International E-Commerce Laws – Part I

International e-commerce laws pertain to online commercial transactions that takes place for the purchase or sale of goods and services.  Electronic contracts are used for the purchase or sale of software through shrink-wrap, click-wrap, and browse-wrap agreements. In general, these electronic transactions have a correlation to taxes, duties, and custom laws. In addition, the topic of intellectual property must be addressed to protect confidential information such as trademarks, copyrights, patents, and trade secrets.

There are six principles that apply to electronic agreements. First, the users should have automatic access to the agreement’s terms. Second, the contractual terms should comply with the applicable laws in relation to form, content, notice, and disclosure. Third, the users should be given the opportunity to take some form of affirmative action to consummate the transaction. Fourth, users should be given the opportunity to reject the agreement. Fifth, the agreement process should provide the user to detect and correct errors. Sixth, users should be able to print the agreement and software developers should provide a method to preserve the electronic records.

It is important for e-businesses to comply with the guidelines. For example, e-businesses should use fair advertising and marketing strategies for the online transactions. They should provide correct and accessible information about their company and its goods and services. They should fully disclose information regarding the transaction’s terms and conditions. They should provide a secure method for online payments. They should protect the customer’s privacy during the e-commerce transactions.

There are state, federal, and international laws that are applicable to e-commerce transactions. The Uniform Commercial Code (“UCC”) is a standard body of law that applies to commercial transactions. It is not a federal statute but a uniformly adopted state law. It has several articles for different transactions. For example, Article 2 applies to the sale of goods. Article 2A applies to personal property leases. Article 3 applies to negotiable instruments such as checks and promissory notes. Moreover, Article 9 applies to secured transactions for obtaining secured credit for property.

The Uniform Electronic Transactions Act (“UETA”) which is codified under California Civil Code Sections 1633.1 et seq. is applicable to electronic commercial transactions. It is referred to as California’s e-Signature law. Section 1633.7 states as follows: “A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.” It defines an “electronic signature” as any kind of electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record. This statute addresses issues such as the enforceability, records retention, and evidentiary use of electronic records. It has similar provisions to the federal E-SIGN Act but it is subject to federal preemption which means the federal law would supersede any inconsistent state law provisions pursuant to 15 U.S.C. § 7002.

The Uniform Computer Information Transactions Act (“UCITA”) was drafted to address the creation and enforcement of contracts related to electronic information. It has been referred to as the “Commercial Code for the Information Age” because it was supposed to address software licenses, online databases, e-books, and computer information transactions. It was initially approved by the National Conference of Commissioners on Uniform State Laws (“NCCUSL”). It was designed to resolve issues regarding software development, distribution, and licensing. However, it has not been uniformly adopted by all states since it was a controversial piece of legislation.

It’s important to know your legal rights and responsibilities when it comes to international e-commerce transactions and the statutory and regulatory guidelines. Please contact our law firm to speak with an international e-commerce attorney at your earliest convenience.