The Future Of E-Commerse in Malaysia

E-commerce has evolved over the years from electronic funds transfers (EFT), comprising of online shopping and Internet banking, to electronic data interchange (EDI),  comprising companies' transfer of documents such as purchase orders or invoices. Recent studies foresee a massive growth of e-commerce in the Asian region especially in Malaysia, Singapore, Hong Kong, Korea and Australia; possibly challenging Europe and United States. 

E-commerce has its numerous advantages.  For instance, it overcomes geographical limitations to allow market expansion; decreases administrative, marketing and logistics costs; increases efficiency and provides a competitive environment to improve quality of service. However, there are some concerns that need to be addressed, particularly, privacy issues, legal issues such as copyright infringement, protection of patent rights, domain name disputes and preservation of trade secrets as well as issues pertaining to the validity and enforcement of agreements made online.

Governments and regulatory bodies throughout Asia have recognized the prospects of e-commerce and policies have been designed to amend the existing laws to deal with the emerging legal issues post by e-commerce transactions. To attract new online business opportunities and increase the competency of e-commerce in the Asian region, it is important for international businessmen and their legal advisors to be familiar with the e-commerce laws, policies and regulations throughout Asia.

To date, some of the legislations that have been conceded in Asia include: Australia"s Electronic Transactions Act 1999; Broadcasting Services Amendment (On-Line Services) Act 1999; Privacy (Private Sector) Bill and the Copyright Amendment (Digital Agenda) Bill 1999; South Korea's Electronic Transaction Basic Act; Singapore's Electronic Transaction Act 1998; Hong Kong Electronic Transactions Ordinance 2000; Japan's Draft Bill Concerning Electronic Signatures and Certification Authorities and the Law Partially Amending the Trade Mark Law; the Philippines' Electronic Commerce Act; and India's Information Technology Act 2000.

Malaysia was one of the pioneers amongst Asian countries to establish a new federal ministry, Ministry of Energy, Communications and Multimedia. The main function of this Ministry is to spearhead and promote the growth of information and communication technology (ICT) with the support of several agencies, including the Malaysian Institute of Microelectronic Systems (MIMOS) established in 1984, Multimedia Development Corporation (MDC) established in 1996, and Malaysian Communications and Multimedia Commission (or MCMC) established in 1998.

These agencies contribute to e-commerce by developing their own agenda.  For instance, the Multimedia Development Corporation has been working on a National Electronic Commerce Masterplan designed to facilitate the growth of e-commerce in Malaysia. The four key elements in this Masterplan are to boost confidence in on-line trading, prepare a regulatory framework, build a critical mass of Internet users and introduce an electronic payment system.

Amongst the legislations that have been passed in Malaysia are Malaysian Communications and Multimedia Commission Act 1998; Communications and Multimedia Act 1998; Digital Signature Act 1997; Computer Crimes Act 1997; and Telemedicine Act 1997. These legislations have been amended over the years in attempts to better address emerging e-commerce issues.

In lieu with the importance of e-commerce, the Malaysian Government has allocated RM 12.9 billion for the Ninth Malaysia Plan (2006-2010). On a broader perspective, Malaysia is participating in Asia Pacific Economic Cooperation's (APEC) to contribute in the efforts of introducing e-commerce laws, policies and regulations to facilitate e-commerce transactions internationally.

The future of e-commerce in Malaysia and the Asia region is bright. Governments and regulatory bodies are collaborating on a wider platform to ensure e-commerce law, policy and regulations are enforced to provide a guideline for traders to systematically utilize e-commerce and in tandem ensure protection for e-commerce users.

ECA 2006 - Legal Perspective on Online Shopping

The Electronic Commerse Act (ECA) 2006 (Act 658) provides for legal recognition of electronic messages in commercial transactions, the use of the electronic messages to fulfil legal requirements and to enable and facilitate commercial transactions through the use of electronic means and other related matters. The Act applies to any commercial transaction conducted through electronic means including commercial transactions by the Federal and State Governments. Nevertheless, the use of such means is not made mandatory. From the outlook of this Act, one can see that it is modelled to a great extent on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerse (Model Law)1996. Certain legal principles adopted including the principles of functional equivalence and technology neutrality.

With the passing of ECA 2006, e-commerce in Malaysia is not what or how it was before the existence of this statute. One fundamental task is fulfilled, namely, providing legal certainty as to the validity and legality of electronic transactions. IT users and the owners of information assets ought to get some assurance that their activities are lawful, their communications and transactions valid and their transactions are protected.

Information Security Standards under ECA 2006

It is note-worthy that ECA 2006 sets up certain information security standards to be applied on the e-commerce activities, among others, on legal recognition of electronic message, writing, and originality of document. The effect of this is indirectly making an information security best practice as an incentive for the legality of e-commerce itself.

Many legal concepts are being tied with the requirement of accessibility of the information or the information system. For example, for the purpose of granting legal recognition of an electronic message, section 6(2) of the Act expressly provides that:

‘Any information shall not be denied legal effect, validity or enforceability on the ground that the information is not contained in the electronic message that gives right to such legal effect, but is merely referred to in that electronic message, provided that the information being referred to is accessible to the person against whom the referred information might be used’ [emphasis added].

As a practical illustration, people who are parties to an e-transaction such as online auction are bound by the terms of contract stipulated in an electronic format such as those on the auction provider’s website, as long as that information (i.e. the online terms) are accessible and available for subsequent reference. This requirement of ‘accessibility’, it is submitted, indicates that the purported user of electronic message must make sure that there is in place and under his control a system from which an electronic message at issue can be accessed and provided. This is exactly what the principle of information availability is all about. Therefore in order to achieve the protection under these provisions, efforts must be made to ensure the information system is neither intruded nor compromised so that access not denied whenever it is required.

Similar information availability principle can be found in the provision on the originality of a document, albeit that it also imposes other measures on information integrity and confidentiality. Section 12(1) of ECA 2006 provides that:

‘Where any law requires any document to be in its original form, the requirement of the law is fulfilled by a document in the form of an electronic message, if –

(a)    There exists a reliable assurance as to the integrity of the information contained in the electronic message from the time it is first generated in its final form [emphasis added]; and

(b)    The electronic message is accessible and intelligible so as to be usable for subsequent reference [emphasis added].

Section 12(2) went on saying that the integrity of the information depends very much on whether the information has remained complete and unaltered; and the standard of reliability shall be assessed in the light of the purpose for which the document was generated and in the light of all other relevant circumstances.

Reading the whole provisions would enable us to suggest that the standard of information security required for ascertaining the originality of an electronic message will vary according to the context of every given communications and can also depend on the nature of harm and threats to any electronic message in any given information system. Thus, the more sensitive communication and information system is, the higher level of measures will be required to achieve a reliable assurance of an information integrity. This particular provision is arguably very central to the idea of setting information security standard for the e-commerce to work effectively.

To conclude, it is noted that ECA 2006 has paid a serious attention to information availability being a central prerequisite for e-commerce players in Malaysia. While the Act may not be a comprehensive ‘masterpiece’, it could arguably play vital role for the information security legal framework in Malaysia.

E-Commerse

 In traditional commerce, it is not easy to start a business. You must apply strategies that follow the rules and regulations imposed by the government. Electronic commerce can make almost any type of business in a very simple. What makes it easier? The reason is that the legal frameworks and enforcement mechanisms are not strong. 

Electronic commerce has been the occasion for the world to see the companies to global markets and shopping without leaving your home or office. Electronic commerce can provide opportunities to improve business processes, such as telephones, faxes and mobile communications in the past. However, like any new business tool for related matters and so does the risk of electronic commerce. It is important to understand the legal issues and potential risks to ensure a safe environment for trade with customers and other businesses. 

E-commerce site development, advertising, electronic transactions, cash transactions and thus involve many legal issues to take into account step by step. Before developing an e-commerce website and a domain registered trademark must be determined. There must be some protection of copyright on the site. Companies must ensure that it shows the terms and conditions and policies within its site. Security in the privacy of your data is always a major concern when a business online. Of rules and regulations for billboards in the placement of other known sites, second. It is very valuable when it comes to such complex issues to consult a lawyer specializing in issues in cyberspace. 

Most of the legal issues surrounding electronic commerce are not new. Lawyers should, however, be able to recognize the growing importance of legal issues in the online environment. In understanding the technical, contractual property, intellectual and regulatory issues that are more important in the new economy, the lawyer is well positioned to help customers proactively to minimize their exposure to legal liabilities . 
Before allocating resources for the initiative is whether the law allows a business process or an electronic transaction. For example, electronic communications and transactions (ECT) act to facilitate the conclusion of the majority of electronic transactions and communications, investing in such operations on an equal footing with traditional transactions or communications. 

The popular perception of the Internet as an unregulated media is not true. The laws of the world powers continue to apply when you surf the net the only difference is how they can apply. The colonization of cyberspace is both the technology and the possible. Indeed, technology is both a threat and a solution because it was on one side challenges the laws and regulations, infrastructure, yet it offers the solution to many of these threats, including security integrity and authenticity. The trend of online shopping is only to grow and become a larger part of our daily lives, so it’s important for consumers of e-wise to the potential threat of online shopping to make their experience more rewarding.

Online Shopping : Legal Issues??

You must apply strategies that follow the rules and regulations imposed by the government. Electronic commerce can make almost any type of business in a very simple. What makes it easier? The reason is that the legal frameworks and enforcement mechanisms are not strong.

Electronic commerce has been the occasion for the world to see the companies to global markets and shopping without leaving your home or office. Electronic commerce can provide opportunities to improve business processes, such as telephones, faxes and mobile communications in the past. However, like any new business tool for related matters and so does the risk of electronic commerce. It is important to understand the legal issues and potential risks to ensure a safe environment for trade with customers and other businesses.

E-commerce site development, advertising, electronic transactions, cash transactions and thus involve many legal issues to take into account step by step. Before developing an e-commerce website and a domain registered trademark must be determined. There must be some protection of copyright on the site. Companies must ensure that it shows the terms and conditions and policies within its site. Security in the privacy of your data is always a major concern when a business online. Of rules and regulations for billboards in the placement of other known sites, second. It is very valuable when it comes to such complex issues to consult a lawyer specializing in issues in cyberspace.

Most of the legal issues surrounding electronic commerse are not new. Lawyers should, however, be able to recognize the growing importance of legal issues in the online environment. In understanding the technical, contractual property, intellectual and regulatory issues that are more important in the new economy, the lawyer is well positioned to help customers proactively to minimize their exposure to legal liabilities .
Before allocating resources for the initiative is whether the law allows a business process or an electronic transaction. For example, electronic communications and transactions (ECT) act to facilitate the conclusion of the majority of electronic transactions and communications, investing in such operations on an equal footing with traditional transactions or communications.

The popular perception of the Internet as an unregulated media is not true. The laws of the world powers continue to apply when you surf the net the only difference is how they can apply. The colonization of cyberspace is both the technology and the possible. Indeed, technology is both a threat and a solution because it was on one side challenges thel aws and regulations, infrastructure, yet it offers the solution to many of these threats, including security integrity and authenticity. The trend of online shopping is only to grow and become a larger part of our daily lives, so it's important for consumers of e-wise to the potential threat of online shopping to make their experience more rewarding.

Online shopping growth to slow in next decade

By: Allison Linn

When Internet pioneer Amazon.com began doing business in 1995, eager analysts forecast a day when people would sit around all day in their pajamas, relying on their computers to order everything from dog food to groceries. Many consumers would see little reason to venture out to the shopping center and visit an actual store, analysts predicted.More than a decade later, online stores have become an established part of the retailing world but those early predictions appear unlikely to ever pan out.In the next five to 10 years, those who are already comfortable shopping online are likely to grow even more so, funneling more and more dollars to Web sites as they continue to increase the number and amount of products they buy online, experts say.That’s the good news for online merchants.

The bad news: The bulk of the people who haven’t already dabbled in online retailing are likely  to stay on the sidelines, analysts say. That’s going to make it harder for companies to continue the ultra-rapid pace of growth they experienced in the early, halcyon days of the online retailing boom.“Pretty much, most of the people who are ever going to be buying online are online,” said Patti Freeman Evans, senior retail analyst with Jupiter Research. “From the standpoint of behavior change and big shifts in adoption, it’s happened and it’s done.”

Jupiter is expecting online retailing to dip below double-digit percentage growth rates sometime by around 2010, and to plateau at some future date after that.At this point, analysts also expect that traditional, store-based retail will continue to dwarf online retailing. Forrester Research expects U.S. online sales to grow from $132 billion in 2006 to $271 billion in 2011 — but still to comprise just 9 percent of overall retail sales.Still, online retailers do have growth potential, especially if they work hard to improve their game in the coming years, analysts say. Most mainstream retailers maintain a Web presence, but many of those online shopping experiences are woefully inadequate, said Forrester analyst Sucharita Mulpuru.“I hardly think that retailers have done everything that they can do to make sure that they’re getting (what they can) out of the channel,” Mulpuru said. “There’s still a lot of mistakes being made, still a lot of basic oversights.”

Problems include Web sites that don’t include enough information about a product, such as detailed pictures, a size chart or accurate measurements. Many also aren’t good enough at maintaining up-to-date information about things like product availability, further alienating a loyal audience that might like to devote more of their shopping dollars to the Web, Mulpuru said.“They want to use the channel, but they can’t always use the channel as much as they would like because the information isn’t there,” she said.As more companies solve those problems in the coming years, she thinks there will be opportunities to boost sales, especially in areas such as home products, clothes and cosmetics.

Mulpuru also sees an opportunity to revive an online retailing trend that failed spectacularly in the early days of the dot-com boom — online grocery shopping. While groceries will remain a small part of the overall market, Mulpuru says such Web sites could do more to appeal to affluent, busy people, such as working moms.Retailers also have another incentive to improve their Web-based sales arm. Even those customers who opt not to purchase many items online are expected to increasingly turn to their computers to research items including cars, houses or even engagement rings.

As online retailing growth slows, Evans says stores will gain a competitive edge if they can get better at integrating their online and brick-and-mortar operations. Already, some stores are experimenting with things like ordering online for in-store pickup, or offering a limited assortment in stores combined with a wider online selection.A trip to the mall or a downtown shopping center is — and will remain — a form of entertainment for many Americans. Still, Freeman said that’s not the only thing keeping people from shopping online. Even now, many remain wary of turning over financial information to online retailers, or unsure of whether they will receive the product on time, in the right color or even in one piece.

“It’s more trust,” she said.That’s one reason she believes the outlook for online retailing would perk up considerably if new technology were developed that gave people the ability to much more easily mimic the real-life experience of, say, touching or trying on a product. Unfortunately for technology geeks, however, the ability to do something like conjure up a life-size hologram of a coffee table in your living room is, for now at least, not even on the horizon.

“Online is very convenient (and) it has a lot of offer,” she said, “but there’s certain things you’re going to want from a store.”

© 2010 msnbc.com Reprints

legal issues in online transaction

The Internet is now used extensively to supply and purchase of goods and services. However, despite online commerse having been conducted for a number of years, online commerce still poses some unique challenges.The purpose of this lens is to highlight some of the legal issues applicable to online transactions. Although the lens focuses on the legal regime in Australia, it does contain useful information for business owners both in and outside Australia. This lens contains general information only and is not intended to constitute legal advice. Each reader of this lens should obtain specific advice relevant to their individual circumstances.

Validity of electronic transactions 

In Australia, the Electronic Transactions Acts of the Commonwealth and States have been in place for a number of years. The aim of the legislation is to allow contractual dealings in transactions conducted in Australia. The legislation provides that any of the following may be undertaken by electronic means:
* giving information in writing;
* providing a handwritten signature;
* producing a document;
* recording of information; and
* retaining a document.


A recent review of the legislation which was conducted to determine whether Australia should enact the UN Convention on the Use of Electronic Communications in International Contracts has concluded that in acceding to the Convention (which applies to international transactions only), the existing Australian legislation should be amended so that the law relating to international and domestic transactions is the same.


Another issue which affects validity of a contract made online is authentication of the user, particularly in cases where automated systems are used to generate the contract. The proposed amendments to the Australian legislation will provide that a person cannot argue that an electronic signature is unreliable if the method used to identify the signatory is proven to have in fact identified the signatory and indicated the signatory's intention in relation to the information contained the electronic communication.

Jurisdiction 

Who has the authority to apply law over an online transaction if there is a problem and either the seller or customer wishes to enforce the contract?


The terms and conditions of the website and of the supply of goods and services via the website should specify the law to be applied if the terms and conditions need to be enforced. Generally, courts will accept a genuine election by the seller of the law that is to apply to the conditions. However, in the instances where an applicable law has not been specified, the courts will have to review the transaction and determine the law which is most closely related to the transaction. In some instances, legislation may specify which law will apply where none has been specified.

Enforceability of terms and conditions 

In the context of online transactions, the key issue for a seller is whether the seller's website terms and conditions are enforceable. The terms and conditions will be enforceable only if the user has accepted the terms and conditions. In the context of online transactions, this requires the seller to provide reasonable notice of the terms and conditions terms (ie, that the conditions to be drawn to the attention of the user) before the user accepts the terms and conditions or is deemed to have accepted them. The two most common ways of drawing a user's attention to terms and conditions and then having the user accept the terms and conditions are:
* a click and accept system - this is a system where the user must scroll through the terms and conditions before agreeing to them; and
* a browse and accept system - this is a system where the user is referred to terms and conditions by way of a hyperlink link, but is not forced to click on the link before agreeing to the terms.


Generally, the click and accept procedure has been preferred, as the process requires that the user reads (or at least scrolls through) the terms and conditions before proceeding.


To maximise a website operator's ability to enforce and rely upon terms and conditions:
* the user should be required to accept the terms before using the website, or performing the relevant act;
* the terms and conditions must be conspicuous and easy to access and read;
* users should be able to print the terms and conditions if they wish to do so; and
* the website should make it clear that by clicking on the "I accept" box, that the user is accepting and will be bound by, the terms and conditions.


Website operators should also regularly review the content of their terms and conditions, in order to ensure that they are accurate, comprehensive, comply with current law, and address all the risks associated with the current functions of the website.

Privacy and security 

While Internet shopping is very easy from a customer's perspective as it involves only a few clicks of a mouse and a limited amount of data entry by the customer, the back-end is more complex. In particular, fulfilment of an order has many steps and may involve many companies. To fulfil an order, it will be necessary to give one or more of the companies involved in the supply chain all or some of the personal and financial information provided by the buyer. As with any process involving a number of steps, a problem can occur at any one of the steps in the process. Customers are rightly concerned about the security of the personal and financial information provide to access sites or complete transactions. Therefore businesses have to take responsibility for the security of the information provided by their customers.


Australia and many other countries require persons who collect personal and financial information from other people (whether customers or not) to restrict the way in which information is collected, the use to which any information that is collected can be put, the disclosure of the information collected and the transmission of the personal information overseas. Although respecting consumer privacy rights is a legal requirement, it also represents good business practice. If customers trust a website and business then they are more likely to trade with it.


Websites should provide the customers with choices regarding the use of their personal information, and incorporate security procedures to limit access to customer information by unauthorised parties. Privacy policies and procedures should be clearly explained to customers.
Sellers should also ensure that their information systems and those of the contractors and the suppliers and contractors involved in their supply chain are able to keep information provided by customers secure as required by applicable laws.

Trade marks 

In very simple terms, a trademark is a badge of origin which signals a relationship between a trader (who can be an individual, company, partnership or other business structure) and particular goods or services in the course of trade. The owner of a registered trade mark has the exclusive right to use the trade mark and to license others to use the trade mark.


If a business attempts to use the same or substantially similar trade mark as the trade markowned by another business for the same goods or services as the trade mark owner, the registered trade mark will be infringed and the trade mark owner can restrain the infringement and recover compensation if the owner has suffered damage (eg, loss sales or damage to reputation). However, in the context of the Internet it is technologically simple and cheap for a business to use the trade marks of another business without being discovered. In addition to using trade marks as a domain name(or as part of a domain name), trade marks can be used in metatags and other forms of indexing. This can result in the diversion of business from thetrade mark owner to the other business without the trade mark owner having any knowledge of the conduct of the other business. In some instances a visitor to a website may be able to work out that the have not arrived at a genuine website but this is not always the case. The use of trade marks by businesses other than the owner of the trade mark or a licensee of the owner, can have a significant impact on the trade mark owner in terms of loss of business and damage to reputation, especially where the other business is providing goods of a lesser quality or services to a lesser standard.

Copyright 

Copyright protects the expression of an idea in a material form. It gives the owner the exclusive right to copy, distribute and otherwise commercialise material. The owner is entitled to license others to , distribute and otherwise commercialise the owner's material.


A work published on the internet can be transmitted, downloaded and digitally manipulated anywhere without the copyright owner's permission. Consequently, a copyright owner must consider the consequences of displaying copyright material online. The fact that material is available online will imply a permission to access the material but it does not of itself imply a permission to do any other acts with the material. Therefore, when displaying material online, the operator of a website should ensure that the operator is entitled to use any of the material posted on the operator's website. For example:
* The operator should ensure that the suppliers of third party products it is selling have allowed the operator to post photographs or marketing material provided by the third party supplier online.
* If the operator of a website is allowing its customers to download material that it does not own, the operator should ensure that it has the permission of the copyright owner to allow users of its website to download material.


The website terms and conditions should include provisions dealing with use of copyright material and the consequences of unauthorised use by a user of the website.

Legal Issues Involved in E-Commerce

Article by: M Ali Nasir

The power of the Web to reach the world carries with it a variety of legal issues, often related to intellectual property concerns, copyright, trademark, privacy, etc., particularly in the context of doing business on the Internet. Authorities seeking to apply their laws in traditional ways or to expand legal control over international links face many challenges due to the global nature of the Internet. This paper provides an overview of some of the legal issues and related problems in e-commerce.

Introduction

Approximately 100 countries now enjoy Internet access, and a recent survey reported that there are approximately 20 million Internet hosts worldwide. The number of Internet users is currently estimated to be in the region of 100 million people.

The exponential growth of the Internet and online activity raise a number of new regulatory issues and legal questions. How does copyright apply to digital content? How can national laws apply to activities in cyberspace? Can privacy and data protection exist on the Web? Can electronic commerce really be secure? Should governments tax cyber trade? Can cyberspace be regulated by one, or by many authorities? In seeking to apply the law to the Internet, problems arise owing to the fact that most laws largely apply to the pre-cyberspace world.

In the modern era of electronic technology, many people want to get their work done quickly with little effort. At times, people forget or do not consider the legal and ethical values of their procedures. In traditional commerce, it's not easy to start a business. You must implement strategies that follow rules and regulations enforced by government. Electronic commerce makes it possible to do almost any kind of business in a very simple way. What makes it simple? The reason is that existing legal frameworks and enforcement mechanisms are not strong.

E-commerce presents a world of opportunity for doing businesses, reaching global markets and purchasing without leaving the home or office. E-commerce can provide opportunities to improve business processes, just as phones, faxes and mobile communications have in the past. However, just as any new business tool has associated issues and risks so does e-commerce. It's important to understand the legal issues and potential risks to ensure a safe, secure environment for trading with customers and other businesses.

The issue of law on the Internet is a complex one. Between the two all-or-nothing extremes lies a broad spectrum of possibilities [2]. Many people revel in the freedom to express themselves and the freedom from prohibitions such as zoning restrictions that the Internet apparently affords. With no law at all, however, the Internet would be no place to conduct business or pleasure. Laws give people certainties about their rights and responsibilities: they make life more predictable. "Without predictability, business will not be able to act efficiently, or price services effectively," said Thomas Vartanian, a Washington, D.C.-based lawyer.

Electronic Transaction

Some federal, state and territory governments encourage the adoption of electronic commerce by enacting and enabling legalisation. In Australia many bills and acts have been passed to resolve legal issues and make electronic transaction more authenticated, such as the Electronic Transaction Act (ETA). ETA enables contractual dealings, such as offers, acceptances and invitations, to be conducted electronically, and also allows people to use an electronic signature to satisfy any legal requirement. Even the electronic transfer of land is covered, "Importantly, the Act is similar in all material respects to those operating both in other States and at the Federal level, so people can be confident that electronic transactions carry the same legal weight nationwide," states Jim McGinty, Attorney General for Western Australia.

Moreover the bill is expected to boost electronic commerce as an effective tool for businesses to increase their efficiency. This may reduce administrative duties, storage and operational costs for businesses. In McGinty's words," This is why it is crucial that we ensure the legal infrastructure around cyberspace is beyond doubt".

New legislation brings some questions such as, For how long will these acts be valid? What are the boundaries of these acts? Who should be forced to follow the rules? Most of these questions are unanswerable today.

Global companies have the responsibility to deal with some of the legal issues such as how to form contracts, abide by consumer protection laws, create privacy policies and protect databases. "As of now, there is no comprehensive set of laws or regulations that exist for international electronic commerce," says David D. Barr. He added that it is difficult to establish uniform worldwide laws for e-commerce, but some building block legislation within individual countries is necessary.

By applying laws and sketching boundaries around the borderless Internet do we negate the term "freedom of information"? How will legal structure affect international transactions on the Internet? Will it restrict the potential growth of the Internet prematurely? Rapid changes in technology do not allow enforcement of specific laws in cyberspace. For now many organizations are promoting global coordination of legal structures.

Privacy & Security

While shopping on the Internet, most people typically do not think about what is happening in the background. Web shopping is generally very easy. We click on a related site, go into that site, buy the required merchandise by adding it to our cart, enter our credit card details and then expect delivery within a couple of days. This entire process looks very simple but a developer or businessmen knows exactly how many hurdles need to be jumped to complete the order. Customer information has to pass through several hands so security and privacy of the information are a major concern. The safety and security of a customer's personal information lies within the hands of the business. Therefore businesses have to give the customer first their guarantee, and second peace of mind, that the information passed over is of no risk to any invading eyes.

In traditional and online trading environments, consumers are entitled to have their privacy respected. Websites should provide the customers with choices regarding the use of their personal information, and incorporate security procedures to limit access to customer information by unauthorised parties. Privacy policies and procedures should be clearly explained to customers. Although respecting consumer privacy rights is a legal requirement, it also represents good business practice. If customers trust a site and business then they are more likely to trade with it.

Many people are not willing to disclose their personal information on the Web. It is up to individuals to decide how much personal information they are willing to disclose and how it might be used. Interestingly, one survey found that many people who disclose personal information do so in hope of financial benefit, such as winning a sweepstakes.

Copyright & Trademark

Many attempts have been made to address the issues related to copyrights on digital content. E-commerce has a tremendous impact on copyright and related issues, and the scope of copyrights is affecting how e-commerce evolves. It is essential that legal rules are set and applied appropriately to ensure that digital technology does not undermine the basic doctrine of copyright and related rights. From one perspective, the Internet has been described as "the world's biggest copy machine". Older technologies such as photocopying, recording and taping are bound by rules and regulations regarding quantity, content, quality and time constraints. In contrast, on the Internet one person can send millions of copies all over the world.

Generally, a trademark can be owned by an individual, a company, or any sort of legal entity. When someone else tries to use that trademark (e.g., your distinctive name or logo) without authorisation, it could be considered an illegal dilution of the distinctive trademark. If someone uses a trademark in such a way as to dilute the distinctive quality of the mark or trade on the owner's reputation, the trademark owner may seek damages.

Some Web-based applications have enabled large-scale exploitation of music samples and audio formats. Software that is available free of cost on the Net allows the transfer of songs and videos without the authorization of rights holders (e.g. Napster, MP3 Providers). Moreover, CD burners and portable MP3 players allow copyright violations to occur rather easily.

A number of important recent developments have occurred in the field of copyright and related issues that have far-reaching implications for the industry, and are being addressed in legislatures, judiciaries and international forums. During the last couple of years, new laws have passed in some countries to ensure effective protection and enforcement of rights in the digital era. At the same time, copyright industries are also adapting their business methods and uses of technology to exploit digital opportunities, while guarding against new risks.

A Pew Research Center survey, conducted among roughly 2,500 Americans through March and May 2003, indicates that 35 million US adults download music files online and about 26 million share files online. The downloading population has grown by approximately 5 million users since February of 2001 "Ultimately, the music industry's war on illegal downloading can never be won" say Charles Shoniregun .

Online Terms, Conditions, Policies and Laws

At the moment, most online privacy policies are produced by private businesses for individual companies. Governments are developing legislation to support and strengthen the privacy protection measures of many businesses. These initiatives are aimed at regulating the storage, use and disclosure by businesses of personal information.

Privacy legislation is designed to protect a person's personal information. The privacy laws of their host country affect overseas companies. Every organisation should be very careful while applying terms and conditions for the electronic transaction for Internet users. Privacy and security policies not only reflect the organizations practice but also the rules and regulations for doing business with the company. Major issues regarding the legalization of electronic transactions include the following.

— Ensure proper online contracts.

— Record retention obligations.

— Original documentation, in terms of TAX and VAT requirements.

— Import/export regulations.

— Exchange control regulation.

— Foreign data protection law.

Legislation Dilemma

Electronic transactions separate e-business from traditional types of businesses. When a transaction takes place, Who has jurisdiction? Who has the authority to apply law over the transaction?

For example, if you buy a laptop in your local computer store, you know your legal rights. If the computer does not work when you take it home, and the store refuses to settle up, then you can probably take the dispute to your local small claims court. But if you buy the same computer online, from a vendor on the other side of the world, perhaps through a dealer based in yet a third country, then your rights are a lot less clear. Which country's protection laws apply: yours, those in the vendor's home country, or those of the intermediary? Without knowing which particular set of laws apply, it's impossible to know whom to sue. "Small claims courts don't work in cyberspace," according to Ron Presser of the American Bar Association.

A little legislation can go a long way toward helping parties to establish better boundaries to work within. When a transaction that takes place between two different parties located in two different countries goes wrong then a number of complex questions arise.

This is not the first time the question of extra-territorial jurisdiction over Web content has been raised. In November of last year, Felix Somm, ex-manager of CompuServe Deutschland, was cleared on appeal of pornography charges brought against him in Germany after newsgroups carried on parent company CompuServe's US servers were found to contain pornographic material. The judge determined that it was technically impossible for Somm to close the illegal newsgroups in question . Following in the footsteps of the CompuServe's case, Yahoo is arguing that it would be technically impossible to block only French citizens from access to its online auctions if should the auctions contain objectionable items.

E-Business and Legal Issues

The technological basis of e-commerce is basically Web client/server middleware, or what is called three-tier architectures. The client tier is the Web browser involving some type of form processing. The middle tier is the Web server, often with transaction processing. The Web server in turn links to the third tier, a database processing the order information. Some of the issues are strictly Internet-related, such as domain names and trademarks, linking and framing, clickware (and shrinkware), and metatag use. Others are traditional issues applied to the Internet, such as copyright, contracts, consumer protection, privacy, taxation, regulated industries and jurisdiction.

E-commerce site development, its advertising, electronic transaction, money transactions and such involve many legal issues, which need to be taken into account step by step. Before developing an e-commerce site a registered domain and a registered trademark should be established. There must be some copyright protection on the site. The business must ensure that it displays the terms and condition/policies within its site. Security involving the privacy of a user's data is always one of the main concerns while doing business online. Defining rules and regulations for the advertisement of the site by placing banners on other known sites is another. It is of great value when dealing with such complex issues to consult an attorney who specializes in the issues of cyberspace.

Conclusion

Most of the legal issues surrounding electronic commerce are not new. Lawyers should, however, be able to recognise the increased significance of certain legal issues to the online environment. In understanding the technical, contractual, intellectual property and regulatory issues, which have enhanced importance in the new economy, the lawyer is well placed to assist clients in pro-actively minimising their exposure to legal liability.

Before allocating resources to the initiative it must be determined whether it is legally possible to perform the business process or transaction electronically. For example, the Electronic Communication and Transaction (ECT) Act facilitates the conclusion of most transactions and communications electronically by placing such transactions on an equal footing with traditional transactions or communications.

The popular view of the Internet as an unregulated medium is not true. The laws of the world's jurisdiction still apply when you surf the Net: the only difference is that the way they might apply. The colonisation of cyberspace is both technology and opportunity driven. Indeed technology is at the same time both a threat as well as a solution, because on the one hand it challenges existing legal and regulatory infrastructures and yet offers the solution to many of those threats, including security, integrity and authenticity.