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Thursday, July 16, 2009

Why You Need to Understand Legal Issues in E-Commerce

Peter King
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In any e-business strategy, it is important to address comprehensively the key legal issues. At a basic level, these are matters such as copyright and libel; at a more advance level, such things as restrictions pertaining to the sale of your product within particular jurisdictions that requires attention. When addressing legal issues on the Web, keep the following in mind:  
Prevention is Better than a Cure
Establishing a sound legal structure early on is much easier than trying to firefight legal problems as they occur.  
Legal systems are Taking Hold on the Internet
More and more laws are being passed that deal with doing business online than ever before, especially in the United States at the federal level.  
Adhere to the Laws that Apply to You
While you can’t deal with the unique legal aspects of every jurisdiction, you still need to isolate the key jurisdictions for your online business and make sure you adhere to their relevant laws when buying or selling products.  
Why should you address the relevant legal issues form the start?
Because it’s important to guard against unpleasant consequences if you get the legal things wrong or just ignore them. Some early e-commerce businesses adopted the latter approach, believing that cyberspace was a kind of laissez-faire utopia beyond the reach of terrestrial governments. As a result, they paid a heavy price.  
Is it not the case that many laws do not apply online?
Nobody believes that fallacy any more, fortunately. Courts and governments around the world have shown no hesitation about claiming jurisdiction over online activity – in some cases, even when the Web site in question is hosted on another continent. They have applied civil sanctions (such as injunctions and damages) and criminal penalties (fines and even imprisonment) in certain instances.  
Is there a pragmatic approach to dealing with legal issues online?
Yes. The practical approach is to get legal advice on three specific types of territory for your Web site:
  1. The country (or countries) in which your Web operates are principally based, which will often, but not always be where the site is hosted;
  2. The countries that are the primary target market of the web site;
  3. Any other countries that may claim authority over the web site and the breach of whose laws might cause unpleasant consequences. The United States is by far the best example of this – its legal regime has a dauntingly long reach.


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