You do not have to have a web site and sell your product or service over the internet to be affected by the practical legal problems of doing business electronically.
We did business electronically before the internet arrived: we bought and sold over the telephone, by telegram and fax.
Nothing is new. Not even the legal problems.
If you buy and sell over the internet through a web site, then there are a number of laws you have to obey, and your lawyers will also have advised you to include a number of useful terms in your contract to reduce your exposure to risk.
Cementing the contract electronically
There are 2 very important issues that stand out from all the other legal bits and pieces, and if you have taken legal advice when selling electronically, the lawyers have probably offered you the same advice that I am covering in this short item.
1. Make sure the customer agrees to the terms of the contract of the sale – that is, the use of an electronic signature.
2. Have sufficient evidence to prove that the customer you think entered the contract, was the person you sold the item to, and not some imposter committing fraud.
Electronic signatures begin with the telegram cases of the 1870’s, then the use of the telex and fax, before the PIN started in the 1960s. All these forms of electronic signature pre-date the e-signature legislation. In the 1990s, old and well-established legal principles were applied to the new technologies when electronic signatures were included in e-mails and digital documents (so much for ‘old’ being useless – the legal rules were pretty good – they adapted to the new technologies.)
Forms of electronic signature
Electronic signatures come in different forms (some web sites offer interesting comments, but are rarely comprehensive):
- Typing a name in an electronic document or e-mail
- The ‘click wrap’ method
- Personal Identification Number (PIN)
- The name in an e-mail address
- A manuscript signature that has been scanned
- Biodynamic version of a manuscript signature
- The digital signature
Many people in business want to know if there has been any case law for any or all of these forms of electronic signature. The response is yes! There has been case law for almost all of these forms of electronic signature now.
For more information on the forms of e-signature and the case law, see Electronic Signatures in Law.
Proving the click, authenticating the customer
The case law is usually straight-forward, but in the end, there are 2 issues about proving that the person clicked on the ‘I accept’ icon or typed their name into an e-mail:
1. First, can you prove the action took place?
2. Second, if you can prove the action took place, was it the actual customer, and not a thief masquerading as the customer?
If you have the technical evidence to prove the action took place (usually clicking the ‘I accept’ icon), then you have almost proved your case in a dispute.
The next problem is proving the customer entered into the contract and not a thief pretending to be the customer. This is where the law on electronic evidence is crucial – and the lawyers that represent you know about authenticating and challenging electronic evidence.
This is a massive topic (see International Electronic Evidence for the position in more countries). Providing you have sufficient evidence to show it is probable the customer entered the contract, you will usually win any litigation (avoiding litigation is always better and cheaper).
© Stephen Mason, 2013
Other articles you may find interesting
Latest market rates