E-Commerce

Doing Business in the Doing Business in the Information AgeInformation Age

What is e-commerce?What is e-commerce?

Includes:Includes:►Online business to business transactionsOnline business to business transactions►Online business to consumer Online business to consumer

transactionstransactions►Digital delivery of products and servicesDigital delivery of products and services►Online merchandisingOnline merchandising►Automated telephone transactions eg Automated telephone transactions eg

phone bankingphone banking►EFTPOS and other automated transfer EFTPOS and other automated transfer

systemssystems

ContractsContracts

►Law of contractsLaw of contracts►Issues for e-commerceIssues for e-commerce

Contracts - the basicsContracts - the basics

►OfferOffer►AcceptanceAcceptance► Intention to enter legal relationsIntention to enter legal relations►ConsiderationConsideration►Legal capacityLegal capacity►Genuine consentGenuine consent

OfferOffer

►Clear statement of termsClear statement of terms►Person who makes it is prepared to be Person who makes it is prepared to be

boundbound►Not just an “invitation to treat”Not just an “invitation to treat”

AcceptanceAcceptance

►Unqualified agreement to terms of offerUnqualified agreement to terms of offer►Express or inferred by conductExpress or inferred by conduct►Can’t be forced on unwilling personCan’t be forced on unwilling person

Time of creation of Time of creation of contractcontract

►Contract formed at time and place the Contract formed at time and place the acceptance is communicated to offeroracceptance is communicated to offeror

Termination orTermination orrevocation of offerrevocation of offer

►Can be revoked prior to acceptanceCan be revoked prior to acceptance►Revocation must be communicated to Revocation must be communicated to

offerorofferor

CertaintyCertainty

►Essential parts of contract must be clear Essential parts of contract must be clear and completeand complete

►Courts may imply a meaningCourts may imply a meaning►Uncertain term can be “severed”Uncertain term can be “severed”

ConsiderationConsideration

►Valuable considerationValuable consideration►Passing between parties to contractPassing between parties to contract►Can’t be unlawful or immoralCan’t be unlawful or immoral

IntentionIntention

►ExpressExpress► Inferred from the circumstancesInferred from the circumstances►Must be genuine consent - not obtained Must be genuine consent - not obtained

under duressunder duress

CapacityCapacity

►AgeAge► Intellectual capacityIntellectual capacity

Terms and conditionsTerms and conditions

►Express Express ► ImpliedImplied

FormalitiesFormalities

►Oral or writtenOral or written►Writing required under statute eg for sale of Writing required under statute eg for sale of

land land

Practical concernsPractical concernsfor e-commerce dealsfor e-commerce deals

► Identity and capacity of seller or buyerIdentity and capacity of seller or buyer►Authenticity of offer and acceptance (digital Authenticity of offer and acceptance (digital

signatures)signatures)► When and where contract formedWhen and where contract formed►Governing lawGoverning law►Terms and conditions (click through)Terms and conditions (click through)

Practical Concerns forPractical Concerns for e-commerce deals(2) e-commerce deals(2)

►Agreement on electronic payment Agreement on electronic payment systemsystem

►Security of information exchangesSecurity of information exchanges►Consequences on breachConsequences on breach►Storing electronic data to prevent Storing electronic data to prevent

alterationalteration

Electronic Transactions ActElectronic Transactions Act

►Federal law with mirror State laws (NSW, Federal law with mirror State laws (NSW, VIC, WA)VIC, WA)

►To remove obstacles to electronic To remove obstacles to electronic transactions, communications, signatures transactions, communications, signatures and record keepingand record keeping

►1 July 2001 applies to all federal laws unless 1 July 2001 applies to all federal laws unless exemptedexempted

Electronic Transactions Electronic Transactions Act(2)Act(2)

► Validates electronic transactionsValidates electronic transactions► Given in writing met electronically nowGiven in writing met electronically now

Govt can specify technology requirementsGovt can specify technology requirements Business requirement valid only with consent Business requirement valid only with consent

► Signatures-parties free to agree on methodSignatures-parties free to agree on method► Production and retention of documentsProduction and retention of documents

Method must ensure integrity and accessibilityMethod must ensure integrity and accessibility► Time and place of dispatch and receipt of Time and place of dispatch and receipt of

communicationscommunications

Electronic Transactions(3)Electronic Transactions(3)

Time of Time of dispatchdispatch is when it enters the is when it enters the first information system outside control of first information system outside control of sendersender

Time of Time of receiptreceipt is when it enters an is when it enters an information system designated by the information system designated by the addressee for receiving it.addressee for receiving it.

PlacePlace of dispatch and receipt taken to be of dispatch and receipt taken to be respective places of businessrespective places of business

Electronic Transactions (4)Electronic Transactions (4)

►Record keeping OK electronically if law Record keeping OK electronically if law says:says: Information to be recorded in writingInformation to be recorded in writing A written document to be keptA written document to be kept An electronic communication to be keptAn electronic communication to be kept

►Records must be kept identifying Records must be kept identifying origin, destination, time of sending origin, destination, time of sending and receipt of electronic and receipt of electronic communicationcommunication

Making a contractMaking a contract

►What terms do you want to include?What terms do you want to include?►What risks are you trying to avoid?What risks are you trying to avoid?►How will disputes about contract be dealt How will disputes about contract be dealt

with?with?►What is the governing law?What is the governing law?►Who will sign it?Who will sign it?

Setting up a Setting up a business entitybusiness entity

► Sole traderSole trader► PartnershipPartnership► CompanyCompany► TrustTrust

Sole traderSole trader

►All profitsAll profits►All lossesAll losses►All liabilitiesAll liabilities►Own name or choose business nameOwn name or choose business name►Register business nameRegister business name

PartnershipPartnership

►Carrying on a businessCarrying on a business►In commonIn common►With a view to profitWith a view to profit►Established by written agreement, oral Established by written agreement, oral

agreement or conductagreement or conduct

PartnershipPartnership

►Partnership Act 1892Partnership Act 1892 (NSW) (NSW)

►Corporations LawCorporations Law: Not more than 20 : Not more than 20 partners (except doctors, solicitors and partners (except doctors, solicitors and accountants)accountants)

PartnershipPartnership

►Profit sharingProfit sharing

► Joint and several liabilityJoint and several liability

►Fiduciary duties to partnersFiduciary duties to partners

CompaniesCompanies

►Corporations ActCorporations Act►Artificial legal entityArtificial legal entity►Liability of members can be limitedLiability of members can be limited

CompaniesCompanies

►ConstitutionConstitution

►Directors dutiesDirectors duties

►Limits on raising money from the Limits on raising money from the publicpublic

CompaniesCompanies

►The “corporate veil”The “corporate veil”

►Lifting the veil: fraud, agency, paying Lifting the veil: fraud, agency, paying more dividends than profit, incurring more dividends than profit, incurring debts when company insolventdebts when company insolvent

CompaniesCompanies

Form a company by:Form a company by:►Registering nameRegistering name►Lodge application with ASICLodge application with ASIC►Registered officeRegistered office►Names of directors and membersNames of directors and members

Which structure?Which structure?

►Where are you getting your money Where are you getting your money from?from?

►What is your risk/liability?What is your risk/liability?►Who will be in control?Who will be in control?►What are the ongoing costs?What are the ongoing costs?

What is a domain nameWhat is a domain name

►Human friendly form of an Internet Human friendly form of an Internet addressaddress

►Actual address is an Internet Protocol (IP) Actual address is an Internet Protocol (IP) numbernumber

►System globally administered by ICANNSystem globally administered by ICANN►Generic top level domains (gTLDs)Generic top level domains (gTLDs)

.com, .org, .net, .edu, .gov, .biz.com, .org, .net, .edu, .gov, .biz

►Country code top level domains (ccTLDs)Country code top level domains (ccTLDs)

Domain name Domain name registration in Australiaregistration in Australia

►open and closed domains open and closed domains ►open - .com, .org, .net, .info, .bizopen - .com, .org, .net, .info, .biz►closed - .gov, .edu, .mil, .museumclosed - .gov, .edu, .mil, .museum►auDA administers .com.au spaceauDA administers .com.au space►to register in .au space must be a to register in .au space must be a

commercial entity registered and commercial entity registered and trading in Australia..trading in Australia..

Domain Names (cont)Domain Names (cont)

►Licensed on a first come-first served basisLicensed on a first come-first served basis►Domain Names never meant to confer Domain Names never meant to confer

property rights.property rights.►Clash with Trade Marks.Clash with Trade Marks.►auDA has a dispute resolution scheme auDA has a dispute resolution scheme

which applies to all domain names which applies to all domain names registered or renewed from 1 August 2002.registered or renewed from 1 August 2002.

► ICANN has the UDRP for .com etc domains.ICANN has the UDRP for .com etc domains.

Domain Names and other Domain Names and other business identifiersbusiness identifiers

►Trade MarksTrade Marks►Personality RightsPersonality Rights►Place NamesPlace Names►Tension with domain namesTension with domain names

Reverse domain name hijackingReverse domain name hijacking cybersquattingcybersquatting