E-Commerce

Doing Business in the Information Age

What is e-commerce? Includes: Online business to business transactions Online business to consumer transactions Digital delivery of products and services Online merchandising Automated telephone transactions eg phone banking EFTPOS and other automated transfer systems

Contracts Law of contracts Issues for e-commerce

Contracts - the basics Offer Acceptance Intention to enter legal relations Consideration Legal capacity Genuine consent

Offer Clear statement of terms Person who makes it is prepared to be bound Not just an “invitation to treat”

Acceptance Unqualified agreement to terms of offer Express or inferred by conduct Can’t be forced on unwilling person

Time of creation of contract Contract formed at time and place the acceptance is communicated to offeror

Termination or revocation of offer Can be revoked prior to acceptance Revocation must be communicated to offeror

Certainty Essential parts of contract must be clear and complete Courts may imply a meaning Uncertain term can be “severed”

Consideration Valuable consideration Passing between parties to contract Can’t be unlawful or immoral

Intention Express Inferred from the circumstances Must be genuine consent - not obtained under duress

Capacity Age Intellectual capacity

Terms and conditions Express Implied

Formalities Oral or written Writing required under statute eg for sale of land

Practical concerns for e-commerce deals 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)

Practical Concerns for e-commerce deals(2) Agreement on electronic payment system Security of information exchanges Consequences on breach Storing electronic data to prevent alteration

Electronic Transactions Act Federal law with mirror State laws (NSW, VIC, WA) To remove obstacles to electronic transactions, communications, signatures and record keeping 1 July 2001 applies to all federal laws unless exempted

Electronic Transactions Act(2) Validates electronic transactions Given in writing met electronically now Govt can specify technology requirements Business requirement valid only with consent Signatures-parties free to agree on method Production and retention of documents Method must ensure integrity and accessibility Time and place of dispatch and receipt of communications

Electronic Transactions(3) Time of dispatch is when it enters the first information system outside control of sender Time of receipt is when it enters an information system designated by the addressee for receiving it. Place of dispatch and receipt taken to be respective places of business

Electronic Transactions (4) Record keeping OK electronically if law says: Information to be recorded in writing A written document to be kept An electronic communication to be kept Records must be kept identifying origin, destination, time of sending and receipt of electronic communication

Making a contract What terms do you want to include? What risks are you trying to avoid? How will disputes about contract be dealt with? What is the governing law? Who will sign it?

Setting up a business entity Sole trader Partnership Company Trust

Sole trader All profits All losses All liabilities Own name or choose business name Register business name

Partnership Carrying on a business In common With a view to profit Established by written agreement, oral agreement or conduct

Partnership Partnership Act 1892 (NSW) Corporations Law : Not more than 20 partners (except doctors, solicitors and accountants)

Partnership Profit sharing Joint and several liability Fiduciary duties to partners

Companies Corporations Act Artificial legal entity Liability of members can be limited

Companies Constitution Directors duties Limits on raising money from the public

Companies The “corporate veil” Lifting the veil: fraud, agency, paying more dividends than profit, incurring debts when company insolvent

Companies Form a company by: Registering name Lodge application with ASIC Registered office Names of directors and members

Which structure? Where are you getting your money from? What is your risk/liability? Who will be in control? What are the ongoing costs?

What is a domain name Human friendly form of an Internet address Actual address is an Internet Protocol (IP) number System globally administered by ICANN Generic top level domains (gTLDs) .com, .org, .net, .edu, .gov, .biz Country code top level domains (ccTLDs)

Domain name registration in Australia open and closed domains open - .com, .org, .net, .info, .biz closed - .gov, .edu, .mil, .museum auDA administers .com.au space to register in .au space must be a commercial entity registered and trading in Australia..

Domain Names (cont) Licensed on a first come-first served basis Domain Names never meant to confer property rights. Clash with Trade Marks. auDA has a dispute resolution scheme which applies to all domain names registered or renewed from 1 August 2002. ICANN has the UDRP for .com etc domains.

Domain Names and other business identifiers Trade Marks Personality Rights Place Names Tension with domain names Reverse domain name hijacking cybersquatting

E-Commerce

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