INTRODUCTION
Electronic commerce (e-commerce) is relatively new, emerging and constantly changing area of business management and information technology. “Electronic commerce is sharing business information, maintaining business relationships and conducting business transactions by means of telecommunications networks”
[1]. The buying and selling of products and services by businesses and consumers through an electronic medium, without using any paper documents. It is a type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet.
Electronic commerce draws on such technologies as electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce has allowed firms to establish a market presence, or to enhance an already larger market position, by allowing for a cheaper and more efficient distribution chain for their products or services.
With the advent of the Internet, the term e-commerce began to include:
A) Electronic trading of physical goods and of intangibles such as information.
B) All the steps involved in trade, such as on-line marketing, ordering payment and support for delivery.
C) The electronic provision of services such as after sales support or on-line legal advice.
D) Electronic support for collaboration between companies such as collaborative on-line design and engineering or virtual business consultancy teams.
Electronic data interchange (EDI):-
Electronic data interchange (EDI) is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from one trading partner to another trading partner without human intervention. It is more than mere e-mail; for instance, organizations might replace bills of lading and even cheques with appropriate EDI messages.
EDI and other similar technologies save a company money by providing an alternative to, or replacing, information flows that require a great deal of human interaction and materials such as paper documents, meetings, faxes, etc. One very important advantage of EDI over paper documents is the speed in which the trading partner receives and incorporates the information into their system thus greatly reducing cycle times.
DISTINCTION BETWEEN E-COMMERCE & E-BUSINESS:
Electronic commerce can be broadly defined as the exchange of merchandise (whether tangible or intangible) on a large scale between different countries using an electronic medium – namely the Internet whereas E-business is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners. [2]
Overview of “UNCITRAL MODEL LAW”
United Nations Commission on International Trade Law (UNCITRAL) Model Law on E-Commerce, the Government of India enacted the Information Technology Act in June 2000. The Act facilitates E-commerce in the country.
The United Nations General Assembly adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on E-Commerce through a Resolution[6] passed on 30 January 1997. The UNCITRAL Model Law on E-commerce was drafted in order to serve as a document that the various countries of the world could use and evaluate and amend their own laws and practices and by providing a common legal platform on which all countries could model their domestic legislations allow the countries of the world to move towards a uniform international law on E-commerce.
The main objective of UNCITRAL Model Law of E-commerce is to offer national legislators with a set of internationally acceptable rules as to how the legal obstacles in the communication of legal significant information through paperless messages, may be removed and how a more secure legal environment may be created for E-commerce.
Any legislation pertaining to E-commerce will be a futile exercise unless it fills up the lacunae in the existing law regarding the validity of online contracts. Recognizing this factor, the Model law has incorporated a provision in Article 11 relating to the formation and validity of contracts:
In the context of contract formation, unless otherwise agreed by the parties, an offer and the acceptance of an offer may be expressed by means of data messages. Where a data message is used in the formation of a contract that contract shall not be denied validity or enforceability on the sole ground that a data message was used for that purpose.[7]
Overview of the Indian law
The Information Technology Act, 2000 (“IT Act”) deals with contractual aspects of use of electronic records.
The validity of electronic transactions is established under the IT Act. The act establishes that an ecommerce transaction is legal if the offer and acceptance are made through a ‘reasonable’ mode. The objectives of the Information Technology Act, as outlined in the preamble, are to provide legal recognition for E-commerce transactions. The Act lays down procedures for networking operations and for civil wrongs and offences. The Indian Information Technology Act does not have any express provision regarding the validity or formation of online contracts.
For instance, a communication sent by an offeror to an offeree through indirect means, such as an email that passes multiple servers and spam mails, is not regarded as a reasonable mode under the IT act. Reasonable modes of acceptance in an ecommerce transaction are:
Direct mail from the offeree to the offeror.
Acceptance by conduct, which is pressing an ‘Accept’ button to an offer.
The IT act governs the revocation of an ecommerce offer and acceptance. An ecommerce transaction is said to be complete when the offeror receives acknowledgment of the receipt of the offer. Besides, an offeror has the liberty to terminate an offer, provided its acceptance has not been communicated by the offeree.
The Information Technology (Amended) Act, ITAA, was amended in 2008 to increase security of e-commerce transactions, with special provisions for legal recognition of digital signatures and electronic documents. Section 43A of ITAA holds ecommerce companies accountable for protection of personal data.
When an ecommerce company fails to protect personal data of its customers or is negligent in maintaining and implementing reasonable security practices, and if this results in wrongful loss of an online buyer, the laws are clear that its body corporate is wholly liable to pay the damages by means of monetary compensation.
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