e-commerce laws

The Scope of E-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
  • Electronic Commerce: -
  • Automates the conduct of business among enterprises, their customers, suppliers and employees - anytime, anywhere.
  • Creates interdependencies between your company’s value chain and those of your suppliers and customers.

Your company can create competitive advantage by optimizing and re-engineering those value chain links to the outside.

Differences between E-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

 E-Commerce laws in India

A facilitative and legal framework is sine qua non for the promotion and development of technology like electronic commerce. Besides developing the e-infrastructure in the country through effective Telecom Policy measures, the Indian Government is taking appropriate steps as confidence building measures for the growth of e-commerce. It has created the necessary legal and administrative framework through the enactment of Information Technology Act 2000, which combines the e-commerce transactions and computer misuse and frauds rolled into an Omnibus Act. While on the one hand it seeks to create the Public Key Infrastructure for electronic authentication through the digital signatures, on the other hand, it seeks to build confidence among the public that the frauds in the cyber space will not go unpunished. The Controller of Certifying Authority (CCA) has been put in place for the effective implementation of the IT Act, 2000. The Act also enables e-governance applications for the electronic delivery of services to the public, business and government.

The Information Technology Act, 2000 and E-Commerce

The Information Technology Act 20004 is based on the Model Law on ECommerce adopted by the United Nations Commission on International Trade Law and pioneering e-commerce enabling legislations such as the Utah Digital Signatures Act, 1995; the Singapore Electronic Transactions Act, 1999 and the Malaysian Electronic Signatures Act. The main objective behind the introduction of IT Act, 2000 is to encourage the environment in which the laws are simple and transparent and in which the advantages of e-commerce can be tapped. The Act aims to provide legal recognition for the transactions carried out by the means of electronic data interchange and other means of communications, commonly referred to as “Electronic Commerce”, which involve the use of alternatives to paper based methods of the communication and storage of information, to facilitate electronic filing of document with the government agencies. The Act comprises of the three significant aspect of e-commerce:

  • Legal recognition of electronic records and communications- contractual framework, evidentiary aspects, digital signatures as the method of authentication, rules for determining time and place of dispatch and receipt of electronic records.
  • Regulation of Certification Authorities- appointment of a Controller of CAs, grant of license to CAs, duties vis-à-vis subscribers of digital signature certificates, recognition of foreign CAs.
  • Cyber contraventions- civil and criminal violations, penalties, establishment of the Adjudicating Authority and the Cyber Regulatory Appellate Tribunals

As the Act establishes the legal validity and enforceability of the digital signature and electronic records as well as the secure digital signatures and secure electronic records, it will enable the growth of e-commerce in India, because the secure computer based signatures will:

  • Minimize the incidence of electronic forgeries.
  • Enable and foster authentication of computerized communications.
  • Facilitating commerce by the means of electronic communications.

Further, electronic filing of records and retention of information in electronic formats, enabled by the IT Act, 2000 will help in saving costs, time and manpower for the corporate.

By virtue of the recognition given to the electronic records, electronic documents and electronic signature, consequent amendments have been made in some existing laws. The Act amends the Indian Panel Code, 1860 , the Indian Evidence Act, 1872, Banker’s Book Evidence Act, 1891 and the Reserve Bank of India Act, 1934 , and for the matters connected therewith or incidental thereto. The main purpose of these amendments is to address the related issues of electronic commerce, electronic crimes and evidence, and to enable further regulation as regards electronic fund transfer.

Security Provisions of the IT Act, 2000

One of the most important issues in the context of e-commerce relates to the security of business and commercial transactions. A security threat in term of Internet has been defined as a circumstance, condition or even with the potential cause economic hardship to data/network resources in the form of destruction, disclosure, modification of data, denial of services, fraud and abuse.

The IT Act 2000 not only amends the Indian Panel Code to bring within its scope conventional offences committed electronically, but also creates a new breed of information technology offences, the prevention of which are incidental to the maintenance of a secure electronic environment for e-commerce. To make e-commerce transactions safe and secure, the IT Act 2000, provides for investigation, trail and punishment for certain offences (these offences are found in Chapter XI of the Act) like source code attacks (section 65), hacking (section 66), obscenity (section 67), failure to comply with the controller’s directions (section 68), subscriber’s failure to Controller’s requirement for decryption (section 69), accessing designated protected systems (section 70), misrepresentation to CCA (section 71), breach of privacy/confidentiality (section 72), publishing false digital signature certificate (section 73), making available digital signature for the fraudulent purpose (section 74) and section 75 of the IT Act deals with the offences or contravention committed outside India which reads as:

  • Subject to the provision of sub-section (2), the provision of this Act shall apply also to any offenses or contravention committed outside India by any person irrespective of his nationality.

For the purpose of sub-section (1), this Act shall apply to an offenses or contravention committed outside India by any person if the act or conduct constituting the offenses or contravention involves a computer, computer system or computer network located in India.

Know Us

Legal Services

Connect With Us on Facebook

Newsletter Subscription

*  Your Email Address: