party to another to do or abstain from doing something if the other party undertakes to pay the price, which need not be monetary.

• an acceptance of an offer will bind the offeror

39

Acceptance

• Acceptance is: the unconditional assent of the offeree to pay the price in return to the offeror’s performing his promise.

• acceptance must not contain any alteration on the offer or it will be deemed to be a counteroffer itself capable of acceptance

40

• Another element of a valid contract is the ‘legal intention’: the parties must have the intention to enter into legal relations

41

‘ Intention’ and Automated Machines

• It has long been accepted that the actions of machines can be attributed to their owner. Therefore, when the proprietor designs a machine and places it to perform a task, it indicates that the proprietor intends to be bound by that transaction. Thus, when a website owner designs his site to automatically process consumer orders and send them to the required address or when a mobile entertainment provider designs a web portal which is ready to send the required mobile entertainment automatically, or when he programs his network platform to send the required item once the order is received through an SMS, the intention of the mobile network operator is to be bound by the activity of his ‘machine’.

42

intention & malfunction

• The issue of intention becomes more complicated where there is a malfunction and a computer does something it was not programmed to do.

• it has been decided that the person will be bound by the computer’s action unless it was clear to the other party that the computer was not operating correctly

43

Concluded Contracts in IT Transactions

• Interactive websites:– The Offer is from the Buyer and acceptance is

from the Seller.– This conclusion is reached by performing an

analogy between these transactions and ‘real world’ transactions. In ‘real world’ transactions products stored in shop windows and on store shelves are considered an ‘invitation to treat’ and not an offer. Therefore, the offer is from the buyer and acceptance is from the seller.

44

• In M-commerce:– In Both SMS contracts and Web-portals the offer is

from the seller and acceptance is from the buyer.– This conclusion is reached by performing an

analogy between these transactions and ‘real world’ transactions. In ‘real world’ transactions products stored vending machines are an offer. As the product cannot be returned and the parties cannot change their minds. Therefore, the offer is from the buyer and acceptance is from the seller.

45

Distance Acceptance

• Theories:

1. Declaration of Acceptance

2. Issuing Acceptance

3. Receipt of Acceptance

4. Knowledge of Acceptance

46

Civil transactions in Jordan are in favour of Declaration of

Acceptance

47

ELECTRONIC TRANSACTIONS LAW N0 (85) OF 2001

• Article (17)• A- Unless otherwise agreed between the originator and the

addressee, the sending of a data message shall occur when it enters an information processing system outside the control of the originator or the person who sent the data message on behalf of the originator.

• B- If the addressee has designated an information processing system for the purpose of receiving data messages, the message shall be deemed to have been actually received upon its entry into such a system. However, if the message is sent to a system other than the designated system, the message shall be deemed to have been received upon the addressee’s retrieval of the message for the first time.

• C- If the addressee has not designated an information processing system for the purpose of receiving data messages, the message shall be deemed to have been received at the time of its entry into any information processing system of the addressee.

48

Incorporation of Terms

49

The Importance of Incorporation of Terms

1. The terms become binding to the parties

2. No other terms can be introduced to the contract after they are incorporated.

50

The problem in the E-environment is that usually the terms are not in the same place to where the contract is formed

51

The Types of Incorporation

1. Incorporation by Notice

2. Incorporation by Signature

52

Incorporation by Notice

• The Website Owner will place a notice sating the transaction is: ‘subject to Terms’

• Is this legal? Are the terms considered binding?

53

This is legal and the terms are

binding if1. The terms are easily accessible (e.g.

Provide a working Hyperlink)2. The statement is given next to or near to

where the consumer agrees to the transaction

3. If the terms do not include any term that excludes any of the seller duties imposed by the law, or, include a waiver of any right given by the law to the consumer.

54

• If there is any term that might affect the consumers interests, this term must by clearly given to the consumer and must be placed next to the ‘terms & Conditions statement”.

• Only the courts can decide which terms are invalid, that is why website owners and consumers have to be constantly legally educated and the Regulations have to be constantly enforced.

55

Incorporation by Signature

• Is where the website owner places the ‘terms & conditions’ and the consumer has to press a button (e.g. I Agree) to enable the consumer to proceed in the transaction.

• This method is legal as this is considered a signature (we will study later); however, the same will apply regarding terms which effect consumer rights as we have mentioned before.

56

Digital Products

57

Digital Products are products which can only be viewed or used on a electronic device (computer

or mobile phone)

58

The Problem regarding Digital products is:

• It is not clear if they are Goods or Services

• They do not easily fit the Definition of Goods provided by Law, and if they are Services they leave the consumer to the mercy of merchants

59

If they are Goods

The Merchant has to insure that they:

1. Meet their description as advertised by the merchant.

2. Are of Satisfactory Quality

3. Meet their purpose

60

If they are Services

The merchant only has to provide that he did his best in providing the service.

The burden of proof lies upon the consumer (i.e. the consumer has to proof that the merchant did not do his best to provide the service).

61

How the problem can be solved

• Including the term “Digital Goods” in the Definition of Goods in Law (Like the European Union)

Or

• The Quality of Digital Products should be “adequate Technical Quality (Like M-content in the UK regulations). This solution gives consumers more protection.

62

Digital Documents & Digital Signatures

63

Digital Documents

64

The requirements of Written Documents under Law

• Legible: It has to be apparent and can be read (writing on water or on Air, is not a form of legible writing)

• Perpetual: The written document has to be lasting (it does not disappear by itself), (writing on sand is a legible form of writing; however it is not perpetual)

• Stable: This means that the written document cannot be changed, and it can be reproduced.

65

• Digital documents are in general considered to be a form of ‘Legal Documents’. However, it will highly depend on the software used for the document.

• Examples for legal Digital Documents:

1. E-mails in INBOX

2. Documents on PDF format.

• Example for un-legal Digital Documents: Documents written on Word Format.

66

Digital Signatures

67

Requirements of Signatures under Law.

• Personal: It is the property of the signatory and he can use it.

• Legible & Perpetual

• Interpenetration: That means that the signature has to be attached/linked/annexed to the document that is signed.

68

Forms of Accepted Digital Signatures

• Magnetic Cards

• Pin & Chip Cards

• Biometric Signatures

• Uploaded Signatures

• E-Signatures

• Click signatures

69

Domain Names

70

What is a domain name?

• Every resource on the Internet, such as a web page or a file of information has its own address - or Uniform Resource Locator (URL). A domain name is part of this address which is assigned to each computer or service on the Internet

71

Example

• www.example123.com• www: is the host name, does not have to be the world

wide web• Example123: is called the lower level (or 2nd level)

domain name. This is selected by the owner of the domain name. The legal problems we are going to study are in relation to lower level domain names,

• .com: is the top level (1st level) domain name. This is provided by the domain registrar of each country. The Dot.Com is registered in the USA

72

•No two domain names can be identical. There can only be one ”example123.com". The word ”example123" could however be registered under one of the country domains. Thus along with ”example123.com", ”example123.jo" can also be used as a domain name.

73

Why disputes Arise

1. The problem: One way in which disputes have arisen is where a third party intentionally registers a domain name in the knowledge that someone else will want it, example is where "Mcdonalds.com" was registered by a journalist, Mr Quittner in 1994. To secure return of the name, McDonalds were forced to make a donation for computer equipment for a primary school.

74

• The Solution: Courts (or judicial bodies) can remove the ownership of a domain name, that is fraudulent, and permit the rightful owner of the domain to register it.

75

2. The Problem: A person registers a domain name without the intention for fraudulent use. But another person wants it (the objector)

The Solution:If ‘the objector’ has a registered Trade

Mark, the Judicial Body can remove the ownership of the first person’s to the domain name, and allow the ownership of the domain name to be registered to the ‘objector’.

76

3. The Problem:

Two people own similar trademarks and want to register the ownership of a the same domain name. Example the trademark ‘prince’ is owned by a sportswear company and by an Educational Company – different purposes-.

The Solution: The Judicial Body will give the right of ownership to the owner of the older trademark.

77

4. The Problem:

Someone has registered a domain name, that resembles another domain name but with some minor modifications. Example: www.haertz.com instead of the famous rent-a-car company www.heartz.com.

78

The Solution:

If the two domain names are used for different purposes, both domain are allowed. However if they are for the same purposes, the owner of the original domain name can ask the judicial body to remove the ownership of the resembling domain name.

79

ISP Liability

80

Why Could the ISP be Liable?

• If the website owner place illegal material on it

• If the website is used for Gambling or Pornography (in Jordan)

• If it is for defamation

• To distribute Copyrighted material

81

The General Rule

• The ISP is not legally Liable if he only acts as MERE CONDUIT

82

The Exception

• The ISP is Liable If:

1. The ISP has the right to Control the Website

2. The ISP has the right to Edit the contents of the Website

83

MNOs as ISPs

• If the MNO only connects the consumer to the ‘open internet’ he is regarded as an ISP

• The MNO regarding webportals is liable because he has the right to control and/or edit the webportal page.

84

If the Courts find the website owner guilty of any misconduct it can order the ISP to deny access

to the website

85

The ISP Cannot deny access to the website without a court order

86

ELECTRONIC TRANSACTIONS LAW N0 (85) OF 2001

87

The provisions of this Law shall apply to the following:

• A- Electronic transactions, electronic records, electronic signatures and any electronic data messages.

• B- Electronic transactions adopted in whole or in part by any governmental department or public institutions.

88

• Unless otherwise provided for in this Law, the provisions of this Law shall apply to transactions between parties which have agreed to conduct their transactions by electronic means.

89

The provisions of this Law shall not apply to:

• 1- Wills and amendments thereto;

• 2- Waqfs and amending conditions thereof;

• 3- Transactions disposing of immovable property, including related powers of attorney, title deeds, and transactions creating real rights in respect thereof, with the exception of lease contracts;

90

The provisions of this Law shall not apply to:

• 4- Power of attorney instruments and transactions relating to personal status;

• 5- Contract termination or revocation notices relating to water or electrical services, health insurance or life insurance;

• 6- Bills of statements, court proceedings, judicial notification and courts decisions.