UK Legal Issues E-Commerce Int’l Loophole Warning

A leading legal IT services firm in the UK has warned of potentially significant contractual mistakes by “bricks and mortar” companies failing to consider the legal consequences of moving their products and/or services online for sale.

The legal firm — Sharespeares — says that, while e-commerce is rapidly becoming a popular method of selling goods and services, changing the way businesses have traditionally traded and communicated with others, businesses need to be aware of cross-country legislation as it relates to the Internet.

Firm Warning

Speaking at an e-commerce seminar hosted by his employers and Internet Solutions for Business (IS4B) earlier this week, Richard Baizley, a commercial partner with the legal firm, warned that the Internet is an international, rather than national, medium.

As such, he told delegates at the event, it is essential for prospective e-commerce traders to be aware of the relevant international law and contract issues which govern trading.

The unwary business, he said, could find itself drawn into litigation in foreign countries and having to apply foreign laws.

“E-commerce and e-contracts bring new legal problems and, as it is a comparatively recent subject, specific case law is limited,” he said, adding that contracts made via the Internet when ordering goods and services involve virtually no paper and often no human-interface.

Baizley went on to say that, when trading over the Internet, there are two key areas of concern for UK companies. “Businesses firstly need to ensure they comply with, and are covered by, UK contract law. In some countries, the law means that certain provisions override the agreed contractual terms of the party contract and where it was made,” he said.

Against this backdrop, he told delegates, businesses may think they have agreed terms with the party they are doing business with, but could find themselves subject to other countries’ laws which override the original agreement.

Keeping E-Commerce Friendly

“The second aspect is the concept of internationally agreed commercial protocols, Currently there are a number of multilateral private law conventions which affect contracts and contracting practice,” he said.

According to Baizley, these include the United Nations convention on contracts for the international sale of goods and the “Undroit” principles of international commercial contract law.

“Our message to businesses looking to become e-commerce friendly should firstly try not to deal with the whole world,” he said, adding that, as the Internet is truly international, any advertisement or offer placed on the Internet is in theory open to acceptance in any jurisdiction in the world.

“It’s obviously impossible for businesses to be fully conversant with every single legal law, regulation, statute and interpretation throughout the world. Therefore it is critical for them to focus on the markets they wish to operate in and to exclude those they do not,” he said.

“Clearly for any company which wishes to contract in accordance with English law, it is critical the point of contract formation ensures that UK law is the relevant governing legal system,” he added.