Electronic commerce fundamentals ch11

Chapter 11

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The Environment of
Electronic Commerce:
International, Legal, Ethical,
and Tax Issues

Electronic Commerce

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Objectives
International electronic commerce
◆ Laws that govern electronic commerce
activities
◆ Ethics issues that arise for companies
engaged in electronic commerce
◆ Taxes that are levied on electronic
commerce
◆

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International Nature of
Electronic Commerce

◆

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Language issues
● “Think

globally, act locally” by establishing
local language versions of the Web site
● By 2001, 60% of Web use and 40% of
e-commerce sales will involve at least one
party outside the United States
● The most used non-English languages for
U.S. companies are Spanish, German,
Japanese, French, and Chinese
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Europages Home Page
Figure 11-1

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International Nature of
Electronic Commerce
◆

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Culture issues
● Errors

can stem from subtle language and
cultural standards
General Motor’s Nova
◆ Pepsi’s “come alive” campaign
◆ Baby food jars in Africa
◆ Cartoon cows in India
◆ White-colored elements in Japan
◆

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International Nature of
Electronic Commerce
◆

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Culture issues
● Unwillingness

to allow citizens free access

to the Internet
● Proxy servers that filter content
● Laws to prohibit publications that conflict

with governmental or religious views, or
must conform to the local language and
customs
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International Nature of
Electronic Commerce
◆

Infrastructure issues
● Variations

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and inadequacies of computers
and software connected to the Internet
● Heavy government-regulated
telecommunications limit support of Internet
availability
● Inadequate bandwidth available for Internet
data packets
● Complex flow of information for international
transactions
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A Typical International Trade Transaction
Figure 11-2

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The Legal Environment of
Electronic Commerce
◆

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Businesses operating on the Web face
two complicating factors
● The

Web extends a company’s reach
beyond traditional boundaries
● The speed and efficiency of
communications on the Web

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The Legal Environment of
Electronic Commerce
◆

Borders and jurisdiction
● Geographic

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boundaries on culture have
historically been set by the distances
involved
● The relationship between geographic and
legal boundaries include
◆power

◆legitimacy

◆effects

◆notice

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Culture Determines Laws and Ethical Standards
Figure 11-3

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The Legal Environment of
Electronic Commerce
◆

Power
● Control

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over physical space
● The ability of a government to exert control
over a person or corporation is called
jurisdiction
● Level of power asserted by a government is
limited to that which is accepted by the culture
within its geographic boundaries
● Strife can erupt when geographic, cultural,
and legal structures do not coincide
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The Legal Environment of
Electronic Commerce
● Effects
◆

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Personal or corporate actions have stronger
effects on people and things that are nearby than
on those that are far away

● Legitimacy
◆

The legitimate right to create and enforce laws

derives from the mandate of those who will be
subject to those laws

● Notice
◆

Physical boundaries, when crossed, provides
notice that a set of rules have changed
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Jurisdiction on the Internet
Governments that want to enforce laws
regarding business conducted on the
Internet must establish jurisdiction over
that conduct
◆ A court has sufficient jurisdiction if it
has both subject-matter and personal
jurisdiction
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Jurisdiction on the Internet

◆

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Subject-matter jurisdiction
● The

court’s authority to decide the type of
dispute
● Rules of subject-matter jurisdiction are
very clear and easy to apply
● Very few disputes arise over subjectmatter jurisdiction

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Jurisdiction on the Internet
◆

Personal jurisdiction
● Determined

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by the residence of the parties
● A “forum selection clause” in a contract
dictates that the contract will be enforced
according to the laws of a particular state
or government
● Tortious acts are an exception, such as
cases of defamation, fraud, and theft of
trade secrets

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Jurisdiction on the Internet

◆

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John Marshall Law School’s Center for
Information Technology and Privacy
Law’s Web site includes links to current
cases, law review articles, and other
updated resources

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John Marshall Law School Cyberspace Law Site
Figure 11-4

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Contracting and Contract Enforcement
in Electronic Commerce
◆

A contract has two elements

● Offer

– declaration of willingness to buy or sell a
product or service

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Sufficient details to be firm, precise, and
unambiguous
◆ Can be revoked as long as no consideration has
been accepted
◆

● Acceptance

– expression of willingness to take

an offer
◆

When one party makes an offer that is
accepted, a contract is created
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Written Contracts on the Web
In general, contracts are valid even if
they are not in writing or signed
◆ Contracts for the sale of goods worth
over $500 and for actions to be

performed that cannot be completed
within one year must be created by a
signed writing
◆ Writing does not require pen or paper
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Written Contracts on the Web
◆

Writing exists on many tangible forms
● Tape

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recordings of spoken words
● Computer files on disks or tape
● Faxed copies of written documents
◆

Signatures are any symbol executed or adopted
for the purpose of authenticating a writing
● Names

on telegrams, telexes, faxes, letterhead are
all considered signatures

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Written Contracts on the Web
◆

Warranties
● Any

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contract for the sale of goods includes
implied warranties
◆

Product is fit for the purposes for which it is
intended

● Explicit

warranties can be created by the
seller in general statements in advertising
materials
● A warranty disclaimer, conspicuously
stated, states that the seller will not honor
some or all implied warranties
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Written Contracts on the Web
Digital IDs are often used to verify the
identity of a person or corporation when
entering into a contract
◆ Digital signatures and certificates can
attest to the title and capacity of a
person holding a particular public key
◆

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Web Site Content
Trademark infringement occurs when a
Web site designer uses any
trademarked name, logo, or other
identifying mark without the express
permission to do so
◆ Deceptive trade practices can lead to
trademark dilution, a reduction of the
distinctive quality of a trademark by
alternative uses
◆

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Advertising Regulation
Figure 11-5
◆

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In the U.S., advertising is primarily
regulated by the Federal Trade
Commission (FTC)

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