Conducting Business Online

The rise of the Internet in recent years has seen a boom for business the world over. The almost instant access to a global marketplace makes it easier to sell goods and services, and is boosting profits no end. With that in mind, it is important to remember a few salient points about online transaction, and there are a number of legal issues which have yet to be clarified in terms of formation of contract and jurisdiction online. In this article we will flag up the discrepancies and issues pertaining to conducting business on the Internet.

The first issue with the Internet is that any transaction is distant, i.e. not face to face. This gives rise to fairly obvious problems of its own when buying goods that have never been seen. However this also causes some complex legal issues, firstly with regards to jurisdiction. Under conventional international law the defendant in any trial has the right to defend in the jurisdiction of his domicile, i.e. the jurisdiction with which he has the greatest connection, and normally lives. This causes problems however in enforcing obligations online.

For example threatening to take legal action against a UK citizen under Californian law is pointless, because Californian law has no jurisdiction anywhere in the UK. To pursue action across frontiers in this way, you would literally have to raise the action in a UK court under the applicable English or Scottish law, and have legal advice from an expert in that field. The fact of the matter is this is a costly business, and at the end of the day it usually isn’t worth it. Attempts can be made to bypass these issues in the standard terms and conditions. ‘Contracting out’ would probably not be considered valid in some jurisdictions with high consumer protection values, so again this is simple a risk that you take.

This leads neatly into the next major problem with online business. Determining when a contract has been formed online is almost impossible. With which law do you abide? French? Indian? Scottish? Nobody knows, so no-one knows when you are in breach, or when indeed a contract has been formed. Again, acceptance of standard terms and conditions may be enough in some jurisdictions, but it may be further necessary to show an intention to create legal relations as an express requirement.

Either way, conducting business online is still a tricky legal area, and one that looks set to majorly feature in the coming decades of international legal development.