By Janelle Muschette, ContributorE-COMMERCE IS growing at a rapid rate worldwide and it has been forecasted that the number of business transactions conducted over the Internet will increase enormously over the next few years.
In this new business environment having a website is often a necessity for most successful businesses and as a result many companies have set up websites without any real consideration of the legal issues arising from the operation of the website and any e-commerce transactions. This article highlights some key legal issues to consider in website development and e-commerce contracts.
DOMAIN NAMES
Firstly you will need a domain name (web address) to allow your customers and business partners to contact you. This name is usually your company or brand name. Registration of a domain name is usually through an Internet service provider (ISP) and is on a 'first come, first serve' basis. As a result you may find that your company's name/brand is already registered and the registered holder may try to sell it back to your company at an exorbitant price.
This practice of 'cybersquatting' is prohibited by law and you may need to consult a lawyer for advice on what steps may be taken to protect your rights. However, if the name is being legitimately used you may have to choose another name. It is advisable to register as many combinations of your name as possible and secure them through various methods, including the use of trademarks. Once the domain name has been confirmed then the registration procedure may be completed. Your company should also decide whether renewing the registration of the domain name will be their responsibility or the ISP's. This will prevent the registration expiring without your company's knowledge.
INTERNET SERVICE
PROVIDER CONTRACTS
Reliable high speed hosting is essential for a successful website. In choosing your ISP you will need to consider security arrangements, availability of customer support and dial up capabilities. The contract should include technical specifications and service warranties to ensure that customers are able to access the website at high speeds with as little down time as possible. The ISP will also require you to give assurances that the material on the website is not defamatory or offensive nor does it breach third party intellectual property rights. You should ensure that you have a right to terminate the contract with no penalty if the performance of the ISP does not meet the required specifications.
WEBSITE DEVELOPMENT
Many companies do not have in-house Internet-related expertise and as a result often engage outside website developers and designers. You should ensure that the website development contract covers key issues including ownership of intellectual property rights in the content and design of the website, technical specifications including security devices and anti-virus safeguards, definitive deadlines and penalties for delays, milestones for payment and the maintenance of the website after the launch.
WEBSITE CONTENT
In determining the content of your website it is important to consider third party intellectual property rights, policy statements and disclaimers including disclaimers of any implied warranties that the information on the website is accurate or up-to-date or a disclaimer of liability for viruses, which a visitor may accidentally carry away from your website.
There are several other important considerations that will need to be borne in mind, including the treatment of sales taxes, advertising, sponsorship and the protection of customer information. Standard form contracts will have to be modified to specifically deal with issues arising in e-commerce transactions and to afford a greater degree of certainty in the rapidly changing landscape of e-commerce law.
Janelle Muschette is an attorney-at-law at DunnCox. email: Janelle.Muschette@dunncox.com
