MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE eCommerce and the Law.

MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE

eCommerce and the Law


Law and management Why do managers need to be aware of

legal issues, surely this what we pay the lawyers for?


Law and Management Business needs to have good corporate

governance to survive. Business law sets down the parameters for good corporate behaviour.

Failure to comply is not only bad business but may have severe legal consequences.


Law and Management Be aware of the legal issues so you can make

sure compliance is embedded in your everyday business practices.

Then you may not need a lawyer which will save you a lot of money

Electronic Commerce challenges the existing law. It is important for managers to be aware of the law as it applies to EC and problem areas that may require reform or undergo change.


Vicarious Liability The Principle of vicarious liability is that the

employer: Is liable to indemnifying a third party for damage or

loss suffered; As a result of a wrongful act committed by an

employee In the course of an employee’s employment .


Vicarious Liability This liability extends also extends to claims by

other employees of the employer arising out of the wrongful act of an employee.

The wrongful act may be in: Tort (which includes negligence and

defamation); or Breach of a statutory duty under legislation

such as the Trade Practices Act.


Occupational Health and Safety The employer is also responsible for:

maintaining a safe place of work pursuant to occupational health and safety legislation; and

Maintaining an workplace free of harassment and discrimination pursuant to anti discrimination and anti harassment legislation


Law and eCommerce What is law? What laws govern a person engaged in

eCommerce or an eCommerce transaction? What areas of law are affected by EC? Is the existing law good enough? How do societies regulate themselves?


Law and Discontinuity Discontinuity is a change so encompassing that

it transforms the standards by which it is measured.

Discontinuity challenges and destroys the assumptions which we hold true

E-commerce is threatening to be the latest example of discontinuity


Challenge of E-commerceEC challenges the commercial assumptions of: who and where the markets are; who competitors are; and how commercial organisations and relationships

are structured


The law and EC Faced with discontinuity the law (lawyers) and

other intermediaries must adapt. Each new application of eCommerce to the

market process requires an analysis of the legal implications flowing from that application including what the law governs the process and the rights of the players associated


Peculiar features of cyberlaw

No need for paper or other physical representation

no clear geographic/ territorial or political limitations or delineations

blurring of the concept of time and the linear order which the law likes to impose


Law of the Horse A few years ago, at a conference on the "Law of

Cyberspace" held at the University of Chicago, Judge Frank Easterbrook told the assembled listeners, a room packed with "cyberlaw" devotees (and worse), that there was no more a "law of cyberspace" than there was a "Law of the Horse";

There is an important general point that comes from thinking in particular about how law and cyberspace connect.


4 ways of regulating society Norms Markets Law Architecture


Jurisdiction One of the major issues Which country’s laws are to be applied to

address the respective rights and obligations of the parties?

What is the consequence of a country’s lack of jurisdiction?


Jurisdiction The Internet transcends geographic borders ,

there are no laws or borders on the Internet. There is no ‘Lex Internet’.

Different countries have different Legal systems Criminal law consumer protection legislation etc


Jurisdiction Which taxation laws apply? Which criminal laws apply? When is copyright breached? What laws apply to contracts agreed upon over

the Internet. Are ‘clickwrap’ agreements enforceable?


Enforcement Even if you have the law on your side there is

the perpetual problem of enforcement. What good is a court order if you cannot enfoce

it against the other person Another pervasive problem in Electronic

Commerce


Approaches to Jurisdiction France

The Yahoo case Germany

The Adelaide Institute USA approach

Minimum contact with Territory Australia

Gutnik’s case


General problem areas Application of paper based law to electronic transactions Formation of contracts Admissibility of evidence Authentication integrity of electronic communication Record retention and management The need for regulation or let the market find its own

balance Should there be more self regulation and codes of

practice or unified International body of law


Specific areas of concern Contract Defamation Security Privacy Criminal activity Copyright Trademark Consumer protection


Contract Formation of the contract

Offer, acceptance , digital signatures

Jurisdiction and proper law Incorporation of terms

“clickwrap contracts”

Consumer perspective TPA, Goods Act


Security What is it. Why is it an issue for managers? Is it a legal issue? Encryption Keys Security over transactions Security over web sites


What security is available? 3 common methods include:

Encryption Digital Signatures Firewalls


Encryption Hot issue Gives security but conflicts with needs of

national security. Should the government be allowed to access

private communications. Is it essential for business?


Internet transaction systems There are about 65 current systems available for

making simple transactions. Range from the sophisticated digital coin system

to variations on the credit card and cheques based systems called cheques in the net.

Credit cards seem to have won the day


Internet transaction systems Secure Socket Layer (SSL) relies on

digital certificates Has beaten proprietary systems developed by

banks, Visa etc.

Stored value cards (Smart cards)


Smart card Need for consumer protection Code of conduct for smart card and stored value

cards What are the legal problems?


Consumer Issues Competitive pricing of payment services to

ensure equal access to all consumers Consumer protection from fraud Right to choice of institutions and payment

methods Transaction privacy, safe record keeping and

proof of payment Managing information privacy Risk management.


Privacy Data collection Data protection Surveillance Encryption Customer profiles developed from eg: smart

cards (one of the selling points for banks)


Crime Hacking Pornography Stalking Illegal firearm sales Fraud Sexual harassment and discrimination Use of computer evidence


Unauthorised Use Disruption Terrorism/ Violation Virus : A program that modifies other computer

programs ensuring the infected program replicates the virus.

Worms: A stand alone program that replicates itself. uses a computer network to duplicate itself, and doesn’t need help from a human hand.


Logic bombs Tells a computer to execute a set of instructions

at a certain time under certain specified conditions.

An attacker can reach thousands of computers at once. Or shut down a banks security system at a given time - say 3 PM on a Friday night.


Trojan Horses Is a program which performs some apparently

useful function But also contains a hidden code that is

malicious. For example will permit outside access at a

given time.


Denial of Service (DOS) - attacks and overwhelms websites and

stops them from communicating with other computers.

One computer becomes the master (operated by a hacker) and other computers the slaves or zombies, giving illegal access to information,


Identity Theft When one’s identity is wrongfully used by

another use of another’s credit card Pose as another to ruin a reputation or other

example forged letters How do you establish identity in an electronic

world


Defamation Name calling in cyberspace E-mail issue Publication of information likely to harm the

reputation of another Site of the defamation (jurisdiction) mailing lists, newsgroups Liability of service providers Gutnik’s Case


Taxation Electronic payment systems have evasion

potential (cash economy?) Jurisdiction rules doubtful Need to administer domestic tax laws

internationally Encryption presents difficulties Taxpayer identity uncertain


Taxation How is the tax department going to approach the

problem? Most jurisdictions have ignored the problem so

far because Too difficult Not enough trade to warrant attention Need to encourage eCommerce to gain a

national competitive advantage


Intellectual Property Framing & linking

Your goodwill and image can be used as another's advertising (Seattle Sidewalk link to ticket master)

Metatags Attaching another name to your HTML eg:

Playboy

Copyright


Web sites Trade Marks

Barbie Doll and McDonalds chase defendants all over the globe

Domain names How do you protect you name What is its status How does it interact with other forms of IP


Copyright Generally the use of the works of others without

consent or appropriate acknowledgment Look at the problems Napster experienced

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MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE eCommerce and the Law.

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