Image source: https://economictimes.indiatimes.com/wealth/spend/heres-how-consumers-will-benefit-under-the-new-consumer-protection-act/articleshow/70711304.cms

This article has been written by Radhika Agarwal, pursuing a Diploma in Cyber Law, FinTech Regulations, and Technology Contracts from LawSikho.

Introduction

As per, Don Slater cyberspace is that function of a social context that is completely within the scope of representation and communication. It subsists totally in computer space, scattered over more complicated and fluid networks. Internet in terms of the topology of traffic flows and the changing balances of power in who gets to decide what traffic flows where and how. From the Internet perspective, certain conditions need to be viewed in the aspect of what one judge has delineated as the “ubiquity, universality and utility” of that statement. In one case of the High Court of Australia, Dow Jones & Company Inc. v. Gutnick, Kirby J. defined the internet as: 

The internet is a decentralized, self-maintained telecommunications network. It is woven with the interlinking tiny networks from different areas of the globe. Further, Justice Kirby gave the internet the following adjectives; “ubiquitous, borderless, global and ambient.” Therefore the name “cyberspace.” This concept identifies that the correlations generated by the Internet endure beyond the traditional geographic barriers and include a unique interconnected mass of data, possibly equal to an individual body of information. The Internet is available in virtual mode to all regions on the Earth wherever access can be reached with the help of a wired connection or through wireless (together with satellite) connections. Finally, the single limitation for Internet access is the dependency on the medians of acquiring the link to a telecommunications arrangement and having the basic hardware.

The extremely mobile nature of the internet and services through the internet makes it hard to govern the activity. Generally, disputes are resolved in the territory wherever one or both of the parties are located. Nonetheless, with an online business, clients could be located anywhere, hence it is difficult to cope up with such wide exposure. To support the consumer’s location is impossible on the internet. The business conflicts which the company may face in e-commerce can be contractual like B2c and B2B or non-contractual for example copyright matters. Hence, it is considered that several of the problems such as the preference of law, jurisdictional concerns,  expensive cross-jurisdictional lawsuits, can arise about the different classes of disputes. The conventional method of jurisdiction allows a court to examine whether it has the pecuniary, territorial, or subject matter jurisdiction to consider the case presented before it. 

What are some challenges about dispute resolution in cross-border e-commerce transactions?

The location of the server

In CompuServe Inc. v Patterson, it was contended that the jurisdiction of dispute should be decided as per the geographical location of the server from where the website in question is supported. This is a reasonably simple approach, but the location of the server is not always a suitable standard for deciding jurisdiction. Wherever a server is placed will usually have less to say regarding the territory or territories to which the website is most remotely connected at present.

For instance, the location where a Swedish radio channel handles a website is in the USA and it broadcast anti-Semitic propaganda an activity that is prohibited under Swedish law. In this case, the mere fact that the server is located in the USA could not prudently limit the execution of jurisdiction by a Swedish court. Furthermore, the client will rarely be conscious of the reallocation of the website that he/she visits, the same goes with the vendor in those matters if it rents storage space on the server. Besides, when the server’s geographical location is considered final, vendors would simply be prepared to bypass the jurisdiction of consumer-friendly States by setting their websites on servers stationed in States with comparatively weak administrations for consumer protection.

Alike factors apply for attempts at demonstrating that a website will possess a more robust connection to one State than another entirely based on the residence of the vendor running the site. There is no significant connection between the vendor’s state of residence and the State in which the website users are most.

Digitized products

It was a debating matter whether digitized commodities should be recognized as goods or services or possibly as a certain unique class of product. A digitized product is a product that has been transformed from a physically tangible object to a purely digital combination of binary code. Typical examples would be CDs, videos, software, and books.

Simultaneously, differentiating among goods and services in an online setting might be considerably easy (understanding that goods need to be physical things to which transferable ownership rights cohere). If a consumer signs a contract for the provision of a digitized product and has at the time the contract is fulfilled some tangible item, the transaction is best characterized as one for the supply of goods. If, on the other hand, the consumer is left without any tangible item, the transaction is best characterized as one for the supply of services. 

Website disclaimers

As a website can be reached from everywhere in the globe, therefore holding possible legal outcomes in each State, businesses have in several matters considered measures to check those consequences by appending legal obligations to their websites.

Numerous mutations subsist from State to State based on the degree to which an obligation may check liabilities. To create one disclaimer that would be internationally effective is improbable and would, of course, be very costly since it would require knowledge of every legal system in the world. Another problem is language. A disclaimer drafted in Indian would plausibly have a slight influence in an Australian court.

Disclaimers with clauses that cover law based on the liking, may face many challenges. Primarily, these clauses are not identified in every circumstance and usually, the legality of the clause would be circumscribed not by the statutes asserted in the clause though as per the law where the concerned party is placed. It could be even very troublesome to point that the user that will visit the website peruse as well as acknowledge the choice-of-law condition. 

The adequacy of the disclaimer may likewise differ concerning what liabilities the disclaimer attempts to keep away from. Other than the decision of-law type disclaimers examined above, there are regularly four unique kinds of disclaimers: 

  1. Obligation proclamations: It is normal to have connections to different websites, on a wide range of websites. A duty articulation regularly expresses that the uploader of one website doesn’t assume any liability for the substance on the websites to which it is connected. Responsibility articulations: These endeavor to renounce liabilities emerging from the website substance. The adequacy of such disclaimers relies especially upon the kinds of liabilities they address. If people could harm themselves or endure actual harm to the property depending on the substance of a website, a disclaimer for such an obligation probably won’t have any impact whatsoever. Further, a few States may even make it an offense to try to limit particular kinds of obligation. 

2. Domain proclamations: Given the specialized troubles in restricting admittance to a website utilizing topographical standards, there is expanding utilization of disclaimers such that the website may be open for dealings with people from specific nations. Such impediments can be alluring in different regards; e.g. to restrict the danger of brand name encroachments as well as to restrict the danger of promoting something unlawful, specifically States.  Copyright proclamations: It is likewise genuinely regular for the disclaimer to incorporate, or be shown related to, some articulation regarding how the data on the website might be utilized. 

Solutions to combat challenges

  • Terms of services and use

The terms and conditions agreement of any website details the intellectual property ownership of the website, a disclaimer of liability, a modification clause, an acceptable use clause, a clause stipulating the applicable law and jurisdiction, and different legal information. Specifying jurisdiction and governing laws before the user avails of the services available on the e-commerce website limits the liability and sets out the method of solving disputes primarily. A user has the opportunity to read these conditions and accordingly decide to use the site or not.

  • International governing body

The current law requires modification or replacement as it somehow endangers the progress of e-commerce. Advocates of the view argue that conventional rules premised on the thought of national sovereignty are irrelevant in a global marketplace where the Internet recognizes no boundaries. Laws that conduct by citing notions such as the place where the contract is made, the location of the party(s) or the location of the transaction with which it has proximate connection do not fit conveniently with the vibrant and extensive nature of the Internet. One answer for this problem could be the institution of an international governing body. 

  • Separate jurisdiction

 Philosophers such as David Post support that cyberspace needs to be treated as a different jurisdiction. Indeed, some observers contend that an informal separate jurisdiction already exists. This is supported by the fact that laws are being designed and enforced by “cyber-communities”, and that these laws are inconsistent outside of the cybercommunity.

Contract and consumer protection in cyberspace

A contract is legally binding when it fulfills the following essentials:

  • offer;
  • acceptance;
  • intention to build a statutory association;
  • consideration (of monetary value).

However, it may still be considered invalid if:

  • it abuts the commission of a crime or illegal act;
  • itis entered by an incapable person which includes minor or insolvent;
  • agreement flows through fraud, misrepresentation, coercion, negligence, or undue influence.

Section 10 of the Indian Contract Act 1872 mentions which agreements may be called contracts. The condition is that the agreement should have the following characteristics:

  • the free will of parties competent to contract,
  • valid consideration 
  • legal object,
  • not void on the face of it.

Does the display of goods on a website constitute an offer?

Generally, the presentation of goods in a catalog and a store have been tagged as invites and not as offers. Similarly, the display of goods on a website usually does not constitute an offer. This is the main rule. However, if the language utilized in the store advertisement is conveyed through the language of an offer, what would ordinarily be an invitation to treat can be interpreted as an offer fitted for acceptance. Further, in one US matter, Lefkowitz v Great Minneapolis Surplus Stores, it was averred that displaying a fur stole worth $139.50 for only $1 as per the notion of the first-served basis, formed an offer. The court judged that if the offer in issue is clear, definite, and explicit, and devises nothing subject to negotiation, it may frame an offer. 

The fundamental idea behind restricting the impact of an alleged offer to simply that of an invitation to treat is that a vendor can never understand how many people might be influenced by the alleged offer. Hence, it would not be appropriate for the vendor to entertain the infringement of a contract if he cannot trade because of the shortage of supply. This deduction has slight significance for the case above. Lastly, despite the statement not being used as language enough to get it similar to an offer, it may provide an increase to obligations under, to speak, trade practices law if it is false or misleading.

Section 5 of the Sale of Goods Act, 1930 states that a contract of sale is formed by an offer to purchase or trade merchandise for a value as well as receipt of such an offer. So the issue is, whether it is achievable to make an online contract? Section 4 of the Information Technology Act, 2000 has allowed legal recognition of electronic records. Accordingly, the offer and acceptance by an electronic record will establish a contract for the Sale of Goods Act, 1930. Therefore, an online contract for the sale of goods will: 

(a) have the equivalent effects like an ordinary contract; 

(b) possess a certain level of performance; 

(c) provide corresponding duties and rights to the buyer as well as the seller; 

(d) produce the related results for violation of contract as a contract in real life.

Liabilities and entitlements, governing laws with examples

  • Statutory provisions of the IT Act, 2000

The Act comprises the significant aspects of e-commerce: 

  • Legal recognition of electronic records and communications contractual framework, evidentiary aspects, digital signatures as the method of authentication, rules for determining time and place of dispatch, and receipt of electronic records. 
  • Cyber contraventions- civil and criminal violations, penalties, the establishment of the Adjudicating Authority, and the Cyber Regulation Appellate Tribunals. As the Act establishes the legal validity and enforceability of the digital signature and electronic records as well as the secure digital signatures and secure electronic records, it will enable the growth of e-commerce in India, because the secure computer-based signatures will minimize the incidence of electronic forgeries, enable and foster authentication of computerized communications and facilitates commerce by the means of electronic communications.
  • Security provision of IT Act, 2000

Major enigmas related to e-commerce are the protection of business plus monetary transactions. The I.T. Act 2000, provides for investigation, trial, and punishment for certain offenses. The offenses are enumerated in sections and provisions under Chapter XI of the act as given below:  

Section

Offense

Section 65

Attack on Source code

Section 66

Hacking 

Section 67

Obscenity

Section 70

obtaining preferred shielded systems 

Section 71

misrepresenting to Controller of Certifying Authorities

Section 72

violation of privacy/ confidentiality

Section 73

proclaiming fabricated digital signature certificate

Section 74

obtaining an available digital signature for fraud.

Section 75

the offenses or violations committed outside the territory of India.

 

  • Privacy and data protection provision of IT Act, 2000

The principles under the Information Technology Act, 2000 are interpreting data, criminal and civil obligation in the matter of transgression of data security, and breach of privacy. Section 43 A of the IT Act grants for compensation when private data with sensitive personal details is jeopardized by a business when it was being processed by the business, whether due to negligence in fulfilling or sustaining reasonable safeguards. This provision can be applied by data controllers or for personal data against a third person. However, the operations will be in separate ways to justify the compensation.

  • The Consumer Protection Act, 2019

The Act defines “e-commerce” as the median of buying or selling goods or services as well as digital goods over a digital connection or the internet. Under Section 94 of this Act, the repression of unlawful business methods in e-commerce and direct selling. Further, it safeguards the rights and interests of consumers. Moreover, the Act also added a requisite notion of “electronic service provider.” An electronic service provider (ESP) works to facilitate a product seller to be involved in the marketing of goods or services to a user through any online marketplace or auction site. ESP is covered under the meaning of a product seller. Forthwith, the online marketplaces and auction sites can be added to product obligation claims following the conditions as asserted in Section 86 of the Act. The inclusion of e-commerce within the purview of this Act affords protection of the rights of the e-consumers as well as allows them to move to face the e-commerce websites in the case of any transgression or violation.

Case laws for e-consumer disputes 

Rediff. com India Ltd v. Urmil Munjal, wherein the shopper needed to return and claim the refund for products conveyed by the online shopping site. However, there was no data with respect to the return policy, which could give the subtleties of the location to which the items are to be returned. As referenced in the terms and conditions, the online portal was the facilitator among purchasers and the vendors and, it was the obligation of the facilitator to advise the complainants on how the products are to be gotten back to the dealer. The court held that the shopping site was the means for correspondence among purchasers and dealers, bringing into reality contracts of sale and acquisition of movable merchandise. The online portal was in this manner held at risk on the grounds of ‘lack of help’ for not giving adequate data

In the case of Kent RO Systems Ltd. & Anr. v. Amit Kotak & Ors. (“Kent RO Systems Case”), the issue before the High Court of Delhi was, “whether once a complaint has been filed by a complainant with the e-commerce platform service provider relating to allegedly encroaching merchandise displayed by the certain seller(s) on the platform, whether the e-commerce platform committed to constantly verify whether products subsequently displayed by the same sellers that may infringe the intellectual property rights of the complainant. The Delhi HC held that the question of an intellectual property right infringement is more often than not technical and intermediaries are not equipped and not required to screen all merchandise/data hosted on its foundation for infringement of the rights of persons who have made complaints in the past relating to infringement.

In WWE v. M/S Reshma Collections, it was held that Division Bench at the 20 very findings coincided with the WWE that the issue of territorial jurisdiction is a jumbled question of law and fact, hence, ought to be adjudicated at the final stage of the suit, and not at a preliminary stage of admission. Further, the Division Bench observed that the learned Single Judge blundered in reversing the Plaint, as at the preliminary stage, just the averments of the Plaint should be perceived, and if, on a challenge, a matter for territorial jurisdiction is brought, the plaint ought not to be returned. 

In the case of Christian Louboutin v Nakul Bajaj where the respondent traded the plaintiff’s merchandise without consent through its website www.darveys.com, therefore generating suspicions as to the quality of those products in the perceptions of users. The plaintiff asserted that the defendant’s actions also influenced the reputation of its brand and customer goodwill. Eventually, the use of its name would cause the brand irreparable damage. The court granted an interim injunction restricting the defendant from marketing unapproved products.

Conclusion 

The emerging regime of internet trade is thrilling and zealous. Apparently, this new trade system is providing consumer ease to the consumer to sell and purchase services and goods. However, one can’t ignore complexity in understanding the legal facilities for a less hostile and consumer-friendly environment.  As of now, despite the fact that e-transactions are in charge, we should understand that the laws overseeing these exchanges are yet to arise and create. Despite the fact that we have the IT Act set up, it isn’t adequate to manage online transactions in India. It is a positive development as it sets out the suitability of electronic records, punishments for digital crimes, and so on. Nonetheless, on account of online exchanges, it very well may be viewed as an empowering rule that should be perused in consonance with the Indian Contract Act, 1872 to decide if the online exchange does without a doubt comprise a substantial agreement. There is a critical requirement for explicit enactment to be authorized to decide issues including ward for internet business questions. By the day’s end, internet business is more about the procedure and business the board than it is about innovation. The online stage ought to give a creative foundation as well as inventive and restrictive data structures with adequate assurances and shields for its clients. This will guarantee the issues will stay under control or possibly the organizations would be set up with a technique to handle them.


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