CHAPTER I

INTRODUCTION

6. Differences between Electronic Commerce and traditional commerce - The major difference is the way information is exchanged and processed: ‡Traditional commerce:  Face-to-face, telephone lines , or mail systems  Manual processing of traditional business transactions  Individual involved in all stages of business transactions ‡E-Commerce:  Using Internet or other network communication technology  Automated processing of business transactions  Individual involved in all stages of transactions  Pulls together all activities of business transactions, marketing And advertising as well as service and customer support

1 CENTRAL THEME OF STUDY The central theme of study is to study concept of Ecommerce its origin and developments, Difference between traditional Commerce and Ecommerce, advantages and disadvantages of ecommerce, existing Indian cyber law and legal issues arising from the ecommerce such as taxation ,jurisdiction ,online security issues , IPRs violations , authentication and other issues. Moreover to study concept of E- contract, laws applicable to it, its rules and procedure of formation and conclusion, applicable rules and jurisdiction in case of dispute arising from

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Econtracts and various kinds of Econtracts. Moreover to study the status and regulation of ecommerce in India. 2 RESEARCH METHODOLOGIES The present research is a doctrinal research where it is exhaustive research that have been carried out on Information Technology act,2000, original and as amended on 2008 and other laws that provides for E commerce . This has been achieved by the original source of law. The researcher referred the documents such as books, Articles, Newspaper Article reference, All India Report, All India Journal and Allied material as primary source and internet accessories as secondary sources. PROBLEM 1) Modern world of business is totally driven by the computer technology. It necessitates electronic and online transactions. But the today¶s cyber laws are not clear and sufficient for electronic commerce and contract. 2) Privacy violation and data piracy in the e-world causes mass damage which is beyond the recovery. 3) What the remedies provided by the IT Acts and all the other acts that are amended in tune of IT Act are insufficient. 4) Investigation mechanism is not that much speedy due to which wrongdoer flies from hands of law. 5) Adjudication is also not speedy and expertise which has proved incompetent to tackle with the cybercrimes related to data protection. 6) Expensive Broadband ±Computer Illiteracy ±Poor Internet Connectivity ± online payment not secure .taxation , jurisdiction issues are major problems for e commerce RATIONAL AND SIGNIFICANCE OF STUDY

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Taking in to account the above mentioned problem related to present research subject it has become very essential to study the preset laws that are governing the e commerce It is significant to study the shortcomings of the legislations and to analyze that shortcomings in the light of the cyber laws in the other countries. Such study will conclude with some significant findings which will evolve some suggestion of amendments in the cyber laws which will be very significant to develop and advance the e commerce. SCOPE OF THE RESEARCH The present researcher has taken in to analyze the Scope and Extend of the Information Technology act 2000 of India with its amendment in the year 2008 with reference to the cyber jurisprudence of other nations. Hence scope of the present paper extends to research of International legal systems for e commerce AIM AND OBJECTIVES OF THE RESEARCH The present research has following objectives:1) To study the historical background of the ecommerce i.e. directly from barter system to the evolution of trade, commerce and ecommerce. 2) To study the concept, nature and scope of ecommerce 3) To analysis the various issues arising there from. 4) To analyze the Indian law in the light of the foreign laws and to understand the lacunas under municipal laws to deals with e commerce, 5) To analysis the concept of Electronic contract and law of its formation and conclusion. 6) To make critical study of legislative framework of Ecommerce in Indian scenario. 7) To make available this research as a guidelines to those who will undertake the similar research. 8) The researcher has undertaken this research to be available for the researcher for the further research for Ph.D

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9) To suggest some legislative, procedural and technological measures for success and advancement of the e commerce

HYPOTHESIS ³At present Information Technology Act, 2000 is insufficient to regulate Ecommerce and issues related to it in India´. REVIEW OF LITERATURE In book titled ³Information Technology Law and Practice´ author by Dr. Gupta & Agarwal discussed about the rapid development of information technology presents challenges for the law; challenges which are not confined to any single one of the traditional legal categories but which arise in, different faculties of law.´ Under his book2 Vakul Sharma Said That; ³Moreover, it is time to amend the old Acts to bring them at par with the new technological developments. There could not be one Act to deal with all the questions of Ecommerce. The digitized developing countries have to go beyond one- Act syndrome for greater effectiveness.´ Off course it is right it will against time wasting task so it is immediately necessary to make present IT Act more efficient to help forward Ecommerce. CONCEPTS AND VARIABLES:1 Commerce : The exchange or buying and selling of commodities; esp. the exchange of merchandise, on a large scale, between different places or communities; extended trade or
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Premier Publishing Company; Edition-2009. Information technology law and practice, law & emerging technology, cyber law & ecommerce. Universal law publishing co. Edition-2010.

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traffic. that the purchase and sale of product for the sake of earning profits.Contract is the essential part of commerce 2 Contracts: A contract is a legally enforceable promise between two or more persons. A more formal definition would be: An agreement between two or more parties that creates in each party a duty to do or not do something and a right to performance of the other's duty or a remedy for the breach of the other's duty. Contracts have existed in virtually every form of civilized i.e., commercial, society. Elements of a valid contract are:
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By merriam-webster Accourding to Indian contract act 1872 1 Offer and Acceptance (aka Mutual Assent) -

There can be no contract without a valid acceptance of a valid offer. Oftentimes, it becomes difficult to determine if an offer has been accepted. As a general rule, an acceptance must ³mirror´ the offer. This is known as the ³mirror image´ rule. We can go a step further and see that if a purported acceptance is really a counter-offer, the original offer is deemed rejected; there will be no contract unless the counter-offer is then accepted. We must also make sure the parties have a µmeeting-of-the-minds¶, which means that there are no mistaken facts between them; and that one intends to part with what the other intends to acquire, and vice versa An Offer that does not contain a time limit within which it must be accepted is considered open for a reasonable amount of time, or until rejected. 2 Consideration --Assuming there has been a valid acceptance, and a meeting of the minds, we must then ask about the ³consideration´. What was given in exchange for what in return? Both parties are generally required to give consideration in order for there to be a binding contract. For example, I agree to sell you my car for $2,000. In other words, in exchange for my car, you will give me the money. My consideration is the car, and your consideration is the money. Contrast this with a gift. If instead of selling you my car, I gave it to you as a gift, there would be no consideration on your part. If I made a promise to give you my car as a gift and then refuse to give it, there is nothing you can do to force me. A promise to make a gift is not a legally enforceable promise Consideration can also consist of a promise not to do certain things. For example, suppose I have a right to sue you for damaging my property, but instead of suing you, I accept payment of $1,000. My agreement not to sue is consideration for your $1.000. Also, as a general rule, past performance or behavior cannot form adequate consideration for a new promise. 3 Legal Capacity --All parties to a contract must have legal capacity to contract. This means the parties must be of sound, sober mind. Most jurisdictions have special rules where underage persons, or minors, are concerned. A minor is not liable for his or her contracts, and a person

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1. Offer

2. Acceptance 3 Consideration 4. Legal Capacity of the parties 5. Legal

object or purpose 6. Good Faith 3 Internet: The Internet is a global digital infrastructure that connects millions of computers. It is a global internetwork (network of networks), with cross platform compatibility, using the Internet Protocol (IP) to communicate between computers. It uses existing public telephone and communication (including satellites) networks to relay data between networks using routers. The fastest growing part of the Internet is the World Wide Web. Other parts of the Internet include services such as gopher, telnet .
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4 World Wide Web The World Wide Web (WWW) is a uniform method of accessing and retrieving information on the Internet. This information is almost always retrieved using the HyperTextTransfer Protocol (HTTP). In fact HTTP has been in use by the World Wide Web since 1990, and its use has increased steadily over the years. Today there are millions of Web sites on the World Wide Web, all of them using HTTP.

who contracts without knowing their age does so at their own peril. The minor is usually allowed to affirm or disaffirm a contract for a reasonable time after reaching the age of majority. What about ³necessities´? These are items that are considered essential for basic survival, such as housing, food, clothing, etc. Although the minor won¶t be held responsible for items such as these furnished by a third party, the parents of the minor can be held accountable. This reasoning is based on the parents¶ duty to care for the child until he/she reaches majority. If a minor is actually ³emancipated´, i.e. living on their own and providing for their own needs, then the parents will not be liable for necessities. Legal capacity can also be an issue when an agent, or purported agent, is attempting to contract on behalf of his/her principal. 4 Legal Object --Promises to pay someone in exchange for illegal property or for the commission of an illegal act, such as murder, are not enforceable. If the object of the contract is illegal, the contract is void from its inception. 5 Good Faith-- All contracts are deemed by law to contain this requirement, which is really more in the nature of an implied contractual term. This means all parties to the contract are expected to act in good faith in performance of their contractual duties.
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Basic Internet Definitionshttp://www.pierobon.org/iis/index.htm

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Information on the World Wide Web is stored in a hierarchical fashion, using hypertext and hypermedia.
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5 Electronic contract:

E-contract is a contract modeled, specified, executed and

deployed by a software system. E-contracts are conceptually very similar to traditional (paper based) commercial contracts. Vendors present their products, prices and terms to prospective buyers. Buyers consider their options, negotiate prices and terms (where possible), place orders and make payments. Then, the vendors deliver the purchased products. Nevertheless, because of the ways in which it differs from traditional commerce, electronic commerce raises some new and interesting technical and legal challenges. For recognition of e-contracts following questions are needed to be considered:
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6 Electronic commerce: ³« the use of the global Internet for purchase and sale of goods and services, including service and support after the sale. The Internet may be an efficient mechanism for advertising and distributing product information, but our focus is on enabling complete business transactions.´
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7 Cyber crime --We all are well acquainted with the term ³cyber crime´. The simplest and one among the first official definition given by group of experts constituted by OCED
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in 1983.They defined the term computer crime as any illegal, unethical or

unauthorized behavior involving automatic processing and transmission of data. According to Cambridge Dictionary defines that Cyber crime as crime s committed with the use of computers or relating to computer, especially through the internet 8 Cyberspace

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Basic Internet Definitionshttp://www.pierobon.org/iis/index.htm

Article :-Econtracts and its legality by Vasudha Tamrakar & Pratibha Pal - Students: NLIU, Bhopal (M.P) 8 According to Treese and Stewart
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(Organisation For Economic Cooperation And Development)

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"Cyberspace is the `place` where a tele phone conversation appears to occur. Not inside your actual phone, the plastic device on your desk. Not inside the other person's phone, in some other city. _The_place_between_ the phones. The indefinate place _out_there_, where the two of you, human beings, actually meet and communicate."
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9 LAN: A LAN is a local area network. A network is a group of computers connected together by some type of broadband cable, such as FDDI, Token Ring or Ethernet. Since it is called a local area network, the network is contained within a single building, or even to a single floor.
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10 WAN: A WAN is a wide area network. It is a group of computers connected through bridges, routers, hubs and repeaters. Since it is called a wide area network, the network may extend across buildings on a campus, across the country, or even around the world.
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11 Protocol: A protocol is a method by which two computers agree to communicate.As human beings, we use language as a protocol. In this case we have agreed to communicate using the English language.
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12 Browser: A browser is a graphical user interface (GUI) application program that retrieves and displays documents from Web sites. A browser has the ability to render text and graphics in the browser window. More specifically it has the ability to: DISPLAY * Hypertext and hypermedia documents. * Text in different fonts, styles, colors, and sizes. * Foreign language character sets conforming to the ISO 8859 standard. * Forms composed of text fields, text widgets, buttons, checkboxes, etc.

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By Bruce Sterling
Basic Internet Definitionshttp://www.pierobon.org/iis/index.htm Basic Internet Definitionshttp://www.pierobon.org/iis/index.htm Basic Internet Definitionshttp://www.pierobon.org/iis/index.htm

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* Graphics in different formats.

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13 Uniform Resource Locator :

(URL) is the term used to identify an Internet
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resource, and can be specified in a single line of text. 14 Uniform Resource Name:

(URN) is the term used to identify an Internet resource,
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without the use of a scheme, and can be specified in a single line of text.

15 Uniform Resource Identifier :(URI) is used by a browser to identify a single document, and it too can be specified in a single line of text. URL vs. URN vs. URI :The difference between the three is subtle. An URL refers to

a Web page, including the scheme, but without a name location. An URN may also include the location of a code fragment. An URI refers to a Web page including the location of the code fragment, if one exists, and the scheme. URL URN http://www.pierobon.org/iis/review1.htm www.pierobon.org/iis/review1.htm#one

URI http://www.pierobon.org/iis/review1.htm.html#one Because Web servers allow for default documents and do not require a scheme to retrieve a document, the subtle difference between an URL and an URN and an URI is hard to tell. URL is now used as the generic term.
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16 Transmission Control Protocol/Internet Protocol:- TCP/IP is an abbreviation for Transmission Control Protocol/Internet Protocol. TCP is a lossless protocol, requiring a handshake to insure that data is not lost during transmission. Internet Protocol (IP) uses addresses which are a series of four "octet" (byte) numbers in a dotted decimal notation.

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Basic Internet Definitionshttp://www.pierobon.org/iis/index.htm Ibid Ibid Ibid

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For example: 199.246.24.130 IP addresses are of three classes: * Class A Class C

* Class *
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Application protocols such as HTTP, and FTP are based on and use TCP/IP.

17 Domain :- A domain is logical grouping of computers on a network. It may include multiple networks. It may also just be a subset of a network of computers. So domains can have subdomains . 18 Domain Name : Just like people, domains need to have names. A domain name on the Internet has the following form: [subdomain].[subdomain].[subdomain].[...].domain For example my electronic mail address includes my name and my domain name. pierobon@pierobon.org
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19 The top level domains:- The top level domains (TLD) of the Internet are: * com ... for commercial entities * edu ... for four-year educational institutions * gov ... for non-military, United States federal government instititutions * mil ... for United States military orgianizations * net ... for network operations and Internet Service Providers (ISP) * org ... for non-profit organizations There are also domain names for each individual country. These conform to the ISO 3166 two-lettter code for each country. For example my electronic mail address in Peru is pierobon@amauta.rcp.net.pe
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20 Hypertext:- Hypertext is text with links to additional information about that text. Hypertext fits very well into the hierarchical architecture of the World Wide Web. The
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Ibid Ibid Ibid Ibid

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first known use of hypertext is in the Book of Psalms. The numbers above the words refer to a Psalm number where one can find more information about such word.
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21 Hypermedia : Hypermedia is the ability to display pictures, video, and sound.

22 Socket :-A socket is an end-to-end connection between a client and a server identifying: * IP address (client, server) * protocol (TCP, UDP) * port (client, server) A socket is a network communications end point. The analogy is to a wire (the network data connection) being pluged into a socket. Sockets come in two primary flavors: active and passive. An active socket is connected to a remote active socket via an open data connection. Closing the connection destroys the active sockets at each end point. A passive socket is not connected, but rather awaits an incoming connection, which will spawn a new active socket. A socket is not a port, though there is a close relationship between them. A socket is associated with a port, though this is a many-to-one relationship. Each port can have a single passive socket, awaiting incoming connections, and multiple active sockets, each corresponding to an open connection on the port.
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23 Port: - A port identifies an application or a service. It has been set up this way. There are TCP ports and UDP ports.Servers can accept multiple connections on a single port

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Ibid Ibid Ibid

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because of active and passive sockets. However, the important thing to remember is that there are two types of ports: well known and ephemeral.
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24 Server:- A server is a a software program, or the computer on which that program runs, that provides a specific kind of service to client software running on the same computer or other computers on a network.26 25 Host:-A host is a computer that is enabled to function on a network. To be a host on the Internet, a computer must * Have a domain name; e. g., nasa.gov * Use the Internet Protocol (IP) * Be assigned a unique IP address; e. g., 199.246.24.130 * Have a network connection that provides a route to the Internet
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RESEARCH DESIGN

The methodology of research is accepted here is purely doctrinal research. It is based on the theoretical background of Ecommerce laws, scholar¶s views and opinion on the same with the landmark and recent judgment. This Research does not involve empirical approach. The research is based on the authoritative texts on Right to Information Act 2000 with its consequent amendments, India telegraph act and other related legislations, Global Issues and UN Conventions, case laws, newspaper articles, Periodicals and internet sites. The sources for the completion of this dissertation will be both primary and secondary. Primary to the extent of that the books will be referred in great depth. Data will be

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Ibid http://www.linfo.org/server.html Supra note 26

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collected from reports, judgments and legislations. Secondary sources such as World Wide Web and articles published therein will also be made use of. Under Doctrinal Data, the researcher plan to collect the following: Books by various authors on administrative law would be referred to. 1. Cases will be mentioned and in this regard, books, law reporters and software and online material (such as SCC Online and Manupatra) will be referred to. 2. Various Acts and Legislations dealing with Right to Information Act2000, Indian penal code, Indian Telegraph act,1885, Indian post office act of 1888 etc.will be studied. 3. The Constitution of India shall be referred. LIMITATION OF THE STUDY Due to time restriction and limited finance the Researcher deals with only meaning and concept of Ecommerce., various issues arising there from. And ,Information Technology Act 2000 and ignore international laws and conventions except few references. Conclusion

SCHEME OF CHAPTERIZATION
CHAPTER I INTRODUCTION

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CHAPTER II

E COMMERCE: CONCEPT MEANING AND DEVELOPMENT OF ECOMMERCE

E-commerce stands for electronic commerce and pertains to trading in goods and services through the electronic medium,. On the Internet, it pertains to a website, which sells products or services directly from the site using a shopping cart or shopping basket system and allows credit card payments.(EC) describes the manner in which transactions take place over networks, mostly the Internet. It is the process of electronically buying and selling goods, services and information. Certain EC applications, such as buying and selling stocks and airline tickets on the internet, are growing very rapidly, exceeding nonInternet trades. EC is not just about buying and selling, it also is about electronically communicating, collaborating, and discovering information (sometimes referred to as ebusiness). It is about e-learning, e-government, social networks, and much more. EC will have an impact on a significant portion of the world, affecting businesses, professions, and, of course, people. 1.E-Commerce Concept In a broad sense Electronic Commerce (E-Commerce) includes not only Internet commerce but also transactions through other electronic medium. In other words it can be described as Transaction between a company and its customers i.e. Buying and selling of Goods, services and information (including after-sale service and support);  exchange of structured business information between two or more Companies, e.g. Electronic data interchange and Internal commerce involving work flow reengineering, product and  Service customization, SUM
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etc; by using Electronic devices.

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Supply Chain Management

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2. Definitions of E-Commerce 2.1 According to Zwass ³« the sharing of business information, maintaining business relationships, and the conducting business transactions by means of telecommunications networks´ He pointed out that e-commerce includes not only buying and selling goods over Internet, but also various business processes within individual organizations that support the goal. Four different types of information technology are converging to create the discipline of e-commerce:  electronic messages, email and fax  sharing a corporate digital library  electronic document interchange utilizing EDI and electronic funds transfer  electronic publishing to promote marketing, advertising, sales, and customer support 2.2 According to Treese and Stewart ³« the use of the global Internet for purchase and sale of goods and services, including service and support after the sale. The Internet may be an efficient mechanism for advertising and distributing product information, but our focus is on enabling complete business transactions.´ ³« . Speaking broadly, electronic commerce includes the use of computing and communication technologies in financial business, online airline reservation, order processing, inventory management... Historically speaking, the best known idea in electronic commerce has been Electronic Data Interchange (EDI)« ´ Their view of ecommerce has been expanded to services and support after sale. ³« This revolution is known as electronic commerce, which is any purchasing or selling through an electronic communications medium. Internet-based commerce, in general, and Web-based commerce, in particular, are important sub-disciplines of electronic commerce.´

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Development Of E-Commerce Development of EC applications started in the early 1970s with electronic funds transfer (EFT), which refers to the computer-based systems used to perform financial transactions electronically. However, the use of these applications was limited to financial institutes, large corporations, and some daring businesses. Electronic data interchange (EDI) was then developed in the late 1970s to improve the limitation of EFT. EDI enlarged the pool of participating company from manufacturers, retailers, services, and others. Such systems were called Interorganizational System (IOS). An Inter organizational System (IOS) allows the flow of information to be automated between organizations to reach a desired supply-chain management system, which enables the development of competitive organizations. From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing. The term

µelectronic commerce¶ was coined in the early 1990s when Internet became commercialized and users began flocking to participate in the World Wide Web. EC applications were then rapidly expanded. Possibly EC is introduced from the Telephone Exchange Office. The earliest example of many-to-many EC in physical goods was the Boston Computer Exchange, a marketplace for used computers launched in 1982. The first online information marketplace, including online consulting, was likely the American Information Exchange, another pre-Internet online system introduced in 1991. Since 1995, many innovative applications, ranging from direct online sales to e-learning experiences had been developed. Almost every organization in the world has a Web site. In 1999, the emphasis of e-commerce shifted from B2C to B2B. In 2001, from B2B to B2E, e-government, e-learning, and m-commerce In 2005, social networks started to rise and so did l-commerce and wireless applications. E-commerce will undoubtedly continue to shift and change in the future.

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In 1984 EDI, or electronic data interchange, was standardized through ASC X12. This guaranteed that companies would be able to complete transactions with one another reliably.In 1992 Compuserve offers online retail products to its customers. This gives people the first chance to buy things off their computer. In 1994Netscape arrived. Providing users a simple browser to surf the Internet and a safe online transaction technology called Secure Sockets Layer. 1995 Two of the biggest names in eIn 1998 DSL, or Digital

commerce are launched: Amazon.com and eBay.com.

Subscriber Line, provides fast, always-on Internet service to subscribers across California. This prompts people to spend more time, and money, online. In 1999

Retail spending over the Internet reaches $20 billion, according to Business.com. In 2000 The U.S government extended the moratorium on Internet taxes until at least 2005. Ecommerce diagrams show the growth of it in USA
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Source --www.internetworldstats.com/stats.htm

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Development in India As the world is growing into a global village by adopting the newest technology, the Indian consumer is demanding more and better services from the businesses. This is one reason why the emergence of ecommerce in India has been closely watched and is
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Survey 2009

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Article:-Prospects of E-Commerce in India BY Shweta Sharma, Sugandha Mittal Management Department, Swami Devi Dayal Institute of Engineering and Technology, Barwala, Haryana, India

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beginning to change the way business is done in this part of the world. Ecommerce gives businesses a chance to cater to the needs of the consumers in a very personalized way. India ranks third biggest e-shopping nation As per Assoc ham, e-commerce is likely to grow by 150% to Rs 5500 crores this fiscal year. The total e-commerce sales for last year were Rs 2200 crores. Delhi and Mumbai contributed 20% and 24% respectively of the total e shopper population in 2006-2007. For 2007-2008 their contribution is expected to reach 30% and 40% respectively. Here is an assumed data« 1. In 2006-2007, Delhi and Mumbai contributed 20% and 24% of the e shopper population 2. In 2007-2008, Delhi and Mumbai are estimated to contribute 30% and 40% of the e shopper population 3. Chennai and Bangalore contributed 7% and 6% of the e shopper populations in 20062007 4. In 2007 -2008, Chennai and Bangalore will likely contribute 12% and 9% of the online shopping population 5. 28% of shoppers are in the 18-25 age group, 48% in 26-35, 15% in the 36-45 age group and 9% in 45-60 age group 6. 88% of online shoppers in India were male, with 86% having at least a bachleor¶s degree 7. Electronic gadgets, apparel, railways, air and movie tickets were most shopped items last year 8. Products likely to gain popularity this year include jewellery, books, apparel, gift products, music, movies, hotel bookings but I am not sure how does these values speak on real time

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According to eMarketer Asia Pacific E Commerce Rises every year and it has been predicted by them that the Ecommerce market may make a hike from &59.1 billion at 2006 TO $168.7 billion by 2011 Here is the graph that shows the hike rate Based on the Graph, this is the statistics of Ecommerce usage for India 2006 : $800 million 2007 : $1.2 billion 2008 : $1.9 billion 2009 : $2.8 billion 2010 : $4.1 billion 2011 : $5.6 billion In a 250 million Urban population in India, 65 million are PC literate. Out of them, 46 million claim to be internet users though only 32 million are active. The growth of the claimed internet user base: 2000 : 4.9 million 2001 : 8.7 million 2003 : 11.9 million 2004 : 16.4 million 2006 : 32.2 million 2007 : 46 million

However, the growth of the active user base shows the following numbers:

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2000 : 2.2 million 2001 : 4.3 million 2003 : 7.5 million 2004 : 11.2 million 2006 : 21.1 million 2007 : 32 million

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Article:-Prospects of E-Commerce in India BY Shweta Sharma, Sugandha Mittal Management Department, Swami Devi Dayal Institute of Engineering and Technology, Barwala, Haryana, India

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3. Types of E-Commerce E-commerce is different from E-business --There are different types of e-commerce and we need to know what e-commerce is and how different it is from e-business. Ecommerce is used for business transactions through the internet medium while e-business involves one or more organizations making and individuals making commercial transactions through a digital medium. So when you want to start anything do with ecommerce, make sure you have followed the right methods to step up your business. 3.1 E-commerce is mainly of five main categories. 3.1.1) Business to Consumer (B2C) ± The B2C model is one of the widely used tools in the e-commerce industry. The pattern is very simple and easy. The marketers sell their products to the retailers who in turn sell them to the consumers. The B2C which was started around 15 years back wasn¶t looked upon as a very efficient system for boosting commercial sales, but over a period of time the popularity and efficiency has been recognized by most business merchants and it has also been looked upon as time and cost saving factor. 3.1.2) Business to Business (B2B) ± B2B is one of the high level businesses involving heavy capital and transactions worth trillions of dollars. Under this form of e-commerce the buying and selling takes place only between two businesses without the involvement of the consumer. The end product is purchased by one business from another and then sold to the consumer under their brand name. A watch manufacturing company might just purchase accessories from a manufacturer and sell them under her name. Major companies which already have a global name purchase manufactured products and then sell them to the retailers under their brand name. 3.1.3) Consumer to Consumer (C2C) ± The C2C format is a very simple transaction which takes place between two consumers. There many online sites which have made

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such transactions easy and possible. Consumers can directly make a purchase on any online site and have the product shipped directly to another consumer. 3.1.4) Peer to Peer (P2P) ± This is a very efficient medium of e-commerce which allows to share vital information. The consumers or businesses can send across different kinds of files and information which can be downloaded immediately and made use of. This doesn¶t generate much revenue as there is a lot of piracy taking place due to the invention of P2P clients. People illegally share music files and movies by uploading them on the websites which gets easily accessible to all clients using the different torrents. The one sharing the file and the one receiving it, both have to install this torrent and get connected to each other. 3.1.5) M-Commerce ± this is a very effective way of transferring information or even conducting business transactions. Almost every application is available for download on the mobile phone today. Even banks offer mobile banking facilities, while you can even do stock trading and booking of airline and railway tickets. M-commerce has become a major source for revenue generation for many organizations today. The internet is easily accessible on the mobile phone which makes it all the more easy for the businessmen and consumers to contact each other even when they are on the move and not gaining any access to the computer. Mobile generation has revolutionized e-commerce completely to a whole dimension of trade and commerce. E-commerce is evolving to new levels everyday as per the needs of the businesses and consumers. Transcending time and space to reach out to the global audience with just one click is definitely something commendable and e-commerce experts have done that by making the world a smaller place. E-commerce has transported the real world into virtual. 4. Other way of classifying E-Commerce Other way of classifying E-Commerce is based on whether Internet is used or other electronic devices are used for transactions. On this basis we can classify them as  Non-Internet Based E-Commerce, and  Internet Based Ecommerce.

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4.1 Non-Internet Based E-Commerce There are many electronic devices, other than Internet, which are used for the purpose of E-Commerce. For example (i) Bar-Code Machines, (ii) Vending Machines, (iii) Telephone & Telegraphs (iv) Fax (v) Television (vi) Stand alone Computers (vii) Computer Network (EDI etc.) Transactions made through the devices mentioned here, are easy to understand except the use of Computer Network for Electronic Data Interchange (EDI). A discussion on EDI follows. Electronic Data Interchange (EDI)This is a business-to-business (B2B) type of

Ecommerce. EDI is the computer-to-computer exchange of structured business information in standard electronic format. Information stored in one computer is translated by software programs into standard EDI format for transmission to one or more trading partners. Trading partner¶s computer, in turn, translates the information using software programs into a form they can understand. There is no human involvement in the processing of the information. EDI was developed in the 1960s. However only in the 1980s, wide range of industries started using this technique. Organizations adopting JIT (Just In Time) purchasing, may be much benefited if they adopt EDI. With the help of EDI, the supplier constantly gets information of stock position of the customer(s) on line. On the basis of such information the supplier can supply goods just in time. Let us suppose that a chicken farm has many outlets in a city, which sells varieties of chicken based products. If the main office has a computer network with EDI facility with its outlets, it can easily monitor stock position of the outlets. Whenever stock position of a particular item in an outlet reaches reorder level, the main office computer will automatically initiate the reorder process. Thus it reduces time and expense of paperwork. Besides this, EDI is also used in international trade, electronic fund transfer (EFT) between supplier and customer via banker, insurance claim settlement etc. If properly used, EDI can save a substantial amount of cost involved in transaction processing. 4.2. Internet Based Ecommerce (I-Commerce)

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When Internet is used as the medium of transaction, it is called Internet Commerce (ICommerce). . At present it is the most powerful distribution channel amongst all the channels. For these reasons the term I-Commerce has become synonymous with the term E-Commerce. In the forthcoming paragraphs, we will use these two terms alternatively. It is because the concept of E-Commerce became popular only during the Internet era, although it was in practice for decades. In future, with the convergence of communication technologies, E-Commerce can be accomplished through any of the networks that make up the Information Superhighway (I-way). In short Electronic devices used for E-Commerce are ± (i) Bar Code Machines, (ii)Vending Machines, (iii) Telephone & Telegraphs (iv) Fax 5. The Scope of Electronic Commerce Electronic Commerce encompasses one or more of the following:  EDI  EDI on the Internet  E-mail on the Internet  Shopping on the World Wide Web  Product sales and services on the Web  Electronic banking or funds transfer  Outsourced customer and employee care operations 7.Characteristics of Electronic Commerce The tools are electronic but the application is commerce. 1. Commerce is not accounting or decision support or any other 2. Internally focuses function. 3. Commerce is externally focused on those with whom you do business. (v) Television (vi)Stand alone Computers (vii) Computer Network (viii) Internet, WWW & E-mail.

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4. Commerce is doing business, not reporting on it or sending messages about it. Special characteristics of electronic commerce and Web commerce: 5. Information exchanged and processed by a communications network and computers, as well as e-commerce software. 6. Most transactions are processed automatically. 7. Pulls together a gamut of business support services, such as 8. Inter-organizational e-mail, on-line directories 9. Trading support systems for commodities 10. Products, and customized products 11. Custom-built goods and services 12. Ordering and logistic support system supports 13. Management and statistical reporting systems

Benefits of ECommerce . a) Economy :Unlike the brick±and±mortar environment, in e±commerce there is no physical store space, insurance, or infrastructure investment. All you need is an idea, a unique product, and a well±designed web storefront to reach your customers, plus a partner to do fulfillment. This makes e±commerce a lot more economical. b) Higher Margins:- E±commerce means higher margins. For example, the cost of processing an airline ticket is £5. According to one travel agency, processing the same ticket online costs £1. Along with higher margins, businesses can gain more control and flexibility and are able to save time when manual transactions are done electronically. c) Better Customer Service:- E±commerce means better and quicker customer service. Online customer service makes customers happier. Instead of calling your company on the phone, the web merchant gives customers direct to their personal account online. This saves time and money. For companies that do business with

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other companies, adding customer service online is a competitive advantage. The overnight package delivery service, where tracking numbers allow customers to check the whereabouts of a package online, is one good example. d) Quick Comparison Shopping:- E±commerce helps consumers to comparison shop. Automated online shopping assistants called hop bots scour online stores and find deals on everything from apples ro printer ribbons. e) Productivity Gains:- Weaving the web throughout an organization means improved productivity. For example IBM incorporated the web into every corner of the firm ± products, marketing, and practices. The company figured it would save $750 million by letting customers find answers to technical questions via its website. The total cost savings in 1999 alone was close to $1 billion. f) Teamwork:- E±mail is one example of how people collaborate to exchange information and work on solutions. It has transformed the way organizations interact with suppliers, vendors, business partners, and customers. More interactions means better results. g) Knowledge Markets :-E±commerce helps create knowledge markets. Small groups inside big firms can be funded with seed money to develop new ideas. For example, DaimlerChrysler has created small teams to look for new trends and products. A Silicon Valley team is doing consumer research on electric cars and advising car designers. h) Information Sharing, Convenience, And Control;- Electronic marketplaces improve information sharing between merchants and customers and promote quick, just±in±time deliveries. Convenience for the consumer is a major driver for changes in various industries. Customers and merchants save money; are online 24 hours a day, 7 days a week; experience no traffic jams, no crowds, and do not have to carry heavy shopping bags. The young population find online transactions much easier i) Easy access to global market-:- Through Internet, a seller can reach all the customers in the world simultaneously cutting across the geographical and time barrier. Of course there must be Internet facility at the customer¶s end.

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j) Reduction in distribution costs-:-

It establishes direct link between the

customers and the suppler. Commission paid to middlemen is done away with. Moreover, cost of documentation, transportation cost (in case of digital products only) and cost of collection from customers are negligible. k) Time saving-:- A transaction can be completed in a few seconds without physically reaching out to the customer. Moreover there is no office hour in case of I-Commerce transactions. A customer also need not visit the place of the supplier. He/she can make transaction seating in his/her home/office. l) Building customer relationshipFor business success, building longterm

relation with the customers is a must. Internet is a good medium to build this relationship. Regular feedback from the customers can easily be obtained with the help of e-mail. After sales service becomes easy through Internet. m) Business benefits: There is a growing awareness among the business community in India about the opportunities offered by ecommerce. Ease of Internet access and navigation are the critical factors that will result in rapid adoption of Net commerce. Safe and secure payment modes are crucial too along with the need to invent and popularize innovations such as Mobile Commerce. India Reports provides accurate and easy to understand India specific reports that capture trends, map business landscapes and custom-made reports for specific needs. The other reports available on India Reports are on retail, outsourcing, tourism, food and other emerging sectors in India n) Benefits for the buyer:-The buyer has access to updated information on price and availability which benefits him in getting the best deal. Buyers can compare prices and products from a single source and save time, rather than contacting various individual supplier. Buyers get a level of trust since established e-marketplace deals with suppliers who are its members only. o) Benefits for the seller:- The seller can request for regular quotations from both new and current customers. The seller gets an additional sales channel to market and sell his products. E-marketplaces can offer reduced marketing costs when compared with other sales channels. The seller gets the opportunity for overseas sales by operating through the international e-marketplace. The time and cost

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required for interaction of the transaction is reduced. E-marketplace facilitates efficient distant trade It aids in the smooth online payments procedure Buyers can benefit by finding new suppliers and place orders with them. A safe and friendly online deal process is possible by operating through e-marketplaces Reduced costs to suppliers by on-line auction p) Marketing benefits: Improved market analysis, product analysis and customer analysis. Low-cost advertising Easy to create and maintain customer o client database .Reduced costs to buyers from increased competition on-line q) Reduced errors, time, and overhead costs information processing r) Reduced inventories, and warehouse s) Increased access to real-time inventory information, speed-up ordering & t) Purchasing processing time u) Easier enter into new markets in an efficient way v) Easily create new markets and get new customers w) Automated business processing x) Cost-effective document transfer y) Reduced time to complete business transactions, speed-up the delivery time z) Reduced business overhead and enhance business management aa) the ability to reach new customers and create more intimate relationships with all customers. bb) The Internet may well change the structure of the competitive landscape

9. Disadvantages Of E±commerce There are some disadvantages of e-commerce which you should be aware of before starting to trade or purchase online. A. Security: Security continues to be a problem for online businesses. Customers have to feel confident about the integrity of the payment process before they commit to the purchase.

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B. System And Data Integrity: Data protection and the integrity of the system that handles the data are serious concerns. Computer viruses are rampant, with new viruses discovered every day. Viruses cause unnecessary delays, file backups, storage problems, and other similar difficulties. The danger of hackers accessing files and corrupting accounts adds more stress to an already complex operation. C. System Scalability-- A business develops an interactive interface with customers via a website. After a while, statistical analysis determines whether visitors to the site are one±time or recurring customers. If the company expects 2 million customers and 6 million show up, website performance is bound to experience degradation, slowdown, and eventually loss of customers. To stop this problem from happening, a website must be scalable, or upgradable on a regular basis. D. E±commerce Is Not Free-- So far, success stories in e±commerce have forced large business with deep pockets and good funding. According to a report, small retailers that go head±to±head with e±commerce giants are fighting losing battle. As in the brick±and±mortar environment, they simply cannot compete on price or product offering. Brand loyalty is related to this issue, which is supposed to be less important for online firms. Brands are expected to lower search costs, build trust, and communicate quality. A search engine can come up with the best music deals, for example, yet consumers continue to flock to trusted entities such as HMV.
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E. Consumer Search Is Not Efficient or Cost±effective --On the surface, the electronic marketplace seems to be a perfect market, where worldwide sellers and buyers share and trade without intermediaries. However, a closer look indicates that new types of intermediaries are essential to e±commerce. They include electronic malls that guarantee legitimacy of transactions. All these intermediaries add to transaction costs. F. Customer Relations Problems-- Not many businesses realise that even e±business cannot survive over the long term without loyal customers. G. Products People won't buy online -- Imagine a website called furniture.com or living.com, where venture capitalists are investing millions in selling home
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His master's voice is a famous trademark in the music business, the famous trademark image comes from a painting by english artist francis barraud, a.r.a. And titled his master's voice. It was acquired from the artist in 1899 by the newly-formed gramophone company.

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furnishings online. In the case of a sofa, you would want to sit on it, feel the texture of the fabric etc. Beside the sofa test, online furniture sotres face costly returns which makes the product harder to sell online. H. Corporate Vulnerability-- The availability of product details, catalogs, and other information about a business through its website makes it vulnerable to access by the competition. The idea of extracting business intelligence from the website is called web framing. I. High Risk Of Internet Start±up --Many stories unfolded in 1999 about successful executives in established firms leaving for Internet start±ups, only to find out that their get±rich dream with a dot.com was just that ± a dream. J. Time for delivery of physical products --. It is possible to visit a local music store and walk out with a compact disc, or a bookstore and leave with a book. E-commerce is often used to buy goods that are not available locally from businesses all over the world, meaning that physical goods need to be delivered, which takes time and costs money. In some cases there are ways around this, for example, with electronic files of the music or books being accessed across the Internet, but then these are not physical goods. K. Physical product, supplier & delivery uncertainty-. When you walk out of a shop with an item, it¶s yours. You have it; you know what it is, where it is and how it looks. In some respects e-commerce purchases are made on trust. This is because, firstly, not having had physical access to the product, a purchase is made on an expectation of what that product is and its condition. Secondly, because supplying businesses can be conducted across the world, it can be uncertain whether or not they are legitimate businesses and are not just going to take your money. It¶s pretty hard to knock on their door to complain or seek legal recourse! Thirdly, even if the item is sent, it is easy to start wondering whether or not it will ever arrive. L. Perishable goods -. Forget about ordering a single gelato ice cream from a shop in Rome! Though specialized or refrigerated transport can be used, goods bought and sold via the Internet tend to be durable and non-perishable: they need to survive the trip from the supplier to the purchasing business or consumer. This shifts the bias for perishable and/or non-durable goods back towards traditional supply chain

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arrangements, or towards relatively more local e-commerce-based purchases, sales and distribution. In contrast, durable goods can be traded from almost anyone to almost anyone else, sparking competition for lower prices. In some cases this leads to disintermediation in which intermediary people and businesses are bypassed by consumers and by other businesses that are seeking to purchase more directly from manufacturers. M. Limited and selected sensory information.- :-The Internet is an effective conduit for visual and auditory information: seeing pictures, hearing sounds and reading text. However it does not allow full scope for our senses: we can see pictures of the flowers, but not smell their fragrance; we can see pictures of a hammer, but not feel its weight or balance. Further, when we pick up and inspect something, we choose what we look at and how we look at it. This is not the case on the Internet. If we were looking at buying a car on the Internet, we would see the pictures the seller had chosen for us to see but not the things we might look for if we were able to see it in person. And, taking into account our other senses, we can¶t test the car to hear the sound of the engine as it changes gears or sense the smell and feel of the leather seats. There are many ways in which the Internet does not convey the richness of experiences of the world. This lack of sensory information means that people are often much more comfortable buying via the Internet generic goods ± things that they have seen or experienced before and about which there is little ambiguity, rather than unique or complex things. N. Returning goods.-:Returning goods online can be an area of difficulty. The

uncertainties surrounding the initial payment and delivery of goods can be exacerbated in this process. Will the goods get back to their source? Who pays for the return postage? Will the refund be paid? Will I be left with nothing? How long will it take? Contrast this with the offline experience of returning goods to a shop. O. Privacy, security, payment, identity, contract. Many issues arise ± privacy of information, security of that information and payment details, whether or not payment details (eg credit card details) will be misused, identity theft, contract, and, whether we have one or not, what laws and legal jurisdiction apply.

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P. Defined services & the unexpected:- -. E-commerce is an effective means for managing the transaction of known and established services, that is, things that are everyday. It is not suitable for dealing with the new or unexpected. For example, a transport company used to dealing with simple packages being asked if it can transport a hippopotamus, or a customer asking for a book order to be wrapped in blue and white polka dot paper with a bow. Such requests need human intervention to investigate and resolve. Q. Personal service :-.- Although some human interaction can be facilitated via the web, e-commerce can not provide the richness of interaction provided by personal service. For most businesses, e-commerce methods provide the equivalent of an information-rich counter attendant rather than a salesperson. This also means that feedback about how people react to product and service offerings also tends to be more granular or perhaps lost using e-commerce approaches. If your only feedback is that people are (or are not) buying your products or services online, this is inadequate for evaluating how to change or improve your e-commerce strategies and/or product and service offerings. Successful business use of e-commerce typically involves strategies for gaining and applying customer feedback. This helps businesses to understand, anticipate and meet changing online customer needs and preferences, which is critical because of the comparatively rapid rate of ongoing Internet-based change. R. Size and number of transactions.;-- E-commerce is most often conducted using credit card facilities for payments, and as a result very small and very large transactions tend not to be conducted online. The size of transactions is also impacted by the economics of transporting physical goods. For example, any benefits or conveniences of buying a box of pens online from a US-based business tend to be eclipsed by the cost of having to pay for them to be delivered to you in Australia. The delivery costs also mean that buying individual items from a range of different overseas businesses is significantly more expensive than buying all of the goods from

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one overseas business because the goods can be packaged and shipped together. Reflecting some of the comments above,
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12. Basic Steps to Starting an Online Store Many people wants to start their own online stores, whether clothing, gift basket or toy stores on the Web. Using a clothing store as an example, here are some basic steps to creating your online storefront:  12.1.Define your business. The very first step is to always know what it is you want to
do. This includes knowing what type of clothing business and what market will you tap (kids, babies, women or men). Consider some niche markets out there ² some examples include online clothing shop for plus sized women or corporate and work outfits for pregnant women.
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Chart shows some of the complaints made by australian e-consumers.

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Look at your competition (and there are a lot) and think: what will make the customer choose your store instead of going to a clothing retailer like Gap.com or a superstore like Amazon.com? 

12,2. Research your market. Understand your target customer as well as know your competitors ² who they are, what are they doing and how are they presenting their store, how are they marketing, are your target market buying online and from where. Also subscribe to publications such as Internet Retailer to help you learn more about the best way to sell online and what the big businesses are doing  12.3. Envision your website. Determine the features you want for your website.

The beauty of the Web is that it makes it easy for you to research the competition. Visit the sites of your potential competition, including the sites of big businesses. Why do you think their websites work? What are the features they have that you think you need to have? Think like a potential customer and see which features make the shopping experience pleasant for you? Remember, even the smallest detail can spell a difference in terms of conversion rates and sales ² e.g. from the color of the Add to Cart button to the promotions and element on the homepage. Of course, big businesses like Amazon.com will have significantly deeper pockets than you may have, but consider the level of personalization and customization that these sites do. Divide the list of features you should really have (e.g. photos, copy, etc) to the features that are nice-to-have-but-no-money-for-it-this time. Once you have the must-have feature list identified, start shopping for an ecommerce provider that offers most, if not all, of what you need.  12.4. Write a business plan. A business plan is important to help you think through your business ² who is your target market, what do you intend to accomplish with your site, how are you going to market your products, what technology you need to accomplish your goals, where will you source your products or how you are going to manufacture your items, and how much resources you need to have. You don¶t have to write a thesis or a very formal business plan ² unless you will seek out financing from loans or investors.

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12.5. Arrange your startup capital. If you think your idea can work, then it is time to start the ball rolling. If you need to apply for a loan, prepare a business plan. If you have savings or will ask loan from your family and friends, a business plan is optional but it can help you think through the business. There are no grants for starting an online store to sell clothing  12.6. Decide what ecommerce platform you will take in selling online. You have several options in terms of building your online store. You can build your own systems, choosing and adding the elements yourself. Or you can also buy a packaged solution where the provider has selected for you all the elements you need. Be sure to weigh their pros and cons including scalability and room for growth: o Create your own ecommerce website. o Use a turnkey ecommerce provider such as Yahoo Stores With your own ecommerce website and using custom developed ecommerce functionalities, you get to have the exact features that you really want. Plus, you get to control how often and when you need to upgrade your system. The downside of course is that it can be expensive, especially if you keep on adding bells and whistles.  12.7. Start the legal and regulatory processes. Register your business and your assumed name (doing business as), get a sellers permit from your state, find out reporting schedules for tax purposes, decide on the legal structure of your business (e.g. sole proprietorship, LLC, S corp, C corp, etc). Go to your county. Note ;-that some trade shows will only allow you to attend if you can prove that you are indeed part of the industry ± which means you have business registration to show to them  12.8. Line up suppliers ± where will you get your merchandise. You may not be able to arrange an account at this stage without a sellers permit, but at least find out who are they. Attend clothing tradeshows so you can meet manufacturers and other industry players personally. Use B2B marketplaces such as Alibaba.com if considering looking for international manufacturers or suppliers.

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12.9. Start working on your website. Get all the elements you need to run your online store based on the platform you have decided to use for your ecommerce venture. At its most basic, you need to be able to display your products/services (catalogue), take orders (shopping cart), and collect payment (payment system) a) Get your domain name b) Decide on a web host c) Compare and decide on the shopping cart system d) Get an SSL certificate e) Decide on your payment gateway f) Determine your system for inventory management (and whether you want one that is connected to your shopping cart system) 

12.10. Decide how you will accept payment. Apply for a merchant account or decide what payment options or combination of payment options you will offer to your customers. Here are a number of options to help you accept payment for your ecommerce site: Credit Card processors (American Express, Visa, MasterCard, Discover, etc) such as Card service International or Merchants Account Express or World pay in Europe Paypal Google Checkout  12.11. Design your website. Put together your website. Decide the look and feel that you want, as well as all the aesthetics considerations:  Find a designer/web programmer to create your site, if needed  Find a photographer to take pictures of your products, if needed  Hire a copywriter to write your sales and website copy including the description of your merchandise, if needed

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12.12. Decide on your shipping and fulfillment mechanisms. When you sell a product online, shipping and fulfillment are key elements that you need to plan for at the start. Some considerations you need to think about are: 1. Should you do fulfillment in-house or should you use a third party fulfillment? 2. What is your target fulfillment and shipping costs per order? 3. Will you use integrated ordering and fulfillment software? 4. Will you need a warehouse? 5. What shipping strategies will you use? Examples include free shipping for x amount of orders, free shipping on everything but higher priced, no free shipping but lower prices, flat rate shipping such as Overstock. 6. Will you allow drop shipping arrangements with manufacturer? 7. What shipping companies will you use? 12.13 Learn about the laws and rules affecting ecommerce.
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There are a number

of important rules that you need to be aware and follow, such as Data security standards put forth in the PCI Compliance Guide . FTC guidelines on endorsements and

testimonial advertisements  12.14 Plan your marketing strategy. 1. Make sure that you are running web analytics on your site, setting clear goals and metrics to better understand your ROI
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The payment card industry data security standard (pci dss) is a worldwide information security standard defined by the payment card industry security standards council. The standard was created to help payment card industry organisations that process card payments prevent credit card fraud through increased controls around data and its exposure to compromise. The standard applies to all organizations that hold, process, or exchange cardholder information from any card branded with the logo of one of the card brands. 36 The federal trade commission (ftc) is an independent agency of the united states government, established in 1914 by the federal trade commission act. Its principal mission is the promotion of consumer protection and the elimination and prevention of what regulators perceive to be harmfully anti-competitive business practices, such as coercive monopoly 37 Return on investment. A measure of a corporation's profitability, equal to a fiscal year's income divided by common stock and preferred stock equity plus long-term debt. Roi measures how effectively the firm uses its capital to generate profit; the higher the roi, the better.

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2. How to market via search engines and whether you need to hire someone to optimize your website and do pay per click advertising 3. Decide whether you need to hire a PR person to help you raise publicity for your business 4. Think whether you are going to use coupons to attract first time and repeat customers? 5. Think of how you can use email marketing to promote your ecommerce store and entice customers to purchase again from your store 6. Decide how you can use videos on your site, whether to educate your customers about your products or show how to use your products 7. Learn about social media and social marketing and how using sites such as Twitter, Face book, Stumbleupon, etc. can help your business 12.15. Protect Your Business. Take the necessary steps to protect your ecommerce store, especially from Hackers who could break the security of your online store and undermine the confidence of your customers. Watch out for fraudulent orders and make sure that you use the necessary precautions to prevent them, such as CVV
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verification,

address verification, and even blocking out orders from selected countries. Read the article ³How to Protect Your Online Business from Credit Card Fraud´ 12. 16 Problems experienced by online retailers:  1.Gift wanted to purchase was out of stock  2.Product was not delivered on time  3.Paid too much for delivery  4.Connection or download trouble
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The card verification value (cvv), is a system the credit card companies are introducing to help protect against fraud. It is a code 3 digits long that is calculated from the data on the magnetic strip and cannot be forged by simply knowing the credit card number. This makes it harder (if not impossible) for people to make up random credit card numbers and hope they will work. Your cvv number may be found in the following locations: Visa: on the back of the card in the signature strip, following the whole card number. Mastercard: on the back of the card in the signature strip, following the card number.

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5.Didn't receive confirmation or status report on purchase  6.Selections were limited  7.Website difficult to navigate  9.Website didn't provide information needed to make purchase  10.Site didn't offer enough gift ideas

12.17 Most Popular Shopping Sites ranked by Alexa.com 1 Amazon.com 24.1% 2 eBay.com 16.1% 3 Yahoo.com 4.9% 4 priceline.com 2.7% 5 buy.com (a)(c) 1.9% 6 Barnesandnoble.com 1.8% 7 CDNow.com 1.3% 8 AOL.com 1.1% 9 Egghead.com 1.0% 10 IWon.com 0.9%

CONCLUSION In conclusion, there are lots of advantages of ecommerce except a few disadvantages. Ecommerce today is still at its infancy. There is a bright future for it.

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CHAPTER III

ELECTRONIC CONTRACTS

Contracts have become so common in daily life that most of the time we do not even realize that we have entered into one. Right from hiring a taxi to buying airline tickets online, innumerable things in our daily lives are governed by contracts. 2. The Indian Contract Act, 1872 The Indian Contract Act, 1872 governs the manner in which contracts are made and executed in India. It governs the way in which the provisions in a contract are implemented and codifies the effect of a breach of contractual provisions. Within the framework of the Act, parties are free to contract on any terms they choose. Indian Contract Act consists of limiting factors subject to which contract may be entered into, executed and breach enforced. It only provides a framework of rules and regulations which govern formation and performance of contract. The rights and duties of parties and terms of agreement are decided by the contracting parties themselves. The court of law acts to enforce agreement, in case of nonperformance. 3. Electronic contracts-- All the provisions of the The Indian Contract Act, 1872 apply to the Electronic contracts also. Electronic contracts (contracts that are not paper based but rather in electronic form) are born out of the need for speed, convenience and efficiency. In the electronic contract Offers and acceptances can be exchanged entirely by e-mail, or can be combined with paper documents, faxes, telephonic discussions etc. the acceptance is usually undertaken by the business after the offer has been made by the consumer in relation with the invitation to offer. An offer is revocable at any time until the acceptance is made. The seller can offer goods or services (e.g. air tickets, software etc) through his website. The customer places an order by completing and transmitting the order form provided on

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the website. The goods may be physically delivered later (e.g. in case of clothes, music CDs etc) or be immediately delivered electronically (e.g. e-tickets, software, mp3 etc). Online Agreements: Users may need to accept an online agreement in order to be able to avail of the services e.g. clicking on ³I accept´ while installing software or clicking on ³I agree´ while signing up for an email account. Imagine a contract that an Indian exporter and an American importer wish to enter into. One option would be that one party first draws up two copies of the contract, signs them and couriers them to the other, who in turn signs both copies and couriers one copy back. The other option is that the two parties meet somewhere and sign the contract. In the electronic age, the whole transaction can be completed in seconds, with both parties simply affixing their digital signatures to an electronic copy of the contract. There is no need for delayed couriers and additional travelling costs in such a scenario. There was initially an apprehension amongst the legislatures to recognize this modern technology, but now many countries have enacted laws to recognize electronic contracts. The conventional law relating to contracts is not sufficient to address all the issues that arise in electronic contracts. The Information Technology Act (IT Act) solves some of the peculiar issues that arise in the formation and authentication of electronic contracts. 4. Essentials of an electronic contract --As in every other contract, an electronic contract also requires the following necessary ingredients: 4.1. An offer needs to be made: In many transactions (whether online or conventional) the offer is not made directly one-on-one. The consumer µbrowses¶ the available goods and services displayed on the merchant¶s website and then chooses what he would like to purchase. The offer is not made by website displaying the items for sale at a particular price. This is actually an invitation to offer and hence is revocable at any time up to the time of acceptance. The offer is made by the customer on placing the products in the virtual µbasket¶ or µshopping cart¶ for payment. 4.2. The offer needs to be accepted: In the traditional notion of contract formation, negotiating parties must come to a "meeting of the minds" on the terms of an agreement.

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In the course of negotiation, there may be invitations to make offers (e.g., price lists are generally not offers, but invitations) and counter-offers, but the general rule is that formation requires an offer and acceptance to be communicated between the parties. 4.2.1 Provision for mail box rule: Communication when complete
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³The communication of a proposal is complete when it becomes to the knowledge of the person to whom it is made. The communication of an acceptance is complete -as against the proposer, when it is put in a course of transmission to him so at to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer. The communication of a revocation is complete -as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge.´ 4.2.2 .Mailbox Rule: "mailbox rule" wherein acceptance is deemed to be communicated to the offeree when it enters the postal system. telegrams and even couriers.
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This rule has been extended to

The offeror, however, is free to put conditions on the

communication of the acceptance (e.g., offer must be received; must be by telephone). Instantaneous Communications rule: In contrast to the "mailbox rule", acceptances communicated using instantaneous or virtually instantaneous means, such as the

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Section 4. Adams V. Lindsell (1818), 106 E.R. 250 Is Usually Credited With The Development Of The Mailbox Rule.
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Stevenson Jacques & Co. V. Mclean (1880), 5 Q.B.D. 346; Carow Towing Co. V. The "Ed Mcwilliams" (1919), 46 D.L.R. 506 (Ex. Ct.); Malady V. Jenkins Steamship Co. (1909), 18 O.L.R. 251 (Div. Ct.) Nova Scotia V. Weymouth Sea Products Ltd. (1983), 149 D.L.R.(3d) 638 At 651; Aff'd 4 D.L.R.(4th) 314 (Sub Nom. R. V. Commercial Credit Corp.) (N.S.C.A.)

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telephone

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, telex , and fax , are formed when the offeror receives the acceptance.
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These means are analogous to face-to-face communications; presumably both parties will be aware of any break in the connection and be able to take corrective action.

4.2.3 Electronic message [ E-mail ] It is also quite possible that no simple rule will govern electronic messages.The courts have yet to consider the electronic message. There is little case law on acceptance by electronic message. On the one hand, some cases suggest the general rule is that the acceptance must be received by the offeror apply to electronic message and that the mailbox rule does not apply.
47

On the other hand, receipt

of electronic messages may not be instantaneous and since the mailbox rule has been extended to telegrams, it could be argued that it should be extended to electronic mail. Although some electronic message systems, such as private EDI networks, provide almost immediate transmission, anecdotal evidence suggests that Internet e-mail is inconsistent and could take minutes, hours or even days to reach its destination. 4.2.4 Offeror's role [ Acceptor ] Another justification for a mailbox-like rule for

electronic mail is the offeror's role in delivery. While telexes and faxes are received at the recipient's location almost immediately after they are sent, some electronic mail systems use mail servers operated by third parties that are not located at the recipient's location.
48

Even after receipt by the mail server, the recipient has to take steps to connect to their `mailbox' on the mail server before the communication is complete. Since the offeror is

43 44 45 46 47 48

Re Viscount Supply Co., [1963] 1 O.R. 640 (S.C.). Entores Ltd. V. Miles Far East Corp., [1955] 2 Q.B. 327 (C.A.). Joan Balcom Sales Inc. V. Poirier (1991), 49 C.P.C.(2d) 180 (N.S. Co. Ct.) Denning L.J. In Entores, Supra; Restatement Of Contracts Ss 64. Birkett L.J. In Entores, Supra; Joan Balcom Sales Inc., Supra At 186.

for example, many people have their e-mail accounts with either on-line services such as america on-line or compuserve or with internet service providers. In either case, the mail server is located elsewhere, possibly in a different country.

44

partially responsible for ensuring delivery, it may not be appropriate to allocate the entire risk in the delivery of electronic mail to the offeree. It is also quite possible that no simple rule will govern electronic messages. In a recent case involving telex communication, England's House of Lords seemed to be backing away from the application of a general rule :{ instantaneous communication or direct communication rule} The message may not reach, or be intended to reach, the designated recipient immediately: messages may be sent out of office hours, or at night, with the intention, or on the assumption, that they will be read at a later time. There may be some error or default at the recipient's end which prevents receipt at the time contemplated and believed in by the sender. The message may have been sent and/or received through machines operated by third persons. And many other variations may occur. No universal rule can cover all such cases; they must be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a judgment where the risks should lie. 4.3. There has to be lawful consideration Any contract to be enforceable by law must have lawful consideration, i.e., when both parties give and receive something in return. Therefore, if an auction site facilitates a contract between two parties where one person provides a pornographic movie as consideration for purchasing an mp3 player, then such a contract is void. 4.4. There has to be an intention to create legal relations If there is no intention on the part of the parties to create legal relationships, then no contract is possible between them. Usually, agreements of a domestic or social nature are not contracts and therefore are not enforceable, e.g., a website providing general health related information and tips. 4. 5. The parties must be competent to contract
49

49

Brinkibon Ltd. V. Stahag Stahl, [1982] 1 all e.r. 293 (hl) at 296 (per lord wilberforce)

45

Contracts by minors, lunatics etc are void. All the parties to the contract must be legally competent to enter into the contract. 4.6. There must be free and genuine consent Consent is said to be free when there is absence of coercion, misrepresentation, undue influence or fraud. In other words, there must not be any subversion of the will of any party to the contract to enter such contract. Usually, in online contracts, especially when there is no active real-time interaction between the contracting parties, e.g., between a website and the customer who buys through such a site, the click through procedure ensures free and genuine consent. 4.7. The object of the contract must be lawful A valid contract presupposes a lawful object. Thus a contract for selling narcotic drugs or pornography online is void. 4.8. There must be certainty and possibility of performance A contract, to be enforceable, must not be vague or uncertain and there must be possibility of performance. A contract, which is impossible to perform, cannot be enforced, e.g., where a website promises to sell land on the moon. 5. Relevant IT Act provisions 5.1 ³Originator´ According to section 2(1)(za) of the IT Act, originator is a person

who: 1. sends, generates, stores or transmits any electronic message or 2. causes any electronic message to be sent, generated, stored or transmitted to any other person.The term originator does not include an intermediary. 5.2 ³Addressee means´ According to section 2(1)(b) of the IT Act, Addressee means a person who is intended by the originator to receive the electronic record but does not include any intermediary. Chapter IV of the Information Technology Act, 2000 contains sections 11, 12 and 13 and is titled Attribution, Acknowledgment and Dispatch of Electronic Records.

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5.3 Attribution of Electronic Records

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An electronic record shall be attributed to the

originator² (a) if it was sent by the originator himself; (b) by a person who had the authority to act on behalf of the originator in respect of that electronic record; or (c) by an information system programmed by or on behalf of the originator to operate automatically. 5.4 Acknowledgment of Receipt
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(1)

Where the originator has not agreed with the

addressee that the acknowledgment of receipt of electronic record be given in a particular form or by a particular method, an acknowledgment may be given by²(a) any communication by the addressee, automated or otherwise; or (b) any conduct of the addressee, sufficient to indicate to the originator that the electronic record has been received. (2) Where the originator has stipulated that the electronic record shall be binding only on receipt of an acknowledgment of such electronic record by him, then unless acknowledgment has been so received, the electronic record shall be deemed to have been never sent by the originator. (3) Where the originator has not stipulated that the electronic record shall be binding only on receipt of such acknowledgment, and the acknowledgment has not been received by the originator within the time specified or agreed or, if no time has been specified or agreed to within a reasonable time, then the originator may give notice to the addressee stating that no acknowledgment has been received by him and specifying a reasonable time by which the acknowledgment must be received by him and if no acknowledgment is received within the aforesaid time limit he may after giving notice to the addressee, treat the electronic record as though it hasnever been sent.

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sec.11 sec.12.

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5.5 Time and place of dispatch and receipt

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(1) Save as otherwise agreed to between

the originator and the addressee, the dispatch of an electronic record occurs when it enters a computer resource outside the control of the originator. (2) Save as otherwise agreed between the originator and the addressee, the time of receipt of an electronic record shall be determined as follows, namely:² (a) if the addressee has designated a computer resource for the purpose of receiving electronic records,² receipt occurs at the time when the electronic record enters the designated computer resource; or if the electronic record is sent to a computer resource of the addressee that is not the designated computer resource, receipt occurs at the time when the electronic record is retrieved by the addressee; (b) if the addressee has not designated a computer resource along with specified timings, if any, receipt occurs when the electronic record enters the computer resource of the addressee. (3Save as otherwise agreed to between the originator and the addressee, an electronic record is deemed to be dispatched at the place where the originator has his place of business, and is deemed to be received at the place where the addressee has his place of business. (4) The provisions of sub-section (2) shall apply notwithstanding that the place where the computer resource is located may be different from the place where the electronic record is deemed to have been received under sub-section (3). (5) (a) If the originator or the addressee has more than one place of business, the principal place of business, shall be the place of business; (b) If the originator or the addressee does not have a place of business, his usual place of residence shall be deemed to be the place of business; (c) "Usual place of residence", in relation to a body corporate, means the place where it is registered.

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sec.13

48

6 P.R. Transport Agency vs. Union of India & others

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A landmark judgment was given

by the Allahabad High Court with respect to the formation of electronic contracts. A. Background of the CASE Bharat Coking Coal Ltd (BCC) held an e-auction for coal in different lots. P.R. Transport Agency¶s (PRTA) bid was accepted for 4000 metric tons of coal from Dobari Colliery. The acceptance letter was issued on 19th July 2005 by e-mail to PRTA¶s e-mail address. Acting upon this acceptance, PRTA deposited the full amount of Rs. 81.12 lakh through a cheque in favour of BCC. This cheque was accepted and encashed by BCC. BCC did not deliver the coal to PRTA. Instead it e-mailed PRTA saying that the sale as well as the eauction in favour of PRTA stood cancelled "due to some technical and unavoidable reasons". The only reason for this cancellation was that there was some other person whose bid for the same coal was slightly higher than that of PRTA. Due to some flaw in the computer or its programme or feeding of data the higher bid had not been considered earlier. This communication was challenged by PRTA in the High Court of Allahabad. [Note: Allahabad is in the state of Uttar Pradesh (UP)] B. Issue raised by BCC --The High Court at Allahabad (in U.P.) had no jurisdiction as no part of the cause of action had arisen within U.P. C. Issues raised by PRTA 1. The communication of the acceptance of the tender was received by the petitioner by e-mail at Chandauli (U.P.). Hence, the contract (from which the dispute arose) was completed at Chandauli (U.P). The completion of the contract is a part of the ³cause of action´. 2. The place where the contract was completed by receipt of communication of acceptance is a place where 'part of cause of action' arises. D. Points considered by the court

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AIR2006all23, 2006(1)awc504

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1. With reference to contracts made by telephone, telex or fax, the contract is complete when and where the acceptance is received. However, this principle can apply only where the transmitting terminal and the receiving terminal are at fixed points. 2. In case of e-mail, the data (in this case acceptance) can be transmitted from anywhere by the e-mail account holder. It goes to the memory of a 'server' which may be located anywhere and can be retrieved by the addressee account holder from anywhere in the world. Therefore, there is no fixed point either of transmission or of receipt. 3. Section 13(3) of the Information Technology Act has covered this difficulty of ³no fixed point either of transmission or of receipt´. According to this section ³...an electronic record is deemed to be received at the place where the addressee has his place of business." 4. The acceptance of the tender will be deemed to be received by PRTA at the places where it has place of business. In this case it is Varanasi and Chandauli(both in U.P.) E .Decision of the court: 1. The acceptance was received by PRTA at Chandauli / Varanasi. The contract became complete by receipt of such acceptance. 2. Both these places were within the territorial jurisdiction of the High Court of Allahabad. Therefore, a part of the cause of action had arisen in U.P. and the court had territorial jurisdiction. 7 .Types of E-Contracts transactions 7.1 Introduction: Licenses Unlike a purchase of goods, in which the buyer owns the item and may freely resell it, the purchase of software is more accurately described as a license, in which the buyer (³licensee´) is only purchasing certain limited uses of the property from the seller (³licensor´). Copying, selling, and usage in general are limited by the terms of the

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license. License violations may result in complete revocation of the license, in which all use must cease and all copies must be returned. These are some of the issues UCITA
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deals with, by the way.

Software licenses are most often entered into via certain

contracts known as: click-wrap, shrink-wrap, and browse-wrap agreements. For the most part, the courts have upheld these contracts, but not necessarily all of the terms contained within them. Just as with other types of contracts, a court may strike certain provisions of these ³wrap´ agreements as unconscionable or as contracts of adhesion. 7.2 There are three main types of transactions in the world of electronic contracting. 1. Shrink wrap contract 2 3 7.3 Click-wrap agreement The Browse Wrap Transaction Shrink wrap contract

(when purchasing off-the-shelf software, for example) when the purchased product is received, it comes with additional terms and conditions in the packaging or in the accompanying documentation. Shrink wrap contracts are license agreements or other terms and conditions of a (putatively) contractual nature which can only be read and accepted by the consumer after opening the product. The term describes the shrinkwrap plastic wrapping used to coat software boxes, though these contracts are not limited to the software industry.

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The Uniform Computer Information Transactions Act (UCITA) is a proposed united states law to create a clear and uniform set of rules to govern such areas as software licensing, online access, and other transactions in computer information. It is intended to bring the same uniformity and certainty to the rules that apply to information technology transactions that the uniform commercial code does for the sale of goods. In particular, ucita attempts to clarify and/or codify rules regarding fair use, reverse engineering, consumer protection and warranties, shrinkwrap licenses, and their duration as well as the transferability of licenses. Ucita generally approves the validity of software licenses, including shrinkwrap and browsewrap agreements, as long as the user is given an opportunity to return the goods (at the seller's expense) if the license terms are found objectionable.

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Web-wrap, click-wrap and browse-wrap are related terms which refer to license agreements in software which is downloaded or used over the internet. Software licenses are commonly called End User License Agreements or EULAs. The legal status of shrink wrap contracts in the US is somewhat unclear. a) ProCD Inc. v. Zeidenberg,
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Court held such contracts enforceable (see, e.g.,

Bower v. Baystate Technologies and the other follows Klocek v. Gateway, Inc., which found the contracts at hand unenforceable (e.g., Specht v. Netscape Communications Corp.) but did not comment on shrink wrap contracts as a whole. These decisions are split on the question of consent, with the former holding that only objective manifestation of consent is required while the latter require at least the possibility of subjective consent. In particular, the Netscape contract was rejected because it lacked an express indication of consent (no "I agree" button) and because the contract was not presented directly to the user (users were required to click on a link to access the terms). However, the court in this case did make it clear that "Reasonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility." Specht, 306 F.3d 17. It may be worth noting that the user in the Zeidenberg case had purchased and opened the packages of multiple copies of the product, and therefore could not easily prove he remained ignorant of the contract/license; whereas in many cases, the so-called shrink-wrap "license" agreement has not been reviewed at the time of purchase (having been hidden inside the box), and therefore is arguably not part of the implicit legal agreement accompanying the sale of the copy, and is thus not enforceable by either party without further "manifestation of assent" to its terms. In general, a user is not legally obligated to read, let alone consent to any literature or envelope packaging that may be contained inside a product; otherwise such transactions would unduly 
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86 f.3d 1447 (7th cir. 1996)

52

burden users who have no notice of the terms and conditions of their possession of the object purchased, or the blind, or those unfamiliar with the language in which such terms are provided, etc. At the very least, the fair trade laws of most U.S. states would grant a buyer the right to cancel the purchase of a product where an enclosed contract provides terms of which purchaser can not be aware at the time the product is purchased. b) Hill v. Gateway 2000, Inc This decision follows the holding of ProCD, upholding the validity of an "approve or return" trigger for setting the terms of a shrinkwrap license, even though the consumer claimed not to have read the statement of terms with regard to the specific clause at issue. c) Brower v. Gateway 2000 , Inc.,
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Following ProCD and Hill, the court here

found that a shrinkwrap contract was formed when the plaintiffs retained the software for longer than the 30 day "approve or return" period. However, the court further held that certain contract terms relating to the arbitration provision at issue were not enforceable. d) M.A. Mortenson Company, Inc., v. Timberline Software Corp In this case, the court followed the reasoning of ProCD and Hill, and held that software license terms shipped with the software were part of the parties contract and therefore limited the plaintiff's remedies, despite the defendants' failure to mention the license terms when negoiating the sale. e) Vault Corp. v. Quaid Software Ltd
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In this case which pre-dated ProCD by a decade, the court refused to enforce terms contained in a shrinkwrap license without directly analyzing the enforceability of these agreements. The particular license agreement at issue was based on a state statute which the court determined conflicted with federal copyright law. Because the 

 
59

., 105 f.3d 1147 (7th cir. 1997) 676 n.y.s.2d 569 (new york supreme ct. App. Div. [aug.] 1998) 58 ., 970 p.2d 803 (wash.app. 1999)
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56

., 847 f.2d 255 (5th cir. 1988)

53

state law upon which the license agreement was based was invalid, the license agreement was unenforceable. f) Step-Saver Data Systems, Inc. v. Wyse Technology,
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In a claim between two

businesses concerning the validity of a "Limited Use License Agreement" printed on a package containing a computer program, the court held that the terms of this "box-top license" were not enforceable under §2-207 of Article 2 of the UCC (the "battle of forms") as the buyer did not agree to be bound by terms that were only disclosed after the goods had been paid for and shipped. Whether the court would reach the same conclusion after ProCD is debatable. g) Arizona Retail Systems, Inc. v. Software Link, Inc.,
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In a case substantially

similar to Step-Saver, the court held that shrinkwrap terms that were on the packaging and were inconsistent with specific representations made by the seller were unenforceable. The court concluded that additional "terms and conditions" disclosed after the shipment of the goods were invalid without the buyer's expressed specific assent.

7.4 Click-wrap agreement, Another method of obtaining assent for sales over the Internet is click wrap. After selecting a product to purchase, the Internet user sees the contract terms on the computer screen and cannot complete the purchase without clicking a box on the screen to indicate assent. Several courts have upheld the use of click wrap agreements. Second is a click-wrap agreement, made at or before the time of purchase on a web site. The purchaser is required to click ³I agree´ before the transaction will continue, the installation will proceed or the user will gain access to the web site. A click wrap agreement (also known as a "click through" agreement or clickwrap license) is a common type of agreement (often used in connection with software licenses).
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939 f.2d 91 (3d cir. 199 831 f.supp. 759 (d. Ariz. 1993)

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Such forms of agreement are mostly found on the Internet, as part of the installation process of many software packages, or in other circumstances where agreement is sought using electronic media. The name "click wrap" came from the use of "shrink wrap contracts" commonly used in boxed software purchases, which "contain a notice that by tearing open the shrink wrap, the user assents to the software terms enclosed within". 7.4.1 The content and form -- The content and form of clickwrap agreements vary widely. Most clickwrap agreements require the end-user to manifest his or her assent by clicking an "ok" or "agree" button on a dialog box or pop-up window. A user indicates rejection by clicking cancel or closing the window. Upon rejection, the user can no longer use or purchase the product or service. Classically, such a take-it-or-leave-it contract was described as a "contract of adhesion, which is a contract that lacks bargaining power, forcing one party to be favored over the other". The terms of service or license do not always appear on the same webpage or window, but are always accessible before acceptance, such as through a hyperlink embedded in the product's webpage or a pop-up screen prior to installation. In order to be deemed to have accepted the terms of service, the purchaser must be put on notice that certain terms of service may apply. If the terms of service are not visible and/or accessible, courts have found the notice requirement to be lacking and as such, the purchaser may not be bound to the terms of the agreement. 7.4.2 Legal consequences in the United States --Few cases have considered the validity of clickwrap licenses. However, in the cases that have challenged their validity, the terms of the contract have usually been upheld. A. Feldman v. Google, Inc., 513 F.Supp.2d 229 (E.D.Pa. 2007)(upholding forumselection clause) B.In re RealNetworks, Inc. Privacy Litigation, No. No. 00-1366, 2000 WL 631341 (D. Ill. May 8, 2000)(upholding an arbitration clause)

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C. Hotmail Corp. v. Van$ Money Pie, No. 98-20064, 1998 WL 388389 (N.D. Cal. Apr. 16, 1998) (granting preliminary injunction for alleged breach of contract for violating the terms of service by using a Hotmail account to send spam or pornography). The court said that clicking the clickwrap button after notice gave consent. Click-wrap is the electronic equivalent of the shrink-wrap method which allows users to read the terms of the agreement before accepting them. The click-wrap method was presented to the court in ProCD v. Zeidenberg D. ProCD v. Zeidenberg Where Zeidenberg purchased a CD-ROM, created by ProCD, which contained a compilation of a telephone directory database. Upon purchase of this CD-ROM, Zeidenberg installed the software onto his computer then created a website which offered to visitors the information contained on the CD-ROM at a price less than what ProCD charged for the software. Prior to his purchase of the software, Zeidenberg may not have been aware of any prohibited use or dissemination of the product without consent by ProCD. However, upon preparing to install the software onto his computer, the software license appeared on his computer screen and would not allow him to continue with the installation without indicating acceptance by clicking his assent in a dialog box. Decision of court -The court held that Zeidenberg did accept the offer and the terms contained within the license by clicking through the dialog box. Zeidenberg had the opportunity to read the terms of the license prior to clicking the acceptance box. The court further stated that Zeidenberg could have rejected the terms of the contract and returned the software. The court upheld the use of shrink wrap as a means of binding a purchaser to contractual terms. the vendor argued that the purchase was subject to license terms found in the software box and presented on the screen at the time of use, which required
62

62 

, 86 f.3d 1447 (7th cir. 1996),

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the user t indicate his assent. Rejecting the user¶s argument that the contract was formed at the time of purchase, and adopting what has now been dubbed a ³rolling contract´ theory, the court held the consumer was bound by the terms of the license, even though he had not seen them at the time of paying for the product. E. Specht v. Netscape Communications Corp.,
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An earlier case, gave perhaps the

clearest definition of a clickwrap license. A click-wrap license presents the user with a message on his or her computer screen, requiring that the user manifest his or her assent to the terms of the license agreement by clicking on an icon. The product cannot be obtained or used unless and until the icon is clicked. For example, when a user attempts to obtain Netscape's Communicator or Navigator, a web page appears containing the full text of the Communicator / Navigator license agreement. Plainly visible on the screen is the query, "Do you accept all the terms of the preceding license agreement? If so, click on the Yes button. If you select No, Setup will close." Below this text are three button or icons: one labeled "Back" and used to return to an earlier step of the download preparation; one labeled "No," which if clicked, terminates the download; and one labeled "Yes," which if clicked, allows the download to proceed. Unless the user clicks "Yes," indicating his or her assent to the license agreement, the user cannot obtain the software. F .In re Real Networks, Inc. Privacy Litigation,
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The court held that Internet users had

agreed to a license agreement requiring arbitration. G . Hotmail Corp. v. Van $ Money Pie, Inc., Court upheld the validity of restrictions
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on the use of free e-mail accounts for sending advertisements. H . Lan Sys., Inc. v. Netscout Serv. Level Corp., (upholding a clickwrap agreement on

two grounds: first, clickwrap is simply "Money now, terms later" contract formation; 
64 65 63

150 f.supp.2d 585 (s.d.n.y. 2001), aff'd, 306 f.3d 17 (2d. Cir. 2002),

no. 00-1366, 2000 wl 631341 (d. Ill. May 8, 2000) (en.wikipedia.org/wiki/clickwrap

47 u.s.p.q.2d (bna) 1020. 1998 wl 388389 (n.d. Cal. 1998) (full-text). Tlaw.wikia.com/wiki/hotmail_v._van%2...
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183 f. Supp. 2d 328, 336 (d. Mass. 2002)

57

second, the court found that the "additional terms" of the clickwrap license was not material under UCC (§207(2)(b)). I .Bragg v. Linden Research, Inc., 487 F.Supp.2d 593 (E.D. Pa. 2007) found certain aspects of the Second Life clickwrap agreement "unconscionable, and therefore unenforceable." J. Hotmail Corporation v. Van$ Money Pie Inc This is the first case implicitly holding that a click wrap contract, specifically a "Terms of Service" e-mail agreement, is valid. K .Caspi v. Microsoft, LLC,
68 67

held a forum selection clause in an online membership agreement was consented to when the user clicked the "I agree" symbol of the agreement in order to proceed with registration. It should be noted however that even though courts have ruled some clickwrap licenses to be enforceable contracts, it does not follow that every term of every clickwrap license is enforceable. Clickwrap licenses must still meet the criteria for enforceability of a unilateral form contract. 7.5 The Browse Wrap Transaction Although the first type of transaction (the shrink wrap) has been around for some time and actually exists in a paper environment, the other two types of transactions (click wrap and browse wrap) are unique to electronic commerce. In the third type, the browse wrap transaction, the user will visit the pages of a web site. Somewhere on the web site, terms and conditions are posted that purport to bind anyone who uses the web site or its services. Browse-wrap (also browse-wrap license) is a term used in Internet law to refer to a contract or license agreement covering access to or use of materials on a web site. Specifically, a browse-wrap license is expected or assumed to have been agreed to before
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., 47 u.s.p.q. 2d 1020, 1998 wl 388389 (april 1998, n.d.cal.) 1999 wl 462175, 323 n.j. Super. 118, 732 a.2d 528 (n.j. App. Div., july 2, 1999) ...

Www.internetlibrary.com/cases/lib_

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a user browses the website It is similar to a click wrap license, but specific to web browsing; both names come by analogy to shrink-wrap licenses. A small number of legal cases have been brought to determine whether browse-wrap licenses are enforceable, and at which point a user's acceptance of license terms can be established. 7.5.1 Case laws A In Specht v. Netscape,
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The court looked at the enforceability of a browse-wrap

contract entered into on the Netscape website Users of the site were urged to download free software available on the site by clicking on a tinted button labeled "download".Only if a user scrolled down the page to the next screen did he come upon an invitation to review the full terms of the program's license agreement, available by hyperlink The plaintiffs, who had not seen the agreement, downloaded the software and then were later sued for violations of federal privacy and computer fraud statutes arising from the use of the software The Second Circuit then noted that an essential ingredient to contract formation is the mutual manifestation of assent. The court found that "a consumer's clicking on a download button does not communicate assent to contractual terms if the offer did not make clear to the consumer that clicking on the download button would signify assent to those terms." Because the plaintiffs were not put on notice of these terms they were not bound by them. B In Ticketmaster Corp. v. Tickets.com, Inc. , The court looked at a breach of contract claim where the terms and conditions were situated at the bottom of the home page in "small print." The court ruled for the defendant in this case but did allow Ticketmaster to replead if there were facts showing that the defendant had knowledge of the terms and implicitly agreed to them. C Hubbert v. Dell Corp
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306 f.3d 17 (2d cir. 2002), is case in the united states court of appeals for the second circuit en.wikipedia.org/wiki/specht_v._netsc
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69

2000 u.s. Dist. Lexis 4553 (c.d. Ca., march 27, 2000). Plaintiffs ticketmaster corporation and ticketmaster ... Www.internetlibrary.com/cases/lib 359 ill.app.3d 976, 835 n.e.2d 113 itlaw.wikia.com/wiki/

71

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In 2005, the Illinois Appellate Court ruled in favor of a browse-wrap agreement . In this case consumers of Dell products were exposed to a conspicuous hyperlink over a series of pages. The court found that this repeated exposure, and visual effect would put the reasonable person on notice of the "terms and conditions". D Pollstar v. Gigmania Ltd.,
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Pollstar (Plaintiff) is a website which publishes concert

information on a daily basis. Pollstar employees spend time and money gathering and compiling the information in order to keep the information up to date. Gigmania (Defendant) runs a similar website and is a competitor of the Plaintiff. Defendant copied concert information from Plaintiff¶s page and published the information to its own webpage. Finally, for the motion to dismiss on the breach of contract claim, Defendant alleged that Plaintiff¶s claim failed as a matter of law because Plaintiff could not allege the required element of mutual consent because the license agreement on Plaintiff¶s page was not visible to the average visitor. The court agreed with Defendant that the license agreement was not readily apparent on the webpage; however the court declined to declare it invalid and unenforceable at this time. E Pollstar v. Gigmania, Ltd.,
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A web site containing concert information, which also

stated terms to restrict copying the information. Although users could see the license, they did not have to click on any permission or agreement in order to see the concert information. When the proprietor of the web site sued a user for breaching the license, the user sought to dismiss on grounds that the user had not assented to it. The court refused to dismiss the case, however. The court concluded that the browse wrap ³agreement may be arguably valid and enforceable´. Further, whether there were sufficient facts to show that the browse wrap license on the web site was sufficiently conspicuous to alert users of its presence F Summary --A browse-wrap agreement can be formed by use of a web page or a hyperlink or small disclaimer on the page. It may only be enforced if the browsing user assents to it. For assent to occur the browse-wrap agreement should be conspicuous,
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170 f.supp.2d 974 (e.d. Cal. 2000) 170 f.2d 974 (e.d.cal. 2000).

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state that there is an agreement, and provide where it can be located. Courts examine the enforceability of browse-wrap agreements on a case-by-case basis, and there are no "bright-line" rules on whether a given agreement is sufficiently conspicuous. However, based on Specht, some practitioners believe that the icon for the terms of use agreement be placed in the upper left-hand quadrant of the homepage and that all visitors be channeled through the homepage. The reason for this suggestion is that the court will take judicial notice of the fact that all Internet pages open from the upper left-hand quadrant, thus the defendant must overcome the presumption that the icon was viewed. Without this presumption, the plaintiff has the burden of proving the defendant did see the icon It should not be surprising that these click wrap agreements are less controversial than the shrink wrap agreement involved in ProCD. Where the clicking occurs online before or during the consummation of the transaction, rather than after payment as was the case in ProCD, the purchaser has arguably had the opportunity to see the terms of the contract before assenting and before parting with any money. G Warranties and Dislcaimers -- This are representations and guarantees that, for

example, an item will perform as promised, or that the product is free of defects. Electronic contracts and licenses can contain express or implied warranties. On the other hand, most of these warranties may also be disclaimed. For example, it is very common in ³wrap´ agreements disclaim all liability for damages in excess of the of the amount paid for the product. Conclusion: An electronic contract is an agreement created and "signed" in electronic

form -- in other words, no paper or other hard copies are used. For example, you write a contract on your computer and email it to a business associate, and the business associate emails it back with an electronic signature indicating acceptance. An e-contract can also be in the form of a "Click to Agree" contract, commonly used with downloaded software. The user clicks an "I Agree" button on a page containing the terms of the software license before the transaction can be completed.
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Read more: http://www.articlesbase.com/cyber-law-articles/econtracts-in-cyberspace-502731.html#ixzz1iaickohr

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CHAPTER: -IV

ECOMMERCE: LEGAL AND SECURITY ISSUES

It has been about ten years since the Internet arrived on the scene to attract businesses and consumers with the promises of new markets and new opportunities. Decades before, however, in the early stages when electronic data interchange and not electronic commerce was the catch phrase, there were questions about the legitimacy of electronic contracting. In the business and legal world, people asked whether electronic contracts were real and could transactions formed by electronic messages in an electronic or Internet environment be enforceable. In matters of law, people asked whether these paperless contracts could be introduced into evidence in the event of dispute. Those questions have been satisfactorily resolved, to a great extent, both on a national and international basis. A key factor in that resolution was the work of the United Nations Commission on International Trade Law (UNCITRAL) and the adoption of the United Nations Model Law on Electronic Commerce in 1996. However there are following legal and security issues regarding ecommerce

1 . LEGAL ISSUE: 1.2] AUTHENTICATION One of the first elements addressed in e-commerce transactions is how to guarantee that a valid contract has been entered between the parties. Assessing the validity of contracts is complicated in the Internet environment because the contracts are paperless. Digital signatures are therefore essential in helping to promote e-commerce because they ensure that all parties have entered in a binding contractual agreement. 1.2.1] Digital Signature means It may be noted that digital signature is unlike a conventional signature. It is nothing but transformation of an electronic record into another electronic record with the help of

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private key. In this connection let us discuss about cryptography. Cryptography- In Greek, it means secret writing. It is the science of codification, which converts a normal text into junk characters (known as cipher text). The process of coding is called encryption and the process of decoding is called decryption. Encryption and decryption is done through software. These software are called Public Key and Private Key. Private Key is kept secret and the Public Key is made public. How does a digital signature work? Step One - The signer who seeks to enter an agreement with an online enterprise will affix his or her "private key" to a particular document. The private key can be stored on the user's computer and accessed by password. The "signature" produced by this private key is a number that has been generated by numerical algorithms. Step Two - The signer will also have a "public key" which is widely available to anyone who wants to authenticate the documents that have been signed by the signer. The public key is then used to verify that the private key belongs to the same person. It may also be used to verify that the message received is exactly the same as the message that was sent. Throughout this identification process the actual identity of the signer is not revealed, the only concern is that the public and private key corresponds. Step Three - To ensure the accuracy of the public and private keys, a certification authority may be used. The role of the certification authority is to authenticate the keys. The certification authority issues a certificate that guarantees that the holder of the public key is the same person who holds the private key. The certificate is digitally signed and date stamped by the certification authority to ensure its enforceability (Website) Certificates may be issued at different levels of authentication. They may be issued with no effort to establish whether the key holder is indeed the person that the key holder claims to be, or keys may be issued at a level where extensive background identification is required in which case the identity of the key holder is also being certified. Following chart will help to better understand the digital signature.

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1.2 .2] Digital signature and relevant IT Act 2000 provisions A ]Authentication of Electronic Records
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(1) Subject to the provisions of this section any subscriber may authenticate an electronic record by affixing his Digital Signature (2) The authentication of the electronic record shall be effected by the use of asymmetric crypto system and hash function which envelop and transform the initial electronic record into another electronic record. Explanation For the purposes of this sub-section, "Hash function" means an algorithm mapping or translation of one sequence of bits into another, generally smaller, set known as "Hash Result" such that an electronic record yields the same hash result every time the

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[sec 3]

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algorithm is executed with the same electronic record as its input making it computationally infeasible (a) to derive or reconstruct the original electronic record from the hash result produced by the algorithm; (b) that two electronic records can produce the same hash result using the algorithm. (3) Any person by the use of a public key of the subscriber can verify the electronic record. (4)The private key and the public key are unique to the subscriber and constitute a functioning key pair. B. Definitions a) "Digital signature".
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Means authentication of any electronic record by a

subscriber by means of an electronic method or procedure in accordance with the provisions of section 3" b) . ³Subscriber" Means a person in whose name the Digital Signature Certificate is issued. c) "Digital Signature Certificate" means a Digital Signature Certificate issued under section 35(4) d) µAffixing digital signature"
79 78 77

with its grammatical variations and cognate

expressions means adoption of any methodology or procedure by a person for the purpose of authenticating an electronic record by means of digital signature.

[section 2(1)(p)]. [section 2(1)(zg)]. 78 [section 2(1)(q)]. 79 [section 2(1)(d)].
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e) µAsymmetric crypto system¶ , as ± ³asymmetric crypto system means a system of a secure key pair consisting of a private key for creating digital signature and a public key to verify the digital signature´, f) µPrivate key¶ and µpublic key¶
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as - ³private key means the key of a key pair

used to create digital signature´ and ³public key means the key of a key pair used to verify a digital signature and listed in the Digital Signature Certificate´. g) "electronic form"
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with reference to information means any information

generated, sent, received or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device; h) "electronic record " means data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche; C. Sec. 35. Certifying Authority to issue[ Electronic Signature ] Certificate. (1) Any person may make an application to the Certifying Authority for the issue of a [Electronic Signature] Certificate in such form as may be prescribed by the Central Government. (2) Every such application shall be accompanied by such fee not exceeding twenty-five thousand rupees as may be prescribed by the Central Government, to be paid to the Certifying Authority : Provided that while prescribing fees under sub-section (2) different fees may be prescribed for different classes of applications;
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section 2(1)(f) {Section 2(1) (zc) and(zd) 82 s.2(1)(r) 83 s.2(1)(t) 84 (Substituted by ITAA 2008)
81

80

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(3) Every such application shall be accompanied by a certification practice statement or where there is no such statement, a statement containing such particulars, as may be specified by regulations. (4) On receipt of an application under sub-section (1), the Certifying Authority may, after consideration of the Certification practice statement or the other statement under subsection (3) and after making such enquiries as it may deem fit, grant the [Electronic Signature ]Certificate or for reasons to be recorded in writing, reject the application : [Provided] that no application shall be rejected unless the applicant has been given a reasonable opportunity of showing cause against the proposed rejection. D. Sec. 36. Representations upon issuance of Digital Signature Certificate A Certifying Authority while issuing a Digital Signature Certificate shall certify that- (a) it has complied with the provisions of this Act and the rules and regulations made there under; (b) it has published the Digital Signature Certificate or otherwise made it available to such person relying on it and the subscriber has accepted it; (c) the subscriber holds the private key corresponding to the public key, listed in the Digital Signature Certificate; [(ca) the subscriber holds a private key which is capable of creating a digital signature (cb) the public key to be listed in the certificate can be used to verify a digital signature affixed by the private key held by the subscriber]
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(d) the subscriber's public key and

private key constitute a functioning key pair; (e) the information contained in the Digital Signature Certificate is accurate; and (f) it has no knowledge of any material fact, which if it had been included in the Digital Signature Certificate would adversely affect the reliability of the representations made in clauses (a) to (d). E. Sec. 37 . Suspension of Digital Signature Certificate (1) Subject to the provisions of sub-section (2), the Certifying Authority which has issued a Digital Signature Certificate may suspend such Digital Signature Certificate,-(a) on receipt of a request to that effect fromi.
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the subscriber listed in the Digital Signature Certificate; or

Inserted Vide ITAA 2008

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ii.

any person duly authorised to act on behalf of that subscriber;

(b) if it is of opinion that the Digital Signature Certificate should be suspended in public interest. ((2) A Digital Signature Certificate shall not be suspended for a period exceeding fifteen days unless the subscriber has been given an opportunity of being heard in the matter. (3) On suspension of a Digital Signature Certificate under this section, the Certifying Authority shall communicate the same to the subscriber. D .Sec. 38. Revocation of Digital Signature Certificate (1) A Certifying Authority may revoke a Digital Signature Certificate issues by it- (a) where the subscriber or any other person authorised by him makes a request to that effect; or (b) upon the death of the subscriber; or (c) upon the dissolution of the firm or winding up of the company where the subscriber is a firm or a company. (2) Subject to the provisions of sub-section (3) and without prejudice to the provisions of sub-section (1), a Certifying Authority may revoke a Digital Signature Certificate which has been issued by it at any time, if it is of opinion that- (a) a material fact represented in the Digital Signature Certificate is false or has been concealed; (b) a requirement for issuance of the Digital Signature Certificate was not satisfied; (c) the Certifying Authority's private key or security system was compromised in a manner materially affecting the Digital Signature Certificate's reliability; (d) the subscriber has been declared insolvent or dead or where a subscriber is a firm or a company, which has been dissolved, wound-up or otherwise ceased to exist. (3) A Digital Signature Certificate shall not be revoked unless the subscriber has been given an opportunity of being heard in the matter. (4) On revocation of a Digital Signature Certificate under this section, the Certifying Authority shall communication the same to the subscriber. E .Sec. 39 .Notice of suspension or revocation.

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(1) Where a Digital Signature Certificate is suspended or revoked under section 37 or section 38, the Certifying Authority shall publish a notice of such suspension or revocation, as the case may be, in the repository specified in the Digital Signature Certificate for publication of such notice. (2) Where one or more repositories are specified, the Certifying Authority shall publish notice of such suspension or revocation, as the case may be, in all such repositories. Information Technology Act, 2000.; made following amendments to the Indian evidence Act, 1872 F ."Evidence" ± "Evidence" means and includes (1) all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry; such statements are called oral evidence; (2)
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[all document including electronic records produced for the inspection of the

Court], such statements are called documentary evidence; 1.2.3 . Technical/legal limitations of digital signatures There are both technical and legal limitations regarding the use of digital signatures. Some of the technical limitations involve ensuring that the encryption technology used is safe from hackers and forgery. y Public keys may not be posted in a convenient central location, but be scattered among different certificate authorities. y Certificate authorities may not be licensed or otherwise regulated for consumer protection. y Also, moving to a system of digital signatures may require both time and resources on the part of both the signer and the recipient. y In many instances the signer would be a consumer who would need to invest in some encryption software and enter an agreement with a certification authority. If the costs of these services are too expensive then the widespread adoption of
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Inserted By It Act 2000

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digital signatures that involve encryption technology may be slower then the use of other types of electronic signatures that involve smart cards or passwords. 1.2.4] Electronic signature means A signature is a stylized script associated with a person. It is comparable to a seal. In commerce and the law, a signature on a document is an indication that the person adopts the intentions recorded in the document. An electronic signature is any electronic means that indicates that a person adopts the contents of an electronic message. The Electronic Signatures in Global and National Commerce Act (ESIGN Act ) US law Sec 106 definitions (2) Electronic- The term 'electronic' means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. (4) Electronic Record- The term 'electronic record' means a contract or other record created, generated, sent, communicated, received, or stored by electronic means. (5) Electronic Signature- The term 'electronic signature' means an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record. It may be an electronic transmission of the document which contains the signature, as in the case of facsimile transmissions, or it may be encoded message, such as telegraphy using Morse code. Increasingly, encrypted digital signatures are used in e-commerce and in regulatory filings as digital signatures are more secure than a simple generic electronic signature The concept itself is not new, with common law jurisdictions having recognized telegraph signatures as far back as the mid-19th century and faxed signatures since the 1980s. 1.2.4.1 ]Examples of Electronic Signatures Although the use of public and private key encryption is one of the more commonly discussed types of digital signatures there are other methods of signatures that could be used. These other types are often distinguished

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by referring to them as electronic signatures as opposed to digital signatures. These signatures do not involve the use of public and private key encryption. Some examples of electronic signatures are,  A smart card that is swiped through the user's computer (the smart card contains verifiable information about the user),  Passwords,  Emailed pictures of handwritten signatures and  Signatures on digital pads using biometric technology (website) (jacobus). The use of these technologies would also be useful for an online enterprise because it helps to ensure the integrity of the transaction. The specific technology chosen may often depend on the specific legislation that has been passed in the state selected in the choice of law provision. This is because many of these statutes limit their applicability to certain types of digital signature technology. 1.2.4.2 ]International Recognition The Electronic Signatures in Global and National Commerce Act (ESIGN, , enacted June 30, 2000, is a United States federal law passed by the U.S. Congress to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically. In 2010, both Houses of Congress passed a resolution at the request of DocuSign and other industry leaders, recognizing June 30th as "National ESIGN Day." Although every state has at least one law pertaining to electronic signatures, it is the federal law that lays out the guidelines for interstate commerce. The general intent of the ESIGN Act is spelled out in the very first section(101.a), that a contract or signature ³may not be denied legal effect, validity, or enforceability solely because it is in electronic form´. This simple statement provides that electronic signatures and records are just as good as their paper equivalents, and therefore subject to the same legal scrutiny of authenticity that applies to paper documents 1.2.4.3 ] Electronic signature and relevant IT Act 2000 provisions

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A "electronic signature"

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means authentication of any electronic record by a subscriber

by means of the electronic technique specified in the second schedule and includes digital signature´ Section 2(ta) introduces the term µelectronic signature¶. Now µdigital signature¶ has been made a subset of µelectronic signature¶. B "Electronic Signature Certificate" 2008) C S. 3A .Electronic signature
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means an Electronic Signature Certificate

issued under section 35 and includes Digital Signature Certificate"( inserted by ITAA

(1) Notwithstanding anything contained in section 3, but subject to the provisions of sub-section (2), a subscriber nay authenticate any electronic record by such electronic signature or electronic authentication technique which- (a) is considered reliable ; and (b) may be specified in the Second Schedule (2) For the purposes of this section any electronic signature or electronic authentication technique shall be considered reliable if(a) the signature creation data or the

authentication data are, within the context in which they are used, linked to the signatory or , as the case may be, the authenticator and of no other person; (b) the signature creation data or the authentication data were, at the time of signing, under the control of the signatory or, as the case may be,the authenticator and of no other person; (c) any alteration to the electronic signature made after affixing such signature is detectable (d) any alteration to the information made after its authentication by electronic signature is detectable; and (e) it fulfills such other conditions which may be prescribed.

S. 2(TA) ( Inserted By ITAA 2008) s. 2(tb) 89 ( Inserted by ITAA 2008)
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87

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(3)

The Central Government may prescribe the procedure for the purpose of

ascertaining whether electronic signature is that of the person by whom it is purported to have been affixed or authenticated (4) The Central Government may, by notification in the Official Gazette, add to or omit any electronic signature or electronic authentication technique and the procedure for affixing such signature from the second schedule; Provided that no electronic signature or authentication technique shall be specified in the Second Schedule unless such signature or technique is reliable (5) Every notification issued under sub-section (4) shall be laid before each House of Parliament D .Sec. 5 . Legal recognition of [Electronic signatures]
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Where any law provides that information or any other matter shall be authenticated by affixing the signature or any document shall be signed or bear the signature of any person then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied, if such information or matter is authenticated by means of [electronic signature] affixed in such manner as may be prescribed by the Central Government. - Explaination for the purpose of this section "Signed", with its grammatical variations and cognate expressions, shall, with reference to a person, mean affixing of his hand written signature or any mark on any document and the expression "signature" shall be construed accordingly E .[.S.15. Secure Electronic Signature ]
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An electronic signature shall be deemed to be a secure electronic signature if- (i) the signature creation data, at the time of affixing signature, was under the exclusive control

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( Inserted by ITAA 2008) ( Substituted by ITAA 2008)

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of signatory and no other person; and (ii) the signature creation data was stored and affixed in such exclusive manner as may be prescribed Explanation- In case of digital signature, the "signature creation data" means the private key of the subscriber

1.3] TAXATION 1.3.1 Introduction: The Information Technology Act, 2000 which is the first legislation to deal with electronic commerce is quite silent about tax system. Today physical presence is no longer necessary to perform activities (i.e., commercial transactions are no longer defined by geographical boundaries) and physical transactions are replaced by bytes of data. Since EC
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can be conducted virtually instantaneously around the globe

and around the clock, the question where the profits should be taxed becomes crucial. Taxing the Internet is a topic that makes global headlines, everyday.The two most commonly discussed types of taxation related to e-commerce are state sales taxes and internet access taxes. Internet makes the physical location of the seller's business irrelevant. Whereas, the conventional notions of the sales tax law are based on the location of sellers business itself. Making use of the unique feature of the Internet, the seller may operate his market in a state effectively from far beyond the state's borders where it may be immune to the states taxing jurisdiction. The task of taxing commerce on the Net is daunting, since the data flowing through the vast annals of the Internet is intangible and the network on which it is built is spread over the space of the Earth. The peculiarity of Net stems from the kind of "traffic" that flows through it- World Wide Web (WWW) pages, e-mail, internet relay chat, video conferencing, internet telephony, streaming audio and video file transfer and so on--- and each of this data is just a meaningless string of zeros and ones.

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Electronic Commerce

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1.3.2 The Need To Tax --Business conducted through the internet caters to globally located customers. This raises cross border legal issues. Transactions that may be legal and valid in one jurisdiction may not be enforceable in others. Creation of wealth through cyber space would also entail the use of "offshore" financial institutions to store this wealth. This would constitute an elaborate and often untraceable form of tax avoidance. This is not only a threat to national sovereignty but also overrides traditional principles of taxation- a transgression of traditional notion of political and monetary autonomy. As wealth is generated through the means of cyber space, accounting mechanisms and monetary control would become difficult. Taxes on cyberspace would be one method of getting some amount of monetary control. 1.3.3 For the development of rational tax policy one should understand the nature of industry. Some of the peculiarities of Internet are" 1. It is a network of networks and it cannot be controlled or owned by one person. 2. This network of networks is capable of rapidly transmitting packets from one computer to another. 3. No human involvement is necessary to transmit data from one computer to another. 4. The Internet can re-route itself if one computer is connected to the net. 5. Content wise the Internet is very rich. 6. The world wide web environment provides a user friendly graphical interface. 7. A simple click is sufficient to obtain vast information any where in the world. 8. It encompasses all territorial and geo- graphical limitations. 9. Lack of any user control to the location of activity: As the physical location of an activity becomes less important, it becomes more difficult to determine where an activity is carried out and hence the source of income. 1.3. 4 In Quill Corp. v. North Dakota, (Website) (Quill) , the Supreme Court affirmed that a physical presence in a state was required for a corporation to have a "substantial nexus" to the state. Under the Courts dormant commerce clause cases, states cannot require out of state corporations to collect sales taxes for them unless they have a
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504 u.s. 298 (1992) is a supreme court ruling concerning use tax.

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substantial nexus to the state. Thus remote sellers, such as an Internet retailer, are not required to collect sales and use taxes for sales made to purchasers located in states where the seller does not have a physical presence. 10. No means of identification of users: In general, proof of identity requirements for Internet use is very weak. The pieces of an internet address (or domain name) only indicate who is responsible for maintaining that name. It has no relationship with the computer or user corresponding to that address or even where the machine is located. Keeping these unique qualities of the Internet in mind one should try to visualize the issues concerning the taxes on the net. E-business for taxation is an intriguing concept. In these circumstances it seems an imperative for revenue authorities to examine the approach and policy towards taxation of e-commerce more comprehensively than they have to date. 1.3.5 Off line Transactions --The off line transactions describe any transaction where goods and service are ordered and possibly paid for electronically, but delivered by other means. The bulk of e-commerce is currently found in off-line transactions In contrast to the normal transactions these offline transactions came by disintermediation. The practicalities of enforcing sales tax, customs duty differ between on-line and off-line transactions. The tax authorities will need to rethink their current methods of tax collection, simplifying or streamlining procedure without threatening any revenue and other cross-frontier controls 1.3.6 On Line - Transactions --The term on- line is used to describe any transaction that is delivered on-line. For tax authorities these transactions are very difficult to handle. The problems with on-line transactions, as perceived by tax collecting authorities include  Inability to identify a transaction  Encryption of transaction  Collecting the tax from millions of end-users rather than a small number of intermediaries.  Difficulties in determining where a product is produced or consumed.  Definition of goods and services and  Distinctions services between types of

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Tax collecting authorities will be virtually powerless in identifying transaction between Indian consumers and overseas suppliers, where all of the transaction has been performed electronically including paying the money through electronic cash. 1.3.7 Encryption of Transaction-- Powerful encryption technologies are now available to everyday Internet user and are expected to become commonly used in the next two to three years. These technologies allow users to encrypt all of the transaction so that only the parties involved can decrypt the information. This means that if the income tax officer or other tax authority is able to interrupt a transaction he will not be able to read it or understand its content in order to identify whether the transaction involves accessible goods or not. The use of encryption technologies will not only be conducted by tax evaders but also by the most honest citizen who just wishes for his transaction to be secure collecting the tax from end users. Another important problem in e-taxation is collection of tax from millions of individuals rather than intermediaries. This will increase the cost of tax collection. 1.3.8 Tax Evasion and the Internet-- Some of the Conventional tax evasion measures undertaken by companies are y y Shifting of profits to low tax Countries by transfer pricing. Thin capitalization Allocation of costs operation artificially either against domestic profits or foreign profits depending on where the rates of tax are less favorable. y Setting up conduit or intermediary companies outside the home country to process and channelize income from different foreign source. y Establishing base companies in tax havens or legal domicle.
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1.3.9 The recent report of OECD

paved way for a statement of broad taxation

principles that should apply to e-commerce as reported in The Economic Times dated 3rd June 2000.  "All double taxation avoidance treaties to be reviewed".
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The Organisation For Economic Co-Operation And Development

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In sum and substance same principles of conventional taxation should apply to ecommerce.  Neutrality: taxation should be neutral and equitable between different forms of ecommerce and thus avoiding double taxation or international non-taxation.  Efficiency: Compliance costs for business and administration costs for governments should be minimized as far as possible.  Certainty and Simplicity: Tax rules should be clear and simple to understand so that tax payers know where they stand.  Effectiveness and fairness: Taxation should produce the right amount of tax at the right time, and the potential for evasion and avoidance should be minimized.  Flexibility: Taxation system should be flexible and dynamic to ensure they keep pace with technological and commercial developments. These principles can be applied through existing tax rules and there should be no discriminatory tax treatment of e-commerce. 1.3.10 Judicial Approach to Taxation Issues --Courts generally relied upon two principles in classifying software as intangible .Software as knowledge and Software encompasses an array of services. 1] Principle of Knowledge --It states that sale of software is the sale of knowledge and acknowledged intangible. Under this theory the tangible means of transmitting this knowledge is merely incidental to the transaction . Therefore, the more separable the content is from the container the more transaction looks like a sale of intangible knowledge. Courts have cited the following factors in support of the knowledge principle. 1 The Tangible product is discardable , 2 The disk is a mere conduct or container for the knowledge and Alternative methods of conveying the information exist.

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a) . District of Columbia v. Universal computer Assocs.

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.It was one of the first case.

The court relied upon the knowledge principle to conclude that two programs at issue in the case-one custom and other canned - constituted intangible knowledge not subject to tax. b) Commerce Union Bank v. Tidwell
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This decision was followed in Commerce

Union Bank v. Tidwell In this case court held that tangible magnetic tapes were only conduits for transmitting the intellectual creations. c) First National Bank of Fort worth v. Bullock
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followed in the wake of universal

and Tidwell and focused upon severability of information from its container in the essence of the transaction test. The court concluded that the primary object of the transaction test. The court concluded that the primary object of the transaction, the sale of particular process coded on the software was intangible, therefore the sale was not subject to sales tax. 2] Personal services Principle -- Characterizing software as a personal service is another commonly used justification for not applying sales/use tax to software .As sales tax apply only to the sale of tangible properly personal services traditionally have been exempt from sales taxation. Thus, if a software sale can be classified as a sale of services then transaction will not be subject to sales taxation. 1.3.11 Indian Judicial Approach In Tata Consultancy services v. State of Andrapradesh.
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there arose a question whether

branded software which is an intangible intellectual property being a product of thought
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The first case to directly address the software tangibility issue was district of. Columbia v. Universal computer assoc., 465 f.2d 615 digitalcommons.law.ggu.edu/cgi/viewco
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s38 s.w. 2d 405 (tenn. 1976). ...heinonlinebackup.com/hol-cgi-bin/get_

584 s.w.2d 548,. 550 (tex. ... See also commissioner v. National alfalfa dehydrating & milling co., 417 ..... 88-c-1474-e (n.d. Okla. Dec. 23, 1988) heinonlinebackup.com/holcgi-bin/get_
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2005) 1 supreme court cases 308

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creativity and intellect be classified as 'goods' for the purpose of Andhra Pradesh General Sales Tax Act,. They held that when a person goes to buy a CD containing the software he does not pay for the mere CD but for the software contained in the CD. The contention that software is merely 'knowledge or intelligence and such is not corporeal and thus not taxable is erroneous. Once the information or knowledge is transformed into physical existence and recorded in physical form, it is no longer in intangible form but a corporeal property and hence taxable. Indian Legislative Approach --The Information Technology Act , 2000 which is the first legislation to deal with electronic commerce is quite silent about tax system. 1.3.12 Conclusion Taxation of e-commerce has become a major concern for international agencies and tax authorities worldwide. In Europe, North America and Australia and in many Asian countries substantial research has been conducted on the impact of e-commerce on taxation . Among the plethora of book reports, articles and papers produced on the topic, the work of OECD stands out as the most significant. The theme underlying throughout OECD work done till now is- that government is to successfully meet the challenges posed by e-commerce for taxation systems and a global co-ordinated approach is required to tax a truly global phenomenon. Need for consensus In this context , considering the unique characteristics of the medium , consensus is necessary at an international level if countries are to ensure the effective application of taxes , direct and indirect , to electronic commerce that  Protects tax revenue generally;  Does not increase the opportunity for avoidance evasion or fraud;  Minimize the cost of compliance for business ;  Does not hinder the development of electronic trade.

1.4] ELECTRONIC CONTRACTS

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At the heart of e-commerce is the need for parties to be able to form valid and legally binding contracts online. Basic questions relate to how e-contracts can be formed, performed, and enforced as parties replace paper documents with electronic equivalents. a. Offer and Acceptance: The Information Technology Act, 2000 (³IT Act´) deals with contractual aspects of use of electronic records, such as attribution, acknowledgement, time and place of dispatch and receipt. However, since the IT Act is only an enabling Act, it is to be read in conjunction with the Indian Contracts Act, 1872("Contract Act"). Formation of any contract, under the Contract Act, would involve three main ingredients. There has to be an offer, there has to be an acceptance of the said offer without modification and there has to be some consideration for the contract. These ingredients would be applicable to e-contracts. However, a difficult question that law often arises: How do we know whether the offeree has ACCEPTED the offer? Additionally, Internet communication does not consist of a direct line of communication between the sender and receiver of e-mail as in ordinary means of communication. The message is broken into chunks in the process of delivery. This raises issues of the exact time of communication of acceptance of the contract as such a time is critical for determination of the rights of the parties. The IT Act has laid down certain methods for determining the exact time and place of dispatch and receipt of the e-mail. b. Clickwrap contracts: Further, various issues arise whether a person would be bound by the terms of a contract without even reading it or without being able to negotiate the terms. For e.g., website XYZ.com offers its newsletters by simply filling in the name and e-mail address on the form provided and then clicking the 'SUBSCRIBE' button after reading and agreeing to the terms and conditions in the Subscriber¶s Contract. If Mr. A fills in his name and e-mail address and clicks SUBSCRIBE, but actually does not take the time to look at, let alone read, the Subscriber's Contract. Would this amount to a contract with XYZ? This is an example of a "clickwrap contract" which is legally enforceable. But in such a case, some of the issues that would need to be addressed are Procd V. Zeidenberg, available at http://www.law.emory.edu/7circuit/june96/961139.html under the ³authentication´ section.
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as to what would be the terms of the contract and would the acceptance of the Subscriber¶s Contract without even reading it be classified as deemed acceptance? c. Online Identity: Transactions on the Internet, particularly consumer-related transactions, often occur between parties who have no pre-existing relationship, which may raise concerns of the person¶s identity with respect to issues of the person¶s capacity, authority and legitimacy to enter the contract. Digital signatures, is one of the methods used to determine the identity of the person. The regulatory framework with respect to digital signatures is governed by the provisions of the IT Act. However, various countries have different legislations regulating digital signatures. This has been further discussed Electronic contract issue has been dealt with in detail in chapter IV.

1.5] PRIVACY AND DATA PROTECTION ISSUES An important consideration for every e-commerce website is to maintain the privacy of its users. Use of innovative technologies and lack of secure systems makes it easy to obtain personal and confidential information about individuals and organisations. In July 2001, a dozen privacy groups filed a complaint in the US about the privacy issues in Microsoft¶s Windows XP operating system. Some features of the Operating System store personal information such as passwords and credit card data so that users are not required to constantly re-enter this information as they surf through websites. However, though the Operating System was launched successfully on October 25, 2001, privacy groups have still have criticised the Federal Trade Commission of not taking any action on the complaint. The web cookie also faces the risk of extinction under a proposed European Commission directive. However, the Interactive Advertising Bureau of UK has marshalled support from several businesses across Europe to launch a lobbying effort that it calls ³Save our Cookies´ as it believes that British companies could lose approximately US$ 272.1 million if web-cookies are banned.
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Privacy concerns have also been raised

regarding the Internet Corporation for Assigned Names and Numbers (³ICANN´)
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Europe goes after the cookie´, october 31, 2001 at www.unwired.com

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"Whois" database, which is a publicly searchable resource used to determine the identity of domain name registrants. The database includes the name of the individual or company that registered a given domain name, as well as the owner's address, the dates on which the domain was created, when it expires and when it was last updated. Privacy groups criticized the company for selling information about its registrants, arguing that many of them are individuals who never agreed to having their information sold as a commodity when they signed up for the service. Some of the important privacy concerns over the Internet include: I. Dissemination of sensitive and confidential medical, financial and personal records of individuals and organisations; II. III. IV. Sending spam (unsolicited) e-mails; Tracking activities of consumers by using web cookies; and Unreasonable check and scrutiny on an employee¶s activities, including their email correspondence. Presently there exists no legislation in India that upholds the privacy rights of an individual or organisation against private parties. While the Constitution of India upholds the right to privacy as a fundamental right of every citizen,
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the right is exercisable only against a State action. Even the IT

Act addresses the issue of protecting privacy rights only from Government action.

Nevertheless, in order to gain the confidence of a wary consumer, protecting their privacy rights is a critical concern. For example, if an e-commerce website seeks information from a user and disseminates this information to third parties, it would amount to a violation of the privacy rights of the user and this may turn away existing and potential users from accessing the site in the future. Moreover, when an e-commerce company caters to consumers in foreign jurisdictions, the foreign jurisdictions may have laws that could make the e-commerce company liable for violating the foreign consumer¶s privacy , Kharak singh v. State of u.p air 1963 sc 1295, gobind v. State of madhya pradesh (1975) scc (cri) 468. & people's union of civil liberties v. The union of india (1997) 1 scc 318.
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Section 69 and section 72 of the information technology act, 2000.

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rights. For example, Company A in India, that receives some personal data from a consumer in the European Union, and disseminates the information to companies in the US, may be liable for invasion of privacy rights of the consumer.

1.6.] INTELLECTUAL PROPERTY RIGHTS ISSUES One of the foremost considerations that any company intending to commence ecommerce activities should bear in mind is the protection of its intellectual assets. The Internet is a boundless and unregulated medium and therefore the protection of intellectual property rights ("IPRs" e.g Copyright, Patent, Know how, Trade mark ,Trade Secret ,Design. ) is a challenge and a growing concern amongst most e-businesses. While there exist laws in India that protect IPRs in the physical world, the efficacy of these laws to safeguard these rights in e-commerce is uncertain. Some of the significant issues that arise with respect protecting IPRs in e-commerce are discussed hereunder. a. Determining the subject matter of protection: With the advent of new technologies, new forms of IPRs are evolving and the challenge for any business would be in identifying how best its intellectual assets can be protected. For example, a software company would have to keep in mind that in order to patent its software, the software may have to be combined with physical objects for it to obtain a patent. b. Ascertaining novelty I originality: Most intellectual property laws require that the work / mark / invention must be novel or original. However, the issue is whether publication or use of a work I invention I mark in electronic form on the Internet would hinder a subsequent novelty or originality claim in an IPR application for the work / invention / mark. An e-commerce company would have to devote attention to satisfying the parameters of intellectual property protection including originality requirements in its works to preclude any infringement actions from third parties who own similar IPRs. c. Enforcing IPRs: As will be discussed under the ³Jurisdiction´ issue, it is difficult to adjudicate and decide cyber-disputes. The Internet makes the duplication, or dissemination of IPR- protected works easy and instantaneous and its anonymous

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environment makes it virtually impossible to detect the infringer. Moreover, infringing material may be available at a particular location for only a very short period of time.
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A company must also keep in mind that since IPRs are inherently territorial in

nature, it may be difficult to adjudge as to whether the IPR in a work or invention is infringed, if it is published or used over the Internet, which is intrinsically boundless in nature. For example, if µCompany A¶ has a trademark registered in India for software products, but a web portal based in the US uses the same trademark for marketing either software products or for marketing some other goods, it may become difficult for Company A to sue for infringement. Moreover, due to differences in laws of different nations, what constitutes infringement in one country may not constitute infringement in another. Further, even if Company A succeeds in proving an infringement action, since the IPR that it owns is only valid for India, the scope of remedies that may be available to Company A would be territorial and not global. Thus, the web-portal may be restrained from displaying its site in India or may have to put sufficient disclaimer¶s on its website. In order to restrain infringement in other countries, Company A may need to file proceedings those countries also. This process may prove to be time-consuming and expensive for the aggrieved Company. In light of certain technology driven mechanisms such as electronic copyright management systems (³ECMS´) and other digital technologies that are evolving to prevent infringement, the recent World Intellectual Property Organisation (³WIPO´) Copyright Treaty
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explicitly mandates that all

contracting parties to the treaty shall have to provide adequate legal remedies against actions intended to circumvent the effective technological measures that may used by authors to prevent infringement of their works.
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However, these mechanisms may not

be commercially viable and their use may also depend on international interoperability standards, as well as privacy concerns.

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³Hosts´ and web page creators can delete files within a matter of hours or days after their posting.
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India has not signed this treaty. Pursuant to this treaty, the us government has enacted that digital millenium copyright act to afford protection to digital copyrights
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Article 11, Wipo Copyright Treaty, 1996.

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d. Preventing unauthorized hyper linking and meta tagging: The judiciary in many countries is grappling with issues concerning infringement of IPRs arising from hyper linking and meta tagging activities. Courts in certain jurisdictions have held that hyper linking, especially deep-linking may constitute copyright infringement, whereas meta tagging may constitute trademark infringement. For example, Company A¶s website provides an unauthorized link to Company B¶s website, or if Company A¶s website uses meta-tags that are similar to Company B¶s trademarks, Company A could be sued for violating Company B¶s IPRs. e. Protection against unfair competition: Protection against unfair competition covers a broad scope of issues relevant for electronic commerce. So far, electronic commerce has not been subject to specific regulations dealing with matters of unfair

competition.Companies on the Internet, have to constantly adapt to and use the particular technical features of the Internet, such as its interactivity and support of multimedia applications, for their marketing practices. Problems may arise with regard to the use of certain marketing practices such as (i) Interactive marketing practices (ii) spamming (discussed under the ³Privacy and Data Protection´ section) and (iii) immersive marketing. Further, questions regarding the territorial applicability of such standards would also arise.

1.7. ] DOMAIN NAMES ISSUES A company that commences e-commerce activities would at first have to get its domainname registered. While registering domain names, if the company chooses a domain name that is similar to some domain name or some existing trademark of a third party, the company could be held liable for cybersquatting. Over the past few years, domestic and international fora have handled and decided numerous cybersquatting disputes. Recently the ³.info´ top-level domain was opened for registration and within no time the WIPO has already received two cases for disputesettlement.
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Further, another

See: http://www.it.mycareer.com.au/breaking/2001/10/22/ffx18i063tc.html (as visited on November 5, 2001).

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US Company, NeuLevel Inc. who had been restrained from distributing the ³.biz´ domain names, has now been allowed to do so as the plaintiffs declined to post a bond that would
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have prevented the company

from handling

out

new domain

names.

Moreover, the ICANN recently confirmed that it had finalised a contract with
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Museum Domain Management Association whereby ³.museum´ has also been included as a generic top-level domain in the global domain name system.

1.8 ] JURISDICTIONAL ISSUES IT Act don¶t address jurisdictional issues. Section 75 of the IT act reads as under : µSubject to the provision of sub- section (2), the provisions of this act shall apply also to offence or contravention committed outside India By any person irrespective of his nationality.¶ The wording of the section is such that the almost brings the whole world within the Jurisdiction of the Indian court. In such case one question arises that the do Indian courts have such a wider jurisdiction? This provision can have efficacy only if India has extradition treaty with the country in which the accused is residing or working for gain or business. It is difficult to ascertain the jurisdiction of courts in electronic contracts for examples An Indian customer of a computer manufactured by a US firm makes payment in advance online. Subsequently the US firm fails to deliver the computer within the stipulated time. The Indian customer decides to sue the US firm but cannot decide where to file the suit. According to traditional law the customer can either file a suit where the cause of action arises [ i.e. India ] or where the defendant [US firm] resides. In this circumstances which is the most appropriate place to file the suit? This issue is yet to be resolved. The IT Act 2000 has failed to provide any solution to this problem. See: Http://News.Zdnet.Co.Uk/Story/0,,T269-S2098080,00.Html (As Visited On November 5, 2001).
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See: Http://Www.Washtech.Com/News/Regulation/13217-1.Html (As Visited On November 5, 2001).

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Jurisdictional issues has been dealt with in details in chapter v. According to the traditional rules of private international law, the jurisdiction of a nation only extends to individuals who are within the country or to the transactions and events that occur within the natural borders of the nation.
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However, in e-commerce

transactions, if a business derives customers from a particular country as a result of their website, it may be required to defend any litigation that may result in that country. As a result, any content placed on a website should be reviewed for compliance with the laws of any jurisdiction where an organisation wishes to market, promote or sell its products or services as it may run the risk of being sued in any jurisdiction where the goods are bought or where the services are availed of. The fact that parties to a contract formed through the Internet may be located in different jurisdictions may have implications for the interpretation and enforcement of the contract. For example, XYZ, a company in London, having its server in USA, may sell its products to customers in India or other countries. In such a situation, if you receive defective goods or if you regret having made the purchase, the question would arise as to which jurisdiction can you sue the company or claim damages or withdrawal respectively. The company, on the other hand, might find itself confronted with foreign laws, which he may not be aware of. For example, the US courts have in numerous cases have held a company in X state liable in Y state on the basis that the website could be accessed in Y state.
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Action, against the host company,

may be by way of a civil law suit, criminal prosecution or an action by regulators. The US courts have developed the ³minimum contacts´ theory whereby the courts may exercise personal jurisdiction over persons who have sufficient minimum contacts with the forum state.
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These "minimum contacts" may consist of physical presence, financial

³Private International Law´, Cheshire and north, 11th ed. Pg. 188

California Software Incorporated V. Reliability Research, inc., 631 f. Supp. 1356 (c.d. Cal. 1986) cited from julian s. Millstein et al doing business on the internet: forms and analysis (1999). the due process clause of the 14th amendment of the constitution of the united states as referred to in ³a separate jurisdiction for cyberspace?´ By juliet m. Oberding and terje norderhaug http://www.ascusc.org/jcmc/vol2/issue1/juris.html.
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gain, stream of commerce, and election of the appropriate court via contract.
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Various

courts have held that statements purposely directed at the forum may create sufficient contacts for jurisdiction. This would mean that even if you are not physically present

in a nation, you can be sued in that foreign court as long as your website has minimum contacts with that nation. Therefore, a company should insert appropriate choice of law and choice of forum clauses in its online contract, which should specify the jurisdiction to which the parties to the contract would be subject to. Such clauses have been held by courts to be binding upon the parties. 1.9.] LIABILITIES ISSUES Owners of websites should guard against the potential sources of liability which could lead to legal claims against them. Since the Internet knows no boundaries, the owner of a website could be confronted with legal liability for non-compliance or violation of laws of almost any country. Liability may arise due to various activities inter alia due to hyperlinking (inserting a clickable link to another site) and framing (incorporating another website into a frame or window appearing within a webpage on the linking site),
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fraud, libel and defamation,

invasion of privacy, trademark and copyright

infringement.

International Shoe Co. V. Washington, 326 u.s. 310 (1945) cited from³a separate jurisdiction for cyberspace?´ By juliet m. Oberding and terje norderhaug. Http://www.ascusc.org/jcmc/vol2/issue1/juris.html. Calder V. Jones, 465 U.S. 783 (1984) cited from³a separate jurisdiction for cyberspace?´ By juliet m. Oberding and terje norderhaug. Http://www.ascusc.org/jcmc/vol2/issue1/juris.html. However, indian courts have yet not taken any particular stance regarding the ³minimum contacts´ theory. Compuserve, Inc. Vs. Pattterson, 89 f.3d 1257, 1259-1260 (6th cir. 1996) cited from julian s. Millstein etal doing business on the internet: forms and analysis (1999) Washington Post Co. V Totalnews, 97 civ. 1190 cited from richard d. Harroch, esq. Start-up and emerging companies: planning, financing, and operating the successful business (vol 2 revised ed.)
115 114 113

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a. Contractual Liability: A website that offers goods or services should contain an online contract to which the customer must assent. The contract needs to be carefully drafted to protect the website owner from liability and should address the key terms and conditions for the provisions of goods or services. The contract should clearly establish the exact time and manner of acceptance of the contract. In the event of dispute or breach of contract, the liability of the owner of the website would be limited only to the extent of the terms of the contract. b. Statutory liability: Depending on the type of business, a website would have to comply with the provisions of the law, central or state, in that jurisdiction. But various nations differ with respect to statutory compliances and permitted activities. The website would therefore, in addition to the state laws, be required to comply with the provisions of the statutes of the countries in which the website would be vastly accessed. Failure to comply with such foreign laws may lead to liability under such law. For example, an Indian company using comparative advertising on the worldwide web, not knowing that such practices are prohibited in Germany and France may be liable for violation of the laws of Germany or France. c. Tortuous Liability: Liability under tort may arise due to wrongful interference withthe business or wrongful defamation or any remark or action that may cause injury to one¶s property or reputation. Thus, although no contractual relationship may exist as well as where the interference or damage is unintentional, the website owner may be liable for wrongful injury. The law of torts lays down a duty on every man to take reasonable care to avoid any harm to nay person. The owner of the website also owes a duty to the user and is bound to take reasonable care to avoid any harm that may be done.

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new york times co. V sulllivan, 376 us 254 (1964) cited from richard d. Harroch, esq. Start-up and emerging companies: planning, financing, and operating the successful business (vol 2 revised ed.).

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2 SECURITY ISSUE 2.1 ] SECURITY ISSUES Security over the Internet is of immense importance to promote e-commerce. Companies that keep sensitive information on their websites must ensure that they have adequate security measures to safeguard their websites from any unauthorised intrusion. A company could face security threats externally as well as internally. Externally, the company could face problems from hackers, viruses and trojan horses. Internally, the company must ensure security against its technical staff and employees. Security can be maintained by using various security tools such as encryption, firewalls, access codes / passwords, virus scans and biometrics. For example, a company could restrict access to the contents on its website only through the use of a password or login code. Similarly confidential information on websites could be safeguarded using firewalls that would prevent any form of external intrusion. Apart from adequate security measures, appropriate legal documentation would also be needed. For example, a company could have an adequate security policy that would bind the all people working in and with the company. Moreover, a company could also be held liable for inadequate security procedures on its website. For example, last year, a person decided to sue Nike because the Nike¶s website was hacked and the contents of the domain were re-directed through the person¶s web servers in the U.K., bogging them down and costing the web hosting company time and money
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2.2.] ELECTRONIC PAYMENT ISSUES The vast majority of e-commerce payments are done by credit card. There are two general types of payment systems available. For an e-commerce site of any significant size, the Operator will need to open Merchant Account and choose an online payment processing service such as CyberCash (Website). For a smaller site, a third-party system such as PayPal (Website) or MoneyZap (Website) may be more cost effective. The third See http://www.wired.com/news/politics/0,1283,37286,00.html (as visited on october 22, 2001).
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party collects the funds for the website operator using its own merchant account and then deposits the funds into the website operator's account. The instrumental growth in e-commerce activities has necessitated the evolution of electronic payment mechanisms. In addition to normal currencies, e-financial instruments digital currencies such as cybercash
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and e-cash

can be used for the purchase of

current as well as capital assets over the Internet and for carrying on other commercial activities. Before regulating the use of such financial instruments, it would be essential to identify the issues that these instruments pose. Some of these issues are: a. Secure Credit Card Transactions: An e-commerce website that accepts online credit card payments must ensure that it has adequate security measures to safeguard confidential customer data that is provided on the site. In the event that credit card numbers are leaked on the Internet, the website could be held liable for damages caused to the consumers. b. Recognition of digital currencies: To be effective, existing laws would need to recognise the payment of digital currencies, as enforceable consideration against obligations undertaken by the other parties. Further, the extent to which these digital currencies are ³valid tender´ would also need to be examined. 34 c. Determining the relevant jurisdiction: This would mean determining the relevant law that parties will be governed by in respect of electronic transactions (whether by the contract, or in its absence, by general principles of law). This may create problems, especially when the laws in Country A, where the company is registered permit electronic

Cyber cash inc created a system called cybercash which permits secure transactions through complex routing transaction. 32 33 Digicash, A Netherlands based company has formed an electronic payment system known as e-cash. The system involves purchasing µunits¶ or µcredits¶ from a bank to a particular value in a particular currency which can be used to trade on internet. The seller of the goods can take e-cash units and either use it to buy some other goods on the internet or redeem it at participating banks for its own country¶s currency. Mark twain bank in the us issues e-cash on internet.
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payment contracts, whereas the laws in Country B, where the consumer is located, do not regulate electronic payment contracts. d. Risk of Regulatory Change: The regulatory environment for electronic payment is likely to change with technological innovations in modes of payment. Therefore, any form of legislation made in this regard should be technologically neutral. Pursuant to the IT Act the Reserve Bank of India (³RBI´), in consultation with the National Payment Council is in the process of giving final touches to the draft of the Payment Systems Regulations Act. This proposed legislation will bring in all electronic fund transfers in the country, such as money orders, settlements at payment gateways, stock and commodity exchanges and clearing houses under the jurisdiction of the RBI. e. Transaction risks: These include the liability for security failures in the system of transaction and the relevant standard of care for system security. f. Consumer-oriented risks: These include risks concerning privacy, consumer protection, money laundering, tax avoidance, online fraud and crime. g. Disabling IT Act: The IT Act does not apply to negotiable instruments which is likely to create problems in the growth of electronic payment mechanisms. h. No virtual banks: The recently announced Internet Banking Guidelines in India, which stipulate that purely virtual banks on the Internet are not allowed, may be a hindrance in maximising the potential of the Internet for electronic payments. However, existing banks are not prevented from setting up e-commerce operations for their customers. 2.2.1 Consumer Fraud Cases Consumer fraud on the Internet is a natural outgrowth of the recent explosion in the use of the Internet to conduct consumer transactions and the number of people on-line. To date, prosecutions for consumer fraud, including claims for false advertising, unfair and deceptive trade practices, and investment fraud, have largely been initiated by governmental agencies, including the Federal Trade Commission, the Securities and Exchange Commission, and the state Attorneys General. These cases not only discuss

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traditional fraud principles in the context of promotions and "commerce" on-line but often raise issues concerning personal jurisdiction. A People v. Lipsitz, 663 N.Y.S.2d 468
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In this case, a New York court held that the

defendant was subject to personal jurisdiction and liable for violating New York consumer protection laws, even though the defendant conducted its magazine subscription business globally over the Internet. B Minnesota v. Granite Gate Resorts, Inc.,
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In this case, the Minnesota Attorney

General brought suit under the state consumer protection statute alleging that the defendant, a Nevada resident, was liable for deceptive trade practices, false advertising and consumer fraud on the Internet by advertising that gambling on the Internet is legal even though the specific on-line gambling service associated with the defendant was not yet operational. While the decision is limited to the defendant's unsuccessful argument that, as a Nevada resident, he was not subject to personal jurisdiction by the Minnesota courts, it illustrates the extent to which consumer protection laws are being used by the states to prosecute fraud - even prospective fraud - on the Internet. On October 31, 1998 the Minnesota Supreme Court agreed to review the case. C Juno Online Services, L.P. v. Juno Lighting, Inc.,
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In this dispute over the use of

Internet domain names, the court held that the mere registration of a domain name, without setting up a web site or e-mail service, does not constitute "trade or commerce" or amount to "deception" as required by the Illinois consumer fraud and deceptive business practice statute.

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(n.y. Sup. Ct. June 23, 1997) 569 n.w.2d 715(mn. App. Ct. 1997) 122 979 f.supp. 684 (n.d. Ill. 1997)

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III ] OTHER ISSUES

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Ecommerce can change the economies of the developing nations. It can integrate them to the global market which in turn improves and strengthens the economic well-being of these nations. However, the practice of Ecommerce in these nations is in its early stages and there are also major challenges that can hold back its growth. I categorize them in two major parts as follows; 1.Cultural issues:A. .Lack of online culture- -Electronic way of doing business is a new concept for the societies of the developing nations. People usually buy and sell on face-toface basis. They see and touch (physically) what they want, negotiate on best deals, and buy. This is the type of business activity they are familiar with, which is entirely different from online way of doing it. The idea of buying goods and services that cannot be seen and touched physically is not the type of risk they can afford. They are not confident also whether online merchants are trust worthy enough to deliver products and services as promised. Merchants as well are afraid to sell their products over the Internet. Considering the lack of online buying habits of the society, and because of the reason that electronic way of doing business is not well-known, they think it is a high business risk to take. They usually are not willing to invest on online ventures. Thus, this extremely damages the growth of Ecommerce in these nations. B. Lack of Trust --Basically, trust is a major issue in online business environment. As I mentioned earlier, people in the developing nations are not confident with online way of doing business, by which one of the major reasons is trust. Because Ecommerce is not a practice in these countries, and business is usually done on

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Article :Major Challenges of Ecommerce in the Developing Nations ; source:

http://ezinearticles.com/?expert=hanna_shiferaw

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face-to-face bases, people usually raise trust issues. They are obliged to think how could they trust people they do not see and may be found thousands of kilometers away? Besides, because there are no Ecommerce policies and laws in most of developing countries, they are afraid where to go in case of disputes. 2 Infrastructural issues:A. 1.Limited access of Telecommunication infrastructure and high cost of Internet-Ecommerce requires technological foundations. One of the major ones is access to the Internet. To run an online business one needs an Internet connection with stable and high connection speed. However, mostly the Internet connection type in the developing nations is a dial up connection, which is very limited and slow. Besides, the cost of possessing it is high. This is another challenge Ecommerce faces in the developing nations. B. Limited access to Personal Computers -- Another major technological facility Ecommerce needs is Personal computers. Possessing computers is expensive in the developing nations because they usually are imported products from the developed nations; which is another major challenge for the growth of Ecommerce in these countries. C. Lack of Electronic payment facilities for enabling transfer of funds --Banking is another major facility needed to do Ecommerce. And in most cases, the developing nations lack this major facility. Online merchants in these countries are obliged to use banking facilities offshore if they are going to do business over the net. D. Imperfect legal system and policy barriers--To do Ecommerce, perfect legal system and policy is required. Without them it is impossible to do business online. However, these nations usually lack these major systems which in turn could make doing Ecommerce difficult. However, even though doing business online in the developing nations is difficult, it is not impossible at all. It can be done given the circumstances. It could take more effort to be successful though. In addition, the industry needs time to utilize its potentials.

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Thus, realizing the potential of Ecommerce in the developing nations, there are concerned bodies by which their co-operation can make a big difference. They are government, professionals, online merchants, banks and customers. If they can work together and collaborate, they can fully avoid all the above mentioned obstacles and can benefit their nations from the outputs of Ecommerce. Conclusion In matters of law, people asked whether these paperless contracts could be introduced into evidence in the event of dispute. Those questions have been satisfactorily resolved, to a great extent, both on a national and international basis. A key factor in that resolution was the work of the United Nations Commission on International Trade Law (UNCITRAL) and the adoption of the United Nations Model Law on Electronic Commerce in 1996. However there are above issues.

CHAPTERV

ECOMMERCE : JURISDICTIONAL ISSUE

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Cyberspace is a µµborderless¶¶ world²a world of its own. It refuses to accord to the

geopolitical boundaries the respect that private international law has always accorded to them and on which it is based. Therefore there is a need to have a different solution to

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By Amit M. Sachdeva

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this different problem. The solution lies neither in adopting a µµhands-off¶¶ approach nor in simply extending mutatis mutandis the existing conflicts rules.

When the traditional conflict of laws rules relating to jurisdiction of courts were being evolved, it was perhaps too nascent a stage in the development of science to contemplate a technological advancement which would deny and defy all notions of political and geographical boundaries. What science could not contemplate, law (perhaps rightly) did not provide for. This is the most discernible argument against the adequacy and appropriateness of extending mutatis mutandis the existing conflicts rules to govern cyberspace. The claim for its appropriateness, as advanced by some, is contradicted by the very nature and concept of the conflict of laws. The claims of adequacy and appropriateness are also opposed to the genesis and the process of evolution of the conflicts rules. The (traditional) conflict rules were evolved to address a category of disputes which involved legally relevant foreign elements. Here, µµforeign¶¶ refers to territorially foreign, determined by and according to the geopolitical boundaries. The internet, on the other hand, is truly a borderless world. It refuses to accord to the (traditional) geopolitical boundaries the respect and sanctity which has been Historically accorded to them. The disregard of these boundaries by the internet gives rise to a multitude of problems, of which the problem of jurisdiction is but the

Foremost. The issue gains special significance in matters concerning cyberspace in that cyberspace is merely a medium of effecting or facilitating certain acts, which have real world implications. Thus acts committed in the µµborderless cyber world¶¶ eventually have to be enforced in the bordered real world. what may be legal in one legal system may be prohibited by another, and the same may be circumstantially justifiable in yet another.
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Fortunately, on account of the absence of a pluralist regime (or indeed any

the degree to which the exercise of the freedom of speech and expression is permitted in different legal systems is a glaring example of the aforementioned difference. For example, much of the freedom guaranteed to individuals in the united states throughthe constitution¶s first amendment is not available in many other states, particularly the islamic and the communist world. The recent controversy over the publication of a

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regime), there exists no such difference in the cyber world. In other words, the differentiation between legality and illegality is not maintained in the cyber world, independent of the real world
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2 .International jurisdiction and cyberspace

Cyberspace, which constitutes a technology-driven imaginary space, defies control by mechanisms evolved in the real world essentially based on geopolitical boundaries. It is a new social order, which cuts across cultures, civilizations, religions, etc. and creates a µµnew realm of human activity¶¶
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forcing mankind to rethink the appropriateness of

extending the existing rules to it. Cyberspace clearly disregards th general correspondence, existing in the real world, between physical borders and µµlawspace¶¶² based on considerations of power, effects, legitimacy and notice. The law, in the µµnonvirtual world¶¶, works essentially on a two-way premise that a certain set of legal rules is applicable to only one set of persons, who are present within the limits of the sovereign prescribing such rules, and to none other
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; and that a certain set of persons are required

to comply with only one set of standards, and with none other. It is this perception, which having been mutually recognized and accepted by most sovereigns gives the requisite strength and legitimacy to each sovereign to enforce its legal rules within its territory. However, the case with the cyber world is different as it admits of no territory or polity based borders sufficient to impose a certain set of rules to a certain territorially defined set of persons. This leads each cyberactor to act according to his own legal order (or perhaps no legal order at all), leading to blatant violations of what may be guaranteed rights under other legal regimes. Litigation involving the internet has thus increased as the internet has developed and expanded. The µµborder-breaching¶¶ nature of cyberspace, µµcaricature of the prophet¶¶ in a leading newspaper well illustrates the difference in the extent of freedom enjoyed. 126 for an excellent general treatment of this complex subject, see dan burk, µµfederalism in cyberspace¶¶ (1996) 28 university of connecticut law review 1095 and henry h. Perritt jr, µµjurisdiction in cyberspace¶¶ (1996) 41 villanova law review 1. 127 david r. Johnson and david g. Post, µlaw & borders²the rise of law in cyberspace¶¶ (1996) 48 stanford law review 1367. 128 Except in a case where another sovereign also prescribes the same set of rules, in which case also there is only one set of persons vis- `a-vis the set of rules in question.

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the substantial difference in the substantive laws of different states and the absence of any enforcement mechanism in the virtual world give rise to a multiplicity of judicial forums, since the cause of action and the parties are spread across physical borders. This enables a plaintiff to choose his forum, and the defendant, in his turn, to question the jurisdiction of the chosen court. Any ruling on the question requires a balancing of the interests of the plaintiff, who has a right to choose his forum and the defendant, who cannot be exposed to the contingency of facing litigation in any and every court. The courts are accordingly struggling to come up with a coherent doctrine of personal jurisdiction for internet transactions. Far from there being unanimously agreed concrete rules, there are at least two broad and diametrically opposite ways in which different legal systems and scholars are responding to the problem. Some scholars and systems find appropriate to µµborrow . . . the principles of [conflict of laws relating to] personal jurisdiction and extending them to cyberspace setting¶¶.
129

Others, realising that the addresses of the computers on the

internet are digital rarely containing geographic indications, find traditional rules of private international law grossly inadequate and often suggest exposition of new rules to address this new situation.A comparative study shows that each legal system has responded to this question differently, based upon its ownideas of justice, expediency, convenience and experience, and guided by the prevalent constitutional and political order. While some states have adhered to the requirement of territorial nexus as the basis of jurisdiction, others claim to have µµadapted¶¶ and µµrelaxed the jurisdictional basis¶¶ to better counter the challenges posed by, and keep pace with, developments in science and technology. 3. The position in India 3.1 Personal jurisdiction --The principle of lex fori is applicable with full force in all mattes of procedure. No rule of procedure of foreign law is recognised. It was held in Ramanathan Chettier v Soma Sunderam Chettier
130

that India accepts the well-

established principle of private international law that the law of the forum in which the legal proceedings are instituted governs all matters of procedure. In India, the law of
129

Vakul Sharma, Information Technology Law And Practice (Delhi: Universal, 2004), P.262 (Emphasis Added). 130 Air 1964 Mad. 527; see also nallatamlei v ponuswami ilr [1879] 2 mad. 406

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personal jurisdiction is governed by the Code of Civil Procedure 1908 (the Code). The Code does not lay any separate set of rules for jurisdiction in case of international private disputes.
131

It incorporates specific provisions for meeting the requirements of serving
132

the procedure beyond territorial limits.

In matter of jurisdiction what is treated

differently is the question of subject-matter competence and not of territorial competence, i.e. the question of territorial jurisdiction arises in the same way in an international private dispute as in a domestic dispute. The Code provides general provisions regarding jurisdiction on the basis of pecuniary limit, subject matter and territory. Sections 16 to 20 of the Code regulate the issue of territorial jurisdiction for institution of suits.

Rules as to the nature of suit Based on the subject-matter suits are divided into three classes: (1) suits in respect of immovable property; (2) suits for torts to persons or movable property; and (3) suits of any other kind.

Suits of immovable property must be filed within the local limits of whose jurisdiction the property situated.
133

The Code therefore incorporates the principle of lex situs and

therefore the property in this section may refer to only property µµsituated in India¶¶. Suits for wrongs to persons and movable property may be instituted in the courts within whose local limits the wrong is done or the defendant resides or carries on business or personally works of gain.
134

Suits of any other kind are dealt with under s.20 of the Code

which is the µµdefault rule¶¶ providing for all others cases not covered by any of the foregoing rules. Under s.20, a court can exercise jurisdiction in actions involving persons where:

See Ss.9 And 15 Of The Code Of Civil Procedure 1908. See Ord.V, Rr.24 To 26. 133 The Code Ss.16 And 17. 134 The Code S.19.
132

131

101

(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for work; or (b) any of the defendants, where there are more than one, at the time of commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case with the leave of the court has been obtained or the defendants who do not reside or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of section wholly or partly arises. 3.2 Rules enforcing µµagreement of parties¶¶ --It is well-established law in India that where more than one court has jurisdiction in a certain matter, an agreement between the parties to confer jurisdiction only on one to the exclusion of the other(s) is valid.
135

The Indian law therefore recognises and gives effect
136

to the principle of party autonomy. However, this extent of autonomy does not travel far enough so as to confer jurisdiction on a court which it inherently lacks. autonomy is also subject to the maxim ex dole malo non oritur action.
137

Party

Thus the position of law on the point is that first, a choice of law agreement is permissible; and secondly, the agreement operates only in respect of a court which does not otherwise inherently lack jurisdiction. In any such case, the courts also consider the balance of convenience and interests of justice while deciding for the forum.
138

Thus, in

India, the principle is well settled that residence in the territorial limits of a court

Hakkam Singh V Gammon (India) Ltd Air 1971sc 740; Globe Transport Corporation V Triveni Engineeringworks [1983] 4 S.C.C. 707; Rsdv Finance Co P Ltd V Shree Vallabh Glass Works Ltd Air 1993 Sc 2094. 136 United Commercial Bank V Workmen [1951] S.C.R. 380; Hira Lal V Kali Nath [1961] 2 S.C.R. 747; Nai Bahu V Lala Ramnarayan [1978] 1 S.C.C. 58; Chief Justice, Ap V Dixitulu [1979] 2 S.C.C. 34; Gm, Ongc, Sibsagam V M/S Raj. Engineering Corp Air 1987 Cal. 165. 137 Abc Laminart (P) Ltd V Ap Agencies Air 1989 Sc 1239. See Also Rewa Mahton V Ram Kishen (1886) 13 I.A. 106 (Pc). 138 Union Of India V Navigation Maritime Bulgare Air 1973 Cal. 526.

135

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furnishes a ground for exercise of jurisdiction.
140

139

Similarly, conduct of business by a

defendant in a forum also gives to the forum court to exercise jurisdiction, irrespective of his non-presence within the jurisdiction. The Indian courts also assume adjudicative
141

jurisdiction on the basis of the territorial nexus with the cause of action.

In this regard,

the consistent view of the courts in India is that the courts are empowered to pass judgments even against non-resident foreigners, if the cause of action arises in whole or part within the territorial limits of the court.
142

The Code also provides for rules and
143

procedure for international service of the processes of the court.

However, since the

courts in India do not assume jurisdiction, unlike in England, on the basis of service of writ, these provisions are of not much consequence to issues of jurisdiction. Personal jurisdiction in cyberspace Unfortunately, only a very few cases concerning personal jurisdiction in cyberspace have been decided by the superior courts in India.
144

The

reason perhaps is that residents in India have not yet accepted or adapted themselves to this new technology as a fit mechanism to undertake legal obligations (coupled with an extremely slow justice delivery system). The approach adopted is similar to the µµminimum contacts¶¶ approach of the United States coupled with the compliance of the proximity test of the Code.
145

Considering the present rules of international jurisdiction

and the tendency of the Indian courts to µµsuitably modify¶¶, the existing domestic rules to
139

kashinath v anant ilr (1899) 34 bom. 407; fernandes v ray ilr (1897) 21 bom. 373; see also sriniwas v v.v. Ayyangar ilr (1906) 29 mad. 239; m. Mudaliar v andappa pillai air 1955 mad. 96. 140 chunnilal kastuschand v dundappa donappa air 1951 bom. 190; frontier bank ltd v shrimati prakashwati bahl ilr (1950) punj. 635. 141 ram bhat v shankar baswant ilr (1902) 25 bom. 528; v.e. Smith v indian textile co. Air 1927 all. 413; gaekwar baroda state railway v sheikj habib ullah air 1934 all. 740; patel kala bechar v patel mohan bhagwan air 1953 sau. 16. 142 r. Blainpain and b. Verschraegev (eds), international encyclopedia of laws: private international law (the hague: kluwer law international, 2005), p.555. 143 See generally ords iii, v of the first schedule to the code 144 Though there are a few cases on cyber crimes and domain name disputes. See for example, bulbul roy mishra v city public prosecutor, criminal original petition no.2205 of 2006, decided april 4, 2006 145 (India tv) Independent News Service Pvt Ltd V India Broadcast Live Llc Cs (Os) No.102/2007, Decision Dated July 10, 2007.

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international situations in other areas of private international law may be analysed. The reaction of the court would much depend on whether the contract contained a choice of court clause or not. Case I: where the contract contains a choice of court clause. In such a case, the Indian courts would normally give effect to such a clause subject only to a survey of forum non conveniens particularly when the same would result in foreclosure of its own jurisdiction. Case II : where the contract does not stipulate an agreed forum. In a case of this sort, the Indian courts would be inclined to apply the test of s.20 CPC since none of the other provisions seem to be of much assistance. The court would make a twin inquiry: place of habitual residence of the defendant and proximity of the cause of action to the forum, where even an µµin part¶¶ cause of action may furnish sufficient basis to exercise jurisdiction. Thus the Code provides for the tests of both objectivity and proximity to base its jurisdiction. While the legal system favours exercise of jurisdiction on the basis of proximity of cause of action, its exercise based on the residence of the defendant is also accepted for three reasons: (1) ease of enforcement; (2) compliance with audi alteram partem; and (3) the (draconian) law of contempt of courts in India (as in most other common law countries). For the purpose of determining whether the cause of action arose in the local limits of a court, the courts generally go into the question of place of conclusion of the contract.
146

However, it seems that the place of conclusion of contract would not be of
147

much assistance in case of an e-contract.

There would be an insoluble confusion

between the rules governing completion of communication of offer, acceptance and

See Bhagwan Dass Govardhan Dass Kedia V Purshottam Dass & Co Air 1966 Sc 543. 147 the anarchic rule conferring jurisdiction on the court where the contract was concluded has ceased to be operative in almost all legal systems today. India, unfortunately, continues with this outdated rule.

146

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revocation.

148

The rule in the Bhagwan Dass case

149

would neither apply nor lend much

support in reaching a reasonable solution in contracts entered into through the internet.

Thus the Indian position as may also be inferred from the trend of the Indian courts may be summarised as follows: an Indian court would not decline jurisdiction merely on the ground that the international contract in entered through the internet. It examines the two bases of jurisdiction: domicile of the defendant and proximity to cause of action. Even if one is found to be satisfied, the Indian court it seems would assume jurisdiction. However, it would be for the plaintiff to prima facie also convince that the courts elsewhere do not have a better basis of jurisdiction since the Indian courts in such a case may also feel tempted to analyse the issue of jurisdiction from the stand point of the doctrine of forum non conveniens as also anti-suit injunctions and thus decline to exercise jurisdiction even where there existed legal basis to do so.
150

4 .The solution There exist irreconcilable differences in what different scholars consider to be solution(s) to the problem of jurisdiction in cyberspace. The vast spectrum of diversity has at one end, a suggestion that there exists no reason to be µµpanicky¶¶ about cyberspace as the new world
151 152

and that it merely requires a µµstraightforward application¶¶

of existing

See [indian] contract act 1872 s.4. The test laid down in this case is that in cases of means of instantaneous communication, the contract is said to be concluded at the place where the acceptance comes to the knowledge of the proposer. 150 (India tv) independent news service v India broadcast live, above fn.126. 151 jack l. Goldsmith, µµabout cyber anarchy¶¶ (1998) 65 u. Chi. L.r. 1199; see also lawrence lessig, µµthe zones of cyberspace¶¶ (1996) 48 stanford law review 1403; timothy s.wu, µµcyberspace sovereignty?²the internet and the international system¶¶ (1997) 10 harvard journal of law & technology 647; Shane A. Orians, µµexercising personal jurisdiction on the internet: the misapplication of the asahi metal decision to µcyberspace¶ ¶¶ (1998) 24 ohio northern university law review 843; ari lanin, µµwho controls the internet? States¶ rights and reawakening of the dormant commerce clause¶¶ (2000) 73 south California law review 1423; Stephan wilske and teresa schiller, µµinternational jurisdiction in cyberspace: which states may regulate the internet?¶¶
149

148

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conflict rules; whereas the scholars at the other extreme suggest a need for a µµfundamental re-examination¶¶ entirely new set of rules.
154 153

of the working of jurisdiction and creation of an

The difficulty in agreeing upon potential solution(s) arises
155

and is deep-rooted in the very understanding of cyberspace, whether as a place, a means of communication, technological state of mind, etc. For the purpose of an analytical

study of the topic, the different suggestions may be considered. There are four basic competing models for the governance of the global net: simple extension (with adjustments) of the existing rules of international jurisdiction
156

; a multilateral treaty

(1997) 50 federal communications law journal 117; jack l. Goldsmith, µµthe internet and the abiding significance of territorial sovereignty¶¶ (????) 5 indiana journal of global legal studies 475; jack l. Goldsmith, µµregulation of the internet: three persistent fallacies¶¶ (1998) 73 chicago-kent law review 1119; steven hanley, µµinternational internet regulation: a multinational approach¶¶ (1998) 16 john Marshall journal of computer and information law 997 (1998). 152 Henry H. Perritt Jr, µµjurisdiction and the internet: basic anglo/american perspectives projects in the coming 2000¶s¶¶, www.ilpf.org; henry h. Perritt jr, µµthe internet is changing international law¶¶ (1998) 73 chicago-kent law review 997 (1998). 153 David R. Johnson And David g. Post, µµlaw and borders²the rise of law in cyberspace¶¶ (1996) 48 stan. L.r. 1367; see also john t. Delacourt, µµrecent development: the international impact of internet regulation¶¶ (1999) 38 harvard international law review 207; david g. Post, µµanarchy, state and the internet: an essay on law-making in cyberspace¶¶ (may 1995), available at www.wm.edu (last accessed june 14, 2007); david g. Post, µµagainst µagainst cyberanarchy¶ ¶¶ in adam theierer and clyde wayne crews jr (eds), who rules the net? (2003); joel r. Reidenberg, µµgoverning networks and rule making in cyberspace¶¶ (1996) 45 emory law journal 911; barry j. Waldman, µµa unified approach to cyber- libel: defamation on the internet, a suggested approach¶¶ (1999) 6 richmond journal of law and technology 9; william s. Byassee, µµjurisdiction of cyberspace: applying real world precedent to the virtual community¶¶ (1995) 30 wake forest law review 197. 154 David R. Johnson And David G. Post, µµand how shall the net be governed? A meditation on the relative virtues of decentralized, emergent law¶¶, www.cli.org. 155 see generally ryder, above fn.4, 206; see also sanjay s. Mody, µµnational cyberspace regulation: unbundling the concept of jurisdiction¶¶ (2001) 37 stanford journal of international law 365 and allen stein, µµthe unexceptional problem of jurisdiction in cyberspace¶¶ (1998) 32 international lawyer 1167; richard zembek, µµjurisdiction and the internet: fundamental fairness in the networked world of cyberspace¶¶ (1996) 6 albany law journal of science and technology 339; trotter hardy, µµthe proper legal regime for µcyberspace¶ ¶¶ (1994) 55 pittsburg law review 993. 156 uta kohl, µµlegal reasoning and legal change in the age of the internet: why the ground rules are still valid¶¶ (1999) 7(2) international journal of law and information

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based establishment of new and uniform jurisdiction rules

157

; establishment of a new

international organisation to propose a set of rules appropriate for cyberspace jurisdiction; and, an optimism of emergence of individual decentralized decisions by various actors and stakeholders. None of these models is free from difficulty. Each has merits and demerits of its own. However, the model endorsing the conclusion of a multilateral treaty based establishment of new and uniform jurisdiction rules seems most appropriate for several reasons. One factor which favours such a model over all others is the story of evolution and development of private international law. We began from a stage when there was no µµforeign element¶¶ in disputes before municipal courts. The gradual increase in international trade and movement of persons and goods necessitated private international law rules. Owing to limited means and resources, different legal systems answered the same set of foreign elements in their own unique way, which was in some instances strikingly different from one another. This resulted in different set of conflicts rules in different countries. Upon realising that such diverse conflict rules actually hampered, rather than promoted, international trade and movement of persons and goods, the world wake up to a harmonisation drive. Unfortunately, this drive has not so far been successful in most areas of conflicts. In context of cyberspace, we are at much the same stage as we were centuries back when international trade had just begun to open up. To allow sovereigns to develop their own rules of cyberspace jurisdiction without having made an endeavour to reach a treaty based solution would mean rewinding to centuries back and to ignore the wisdom and experience we gained during all these years. The mistakes that we committed by compulsion centuries ago should not be committed by choice now. Since cyberspace is a global phenomenon which transcends, ignores and bypasses geopolitical borders, solutions likely to be appropriate must also be global, or in any case technology 123; See Also uta kohl, µµeggs, jurisdiction and the internet¶¶ (2002) 51 international and comparative law quarterly 555 (2002); andreas manolopoulos, µµraising cyberspace: the interaction between law and technology¶¶ (2003) 11 international journal of law and technology 40. 157 Moritz keller, µµlessons from the hague: internet jurisdiction in contract and tort cases in the ec and the us¶¶ (2004) 23 john marshall journal of computer and information law 1; sean selin, µµgoverning cyberspace: the need for an international solution¶¶ (1997) 32 gonzaga law review 365.

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multilateral. In other words, the likelihood that a proposed scheme or arrangement would resolve the issue of jurisdiction effectively increases with the increase in multilateral basis. Therefore, despite its demerits of being a slow process and a generalised approach, it seems that international harmonisation²whether in the form of voluntary convergence of national regulatory laws or of a treaty adopting a uniform international standard or by µµsoft¶¶ co-operation among national enforcement agencies²would be the most promising and feasible solution, provided that the scheme of the treaty admits of limited reservations and establishes an international regulatory body and a dispute resolution system. Besides being a charter of a uniform international standard,
158

a treaty may also

specify the outcome characteristics of particular transactions; state general governmental policy objectives; or establish international choice-of-law rules that specify which nation¶s law governs particular transactions.
159

At the same time, one can not afford to

lose sight of the fact that any legal doctrine that gives the right of regulation of the net to one country (or state, county or city) must give that right to all sovereigns. Therefore, all States must decline to exercise jurisdiction unless they consider it equally permissible for other states, in similar circumstances, to assume jurisdiction. Even if the present state
160

of knowledge and understanding of cyberspace and legal issues related thereto

does not permit a detailed agreement on intricate technology based issues, a more policy based framework convention would only form a strong foundation for the future harmonisation and guide the municipal courts in this regard. Thus, to whatever extent agreement is possible, a convention may be negotiated and drawn up. However, for aspects on which no consensus may be reached, an international monitoring or regulatory

An example of a treaty establishing a uniform international standard is the united nations convention on the international sale of goods. 159 141 a good example of a treaty that establishes an international choice-of-law regime is the rome convention on the law governing contracts. 160 µµso far, international harmonization of issues of jurisdiction is relatively limited. Various international conventions dealing with the harmonization of specific areas of law contain provisions on jurisdiction over disputes arising in the specific field. However, as regards jurisdiction and the enforcement of foreign judgements in general, a widely accepted multilateral instrument²which would also cover intellectual property disputes²does not yet exist¶¶: wipo on international harmonization of jurisdictional issues, available at www.wipo.int.

158

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body with some binding authority may be assigned the task of analysing, etc. rules of cyber jurisdiction. Such a body may, on the lines of UNCITRAL, UNIDROIT, etc. may propose and adopt certain model laws for the states to base their municipal legislations on.
161

Still other aspects may have to be inevitably left to the municipal courts to rule

upon since it is only in a real factual situation that issues which could not be contemplated will arise, requiring courts to adjudicate upon the legitimate interests of the parties. Expecting a comprehensive treaty based solution on all possible issues is unrealistic and also undesired for cyberspace is only a few decades old and a number of more complex issues are yet to surface. And, to decline to act merely because a comprehensive agreement looks difficult is to act contrary to the collected wisdom from the past.

5. Some proposed rules of jurisdiction --Considering the complexities of the cyber world and conscious that the presently known complexities are only the tip of the iceberg, as well as realising that disputes have and will continue to arise, it is a considered view that the following may form reasonable and acceptable bases of jurisdiction for an international convention. However, since disputes would arise even before a certain degree of international harmonisation is reached, compelling the courts to render judgments, the following are the suggestions on the issue of personal jurisdiction in cyberspace to municipal courts:

5.1 .Domicile-jurisdiction rule -The nearly universally accepted rule of founding jurisdiction on the basis of the domicile of the defendant may constitute a good general rule for cyberspace also. The territorial nexus of the defendant is not expected to produce much disagreement or opposition. A Brussels Regulation Art.2-type rule may find quick agreement. However, the definition of the expression µµdomicile¶¶, unlike in the Regulation, should not be left to the municipal regimes. At the same time, territorial nexus must not be confused for mere casual presence and for a very short period of time. Most legal systems, including The uncitral model law on arbitration sets a valuable precedent as it forms the basis for domestic legislations in a number of states, including india.
161

109

England, have abdicated this rule in favour of a rule of domicile and/or habitual residence. However, physical territorial presence at the time of the commission of an act so as to facilitate its commission may also form a just basis for jurisdiction. Rule of proximity to cause of action Since physical territorial presence is often inconsequential toa wrongful act in cyberspace and mostly difficult to trace, an extended meaning may be assigned to µµpresence¶¶ as µµcontextual presence¶¶. Presence must thus be presence for the purpose of and in relation to the cause of action. Proximity to the cause of action may serve as a reasonable basis for exercise of what Americans understand to be µµspecial jurisdiction¶¶. Even so, proximity must not be sought to be determined in terms of µµminimum contacts¶¶ or any other municipal law expression to ensure a highest degree of uniformity. Whether or not there is an actual proximity to the cause of action may be, instead, best left as a µµquestion of fact¶¶, to be determined by application of the judicial mind to the facts of each particular case. This approach is expected to meet criticism of some of the sceptics and would ensure that each state imparts justice in each individual case in accordance with its own notions of constitutional rights and obligations. This approach has the merit of adequately blending legal predictability (of the basis of jurisdiction) with flexibility (of its exercise) in each individual case. This would also partly accommodate the concern of the United States to give necessary choice to the parties to determine whether or not they wish to become connected to (and consequently, subject to the laws of) any given sovereign in respect of a cause of action.
162

5.2 µµEffects¶¶ as a basis of jurisdiction --If the mere contact, on the basis of which jurisdiction is sought to be assumed, is the µµeffects¶¶ of an online act, its exercise must be declined unless the effect is itself an essential ingredient of the wrongful act
162

163

or unless

The report on µµglobal jurisdiction issues created by the internet¶¶ (american bar association, 2000, s.2.2, london meeting draft) prepared and submitted by the american bar association clearly indicates the importance of targeting for the purposes of jurisdiction to prescribe and to adjudicate: µµsuch a chosen relationship will subject the foreign actor to both personal and prescriptive jurisdiction. The critical issues are the intent of the website sponsor and what constitutes sufficient evidence of that intent. When transactions are involved, the best evidence of intent is the willingness to deal with the persons in that forum.¶¶ : [2007] c.t.l.r. 257 163 for example, in defamation it may be resorted to.

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there exists no other more appropriate forum for redress to the plaintiff. In such a case, the place where the harm occurred or its effects surfaced may form an acceptable jurisdictional basis. Special rules in cases of consumer contracts In the context of consumer contracts, a rule favouring a very strong protectionist regime may not be suitable for cyberspace. Any overambitious rule akin to the Brussels I Regulation Art.15 is likely to lose sight of the market selfregulation approach of the United States. The latter seems to be a more appropriate rule for consumer contracts concluded through cyberspace. The inappropriateness of the rule can be best understood by examining the implications, if such a rule is hypothetically adopted. Consumers are generally spread across jurisdictions and the deliberations one makes while deciding in favour of or against concluding a consumer relationship is far less than in a B2B contract. The possibility of negotiation is much less in consumer contracts and whatever little there is, is often excluded by the municipal laws of different countries, sometimes in the name of µµpublic policy¶¶, sometimes in the name of µµmandatory rules¶¶ and sometimes under the banner of µµconstitutionally guaranteed fundamental rights¶¶. This would expose a potential seller/service provider to the risk of litigation in almost all countries of the world. Any temptation to be guided by an emotion to protect the µµweak consumer¶¶ must therefore be resisted in favour of the need to prevent the hindrance in the development of the internet as a means of entering into legally binding relations. Such a rule may further, in some cases, lead to a denial of an effective

5.3 Compliance of the rule of audi alteram partem. --Nevertheless, since the consumer needs to be given at least some protection considering his weak bargaining power, it may be reasonable to adopt a rule conferring jurisdiction upon the courts of the state where the consumer is domiciled if the other party also has an office, branch, agency or other establishment etc within the territorial limits of the same state. Similarly, jurisdiction may be exercised when it is made out on the basis of proximity of the cause of action. Some of the rules referred to in the previous section may be of great assistance in an effort to reach a treaty on international jurisdiction in cyberspace. These rules have been chosen and proposed on a two prong criterion: (1)the degree of acceptance and (2) reasonableness.

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A balance must therefore be made between the necessary µµliberty¶¶ for technology and the need to check its possible abuse. While a strict view on cyberspace jurisdiction runs the risk of its unbridled and unchecked misuse, a rather casual view of jurisdiction may mean fighting the wrong enemy with the wrong weapons in the wrong battlefield. This may indeed retard the potential growth of the internet. Thus each court must properly weigh and address the competing claims of the parties before giving effect to one over the other, keeping in view also the possibility of enforcement.
164

It is here that the

necessity of international harmonisation steps in. Since all international harmonisation is a compromise, an overambitious agenda to have a comprehensive and perfect set of rules may be detrimental to the whole exercise.

6 .Summary and conclusions In a matter which is as unknown to a judge as a legislator, it is difficult to suggest whether a common law or a civil law approach should be the preferred one. To favour the view µµto learn with experience and time¶¶ would mean allowing the common law courts enough time to decide a good number of cases and attract the application of their doctrine of stare decisis. This would jeopardise the harmonisation process at a later stage. To favour the other approach of laying down some inflexible rules (purporting to be comprehensive) comes with the risk of compromising justice. While the desired harmonisation is not reached and/or the states do not legislate on the basis of the µµmodel laws¶¶ referred to above, the difficulty will remain paramount for the courts. It is there that the important question will arise: in the absence of statutory and international guidelines on cyber jurisdiction, how far would resorting to private international law norms, as prevalent in different legal systems, be justified and/or feasible? This inquiry has a twofold concern: the inevitability of municipal courts decisions and the inappropriateness of conflicts rules being related to cyberspace. It must be understood and realised that the rules of jurisdiction, just as any other concept of private international law, were framed or evolved in order to address the then existing circumstances, political order, sense of justice and the targeted social order. No rule of law can be fit for all See the relation between enforcement and curial jurisdiction under the heading µµinternational jurisdiction¶¶ above.
112
164

ages even in identical set of circumstances; a change in time, accompanied by changing circumstances, socio-political order, therefore calls for modification, and in some cases, abdication of the old in favour of a new rule. Thus, when any of the factors that contributed to the formulation of a rule changes, so must also the response of law to them. The main problem lies in attempting to extend to this µµnew virtual world¶¶ the existing rules of private international law, which were evolved to best suit the transactions of a µµtraditional politically divided real world¶¶. The new world is almost completely free from elements that led to the evolution of conflict rules. The only sustainable solution then seems to lie in framing new rules, which answer the problems considering the peculiarities of this new world that the courts are confronted with today. In such a case, a different approach
165

may have to be devised, unique to each legal

system and in accordance with its own constitutional scheme and notions of fairness and justice, in order to exercise jurisdiction over non-resident online users. To expect or require a municipal court to uphold and apply an international norm of jurisdiction in complete disregard of the notions of its own constitutional rights and wrongs, is doubtless impolitic and unrealistic. Undoubtedly law, being a social science, cannot grow at the pace at which science and technology grow. Nevertheless, every endeavour must be made to keep pace with their growth. It is possible only when law modifies itself in the light of new developments in science and technology, progressing at both a micro, issue byissue. level as well as a broad, trans-substantive level. No single model solution is sufficient in itself to adequately address the problem. Cyber jurisdiction can be addressed only by a proportionate contribution from all the models, Complementing and supplementing each other. But, before adopting any one model or any combination of different models, it must be remembered that the internet is here to stay, and so is its potential to commit and facilitate unlawful acts, and the resultant litigation. Therefore it is necessary for each state to participate in every attempt to harmonize the rules of jurisdiction and to codify such rules into domestic legislations, even where no international harmonization is reached. This will ensure that both sides of

165

Jean-gabriel castel and janet walker, canadian conflict of laws, 5th edn (canada: butterworth, 2003), para.11.47.

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a cyber litigation will be faced in a predictable forum with certain legal consequences the prior knowledge of which would enable them to act accordingly.

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CHAPTER VI

ECOMMERCE AND INDIAN SCENARIO: A critical study

India today is one of the fastest growing economies in the world. Along with China, it is responsible for propelling the growth of Asia and changing the rules of the game. With a huge size of the economy that is growing at this rapid rate, it is necessary that businesses in India adopt the latest in terms of technology. Firms and businesses are expected to constantly update and upgrade themselves to serve the growing consumer base and to reach out to the millions in this country that are prospering due to the tremendous growth. Everyday, more and more consumers are added to the list of potential customers for a wide variety of businesses due to a rapid increase in the disposable income of the people. As the world is growing into a global village by adopting the newest technology, the Indian consumer is demanding more and better services from the businesses. This is one reason why the emergence of ecommerce in India has been closely watched and is beginning to change the way business is done in this part of the world. Ecommerce gives businesses a chance to cater to the needs of the consumers in a very personalized way. However optimistic the scenario of the emergence of ecommerce in India seems, it is however not an easy task and there are peculiar challenges that lie its path. This is why businesses should adopt a more local approach after understanding well the needs of the Indian consumer, while also keeping in mind the problems of the consumer. If you analyze carefully, you will realize that ecommerce in India is still in a nascent stage and businesses haven¶t been able to harness the full potential of ecommerce in India. There are several challenges that the Indian businesses and the multinational companies who have built a strong base in India must face and overcome. This hasn¶t really been easy and the country as a whole has been slow to adopt ecommerce as compared to other parts of the world.
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2 .Technological challenges for ecommerce in India

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by ecommerce in india (by siddhartha kalla)

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A ) Bottom of Form Barriers to Ecommerce in India Some of the infrastructural barriers responsible for slow growth of eCommerce in India are as follows. Some of these even present new business opportunities. A. Payment Collection: When get paid by net banking one has to end up giving a significant share of revenue (4% or more) even with a business of thin margin. This effectively means y parting away with almost half of profits. Fraudulent charges, charge backs etc. all become merchant¶s responsibility and hence to be accounted for in the business model. B. Logistics: You have to deliver the product, safe and secure, in the hands of the right guy in right time frame. Regular post doesn¶t offer an acceptable service level; couriers have high charges and limited reach. Initially, you might have to take insurance for high value shipped articles increasing the cost. C. Vendor Management: However advanced system may be, vendor will have to come down and deal in an inefficient system for inventory management. This will slow down drastically. Most of them won¶t carry any digital data for their products. No nice looking photographs, no digital data sheet, no mechanism to check for daily prices, availability to keep your site updated. D. Taxation: Octroi, entry tax, VAT and lots of state specific forms which accompany them. This can be confusing at times with lots of exceptions and special rules. E. Limited Internet access among customers and SMEs F. Poor telecom and infrastructure for reliable connectivity G. Multiple gaps in the current legal and regulatory framework H. Multiple issues of trust and lack of payment gateways: privacy of personal and business data connected over the Internet not assured; security and confidentiality of data not in place.

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B) In order to fully realize the potential of ecommerce in a developing world like India, it is first necessary to understand the challenges that it faces. There are of course certain challenges that are global in scope, which affect ecommerce in all parts of the world. These challenges are understood well especially by the multinationals that come to India for expanding their business and finding a profitable and rich market. However, these multinationals overlook the context in which they do the business, and fail to understand the psyche of the Indian consumer. In addition, they overlook certain key social and economical aspects and this is the reason why so many huge multinationals have had a very difficult time initially in India, until they really understood the local needs of the market. This applies even to the local firms and businesses. Ecommerce is no exception to this rule, and unless the Indian consumer is well studied, ecommerce will remain in its dormancy. We look here at the technological challenges that India faces, which are also similar to the rest of the developing world. The most important challenge in India for the development and implementation of ecommerce on a large scale is the unavailability of internet to a major Indian population. This is an especially acute problem, since less than 4% of the Indian population actually has access to the internet. Therefore a business that aims to cater to the larger segment of the Indian population will fail to have a large impact on the population who don¶t have access to internet. It is not just access to internet that is a problem. India has a very low computer literacy rate. About 6% of the Indian population is computer literate. This translates to about 10% of the Indian literates who are also computer literate, which is a very low fraction indeed. This is in sharp contrast to the developed countries of the West. Therefore it does not make good business sense for businesses that cater to those segments without internet accessibility to go in for a full scale remodeling of their business into the world of ecommerce. The internet and computer penetration of this country that till last year was growing at about 9% and which comprises a sixth of the world population is indeed very low. In order for ecommerce to fully develop in India, this is the very basic requirement. The good news however is that the government of India is trying its best to make computers and internet reach the villages of India, through various projects in the development and distribution of cheap computer and internet

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facilities which are likely to convert into solid results. It has, for example, unveiled a plan for the manufacture of the cheapest laptop in the world. In addition, the mobile and fixed landline communication system in the Indian villages is far superior. Therefore in order to bring internet to the villages of India, the infrastructure is already present. This is good news, since the cost of infrastructure can be prohibitively large for such ambitious projects. You can therefore expect the scenario to improve drastically in the next decade. Businesses and multinationals can therefore expect a rapid growth in this area in the next few years and can capitalize on this boom once they understand well the challenges faced by them. It thus makes sense to make a gradual foray into this area to become a business leader in ecommerce in India sometime soon while making a good amount of sales and profits. The other concern in India is the still poorer lack of broadband connection, which is almost essential for a hassle free online ecommerce experience. Therefore even to those people who have access to the internet, the browsing experience is very limited due to slow connection. This is a definite obstacle for ecommerce. The cost of a broadband connection in India is also higher than in other countries. The other technological challenge facing the Indian markets of ecommerce is the use of credit and other smart cards by the Indian consumers. Though India is one of the fastest growing markets in terms of number of cards, the spending still remains very low. Also, the number of people who have credit cards is less, with the ones that do use them possessing several of them. Therefore to get the consumers to start using their cards is itself a challenge in itself that is apparent in banks trying to woo their customers by having offers such as 5% cash back while using credit cards. Not using credit cards is a problem because customers will not be able to use ecommerce effectively. The safety of using credit cards online is always a concern even in other countries. However, the problem in India is a little more complex because it doesn¶t have a universal online payment system like the presence of PayPal in the western markets. EBay has launched PayPaisa for the Indian wing of its eBay, but it still remains largely unpopular among other ecommerce websites. The obvious advantage of having such an online payment system is that you don¶t need to enter sensitive credit card information

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everyone on the net where you don¶t trust the source very much. Poor logistics for company to use is also a hurdle in the development of ecommerce, since businesses are in dark about how much to invest and how much to foray into the world of ecommerce for the Indian customer. In short there are many reasons for a frustratingly slow climb of e-commerce in India, three of the most relevant issues that are being faced today nation-wide are: Expensive Broadband ±Computer Illiteracy ±Poor Internet Connectivity ± 1.1] ADEQUACY OF I T ACT 2000 The information technology act, 2000
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The IT Act is a first step taken by the Government of India towards promoting the growth of e-commerce. It is a first historical step. 1. Aims to provide the legal infrastructure for e-commerce in India. 2. Based on the INCITRAL Model Law on Electronic Commerce, 1996. 3. IT Act is divided into 13 chapters and has 94 sections. 4. Amendments to IPC, Indian Evidence Act, Bankers Book Evidence Act and RBI Act have been effected. Objectives 1. To provide legal recognition for transactions:- Carried out by means of electronic data interchange, and Other means of electronic communication, commonly

referred to as "electronic commerce", involving the use of alternatives to paperbased methods of communication and storage of information, 2. To facilitate electronic filing of documents with the Government agencies 3. To amend the Indian Penal Code, the Indian Evidence Act, 1872, the Banker's Book Evidence Act, 1891 and the Reserve Bank of India Act, 1934 4. Aims to provide for the legal framework so that legal sanctity is accorded to all electronic records and other activities carried out by electronic means.
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India 's first cyber law -

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5. To protect: All electronic systems for intrusion; Privacy of certain messages; protect the computer system from unauthorized access 6. to ensure: Compliance to the provisions of the Act; Non-publishing of obscene information. Assistance in the decrypting information in the interest of state and crime control. 7. The Act also aims at preventing misrepresentation, falsity and fraud and provides for penalty. Scope of the Act,2000 Every electronic information is under the scope of I.T. Act 2000 but following electronic transaction is not under I.T. Act 2000  Information technology act 2000 is not applicable on the attestation for creating trust via electronic way. Physical attestation is must.  I.T. Act 2000 is not applicable on the attestation for making will of any body. Physical attestation by two witnesses is must.  A contract of sale of any immovable property.  Attestation for giving power of attorney of property is not possible via electronic record. Legality of Email: E-mail will now be a valid and legal form of communication in our country, can be duly produced and proved in a court of law. Shortcoming of I.T. Act 2000 1. Infringement of copyright has not been included in this law. 2. No provision as to online ecommerce taxation and jurisdictional issues 3. No protection for domain names. 4. The act is not applicable on the power of attorney, trusts and will. 5. No, provision of payment of stamp duty on electronic documents. 6. Act 2000 does not deal with so many cyber crimes such as a. Cyber Defamation and therefore we have to rely on Indian penal code. b. Cyber squatting

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c. conduct of cybercafés d. cyber stalking e. not specific as to credit card frauds f. junk e mail g. Another demerit is that the word Spam is not mentioned in the IT amendment Bill. This is a serious problem because India already features among the top ten nations in the world from where spam originates. Moreover the most cyber crimes are bail able offence, corporations can forget about being able to get their errant employees, who misuse confidential data and information behind bars. The maximum damage by way of compensation stipulated by way new cyber law amendments is Rs.5 core. When calculated in dollar a term this is a small figure and hardly provides any effective relief to corporations, whose confidential information, which might be worth several cores , is stolen or misused by its employee. Thus there is need to amend the I T Act 2000 to address the above problems 3 .Advantages of ecommerce for IndiaAs a developing nation, there are several challenges in economic and social development that India must overcome in order to truly become a global power. It may not seem apparent, but ecommerce greatly helps in bringing about social and economical changes in the Indian context. This has a profound effect on the life of the people of India. The first social change that ecommerce brings about is the empowerment of women. Traditionally, men are the bread winners of the family and women are expected to stay at home. Though this trend isn¶t followed in the major cities and metropolitans, it is a deep rooted reality for families living in smaller cities, towns and villages. Though the system isn¶t as rigid as it used to be a couple of decades ago, still this is the trend in many households. Women in India are not without their set of skills, however. They can create beautiful pieces of art that men traditionally cannot make. Further, it is this culture that is preserved in the villages of India that has almost been lost from the cities that can help to empower rural and urban women. By selling their goods, Indian women can contribute

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substantially to the family income. They can make many of the traditional handicrafts, clay modeling, basket making, weaving etc. which are great items to sell especially to the urban population. There are also several products like clothes, baskets, pots, etc. that women are skilled in making that have a day to day use in the Indian context and making them artistically beautiful only adds to its value. However, the most important thing that women can make and sell is jewelry. In fact, as eBay India revealed, a jewelry item is sold every 5 minutes in India. This is a boon for the rural women who can design and make traditionally beautiful jewelry, which can find great demand in the urban context for general use and during special occasions like ceremonies and marriages. When women are allowed to contribute substantially to the economics of the country, they are naturally empowered. Ecommerce also forms an important political tool for the development of the country. This is because the world of ecommerce doesn¶t require any political patronage or interference except a basic level of freedom and security that is well ensured by the government. As with other developing countries, the problem of red tape and regulation make sectors very inefficient to work in. This is one of the main reason why manufacturing in India suffered for most part of the last decade, and still does. Ecommerce industry works without the borders of bureaucracy, and therefore gives equality to all players, irrespective of the business and political connections of the individual or the firm. This will form a welcome break from the undue influence of political forces in the growth of the nation. Ecommerce therefore will help India to rebuild portions of the economy that have been neglected up to now. Indian economy is composed of a very large number of small and medium enterprises, who would be at a maximum benefit with ecommerce. This is because there will be reduced overhead costs and infrastructure investments. This is important because it will let these small players have their say and when these small enterprises thrive, there will be a much higher employment among the people of the country. This has profound effect on the economy of the country. There can be small players in the business that can, through ecommerce, make their mark in their specific area of business.

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Ecommerce also gives a direct boost to the software sector of India. The software sector is a great source of income for India, and has been responsible to a very large extent for the global image of India among other nations. Also, the software industry is one of the biggest recruiters of engineers in the country, and with this type of skill, they have the potential to leave a mark for themselves in the world, which they are already successful in doing. If these firms can take over the challenge of ecommerce and provide their quality service in this field as well, they will get a great scope to expand their business and reach within India and also abroad. This is because there are many global firms that are operating in India and which require ecommerce for their business to work. This gives a window of opportunity for the Indian software companies to enter into the next business changing revolution that the country is witnessing. Another big achievement of ecommerce already is that it has helped to drastically improve the services of the government sector. For example, it is now possible and easy to pay your telephone and electricity bills online, which would otherwise have taken hours together in lines to pay. The Indian Railways is another public sector that has been completely revolutionized. The online booking system has gotten rid of the need to wait in queue for hours and hours at the railway counter. Though often overlooked, ecommerce solutions for activities that formed a major headache for the common man has really helped the people of the country in their day to day activities. 4 .Today status of E-Commerce in India ± Today E-commerce is a byword in Indian society and it has become an integral part of our daily life. There are websites providing any number of goods and services. Then there are those, which provide a specific product along with its allied services.

A) Multi-Product E-Commerce: Some Internet portals provide almost all categories of goods and services in a single site; hence, they are targeting buyers of every possible product/service. The most popular examples are www.indiaplaza.com, www.thebestofindia.com, www.khoj.com, www.sify.com, www.rediff.com, www.indiatimes.com and so on.

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These Indian E-commerce portals provide goods and services in a variety of categories. To name a few: 1. Apparel and accessories for men 10. 11. 12. 13. 14. 15. 16. 17. 18. Jewelry Audio/video entertainment goods Gift articles Real estate and services Business opportunities Employment Travel tickets Matrimony Pets«and more.

and women 2. 3. 4. 5. 6. 7. 8. 9. Health and beauty products Books and magazines Computers and peripherals Vehicles Collectibles Software Consumer electronics Household appliances

B) Single-Product E-Commerce: Some Indian portals/websites deal in a specialized field, for example: 1) Automobiles: Examples are: http://www.indiacar.com/ and http://www.automartindia.com/. On these sites we can buy and sell four-wheelers and two-wheelers, new as well as used vehicles, online. Some of the services they provide are: ‡ ‡ ‡ ‡ Car research and reviews Online evaluation Technical specifications Vehicle Insurance ‡ ‡ ‡ Vehicle Finance Dealer Locator Regional Transport Office

regulations

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‡

Expertspeak

‡

Message board«and more.

2) Stocks And Shares And E-Commerce: In India today, we can even deal in stocks and shares through e-commerce. Some of the sites are: http://www.equitymaster.com/ and www.5paisa.com/. Some of the services offered to registered members are: y Online buying/delling of stocks and shares; y y y Market analysis and research Company information Comparison of companies y 3) Real Estate and E-Commerce: Portals like http://www.indiaproperties.com/ facilitate online dealing in real estate. They offer either outright purchase or lease of a property through their portal. They provide information on new properties as well as properties for resale. One can deal directly with developers/builders or through consultant/brokers. Allied services: y y y y y Housing Finance Insurance companies Architects & Interior Designers NRI services PropertyManagementConsultants y y y Packers & Movers Security & Maintenance Services Vaastu or Feng Shui y y y Research on Equity and Mutual Funds Tracking Market Trends Hotline for advice on Risk Management 24-Hour helpdesk«.and more.

Consultants«and more.

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4) Travel & Tourism and E-Commerce: India has a rich history and heritage and e-commerce is instrumental, to a large extent, in selling India as a product, encouraging Indians as well as foreigners to see its multifaceted culture and beauty. A major Government of India portal,

http://www.tourisminindia.com/, has a vast variety of information for a potential tourist. The tourist destination sites are categorized according to themes like: y y y y y y y Adventure - trekking, mountain climbing etc Eco-Themes pertains to jungles, flora and fauna Beaches of India Architectural attractions Forts and Palaces Buddhist attractions Hill resorts y y Desert treks Pilgrimage sites

Allied services offered are: 1. Passport & visa 2. Travel & accommodation 5. Shopping 6. Tour Operators 7. Information Restaurants 8. Car rental services«and more. on Cuisine &

information 3. Weather information 4. Festival & fair dates

There are also sites that highlight the tourist destinations of a specific region in India, like http://www.incredibleindia.org/, which covers North East India. 5) Gifts and E-Commerce: In the bygone days, one had to plan what to gift a loved one, trudge across to your favorite shop, and browse for hours before purchasing a gift. Today there are specific

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Indian websites making the act of gifting quick and easy to suit ones lifestyle. One such site is http://www.indiangiftsportal.com/. The gifts are categorized as: 1. Collectibles like paintings and sculptures 2. Luxury items like leather goods, perfumes, jewelry boxes, etc 3. Household curios and carpets, etc 4. Toys & games 5. Chocolates 6. Flowers 7. Wood-craft & metal-craft 8. Idols for worship«and more.

Also the items can be searched by different regions of India, as every region has a special style in making handicrafts. 6) Hobbies and E-Commerce: The most popular hobbies from time immemorial are reading, music and films. On the Indian website http://www.firstandsecond.com/ one can buy more than 300,000 titles of books, cassettes, VCDs and DVDs. The books cover a wide range of topics like Business, Art, Cookery, Engineering, Children¶s Stories, Health, Medicine, Biographies, Horror, Home & Garden, etc. As for music and videos, they are available in English as well as in Indian languages to cater to the varied tastes and the topics range from devotional songs, old-time favorites and retro and jazz to the latest pop, rap, etc. 7) Matrimony and E-Commerce: It is said that marriages are made in heaven, but in the world of E-commerce they are made on marriage portals like http://www.jeevansathi.com/ (meaning life-partner.com in Hindi) and http://www.shaadi.com/ (meaning marriage.com in Hindi). One can search for a suitable match on their websites by region of residence (India or abroad), religion or caste. Once registered with them, they have email facility and chat rooms too, so that the couple gets to know more about each other before making the biggest decision of their lives.

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Allied services for registered members: 1. Astrological services 2. Information on Customs and Rituals 3. Legal issues 4. Health & Beauty 5. Fashion & Style 6. Wedding Planners 7. Honeymoon more. Destinations«and

8) Employment and E-Commerce: Two major portals like www.Monsterindia.com and www.naukri.com (meaning job.com in Hindi) are instrumental in providing job seekers with suitable employment at the click of a mouse. They have directories categorized under the headings Employers and Job Seekers. The service for job seekers is free and for Employers they charge a nominal fee. Jobs are available online in fields ranging from secretarial to software development, and from real estate to education. The opportunities offered are unlimited. 5. Facilitators Of E-Commerce In India: 5.1. Information Directories: Portals like http://www.trade-india.com/ and

http://trade.indiamart.com/ maintain directories giving trade details on almost any topic, whether it is from apparel to toys, from gems to heavy machinery, or from food to employment. The products and services are listed with appropriate sub-headings to make it easy for a serious information-seeker to find what he wants. Some other similar sites are http://www.indiagrid.com/, http://indiainfo.com/, and http://in.indiatimes.com/. Allied services provided by them: Message boards, chat rooms, forums, etc. 5.2. Banks: a. Net banking /phone banking: This is an online banking facility available for savings account holders as well as current account holders. Some of the special Net banking services are:

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1. Demat accounts for sale/purchase of stocks and shares 2. Foreign Exchange services 3. Direct/Instant payment of bills on the account-holder¶s behalf b. Credit/Debit Cards: Banks providing facilitate the E-commerce most vital by trade

4. Financial Planning & advice 5. Electronics Funds Transfer 6. Loans to account-holders 7. NRI services«and more.

be impossible. Some of the major Indian players in this field are:

http://www.hdfcbank.com/, http://www.icicibank.com/ http://www.statebankofindia.com/. and

instrument, namely the Credit or Debit Card, without which E-commerce would 7. Magnitude of e-commerce in India

India is showing tremendous growth in the Ecommerce. Rival tradeindia.com has 700,000 registered buyers and it has the growth rate of 35% every year which is likely to double in the year 2010. Indiamart.com claims revenues of Rs. 38 crores and has a growing rate of 50 every year. It receives around 500,000 enquiries per month. Undoubtedly, with the middle class of 288 million people, online shopping shows unlimited potential in India. The real estate costs are touching the sky. The travel portals' share in the online business contributed to 50% of Rs 4800 crore online market in 200708. The travel portal MakeMyTrip.com has attained Rs 1000 crores of turnovers which are around 20% of total e-commerce market in India. Further an annual growth of 65% has been anticipated annually in the travel portals alone. 8 .Prospects of E-Commerce in India E-Commerce has unleashed yet another revolution, which is changing the way businesses buy and sell products and services. . E-commerce stands for electronic commerce and pertains to trading in goods and services through the electronic medium. India is showing tremendous growth in the Ecommerce. The low cost of the PC and the growing use of the Internet is one of reasons for that. There is a growing awareness among the business community in India about the opportunities offered by eCommerce. The future does look

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very bright for ecommerce in India with even the stock exchanges coming online providing a online stock portfolio and status with a fifteen minute delay in prices. . In the next 3 to 5 years, India will have 30 to 70 million Internet users which will equal, if not surpass, many of the developed countries. Critical Analysis Electronic commerce or in short e-commerce, refers to business activities like selling and purchasing of products and services carried out over electronic systems like the Internet and computer networks. The history of e-commerce dates back to 1970, when for the first time, electronic data interchange (EDI) and electronic fund transfer were introduced. Since then, a rapid growth of e-commerce has pervaded almost every other aspects of business such as supply chain management, transaction processing, Internet marketing and inventory management. Like any conventional business, electronic commerce is also characterized by some advantages and inherent drawbacks. Let's have a look at some of these important advantages and disadvantages of electronic commerce. The greatest and the most important advantage of e-commerce, is that it enables a business concern or individual to reach the global market. It caters to the demands of both the national and the international market, as your business activities are no longer restricted by geographical boundaries. With the help of electronic commerce, even small enterprises can access the global market for selling and purchasing products and services. Even time restrictions are nonexistent while conducting businesses, as e-commerce empowers one to execute business transactions 24 hours a day and even on holidays and weekends. This in turn significantly increases sales and profit. Electronic commerce gives the customers the opportunity to look for cheaper and quality products. With the help of e-commerce, consumers can easily research on a specific product and sometimes even find out the original manufacturer to purchase a product at a much cheaper price than that charged by the wholesaler. Shopping online is usually more convenient and time saving than conventional shopping. Besides these, people also come

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across reviews posted by other customers, about the products purchased from a particular e-commerce site, which can help make purchasing decisions. For business concerns, e-commerce significantly cuts down the cost associated with marketing, customer care, processing, information storage and inventory management. It reduces the time period involved with business process re-engineering, customization of products to meet the demand of particular customers, increasing productivity and customer care services. Electronic commerce reduces the burden of infrastructure to conduct businesses and thereby raises the amount of funds available for profitable investment. It also enables efficient customer care services. On the other hand, It collects and manages information related to customer behavior, which in turn helps develop and adopt an efficient marketing and promotional strategy. Electronic commerce is also characterized by some technological and inherent limitations which have restricted the number of people using this revolutionary system. One important disadvantage of e-commerce is that the Internet has still not touched the lives of a great number of people, either due to the lack of knowledge or trust. A large number of people do not use the Internet for any kind of financial transaction. Some people simply refuse to trust the authenticity of completely impersonal business transactions, as in the case of e-commerce. Many people have reservations regarding the requirement to disclose personal and private information for security concerns. Many times, the legitimacy and authenticity of different e-commerce sites have also been questioned. Another limitation of e-commerce is that it is not suitable for perishable commodities like food items. People prefer to shop in the conventional way than to use e-commerce for purchasing food products. So e-commerce is not suitable for such business sectors. The time period required for delivering physical products can also be quite significant in case of e-commerce. A lot of phone calls and e-mails may be required till you get your desired products. However, returning the product and getting a refund can be even more troublesome and time consuming than purchasing, in case if you are not satisfied with a particular product.

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3. CONCLUSION Introduction From the perusal of the concept of e commerce I have come across that it is a very revolutionary concept making the drastic and positive changes in the way people live. However it can still be improved and advanced so as to remove disadvantages of the ecommerce. So to this end following improvements has been suggested

Thus, on evaluating the various pros and cons of electronic commerce, we can say that the advantages of e-commerce have the potential to outweigh the disadvantages. A proper strategy to address the technical issues and to build up customers trust in the system, can change the present scenario and help e-commerce adapt to the changing needs of the world. E-commerce can bring immense benefit both to the buyers and the sellers. But it has not developed to the level as was envisaged. It is because it is not free from problems. These are, security problem, poor spread of Internet facility, lack of face-to-face contact, taxation problem, problem of intellectual property right violation etc. Some of these problems have been addressed by enactment of laws. We are confident that all the problems will be addressed in course of time and it will become most popular mode of commerce.

9. Conclusion India is developing at a very fast rate and Indians are seeing wealth they haven¶t seen after the colonial period. This rapid economic growth brings with it huge prospects for ecommerce. With a good rate of increase of internet and computer penetration into rural India, more and more people are being brought into the realm of the internet and getting to know the power of this revolution in their day to day life. The availability of skilled
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labor especially in the field of IT is plentiful which provides a fertile ground for homegrown ecommerce for businesses. Though there are several challenges in this field, they can be overcome and in the long run, it will be very fruitful for businesses to adapt ecommerce in the Indian context, as they can be the industry leaders a decade down the line when ecommerce would have grown tremendously. It thus makes good business sense to foray into the world of ecommerce now, rather than later, and make steady but cautious advances, so that you can adapt to this changing business scenario of the Indian market. Indians are also quick to adapt to this new technology, though they are severely limited by infrastructure problems. Many government departments and most major banks have however shifted to ecommerce and have been very successful in doing this.

4. SUGGESTION

i) Suggestion as to Global co-operation-:-Since e commerce is a global phenomenon problems arising out of it can be dealt with by global co-operation only so the following measures should be taken. 1. To deal with the e commerce and cyberspace and particularly taxation, jurisdiction, payment security and cyber crime issues should be Uniform International law framed. 2. Uniform International law should be binding on the signatory states 3. .Provisions as to formation and conclusion of e contract should be simplified or streamlined 4. According to the uniform law necessary changes should be made in the state laws 5. At the international as well as national level an effective mechanism for the investigation, prevention of cybercrimes need be set up and there must be harmony and co-operation between these two levels of bodies.
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6. Recommendatory bodies at international level making suggestions for the improvement of cyber law and e transactions should be set up.. Extradition treaties for cybercrimes should be entered into by the signatory states. 7. A continuous awareness programs should be undertaken educating the people as to computer technology, e commerce, its advantages and disadvantages, etc 8. . Cyber law should be simple and effective so as to advance the e commerce

ii) Suggestions as to Online Payments:1. .Online payment should always be made through a secure site. A secure site starts with https:// instead of http:// and you will see the symbol of a lock in the task bar. Any data going through a secure server is encrypted and no one will be able to capture any information. Never give your credit card information to anyone. 2. Use Virtual cards.-- Some banks also provide virtual cards. A virtual card is created just before the transaction using your original credit or debit card and can be used only once. As soon as the transaction is effected the card expires and hence there is no risk of anyone capturing your credit or debit card number during transaction and misusing it. 3. Avoid the use of a public computer for doing online money transfers. Do all your Internet money transactions from your home or from your office computer only to which you have total access. 4. Use payment processor :-You can also make use of a payment processor. PayPal is a reputed company and you can make payment safely using it. When you make payment through PayPal you need not give your credit card information to any third party. You can also receive money into your PayPal account. While you need not pay any money for making payment through Paypal, you will be charged for receiving money. Click on the banner below to open your Paypal account. It is free. With this you can make payment to any one with an email.You may occasionally get emails claiming to be from PayPal asking you to update your information by clicking on a link in the mail. NEVER do it. Some people try to get your account information using a method called Spoofing. Always open a new
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browser and type the address of PayPal in the address. If you get any suspicious email forward it to PayPal. Online money transfer is gaining huge popularity now days and so there is a sharp increase in the number of companies offering online money transfer services. But you need to be cautious while selecting the company for your Internet payments. Online money transfer is a safe and quickest way to transfer money. With a few precautions you can take the full advantage of this service iii) Suggestions as to Safe Online Shopping ± 1. Read thoroughly --When you go to make a purchase online, always remember that you should read the fine print. Are you looking at the full cost or a payment plan, and are you seeing that they have included shipping. Are you getting the item pictured or are you getting something else? This can help you figure out what your options are. 2. Look for secure shipping ± 3. .Check seller's reviews --If you are buying from an auction site or any site of that variety, there is bound to be a place where people who have bought from the seller can leave remarks. Take some time and really see what their buyers have said. 4. Save everything-- When you purchase anything online, always keep any correspondence that you have with the vendor. You may want to archive it in your email or you may wish to print it. This is something that can make a huge difference if you run into some kind of trouble. 5. Stay in contact-- When you want to figure out if a vendor is reliable, don't hesitate to email them a question about the product. Do they respond promptly and are they able to answer your questions thoroughly? 6. Try http://www.shoppingsnooper.com-- If you wants to shop online and have no much experience of shopping and don"t know where to shop. Try http://www.shoppingsnooper.com/ this site provide easy way of searching products. Thisis the idle product search engine for beginners it provides advance search facility.
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BIBLIOGRAPHY

Library Books referred 1) Information Technology Act, 2000 came into force on 17th October 2000 vide G.S.R 788 (E), dated 17th October, 2000.( bare act) 2) Information Technology Law and Practice´ author Dr. Gupta & Agarwal; Premier publishing company; Edition-2009 3) Information Technology Law and Practice, law & emerging technology, cyber law & E-Commerce; Vakul Sharma ; Universal law publishing co. Edition-2010. 4) Internet law text and masterials; By - Chris Reed; 2nd edition; Universal law pub.co.2005. 5) Cyber law and crimes; Barkha & Rama mohan; Asia law house, hydrabad,2006.

E-Books. referred 1) Emerging trends in information technology; Mrs. Gigesha Pardesi; Nirali prakashan; 1st edition 2007. 2) Cyber law simplified; by- Vivek Sood; 3) The global cyber industry: economic, institutional and strategic perspective. By ± Dr. Nir Kshetri. 2010 All online Books from (http://books.google.co.in/books?id=UNqchpUYgJMC&printsec=frontcover&dq =cyber+crimes+india&hl=en&ei=VWqVTbPRMeffiAKepP2cCQ&sa=X&oi=boo k)

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Statutory Documents Referred i) ii) iii) iv) v) vi) Information technology act,2000 Information technology(Amend) act,2008 Indian contract act, 1882 Indian Penal Code, 1860 Indian Evidence Act, 1882 Indian telegraph act.

Websites referred 1. www.legalserviceindia.com 2. www.supremecourtcases.com 3. www.highcourtcases.com 4. www.vakil no.1.com 5. www.familyconsultant.com 6. www.c yberc rime la w. net/co nte nt/histo ry. html. 7. http://www.asainlaws.org/cyberlaw/library/cc/what_cc.htm. 8. http://etd.rau.ac.za/thesis/available/etd-05252005120227/resticted/AppendixA.pdf. 9. http ://web zo ne.k3. ma h.se/k3 jo lo /HackerC ultures/origins. htm

10. http://www.mailsbroadcast.com/e-email.broadcast.faq/46.e- mail.spoofing.htm.

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11. http ://www. nrps. co m/co mmunity/co mp re v.asp. 12. http ://www. unc itra l.org/e nglish/te xts/e lectco m/. 13. www.lawyerscollective.org 14. www.wikipedia .co m 15. www.google .com 16. www.ecommercetimes.com/ 17. www.digitsmith.com Articles referred Journals referred 1. Journal of Intellectual Property Right

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