This article is written by Akshay Kumar pursuing Diploma in US Contract Drafting and Paralegal Studies at Lawsikho.
This article has been published by Sneha Mahawar.
Table of Contents
Introduction: What is e- Commerce
Did you ever book a bus/train/flight ticket online? Have you booked a cab online? Have you transferred money online? Have you scheduled an online consultation with your doctor? Then you have already used an e-Commerce Website. Any website that provides or becomes the medium for a buyer and seller to get into a deal for selling its products or providing its service can be called an e-Commerce Website.
In this busy world, we are all used to these websites. In the term “e-Commerce”, e stands for electronic, and the term e-Commerce refers to any commercial activity that involves the buying or selling of goods and services via the internet.
Although online shopping is famous in India, very few people prefer to order online. There have been a few instances in which people have started buying online more often. For example, in the Big Billion Day Sale, the Amazon Shopping Festival, and also during COVID time, most people have become tech savvy, and it has now become routine.
Introduction
In today’s world, most companies have integrated their business with the internet to network with or communicate with their clients anywhere in the world. These Businesses don’t necessarily need to have their office/store in every country, state and city, saving on costs for such premises, ease of accounting by maintaining the record of sales automatically, etc. These transactions are definitely helping both parties in various ways.
Growing businesses opt for free delivery of goods and services and offer good discounts for payments made online at your doorstep by hitting a button. Also, there are Cash on Delivery or Pay on Delivery options available for Online Shopping. These benefits attract customers. These transactions can be termed as e-Commerce transactions.
Most people have become tech savvy, lazy, or busy, so they can’t wait in long queues for buying goods and services anymore, and online shopping has made it easy. They can choose from a wide range of goods and services. Now they can even book a health checkup sample collection or eye checkup at home, online in app doctor consultations, etc. Various services can be booked, and the same can be availed online just by clicking on the button. It is that easy.
Types of e-Commerce
There are various types of e-Commerce. A few of them are:
B2C- B2C
It is Business to Consumer and is the most commonly used e-Commerce. Amazon, Flipkart, and various such businesses deal with customers by selling their goods and services directly.
B2B- B2B
It is Business to Business and it involves transactions between business and business to sell their goods and services. Like IndiaMart and Truecaller providing services to businesses by promoting their businesses.
C2C
Consumer to Consumer where individuals can sell products or services to other individuals. Like Olx and Quikr.
C2B
Consumer to business, where an individual provides their product or service to businesses. Like a Freelancer who provides their software development services at Fiverr to IT Companies.
Which laws are applicable to e-commerce transactions
In any business, it is always possible that there will be conflicts between both parties and necessary compliance by the business. In such cases, the laws or terms and conditions should be known for easy resolution. When certain Terms and Conditions of the company and Laws contradict each other or are unclear and no parties to the contract are ready to compromise. It becomes necessary to know which laws to apply.
The laws vary from country to country and that can be a problem. It becomes easy when there are Treaties and Conventions between different countries to determine the laws that are applicable to such transactions to determine jurisdiction and Laws. Laws vary based on Jurisdiction and Cause of action.
However, it doesn’t supersede local laws, and local laws will definitely have more value. So when international e-commerce transactions happen, the legal knowledge regarding applicability needs to be known. In respect to Indian e-Commerce transactions. The laws that are applicable are:
India Contract Act, 1872
It lays down the essential elements of Contracts in India. There is a contract between the buyer and seller, and so we should know there should be rules and regulations that are applicable to the transaction. This is an online transaction; we can say that it is an online contract. So it is applicable to such contracts.
Criminal Procedure Code
It governs the procedure for the investigation and trial of criminal offences. If there is a criminal offence involved in an e-Commerce transaction where one party has committed fraud, cheating, etc. in regards to the transaction, then this will apply.
Civil Procedure Code
It lays down provisions for the place of suing, and both parties in the contract can approach the appropriate court. This will apply to e-Commerce transactions because most contracts are of a civil nature.
Indian Penal Code
The provisions of the Code will apply when offences like forgery, fraud, cheating, and impersonation happen in an e-Commerce transaction.
Consumer Protection Act, 2019
It contains provisions related to consumer rights, consumer dispute redressal, product liability, unfair trade practices, etc. This provides legal framework for protection of consumer rights and interests in India
Competition Act 2002
It contains provisions to promote fair competition in the market and prevent any anti competitive and unfair trade practices.
Information Technology Act, 2000
This provides legal recognition for electronic media and establishes provisions related to data protection, cyber security, and third party liabilities in e-Commerce transactions. It is the primary legislation governing e-Commerce in India. The data of customers is personal and sensitive, so if a business collects such data from its customers, then it is the duty or responsibility of the business to protect it from misuse and from getting into the wrong hands.
Income Tax Act
It is a direct tax applicable to all the transactions specified in the Act in India. It governs the taxation of Income earned in India, and if the business generates income from e-commerce, then such income will certainly be taxable under the Income Tax Act. If the buyer or seller is a foreign individual or company and the transaction falls under specified categories, then TDS and TCS will be applicable to such e-Commerce transactions as well. They would have to comply with the Income Tax Act.
Goods and Service Tax Act:
It is an Indirect Tax applicable to goods or services. Any Business that provides Goods and Services with a certain turnover will be obligated to have a GSTIN and file GST Returns. So they will have to follow the GST Act and comply accordingly.
Why is a place of suing or cause of action necessary in cases of disputes in e-commerce
Jurisdiction
There are two types of Rights and Claims available to a party or parties to the Contract. They are as follows:-
Jus in Personam
When Rights are enforceable against an individual, such a right can be called jus in Personam. Only that person is obligated to fulfill the duties and is liable for any loss or harm caused. The claims of rights or interests are in person. Contractual rights or Tortious Claims can be examples of Jus in Personam.
Jus in Rem
When Rights are enforceable against a specific thing or property, such a right can be called jus in Rem. The rights are enforced by actions or claims against specific property only. The claims for rights or interests are against tangible and intangible assets.
The terms and conditions may vary for each company, even in the same field. But the laws are the same for particular jurisdictions.
– Then they resort to resolution through a judicial authority that is impartial to both parties. It can become difficult to determine jurisdiction when it comes to international e-commerce transactions where both parties are located in different countries, so they can go with ODR (Online Dispute Resolution). Most Companies mention their jurisdiction so that it is easy for both parties to decide which court to approach.
– The Indian Contract Act, 1872, is now applicable to the State of Jammu and Kashmir also, making it applicable to the whole of India. Similarly, the IPC (Indian Penal Code), CrPC and various Acts have become applicable on J&K after its Reorganisation. This is how the laws enacted can play a role in finding/deciding the jurisdiction of the case.Similarly, any place outside India falls under some law, convention, or treaties and accordingly the jurisdiction is decided.
To determine the jurisdiction, it is necessary to understand the nature of business is being carried out, cause of action, the addresses of plaintiff and defendant, applicable laws and regulations, etc
Cause of Action
Depending on the cause of action, we can understand which laws to apply. It can be Contractual or Non Contractual. When any business is located in a country, it is obligated to follow certain laws, rules, and regulations of that country. These can be the causes of action:
Breach of Contract
Any party to the Contract fails to fulfill his part, like a delay in delivery where time is a constraint, supplying defective goods, an item missing, non-payment or other aspects of the contract that are essential for performance. Such nonperformance becomes a cause for action.
Non Compliance
When the certain obligations are imposed by the local government, they must be complied with and non compliance will lead to cause of an action
Unfair Trade Practice and Anti Competition
When the conduct of the seller is defective, deceptive, anti competitive and misleading by ways of false advertising, any act which is unfairly affecting the business in competition will become a cause of action.
Fraud or Misrepresentation
If any party uses deceptive ways to manipulate a transaction, that can also be a cause of action, and it can be anything like intentionally providing false information, cheating, or misrepresenting facts about any good, such as price, quality, etc.
Consumer Protection Violation
Consumer Protection involves Consumer rights, preventing consumers from getting misled by false pricing, unfair terms and conditions, etc., and failure to provide these to consumers can be called a consumer protection violation.
Conclusion
All these laws help in understanding the jurisdiction (place of suing), cause of action, and possible outcomes of any disputes in regards to e-Commerce. The laws in regard to e-Commerce Disputes should be progressive, as they are something that keeps evolving as time goes by. For now, buyers and sellers should both know their rights and duties. They must abide by laws and understand that whenever they have any dispute, it is better to clarify with the other party first, and if they don’t agree, they can approach the court for justice. Any dispute in this world can be solved by the parties involved in it by having a word, and as disputes increase, the burden on the courts increases, and both parties have to bear the cost and give their time. A Genuine Seller would not like to waste his money and time fighting with his customer without any reason, and this would simply tarnish his image in the market. The Company should mention the Jurisdiction where they can be sued so that the buyer can file suit accordingly.
References
- https://cyber.harvard.edu/olds/ecommerce/disputes.html
- https://www.scconline.com/blog/post/2021/06/05/e-commerce-suits/
- https://www.dwulaw.com/news/alternative-dispute-resolution-for-e-commerce/
- https://blog.ipleaders.in/place-of-suing-and-cause-of-action-in-e-commerce-disputes/
- https://www.indiacode.nic.in/
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