Indeed, the signature is also a main problem in the e-commerce. How to obtain the other party’s signature? Is a contract valuable without the e-signature? “The European Commission has adopted a directive guaranteeing EU-wide recognition of electronic signatures” (Singleton 1999). The EU signature directive 1999/93/EC begins with UK’s electronic communication Act 2000 conclude that “a contract needs electronic signature” to be completed. It is defined as “Data in electronic forms which are attached to or logically associated with other electronic data and which serve as a method of authentification.”(Directive 1999/EC/93/EC art. 2). “The directive requires that member states enact legislation that affords legal recognition to electronic signature that is based on qualified certificate so long as they were created by a secure-signature-creation device…” (Pappas 2003) .The e-signature must “satisfy the legal requirements of a signature in relation to data in electronic form in the same manner as a hand- written signature satisfies those requirements in relation to paper-based data; and are admissible as evidence in legal proceedings.”
Furthermore, the jurisdiction is important when contracting online because the buyer has to know which law apply to him in case of dispute with the supplier. “The contract should have a clear choice of law and jurisdiction clause e.g. that the contract is subject to the Laws of England and disputes must be heard in that jurisdiction.” (Elborne 2000). “Businesses which sell goods to foreign nationals over the internet will be subject to the consumer laws of their home country” indeed, the contract is often under the jurisdiction of the home country where the transaction is made (Singleton 1999). “In the EU jurisdiction of disputes is determined by reference to the Brussels Regulation (which has superseded the Brussels Convention). If the parties have not agreed jurisdiction, the basic rule is that a defendant may be sued where it is domiciled or in the place of performance of the contractual obligation.” (Principia 2000) For instance if a British company decides to purchase raw materials in Russia, in case of dispute a Russian jurisdiction shall be in charge of the issue. However in the European Economic Area, “the basic principle is that the parties can choose the governing law and the forum for dispute resolution (i.e. courts of a particular country, arbitration etc.)”(Principia 2000).
Finally another issue in the EU e-commerce is the taxation. The EU directive also consists in harmonizing the VAT between the member states and especially with the non-EU countries. For example an American company could import in EU without paying the tax whereas EU companies could not. Consequently, European organisations were less competitive than the non-EU firms. Pinkernell states that “the supply is taxable at the place where the supplier has established his business ("country of origin principle")” and in his book, Hickey (2000) provides a complete guide which explains the Tax regulations for E-commerce in the UK and the EU.
The contract law has always been a controversial issue but the e-contract is both a controversial and a current issue. Compared to the traditional contract the e-contract is a recent issue evolving many disputes because of the different legislation that exists between the countries all around the World. Since the apparition of internet many authors and institutions such as the EU has been discussed the legal issues of contracting online because notably of the different law and legislation between the states. It is also a current issue because everyday new disputes and conflicts appear especially within the EU where the e-commerce increases faster than the European reforms and with the non-EU states. Even internationally states try to improve and solve this problem which impacts on e-commerce and organisations supply chain. The fact that internet represents uncertainty and an unlimited number of suppliers tend to influence decisions of businesses regarding the sourcing; indeed they tend to adopt a multisourcing supplier strategy to deal with several suppliers. In addition, all these issues tend to cause delays in delivery and in all the supply chain generally. Sharing of information between the partners is a key success in the supply chain. According to Whiteley (2000) “each stage in the supply chain adds value, the interfaces between the stage require the exchange of information and e-commerce can be utilised for many interfaces”. Indeed, the origin of the conflicts is often due to a lack of communication and information sharing. In case of dispute between the supplier and the buyer, the transaction will not occur or the supplies will not be delivered on time. As a result the inefficiency of the system shall evolve the non-satisfaction of the end customer, loss of competitiveness and waste of time and money.
Within the EU there are different states and the main problem is the compliancy between them. EU directives are goals to achieve and “in most of the cases it is left to national parliament to interpret the Directives and bring about the necessary mechanism for implementing them in their own countries” (Jahankhani 2002). Accenture (2001) found four problems in Europe which are the balancing public protection with promotion of e-commerce, the regulation of competition, a business friendly environment, the European social model. “The legal framework for trading online can sometimes be unclear regarding regulations about trading in this new ‘environment without borders’” (Queensland Government). Disputes due to e-contract have literally increased especially because of both the different laws between the countries and the non-respect of the contract law and procedure. Consequently there is an increase of uncertainty between the buyer and seller and increase of cost, indeed all theses disputes cost money and time.
Edwards (2002 p35) argues that the problem can be solved or at least minimised with the “Real WWW” consisting in “asking three basic questions, when was the contract concluded? what are the terms? and where is the contract governed?”. Furthermore, EU laws do not always comply with the international laws and EU institutions must enact legislation to be “adequate” with the world trade. In order to reduce risks in online contracting, supply chain organisations must “keep their website accurate and up to date, use clear terms and conditions and know when contracts are formed” and maintain records of contracts and dealing with customers. According to Baker & Mc Kenzie (2001) “They must establish where and how disputes will be resolved and be aware advertising, distance selling, data protection…” Organisations must specify in the terms and condition the government law and jurisdiction for disputes if they want to reduce uncertainty and cost. Baker & Mc Kenzie (2001) also suggest “Perhaps the most important point is that IT systems themselves will have to be designed to minimise legal risks, such as ensuring that any evidential requirements will be satisfied.”
In summary E-commerce has increased considerably and in short-term shall overtake the traditional trade. In one hand, business online is definitively an important way of generating profits for the firms and in the other hand it is also risky and represents a threat for many managers. Contracting online presents many problems such as the signature, jurisdiction however a “careful implementation of the contract formation process and content will increase the probability that a contract is enforceable” (Greguras 1995). E-commerce needs time and agreement between the states to be more secure and increase more.
REFERENCES
Accenture 2001, “E-Europe: Connecting the dots?” Cited August 2001, URL: http://www.accenture.com
Baker & Mc Kenzie (2001) “Doing E-commerce in Europe” available at: http://www.bakernet.com/ecommerce/EcomCD/Roadmap/legalenv/dotcom/contract.htm
Directive 1999/93/EC of the European Parliament and of the Council, 19/01/2000, Journal of the European Communities.
Directive 2000/31/EC available at: http://europa.eu.int/comm/internal_market/en/ecommerce/
Edwards L. and Waelde C., 2000 “Law and the Internet: a framework for electronic commerce”, Oxford: Hart.
Elborne M. & Bogle P., 2001 “E-commerce legislation in the EU”, First published in 'e-Risk Management Briefing' December available at:
Greguras F.M. 1995, “E-commerce: On-line contract issues, Law Seminars International Electronic Commerce; Doing Business On-line. Available at: http://www.batnet.com/oikoumene/ec_contracts.htm
Hickey J. J.B. & Mathew R. and Rose C., 2000 “E-commerce: law, business and tax planning”, Bristol: Jordans.
Jahankani 2002, “The impact of law on e-business practices in the EU”, University of East London.
Pappas C. W., 2003 “Comparative U.S & EU approach to e-commerce regulation: jurisdiction, electronic contracts, electronic signatures and taxation” available at
Pinkernell R. “Application of the EU Value Added Tax to E-Commerce Transactions” available at: http://www.pinkernell.de/euvat.htm
Queensland Government, “Supply Chain issues available” at: http://www.sdi.qld.gov.au/dsdweb/v3/guis/templates/content/gui_cue_doc.cfm?id=7381
Principia (Website) 2002, Are online contract safe? ‘NCC's Member Journal’ available at: http://www.nccmembership.co.uk/pooled/articles/BF_WEBART/view.asp?Q=BF_WEBART_113207
Principia (Website) 2002, “The impact of e-purchasing on supply chain management”, ‘NCC's Member Journal’ available at: http://www.nccmembership.co.uk/pooled/articles/BF_WEBART/view.asp?Q=BF_WEBART_113231
Singleton S. & Halberstam S., 1999 “Business, the internet and the law”; Croydon : Tolley's.
Whiteley D., 2000 “E-commerce: Strategy, technologies and application”, London: McGraw-Hill, p.17.
Zekios G. I. 2002 “legal problem in cyber space”, Volume 44 Number 5, available at: http://miranda.emeraldinsight.com/vl=1234546/cl=13/fm=docpdf/nw=1/rpsv/cw/mcb/03090558/v44n5/s4/p45.
BIBLIOGRAPHY
Pistorius T. & Hurter E. 1999, “Contracting on the Internet: The Formation of Contracts, Trade Practices and Online Dispute”.
Pauline Ratnasingham 1998, “The importance of trust in electronic commerce”, Internet Research: Electronic Networking Applications and Policy, Volume 8 Number 4 p 313-321.
Silver J. 14th April 2003, “A to Z of Legal Issues”, ‘Entrepreneur.com’.
Zugelder M.T., Flaherty T. B. & Johnson J. P. 2000, “Legal issues associated with international Internet marketing”, International Marketing Review, Volume 17 Number 3 p. 253-271 available at: http://oberon.emeraldinsight.com/vl=8750325/cl=33/fm=html/nw=1/rpsv/cw/mcb/02651335/v17n3/s4/p253
