Presentation on theme: "Chapter 7 The Environment of Electronic Commerce: International, Legal, Ethical, and Tax Issues."— Presentation transcript:
Chapter 7 The Environment of Electronic Commerce: International, Legal, Ethical, and Tax Issues
International Nature of Electronic Commerce Any business that engages in electronic commerce instantly becomes an international business. When companies use the Web to create a corporate image, or build a community, they are automatically operating in a global environment. Businesses engaging in electronic commerce must be aware of the differences in language and customs that make up the culture of any region in which they do business. The barriers to international electronic commerce include language, culture, and infrastructure issues.
Language Issues The only way to do business effectively in other cultures is to adapt to those cultures. The first step to reach foreign customers is to provide local language versions of its Web site - translating the Web site into another language or regional dialect.
Culture Issues The combination of language and customs = culture. Some errors stemming from subtle language and cultural standards are culture issues. On the Web, designers must be very careful when choosing icons that represent common actions - even colors or Web page design elements can be troublesome – examples : Bokus.com. reflects a cultural design preference - Swedish Softbank devised a way to introduce electronic commerce to a reluctant Japanese population. Nike realized that it had to create special Web pages for foreign customers.
Infrastructure Issues Internet infrastructure - computers and software connected to the Internet and the communications networks over which message packets travel. Regulations in some countries have inhibited the development of the telecommunications infrastructure or limited the expansion of that infrastructure. Local connection costs through the existing telephone networks of many countries are very high. This can have a profound effect on the behavior of electronic commerce participants.
Infrastructure Issues (cont.)
The Legal Environment of Electronic Commerce Businesses that operate on the Web must comply with the same laws and regulations that govern the operations of all businesses. The Web extends a company’s reach beyond traditional boundaries, thus it faces many more laws than before. Web businesses that violate laws can face rapid and intense reactions from many customers.
Borders and Jurisdiction Territorial borders in the physical world serve a useful purpose in traditional commerce. In the physical world, geographic boundaries almost always coincide with legal and cultural boundaries. The relationship between geographical boundaries and legal boundaries can be discussed in terms of four elements: power, effects, legitimacy, and notice.
Jurisdiction on the Internet Jurisdiction is more difficult on the Internet because traditional geographic boundaries do not exist People or corporations that wish to enforce their rights based on either contract or tort law must file their claims in courts with jurisdiction to hear their case.
Subject-Matter Jurisdiction Subject-matter jurisdiction is a court’s authority to decide a particular type of dispute. Federal courts have subject-matter jurisdiction over issues governed by federal law. State courts have subject-matter jurisdiction over issues governed by state laws.
Personal Jurisdiction Personal jurisdiction is determined by the residence of the parties. One way that people voluntarily submit to a jurisdiction is by signing a contract that includes a statement known as a forum selection clause. Businesses should be aware of jurisdictional considerations when conducting electronic commerce over state and international lines.
Jurisdiction in International Commerce The exercise of jurisdiction across international borders is governed by treaties between the countries engaged in the dispute. The John Marshall Law School’s Center for Information Technology and Privacy Law Web site is a good source of cyberspace law. http://www.jmls.edu/catalog.cfm?dest=dir &linkon=subsection&linkid=64
Online Resource for Cyberspace Law
Contract Enforcement in Electronic Commerce Any contract includes three essential elements: an offer, an acceptance, and consideration. The contract is formed when one party accepts the offer of another party. Contracts - key element of traditional business practice - important on the Internet - occur when parties exchange e-mail messages, engage in EDI, or fill out forms on Web pages.
Written Contracts on the Web In general, contracts are valid even if they are not in writing or signed. A signature is any symbol executed or adopted for the purpose of authenticating a writing - reasonable to assume that a symbol or code included in an electronic file would constitute a signature. A contract is formed when an offer is accepted for consideration. Digital signatures, however, are an excellent way to establish identity in online transactions
Warranties - Any contract for the sale of goods includes implied warranties - Sellers can avoid some implied warranty liability by making a warranty disclaimer - legally effective, the warranty disclaimer must be stated obviously and must be easy for a buyer to find on the Web site. Terms of Service Agreement - Most Web sites have stated rules that visitors must follow, although few visitors are aware of these rules. If you examine the home page of a Web site, you will often find a link to a page titled “Terms of Service”, “Conditions of Use”, “User Agreement” or something similar - contracts are often called terms of service (ToS) agreements.
Web Site Content A number of other legal issues can arise regarding the Web page content of electronic commerce sites, including: trademark infringement - Web site designers must be very careful not to use any trademarked name, logo, or other identifying mark without permission. deceptive trade practices - trademark protection prevents another firm from using the same or a similar name, logo, or other identifying characteristic in a way that would cause confusion. regulation of advertising claims - any advertising claim that can mislead a substantial number of consumers in a material way is illegal under Malaysian law. defamation - a defamatory statement is a statement that is false and injures the reputation of another person or company - statement injures the reputation of a product = product disparagement
Copyright Infringement Copyright infringement A copyright is a right granted by a government to the author or creator of a literary or artistic work. Creations that can be copyrighted include virtually all forms of artistic or intellectual expression: books, music, artworks, recordings (audio and video), architectural drawings, choreographic works, product packaging, and computer software. Patent infringement A patent is an exclusive right to make, use, and sell an invention that a government grants to the inventor. To be patentable, an invention must be genuine, novel, useful, and not obvious given the current state of technology.
Ethical Issues Laws in Malaysia Companies using Web sites to conduct electronic commerce should adhere to the same ethical standards that other businesses follow. Advertising on the Web should include only true statements - ethical considerations are important in determining advertising policy on the Web. Defamation - a defamatory statement is a statement that is false and injures the reputation of another person or company Product disparagement – a statement that injures the reputation of a product Privacy rights Protection of personal data