E-Commerce

E-Commerce

E-Commerce refers to the marketing, sale and after-sale support of goods and services via electronic means, in particular, the internet.

Many businesses use E-Commerce for direct selling of goods or services online.  In some cases, such as with software or music, the actual sale and delivery can take place online. Generally, however, goods will require physical delivery

The internet can be used for marketing and pre-sales activity.  The most basic version of this is an online version of promotional materials on a website.  Other options include e-mail campaigns, and online advertising to attract visitors to the business’ website.

The internet can be used to automate aspects of customer support and reduce routine service calls by placing Frequently Asked Questions and putting technical information online.


E-Commerce Site

The E-Commerce site should be designed to make it easy and enjoyable to use.  Classically, there is a shop front, shopping cart, and payment software.  The shop front is the interface and incorporates the online catalogue. The shopping cart facilitates easy selection and payment for products.

The checkout should be clearly signposted so that customers can proceed to pay for goods.  The system should process the orders speedily and provide a summary, including transportation and dispatch requirements.  It should generate a receipt and send a confirmation e-mail.

Payment software will usually involve payment via debit or credit card.  There are three possibilities namely opening a merchant account, use of a payment processing  company or set up of an on-line shop.

E-Marketplaces are online exchanges which enable suppliers, buyers and intermediaries to come together and offer services to each other.  Buyers and sellers work interactively with bids and offers.  When a deal is made a match is made between the buyer and seller on variables such as price, volume and delivery costs.


Practicalities of E-Commerce

A website specification should identify what the site is trying to achieve and how its various components will contribute to this.  A domain name is helpful in branding a business.  It is possible to verify whether domain names have been taken on the Nominet website.  If a domain name is purchased, a business can either host its own website or have an internet service provider (ISP) host it.

It is possible to purchase certain packages such as shop packages or alternatively build software from scratch.  Shop packages permit configuration and provide the look and feel of the shop.

Popular methods of promotion of websites include e-mail advertising campaigns, web adverts and the use of digital coupons offering discounts.  Web tools provided by the search engines can help search engine performance and website rankings. Search engines such as Google, Yahoo etc. provide tips, advice, and tools for improving website searchability.   It is useful to take advantage of search engines by ensuring they pick up all the key terms that customers will use in relation to the matter or business concerned.


Regulations and On-line selling

It is necessary to consider the legal and regulatory requirements applicable to particular businesses in planning an online shop.  Certain businesses will have specific additional requirements dictated by regulations affecting it.  For example, financial services are subject to specific additional requirements.

There are general regulations in respect of an online shop, details of which are set out below. It

  •  Data Protection legislation makes requirements in relation to holding and processing personal information
  • The Distance Selling (now updated) Regulations require specific information to be given to customers before they place an order.  Confirmation of sale must be sent to the buyer and there is also provision for a cooling off period in which the contract can be cancelled.
  • The Electronic Commerce Regulations specify the information that must be shared with online customers.  It regulates the advertising and promotion of goods and services online.  It is necessary that the terms and conditions of a contract are sent to the consumer in a printable form.
  • Legislation requires that a company’s website show the following: –
  • full name of the company
  • registered office
  • registered number
  • place of registration
  • if the company is being wound up
  • VAT number
  • membership of any trade or professional organisation

EU Measures Supporting E-Commerce

The arrival and rapid expansion of the internet raised many legal issues including questions as to the enforceability of online agreements, which country’s laws might apply and the extent of consumer protection rights.  The lack of face to face or “real-time” contact, the risk of fraud and the practical difficulties in pursuing claims in foreign countries posed further risks and uncertainty in e-commerce.

The European Union passed a number of laws in the late 1990s (including most of those mentioned below) which strongly support E-Commerce and protect consumers. These laws increased certainty and uniformity and afforded confidence in e-commerce dealing throughout the EU.

Many other EU trade laws support E-Commerce generally, such as the requirement that consumers can only be sued in their home state, common consumer protection laws, common misleading advertising and unfair consumer practices laws and common product standards.


E-Commerce Directive and E-Commerce Act

The European Union Directive on Electronic Commerce is designed to support and facilitate contracts made on-line. The Directive confirms that contracts can be made as freely over the internet, email and other electronic means as they can by personal or written communication.  These uniform rules assist and underpin e-commerce in the EU. The Directive does not apply to property contracts, wills, trusts, family law, certain guarantees

The E-Commerce Directive provides that documents are not invalid simply because they are stored electronically.  Where any legal requirement requires information to be given in writing, an electronic form is deemed to suffice.  Where by law information is required to be retained it may be retained in the electronic form. All electronic contracts are subject to existing consumer law which applies equally to consumer transactions whether conducted electronically or non-electronically

The E-Commerce Act, which gave effect to the E-Commerce Directive in Ireland, confirms that contracts made over the internet are legally binding in the same way as contracts made in writing or face to face.  It allows legal documents to be stored electronically.  Where there is a legal requirement that information must be given in writing, an electronic form is deemed to suffice.


Internet Contracts and Business

Contracts made over the internet are legally binding in the same way as contracts made in writing or face to face.   The usual laws of contract apply to the making of the “on-line” contract, subject to certain additional requirements on the part of the supplier.

The European Union E-Commerce Directive is designed to support and facilitate contracts made online. The Directive confirms that contracts can be made as freely over the internet, email and other electronic means as they can by personal or written communication.  It provides uniform rules which assist and underpin e-commerce in the EU.

The Directive does not apply to property contracts, wills, trusts, family law, certain guarantees


Authenticating Contract

Under the Irish and English, and many other common law legal systems signature is the primary means of authenticating consent and agreement to the terms of a legally significant document. Certain type of contracts must be signed or must be proved by a document which is signed in order to be enforceable.

E-Commerce legislation allows for an electronic signature, both formal and informal. Where data is attached to or associated with other data, in a manner which is intended as a means of authenticating the originator, such as a name or signature at the end of an e-mail which originates from that person, it is presumed to be sufficient to authenticate it.

An electronic signature is data in an electronic form which is attached to or associated with other electronic data and is intended to serve as a method of authentication.  Where a name is specifically typed into the body of an email it can potentially act as equivalent to a signature.

The key issue is whether it is intended to authenticate the communication as that of the sender.  In most circumstances, this will satisfy legal requirements for signature or authentication.  An automatically generated signature may not be sufficient to authenticate a document.

An e-mail address in itself may be a signature in the sense in that it serves to authenticate the originator. It has, potentially the same effect as a signature to a letter. The intention to authenticate and associate the document with the person concerned is the critical requirement.

The automatic inclusion of an e-mail address or name by the IT system was held not sufficient as a signature in relation to legislation which required a guarantee to be signed and in writing.


Electronic Form Legally Valid

The E-Commerce Directive provides that documents are legally valid and may be received in evidence, where are stored and reproduced electronically.  Where by law information is required to be retained it may be retained in the electronic form.

Where any legal requirement requires information to be given in writing, an electronic form is deemed to suffice. All electronic contracts are subject to existing consumer law which applies equally to consumer transactions whether conducted electronically or by other means.

The EU Directive on Electronic Signatures in 1999 contemplated a system of advanced signatures would be put in place to act as higher-level authentication.  However, this has only occurred to a limited extent. The Directive contemplated certification service providers who would issue certificates to confirm the identity of a person or public body.

In practice, advanced electronic signatures have been slow to take off.  Various sectors such as the banking sector have found other means of authentication, such as passwords etc.


Privacy and Data Protection

The holding and use of personal information in electronic form or in an organised filing system is regulated by the Data Protection Act and the General Data Protection Regulation.  “Personal information” means information about living, identified or identifiable individuals.

The principal purpose of the legislation is to protect privacy. The legislation has implications in relation to the retention and use of such information for marketing and other purposes.

Personal information must be acquired fairly, freely and lawfully. Individuals should be told and specifically consent to what will be done with their personal information.  Personal information must not be used for another purpose that would not be expected. For example, if a person is told and agrees by a seller that his contact details will be used for direct marketing of a company’s own products and services, it must not pass this information on to another entity.


Unsolicited marketing

The EU has made a Directive to tackle so-called “spam” or unsolicited mail. The rules cover marketing by electronic means such as email, telephone, fax, voicemail and similar automatic means. Direct marketing to individuals without prior consent, is prohibited.  Direct marketing to businesses is prohibited if the recipient has “opted out” by communicating its objection or registering its objection in the National Directory Database.

The E-Commerce regulations protect against unsolicited (spam) mail. Unsolicited mail must be clearly identified as such.  Where a recipient consents to the receipt of mail, he retains the right to opt out.  The opt-out must be set out in a form that is easily accessible to customers and to potential customers.  It must be set out on the website, at every point at which data is captured such as login and registration.

Where a service provider sends an e-mail, the commercial nature and identity of the sender must be identifiable.  Details must be included of how the recipient can register his choice (in particular to opt out) regarding further direct mail.

It is an offence to send an e-mail for the purpose of direct marketing which disguises or conceals the identity of the sender or is made without a valid address to which the recipient may opt out.  The nature of the communication must be identifiable on the subject line.


Information Society Services

The E-Commerce Directive was designed to contribute to the proper functioning of the internal EU market by ensuring free movement of “information society services” between member states.  The purpose was to harmonise EU laws in relation to the establishment of providers of information society services, commercial communications, electronic contracts, the liability of intermediaries, codes of conduct, out of court dispute procedures and litigation.

The Directive covers online activity such as online information, advertising, online shopping and online contracting.  It does not affect legal requirements in member states such as safety standards, labelling, liability for goods and requirements relating to delivery of transport of goods.  The Directive does not apply to the activities of notaries, lawyers, gamblers or bookies.


Definition of Information Society Services

“Information society services” are economic activities which take place online.  The sale of goods online is covered by the Directive but the delivery of the goods and provision of off-line services will not be covered. The use of email by itself would not constitute an “information society service”.

“Information society services” are services normally provided for remuneration at a distance by electronic means at the individual request of the recipient of the services.  “At a distance” implies that the services provider and the customer are not simultaneously present at any stage. “Electronic” means that the service is sent initially and received at its destination by electronic equipment for the processing and storage of data.  This does not cover radio or broadcasting services.

Services such as ATM, car parking networks, off-line services, distribution of CDs, voice telephony services, telephone conversations with a service provider (e.g. a lawyer) are deemed not to be by electronic means.   Television and radio broadcasting (e.g. TV marketing) will not generally be “information society services” because they are not provided at individual request. By contrast, services which are transmitted point to point such as video on demand and the provision of commercial communications by email, are information society services.


Home State Compliance Sufficient for Most Purposes

Each member state of the European Union must ensure that information society services provided by a service provider within its state, comply with its own internal laws relating to the services.  This covers requirements laid down in the member state applicable to information society services. These are the requirements that a service provider has to comply with in respect of the taking up of the activity of an information society service.

These requirements include such matters such as qualifications, authorisation, notification, requirements concerning behaviour, requirements regarding quality and contents of the service including those applicable to advertising and contracts and requirements concerning the liability of the service provider.  They do not cover requirements applicable to the standards of the goods, requirements applicable to the delivery of goods or requirements applicable to services not provided by electronic means.

Member states cannot impose an obligation on a service provider to apply for authorisation in the recipient state before commencing to provide services.


Limited Permissible Regulation

Member states may only regulate information society services based in another member state in limited circumstances only. The regulation must be necessary for limited public policy reasons only such as prevention, investigation, detention of criminal offences, protection of public health, security or protection of consumers including investors.

Any such measures or restrictions must be strictly limited to what is necessary to protect the above objectives and the EU Commission must also be notified in order to ensure the provision is not abused.  The EU is entitled to examine the compatibility of the restriction within a short time frame with a view to ascertaining whether it is justified.


References and Sources

Legislation

Electronic Commerce Act 2000

Electronic Commerce Act, 2000 (Commencement) Order 2000, S.I. No. 293 of 2000

European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004,

European Communities (Distance Marketing of Consumer Financial Services) (Amendment)

Regulations 2005, S.I. No. 63 of 2005

European Communities (Protection of Consumers in Respect of Contracts Made by Means of

Distance Communication) (Amendment) Regulations 2005, S.I. No. 71 of 2005

European Communities (Protection of Consumers in Respect of Contracts made by Means of

Distance Communication) (Amendment) Regulations 2010, S.I. No. 370 of 2010

Electronic Commerce (Certification Service Providers Supervision Scheme) Regulations 2010, S.I. No. 233 of 2010

European Communities (Electronic Communications Networks and Services) (Privacy and Electronic Communications) Regulations 2011, S.I. No. 336 of 2011

European Union (Consumer Information, Cancellation and Other Rights) Regulations 2013, S.I. No. 484 of 2013

European Union (Consumer Information, Cancellation and Other Rights) (Amendment)

Regulations 2014, S.I. No. 250 of 2014

European Union (Consumer Information, Cancellation and Other Rights) (Amendment)

Regulations 2016, S.I. No. 336 of 2016

E

U Legislation

Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’)

Regulation (EU) No 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR)

Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR)

Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC

Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European

Regulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004

Irish Books

EU Data Protection Law Kelleher & Murray           2018

Information & Technology Communications Law Kennedy & Murphy         2017

Social Networking           Lambert               2014

Law Society PPG Hyland Technology & Intellectual Property Law                 2008

Information Technology Law in Ireland   2 Kelleher & Murray       2007

Data Protection Law in Ireland: Sources & Issues 2 Lambert 2016

Privacy & Data Protection Law in Ireland                Kelleher               2015

Data Protection: A Practical Guide to Irish & EU Law         Carey    2010

Practical Guide to Data Protection Law in Ireland A&L Goodbody 2003

Contract Law in an Electronic Age Haigh 2001

Contract law McDermott 2nd ed 2017

EU and UK Texts

Cover of Getting the Deal Through: e-Commerce 2018 Robert Bond 2017

EU Regulation of e-Commerce: A Commentary Edited by: Arno R. Lodder, Andrew D. Murray 2017

Butterworths E-Commerce and IT Law Handbook 6th ed Jeremy Phillips 2012

Internet & E-commerce Law, Business and Policy Internet & E-commerce Law, Business and Policy 2nd ed Brian Fitzgerald, Anne Fitzgerald, Gaye Middleton, Yee Fen Lim, Timothy B Beale 2011

E-Commerce and Convergence: A Guide to the Law of Digital Media E-Commerce and Convergence: 4th ed Edited by: Mike Butler 2011

Blackstone’s Statutes on IT and e-commerce Blackstone’s Statutes on IT and e-commerce 4th ed Edited by: Steve Hedley, Tanya Aplin 2008

E-Commerce Law E-Commerce Law Paul Todd 2005

A Practical Guide to E-Commerce and Internet Law 2nd ed Osborne Clarke 2005