10/11/2016
PROCESS OF E-COMMERCE:
E-commerce refers to the process of buying or selling products or services over the Internet. Online shopping is becoming increasingly popular because of speed and ease of use for customers. Consumer (B2C) involves the online sales of goods, services and provision of information directly to consumers.
Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web for at least one part of the transaction's life cycle although it may also use other technologies such as e-mail.
TYPE OF E-COMMERCE PROCESS:
1. BUSINESS TO BUSINESS (B2B)
2. BUSINESS TO CONSUMER (B2C)
3. CONSUMER TO BUSINESS (C2B)
LEGAL ISSUES RELATED TO E-COMMERCE:
1. E-contracts: Electronic contracts are governed by the basic principles provided in the Indian Contract Act, 1872 (“ICA”), which mandates that a valid contract should have been entered with a free consent and for a lawful consideration between two adults. Section 10A of the Information Technology Act, 2000 (“IT Act”) provides validity to e-contracts. So, both ICA and IT Act needs to be read in conjunction to understand and provide legal validity to e-contracts. Further, section 3 of the Evidence Act provides that the evidence may be in electronic form. The Supreme Court in Trimex International FZE Ltd. Dubai v. Vedanta Aluminum Ltd.1 has held that e-mails exchanges between parties regarding mutual obligations constitute a contract. In an online environment, the possibility of minors entering into contracts increases, more so with the increasing usage of online medium among teenagers (read minors here) and their preference to shop online or purchase online goods/services. It becomes crucial for an online business portal to keep such possibility in consideration and qualify its website or form stating that the individual with whom it is trading or entering into the contract is a major.
Stamping of contracts is yet another issue. An instrument that is not appropriately stamped may not be admissible as evidence unless the necessary stamp duty along with the penalty has been paid. But payment of stamp duty is applicable in case of physical documents and is not feasible in cases of e-contracts. However, as the payment of stamp duty has gone online and e-stamp papers are available, it can become a possibility later that stamp duty might be asked on e-contracts as well.
2. Data Protection: Security of the information provided during the online transaction is a major concern. Under section 43A of the IT Act the “Reasonable practices and procedures and sensitive personal data or information Rules, 2011” have been proposed, which provide a framework for the protection of data in India. Data can be personal, which has been defined as “any information that relates to a natural person, which, either directly or indirectly, in combination with other information available or likely to be available with a body corporate, is capable of identifying such person.” The date can also be sensitive and a sensitive personal data consists of password, financial information, physical, physiological and mental health condition, sexual orientation, medical records and history and biometric information. The entity collecting data should have a privacy policy in place, should always obtain consent from the provider of sensitive information and maintain reasonable security practices and procedures. Unauthorized access to personal information and any misuse of such personal information should be checked by the online goods/service providers.
3. Intellectual Property Rights (“IPR”): There are enormous possibilities of trade mark, copyright or patent infringements in online medium. E-commerce websites are designed and made by other parties and often the content is also created by third parties. Unless the agreements between the parties specifically provide the IP rights, there can be serious ownership issues of IPR. Any usage of third party IPR should have valid approvals in place. In interactive websites, the disclaimer and IPR policy should clearly spell out these issues and goods/service providers should also keep a watchful eye on the usage of their websites regularly. Domain names have trade mark protection and deceptively similar domain names can give rise to disputes. In Satyam Infoway Ltd v. SifynetSolutions Pvt Ltd., the Supreme Court had held that “a domain name may pertain to the provision of services within the meaning of section 2(z) of the Trade Marks Act.”
4. Advertising: Advertising is an important and legitimate means for a seller to awaken interest in his products. For long, advertisements were regulated by the courts, government, tribunals, or police that depended upon the nature of each case. Additionally, absence of a single comprehensive legislation created a lot of confusion in terms of a proper code to follow by the industry and the authority to regulate or guide the pattern of advertising. In 1985, the Advertising Standards Council of India (“ASCI”), a non statutory tribunal, was established that created a self regulatory mechanism of ensuring ethical advertising practices. ASCI entertained and disposed off complaints based on its Code of Advertising Practice (“ASCI Code”). On certain occasions, however, the ASCI orders were set aside by courts as ASCI being a voluntary association was considered usurping the jurisdiction of courts when it passed orders against non-members. Gradually, the ASCI Code received huge recognition from the advertising industry. The warnings issued by ASCI to the advertisers against the misleading advertisements were gradually being accepted by the advertisers and the advertisements were actually stopped being aired or were modified significantly to comply with the prescribed ASCI Code. The advertisements should make truthful and honest representations and avoid false and misleading claims, should not be offensive to public decency or morality, not promote products which are hazardous or harmful to society or to individuals, particularly minors, observe fairness in competition keeping in mind.
