SHAPING AN E-COMMERCE BUSINESS IN INDIA

E-commerce businesses like Reliance use a multi-format approach to run their

businesses. Multi-format means using various platforms to engage with the end users. On
your screen is an illustration of platforms (Show slide 2 of PPT) we (DSK Legal) have come
across while working for Reliance. There are many more such.

For running such an expansive e-commerce business, numerous contracts have to

executed. One way of doing so is to sign contracts physically. Another and a faster way is
signing contracts electronically in which acceptance of contract is instantaneous.

(Show slide 4): Physical contracts are typically signed where the scope of negotiation is
greater. Example: In celebrity endorsement contracts. A click wrap contract, on the other
hand, braves the headwinds of negotiation at the click of the “I Agree” button. Such is the
case with most websites’ privacy policy.

(Show slide 5): Once contracts are signed it is important to ensure their legality, validity,
enforceability and admissibility in court of law. In physical contracts, it is simpler. By just
paying the appropriate stamp duty this objective can be achieved. However, some of you in
the audience might have a question in their mind regarding click-wrap agreements. Click-
wrap agreements are not required to be stamped. Yet, their enforceability, legality and
validity flows from the judicial precedents which say that for a click wrap agreement to be
enforceable, the standard terms must neither be too onerous nor too lopsided in favour of
party designing the agreement.

(Show slide 6): As I mentioned earlier, physical contracts are signed wherein there is room
for negotiation between the parties. We (DSK Legal) have worked upon multiple such
agreements in the past and from our experience, each contract is unique. Thus, lawyers
need to cherrypick a distinct set of clauses each time they rummage a bag (agreement) full
of clauses. While a celebrity endorsement will require the lawyer to construct a balancing
act between the “celebrity attributes” and “usage rights”, a licensing agreement will require
the same lawyer to design a bespoke business continuity plan.

Now let us look at the different kinds of agreements in some detail. [Show slides 7-12]

(Show slide 13): The counterparties engaging with large e-commerce conglomerates are
not a homogenous class. Thus, it is imperative to have a ready reckoner repository of
fallbacks in case the counterparty doesn’t agree to a standard position. However, it must be
remembered that it is not always plausible to allude to fallbacks. We recommend fallbacks
only in case of business exigencies and definitely not as a routine practice.

(Show slide 15): DO’S AND DON’TS: E-commerce giants are expected to be stalwarts of
ethics and corporate values. Practices such as self-preferencing, discriminatory treatment
between users, anti-competitive use of data etc. must be prohibited on an ex-ante basis.
We also recommend regular hygiene checks on the platform’s website for spearheading
growth.

(Show slide 17): From our experience, we have prepared an illustration on the best
business practices for an e-commerce venture.
(Show slide 19): Data Protection aspect: E-commerce entities thrive by capitalising on the
treasure trove of data. But this goldmine of data comes with its own set of responsibilities.
There are multiple laws and guidelines that needs to be adhered to. The Advertising
Standards Council of India (ASCI) is a voluntary self-regulatory body that promotes
responsible advertising in India. It’s imperative for advertisers to ensure that the material
claims, which are likely to mislead consumers are appropriately qualified or disclaimed, to
ensure that reasonable consumers with average intelligence are not misled or deceived.
The latest piece of legislation on the aspect of data is the Draft Digital Personal Data
Protection (DPDP) Bill, 2022. The DPDP Bill requires data fiduciaries (such as Reliance
platforms) to share with the data principal an itemised list containing a description of all the
personal data intended to be collected on their platform.

Consumer Protection aspect: Consumers satisfaction is the golden key to running an e-

commerce business. In India, consumer welfare is primarily governed by the Consumer
Protection Act, 2019. There are other laws also. The Indian Standard (IS) 19000:2022 is a
voluntary compliance manual and is also applicable on sellers that collect online reviews
from their customers (such as JioMart) and requires them to steer clear of paid and
fraudulent product reviews on their platform and formulation of a written code of practice
(CoP).

(Show slide 21): There is a regulatory vacuum in governance of the platform-to-business

user (P2B) relationship. Currently, the legal regime only governs the ex-post activities of e-
commerce. Further, the current state of governance has a lot of grey areas. For example:
Rule 39(e) of the draft Amendments to the Consumer Protection (E-Commerce) Rules,
2020 places a prohibition on e-commerce entities from organising flash sales which limit
customer choice. Customer choice is a factor which can’t be determined objectively.