A

PROJECT ON
E-COMMERCE
SUBMITTED TO :
mr.sudeep sarwan
ASST. PROFESSOR
CYBER LAW

SUBMITTED BY :

Afsana Begum
B.com.LL.B
Roll no. 15002004 , SEMESTER- X

SCHOOL OF LAW
GURU GHASIDAS UNIVERSITY, BILASPUR

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 DECLARATION

I Afsana Begum , Roll No.15002004 of B.com-LL.B 10TH SEM, of Guru

Ghasidas University , do hereby specially declare that this project is my original
piece of work and I have not copied this project from any source without due
acknowledgment. I am highly indebted from the author of the books that I have
referred in my project as well as all the writers of the articles and the owners of
the information taken from the website for it. It is only because of their
contribution and properguidance of my faculty advisor Asst.Professor Sudeep
sarwan that I was able to gather light on the subject.

Afsana Begum
B.com.LL.B.
10th semester

CERTIFICATE
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I am glad here to submit this project on E-COMMERCE as a part of my
academic assignment. I hope this would be significant for academic purposes as
well as prove informative to all readers.

Here though I declare that this paper is an original piece of research and all
are borrowed text and ideas have been duly acknowledged.

Afsana Begum FACULTY SIGNATURE :

B.com. LL.B
SEMESTER – X

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 ACKNOWLEDGMENT

I am using this opportunity to express my deepest appreciation to all those who

provided me the possibility to complete this project work.

I pay my special gratitude and warm thanks to my subject teacher Asst. Prof. Mr
Sudeep sarwan for his aspiring guidance, invaluably constructive criticism and
friendly advice during the project work.

Last but not the least I would also like to thank my parents who supported me
economically a lot in finalizing within the limited time frame. So I could present
it so well.

Afsana Begum
B.com. LL.B.
SEMESTER- X

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 Table of content

1) Introduction…………………………………………………………………..
2) Objective……………………………………………………………………..

3) The following are the types of fraud committed one-consumers:-…………..

(a) Online IdentityTheft…………………………………………...
(b)Phishing………………………………………………………...
(c) Copyright Issues………………………………………………..
4) Intellectual PropertyRights………………………………………………….
(a) Publication under IndianLaw………………………………….
(b) Rights ManagementInformation………………………………
(c) Fair Dealing &Licensing………………………………………
(d) Domain Names Issues…………………………………………
(e) Database SharingIssues……………………………………….
(f) JurisdictionIssues……………………………………………...
(g) ConsumerIssues……………………………………………….
(h) Insurance Issues……………………………………………….
(i) SecurityIssues…………………………………………………
(j) Electronicmoney………………………………………………
(k) Legalvalidity…………………………………………………..
(l) Money laundering & Tax evasion………………………………
(m) Onlineshops……………………………………………………..
5) Legal measures to control E-Commerceissues………………………………….
(a) ITact…………………………………………………………………
(b) IT Act and e-commerce……………………………………………..
(c) Laws for database sharing …………………………………………..
6)Conclusion…………………………………………………………………..
7)Bibliography…………………………………………………………………

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 Introduction

E-commerce can simply be defined as conducting business on-line. The Organization for
Economic Cooperation and Development (OECD) defines E-commerce as a new way of
conducting business, qualifying it as business occurring over networks which uses non-
proprietary protocols that are established through an open standard setting process such as the
Internet. Broadly defined, e-commerce encompasses all kinds of commercial transactions that
are conducted over an electronic medium or network, essentially, the Internet. Electronic
commerce covers three main types of transactions - business-to-consumer (B2C),business-to-
business (B2B), and business-to-government (B2G).In countries like USA it has been
estimated that in 1999 the value of "e-commerce" amounted to about $500 billion. However,
in view of the new environment,anumber of laws have been enacted or are underconsideration
to supplement or, where necessary, modify the traditional law so as to make it more readily
applicabletoe-commerce.InIndiae-commerce shows a huge potential having middle class of
288 million people, online shopping shows unlimited potential in India. However, many
technological,legal and regulatory challenges have the limited growth of electroniccommerce
in India. Presently, very few law-firms in India are familiar with the legal and technological
aspects in e-commerce laws. Lawyers in India must upgrade their skills and knowledge in the
fast growing fields like cyber law, e-commerce, etc. Although we do not have a dedicated
commerce law in our country, the Information Technology act 2000 (IT Act 2000) is the only
cyber law of India, which is regulating e-commerce business and transactions in India.
Objective

• To identify the legal issues in the ecommerceindustry

• To study the existing laws & industry regulations that governecommerce

• To understand the effectiveness of ecommerce laws in ourcountry

• To prepare a comparative study of international & Indian laws , so as to combat

loopholes in the ecommerce industry

Introduction to Types of Legal Issues in Ecommerce Industry

Internet fraud is defined as any fraud committed through or with the aid of computer
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 programmingorInternetrelatedcommunicationslikewebsites,spamsande-mails.Itisaform of
white collar crimes. Almost ninety percent of the malicious acts committed online are covered
under this category.

The increasing rate of fraud globally is due to the communication of the individuals and
companies with a whole of people either by building a website or chatormail.The problem
become severe when such persons have malafide intention.Forfraud,to beacrime,it should have
two essentials:-

a) Deceit or intention todeceive

b) Any kind of injury to person orproperty

So, under this electronic frauds on e-consumers can be broadly classified under three
categories:

a.) To deprive a man of his right, either by obtaining something by deception or bytaking
something wrongfully without the knowledge or consent of the ownerb.) To withhold
wrongfully from another what is due to him, or to wrongfully prevent onefrom obtaining what
he may just lyclaim

c.) To defeat or frustrate wrongfully another’s right to property

The following are the types of fraud committed on e-consumers:-

Online Identity Theft

Online identity theft of the consumer has long been an epidemic. It can be defined as the
practice of pretending to be someone else on the internet. Although it appears to be harmless
but mostly it is related to the crime of stealing someone’s personal information for his or her
own financial gain.

Phishing

Phishing means stealing a person’s banking information and using that to order goods or
transfer money to another bank account.There is a frame work of legal regulationsdesignedto
provide protection as a consumer in physical or traditional modes means when shopping from
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 a local shop. But, at present there is no similar framework that covers all situations where one
purchase goods on Internet by electronic transactions. In In dia though the Government has
promoted e-commerce aggressively resulting in increase of e-consumers activities but has
failed to catch up with the frauds that have comeup.
The Ecommerce issues can broadly be classified into the following categories:

Copyright Issues
The emergence of new digital technologies,such as the Internet,is having a significant impact on
the copyright and related rights and the industries such as music, film and software throughout
the world. It is very difficult to protect Intellectual property in ECommerce. For example, if you
buy a software you have the right to use it, but you do not have the right to distributeit.For
example Piracy which has been rampantin ourcountryhascausedhugelosses to music and
production studios.Inspite of laws being present,the same has not been enforced to the best
extentpossible.

Intellectual Property Rights

Publication under Indian Law

Under the Indian law, publication means that any content which is available to the public issue
through material copies or by communicating to the public.

Rights Management Information

RMI act identifies who has done the work, has the work been registered in the country & if
there are any other owners for the work. For any publication or usage of work in theatrical

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issues India mandates that the author/publisher/owner be mentioned. However, when it comes
to electronic rights India remains very silent on this issue.

Fair Dealing & Licensing

When the content that is accesse don the internet is stored temporarily on the computer system.
This is legal under the purview of Indian Law. However, if any permanent ownership of the
content is being claimed by the owner of the computer in which the content gets downloaded
temporarily then it is an offence.

Domain Names Issues

The Internet Assigned Numbers Authority (IANA), manages the Domain Name System (DNS).
Problems arise when several companies having similar names compete over the same domain
name. The problem of domain names was alleviated in 2001 after several upper level names
were added to com.

The key issue for a business is to ensure that the domain name that they choose do not happen
to breach the trade mark rights of anyone else nor do they copy from any copyright works
which belongs to a third party.They should also keep a watch in case others infringe upon their
rights and act quickly if they do.

Database Sharing Issues

A very important area to watch out for is database sharing. Many websites provide access to
databases some on a chargeable basis, which may or may not always have a copyright
protection.

Jurisdiction Issues

Although occasionally discussed interchangeably, applicable law and choice of forum are
different concepts that must both be addressed while addressing Internet jurisdiction concerns.

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Applicable law refers to which country's law will be applied to a particular dispute.While some
contracts will specify which law governs should a dispute arise, where such a clause has not
been included, it is left to the courts to determine which law should beapplied.

Consumer Issues

Unlike the offline environment,where consumer senter a store,inspect potential purchases and
judge for them selves the trust worthiness ofaseller,the online world does not provide the same
opportunity to use a"buyer'sinstinct."Rather,many consumer sare for ced to proceed on faith,
knowing precious little about the seller to whom they are entrusting their credit card data.

Insurance Issues

Many businesses have legal expense insurance .Software companies for example will have
their professional indemnity insurance which protects them if they are sued for breach of
contract or negligence arising from the software they have written for the customer. Other
companies which supply goods or services over the internet will have insurance cover against
product liability risks .This might include goods that physically harm the customer.

Security Issues

Many consumers are put off using the internet to purchase goods and services because of
concerns that their credit card details maybe disclosed. Ensure that a secure server is used.
Where personal data is gather in the UK there is a legal duty under data protection act 1998
principles to keep data safe and secure .If a security breach occurs bigger companies should
speak to their public relation agencies to determine how best to address the matter.From a legal
point of view the customer may be entitled to a refund and damages.

Recurring payment mechanism, which the Indian SaaS businesses are lobbying for, is still not
available in India because of RBI restrictions and the guidelines under the Payment and
Settlement Systems Act is still expected.

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Electronic money

Whatever way e-commerce develops, it will definitely need the support of a financial system
that is fast, reliable, and secure. Electronic banking and electronic money are revolutionizing
the way our financial system functions. Some of the issues seen with respect to e-money are.

Legal validity

The issuance of paper currency and coins in India is legally governed by the Constitution of
India and some Central statutes. The Constitution gives the Central Government the sole
authority to coin money that serves as legal tender. The Reserve Bank of India has the sole
right to issue currency notes. When e-money products allow multiple transfers among
individuals without requiring the direct involvement of a third party, in a manner similar to a
person-to-person exchange of currency, it is likely that e-money could act as a substitute to
cash. However, e-money would not constitute a valid legal tender as it is not a medium of
exchange authorized or adopted by the government.At best,e-money is apromise by the issuer
to pay the e-money holder an equivalent amount in valid legaltender.

Rather than simply clarifying whether under the existing laws private issuers can issue
Emoney,the RBI should also address the issue of whether the private sector should be allowed
to issue e-money. If the RBI decides to permit private issuance, it will have to develop rules
and regulations affecting the issue and conduct of e-money business inIndia.

Money laundering & Tax evasion

There is a concern over the speed and ease by which money laundering would be possibleand
states desire to ensure that the flow of fundsistraceable.Many jurisdictions have cash/financial
reporting requirements. In the Indian Income tax Act of 1961 there are provisions that seek to
control or track the flow of funds through electronic means.The Indian Government in tends to
enact the Prevention of Money Laundering Bill (PMLB), 1998, where money laundering has
been made punishable with a rigorous imprisonment for a period not less than three years.
Under this Bill every person who was in charge of a corporation at the time the offence was
committed can be proceeded against.

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Online shops

Establishments are defined in the Bombay Shops and Establishments Act, 1948, to mean
“shops, commercial establishments, residential hotels, restaurants, eating houses, theatres,
other place of public amusement or entertainment to which this Act applies and include such
other establishments as may be notified in the Official Gazette to be establishments for the
purposes of this Act”. While the definition of shops, restaurants, eating houses, residential
hotels and the at resrequirea“premises”where activity is carried out,commercial establishment
does not include a “premises” in its definition. It may therefore be possible that online shops
may fall within this definition and consequently have to adhere to conditions such as
registration that are prescribed by the Shops and Establishments Act.

Legal measures to control E-Commerce issues

IT act

The Information Technology Act,2001,makes India only twelfth country in the world to have
such a comprehensive legislation for ecommerce.This Act has led to amendments in the Indian
Penal Code, the Indian Evidence Act, 1872, and the RBI Act, 1934 to make them align with
the requirements of digitaltransactions.

The IT Act essentially seeks to address three areas or requirements for the digital era:

(1) To make e-commerce transactions possible —both business to business and business to
consumer

(2) To make e-governance transactions possible —both government to citizen and citizen to
government

(3) To prevent cybercrimes and regulation of theInternet

IT Act and e-commerce

There is one more WTO agreement that has an indirect bearing on e-commerce and India’s
strategic position. This is the Information Technology Agreement (ITA) negotiated post-
Uruguay Round and embodied in the WTO Ministerial Declaration on Trade in Information

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Technology Products. The agreement went into effect in March 1997 and provides for its
participants to eliminate customs duties and other duties and charges on information technology
products by the year 2000 on MFN basis. The agreement relates to IT, telecom, semi-
conductor,and scientific equipment and products.It includes software,but only on a hard medium
such as diskettes and CDs, etc. It would, therefore, not cover digital commerce oron- line
transactions of software. India is one of the 40 signatories to this agreement but, being a
developing country, has till 2005 to harmonise with the agreement.

The basic principle behind this agreement was the further liberalization of the info
communications sector. Though there has been much debate on the way this agreement was
negotiated, ignoring developing countries views, for India it means progressing towards the
zero duty regime in the phased manner—something that the country has already been doing for
IT products. At the macro-economic level the agreement aims at reducing the cost of
hardware—therefore, leading to a subsequent positive impact on the cost of service
provisioning. Although the hardware sector in the country may have misgivings with this, so
farase-commerce and the software sector is concerned,this movement should result in cheaper
products and, therefore, growth in e-commerce services. For consumers, this means cheaper
products and services, and for the economy a possible impetus to the growth of networks. For
the country as a whole, however, this could possibly mean two things:

(a) that the new opportunities in the ICT sector and hardware may be swamped by
multinationals,
(b) that the IT sector becomes even more software and e-commerce centric. The last few
years have shown that in the first some Indian companies are also benefiting from the
opportunities; so far as the second is concerned, that is the country’s primary
competitive advantage and the software industry should benefit from the growth in the
market of standardized software products and applications.

The last few years have shown that in the first some Indian companies are also benefiting
from the opportunities; so far as the second is concerned, that is the country’s primary
competitive advantage and the software industry should benefit from the growth in the
market of standardized software products and applications.

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Laws for database sharing

The “legal protection of databases” was introduced in EU is considered to be a property

right,comparable to but distinct from copyright,that exists to recognize the investment that
is made in compiling a database, even when this does not involve the 'creative' aspect that
is reflected by copyright.

The UK department of trade and industry (DTI ) has proposed a compromise that if the
website is directed at a particular foreign territory then the customer can bring proceeding
their home state,but if the website is just a general site not directed the consumer’s territory
then the supplier could be confident that only its own local law would apply.

Laws for Jurisdiction Issues

The European Union has adopted several regulations that are relevant to the Internet
jurisdiction issue. The primary source of law is the 1980 Rome Convention, which
distinguishes between business and consumer contracts.

Courts in the United States and around the world have been somewhat inconsistent in
their treatment of Internet jurisdiction issues. Although some courts have been willing
to assert jurisdiction to virtually any website accessible within their jurisdiction,others
have adopted a more cautious approach that sets some limits on when a court will assert
jurisdiction over a foreignorout-of-state entity whosetiesto the jurisdictionare limited to
the Internet. This latter approach is often referred to as the "Zippotest."

CONCLUSION

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 Electronic commerce system swhich basically operated over the internet,forallintents,
operate outside of clear geographical boundaries. In India, this issue creates potential
questions concerning the applicability of the state laws to transactions that could be
initiated by a consumer in one state who uses a financial institution headquartered in a
second state to make payments to recipients located in yet other states, by means of a
computer at some unknown location. These challenges are even greater at the
international level. It is certainly a huge challenge for all the countries to agree upon a
common law. Laws such as those involving protection of personal privacy and entities
permitted to issue electronic money may raise difficult problems, as will those dealing
with tax collections. Sales over the Internet, for example, raises questions about the
location of transactions and consequently about which tax laws apply. All these
considerations raise the larger question: What are steps that the Indian Government
should take to identify and coordinate responses among countries to those common
problems in such areas as law enforcement, personal privacy, taxation, protection of
intellectual property etc.? We have tried to highlight some of the major issues in
ecommerce and tried comparing certain international laws with the laws in our country.
For electronic commerce,progress is best achieved through innovation by industry,and
it can only strengthened further by government by enacting laws that helps in
maintaining the trust of the public,protecting private information,creating mechanisms
to safeguard online transactions etc. Hence in order to achieve this, it is certainly
necessary that industry, consumers and government.

BIBLIOGRAPHY

• www.academia.edu
• www.wikipedia.com
• www.lawoctopus.com

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