E commerce & contracts

Doing Business in the Information Age

By,MOHAMMED HAROON RASHEED

B.A.LL.B (Hons.), [BSW] & [LLM]Advocate

Email ID: [email protected]

1(c)2013 MD HAROON RASHEED, ADVOCATE

Definition of Commerce

► The exchange of goods and services for money

► Consists of:Buyers - these are people with money who want to purchase a good or service. Sellers - these are the people who offer goods and services to buyers. Producers - these are the people who create the products and services that sellers offer to buyers.

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(c)2013 MD HAROON RASHEED, ADVOCATE

E-commerce vs. E-business

►E-commerce is about doing business electronically

►E-commerce conducting financial transactions electronically

►E-business is conducting business on the Internet

►E-business is the transformation of business processes through the Internet

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Electronic Commerce: Definition

E- Commerce The process of buying, selling, or exchanging products, services, or information via

computer networks

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Electronic- Business:Definition

E-BusinessA broader definition of EC that includes not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization

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Four Categories of E-Commerce

B2B

B2C

C2B

C2CConsumers

Business

And selling

to...

Business originating from...

Business Consumers

6(c) MD HAROON RASHEED, ADVOCATE

Distinct Categories of E-Commerce

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Business to Business (B2B) refers to the full spectrum of e-commerce that can occur between two organizations.

This includes purchasing and procurement, supplier management, inventory management, channel management, sales activities, payment management &service and support.

Examples: Free Markets, Dell and General Electric Business to Consumer (B2C) refers to exchanges between

business and consumers, activities tracked are consumer search, frequently asked questions and service and support.

Examples: Amazon, Yahoo and Charles Schwab & Co

(c) MD HAROON RASHEED, ADVOCATE

Distinct Categories of E-Commerce

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Peer to Peer (C2C) exchanges involve transactions between and among consumers. These can include third party involvement, as in the case of the auction website Ebay.

Examples: Owners.com, Monster

Consumer to Business (C2B) involves when consumers band together to present themselves as a buyer in group.

Example: www.planetfeedback.com


Advantages of Electronic Commerce

► Electronic commerce can increase sales and decrease costs

► If advertising is done well on the Web, it can get a firm’s promotional message out to potential customers in every country

► Using e-commerce sales support and order-taking processes, a business can: Reduce costs of handling sales inquiries Provide price quotes

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Advantages of Electronic Commerce

► It increases purchasing opportunities for buyers► Negotiating price and delivery terms is easier

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Disadvantages of Electronic Commerce

► Perishable grocery products are much harder to sell online

► It is difficult to: Integrate existing databases and transaction-

processing software into software that enables e-commerce

► Cultural and legal obstacles also exist

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Disadvantages of Electronic Commerce

► Identity and capacity of seller or buyer► Authenticity of offer and acceptance (digital signatures)► When and where contract formed► Governing law► Terms and conditions (click through)

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Limitations of E-commerce

► To organizations: lack of security, reliability, standards, changing technology, pressure to innovate, competition, old vs. new technology

► To consumers: equipment costs, access costs, knowledge, lack of privacy for personal data, relationship replacement

► To society: less human interaction, social division, reliance on technology.

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The Three Basic Genre

►Generally the basic forms of "E-Contracts" that a person comes across are:

► The Shrink-wrap Agreements.►The Click-wrap or Web-wrap Agreements. ►The Browse wrap Agreements.

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Shrink-wrap agreements

►The name was derived from the "shrink-wrap" packaging that generally contains the CD Rom of Software's.

►The terms and conditions of accessing the particular software are printed on the shrink-wrap cover of the CD and the purchaser after going through the same tears the cover to access the CD Rom.

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►Sometimes additional terms are also imposed in such licenses which appear on the screen only when the CD is loaded to the computer .

►The user always has the option of returning the software if the new terms are not to his liking for a full refund.

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Case:

►ProCD Inc. v. Zeidenberg 86 F 3d 1447, 1449 (US. 7th Circuit Court 1996) The Court upheld the Shrink- wrap agreement as a valid contract.

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►Limitation:

The terms are not available to the purchaser until after payment is made.

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Click-wrap agreements

►Click-wrap agreements are those whereby a party after going through the terms and conditions provided in the website or program has to typically indicate his assent to the same, by way of clicking on an "I Agree" icon or decline the same by clicking "I Disagree".

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►Examples:

permission to access a site or downloading of a software or selling something by way of a website.

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Case:► In Re Real Network , Inc. Privacy Litigation. 2000

WL 631341 *4 (N.D. III)The Court held that the internet users had agreed to a license agreement for arbitration.

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►Advantage:The user has the opportunity to see the terms of the before assenting or paying the money.

►Limitation:Doubt whether the user clearly or expressly assented to the agreement.

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Browse Wrap Tranactions

►Terms and Conditions posted on the screen.►Purports to bind anyone who uses the website

or services. ►Does not require the user to click on anything to

indicate his assent to these terms before paying for the product.

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Case:►In Specht v. Netscape communications Corp. 150

F . Supp 2d 585(S.D.N.Y. 2001)The court held the following scheme did not suffice to create a contract.►Pollstar v. Gigmania Ltd ., F. 2d 974 (2000)Court upheld the validity of the BW agreemensts.

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►Limitations:No mandatory AgreementsNo Clear Notice of the terms.

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Consideration

►Any contract (except under exceptional circumstances as permitted by law) is not valid, without valid consideration.

►Typically, consideration is the compensation or promise that is given in return for a promise (in most cases the money paid or promised for goods or services).

►In other words, consideration is the price or the return for a promise that turns that promise into a legally binding contract.

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Consideration

► In electronic commerce, consideration does not pose any special concern except, perhaps, for the risks associated with payment online or through electronic means.

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THANK YOU

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E commerce & contracts