Legal Audits for E-Commerce

Copyright (c) 2000 Montana Law Review

Montana Law Review

Winter, 2000

61 Mont. L. Rev. 77

by Richard C. Bulman, Jr., Esq. and Jorge R. Gutierrez, Esq.

Summary

• Review of the legal issues that E-commerce raises is an important step businesses can take to limit liability and protect their interests.

• Due process reviews have as much value to e-business as they do for more traditional business functions.

• Software - usually software is rented but when software is customized there are issues about the commercial platform products by Microsoft or Lotus that the software runs on.

• Web site developer agreements typically address features to be incorporated into the web pages, data collection process, progress payments, warranties,

• Hardware - if purchased the sales agreement will address delivery and set up, technical services and maintenance services and fees for various items.

• If space on an ISP’s server is rented the agreement with the ISP will need to be reviewed.

• ACCESS - Hosted site, items in agreements response time, space requirement, cost scalability,

remedies for - down time, lost data, warranties against viruses and downtime.

• Security - communication with customers and third parties like credit card companies needs to be protected. Agreements with the service provider to provide security needs to be scrutinized because integrity of a site and its data is critical.

• Maintenance - to avoid downtime service contracts for the various components need to be coordinated. To avoid lost time during finger pointing of who’s fault is it stage a maintenance service contract might be advisable. Service agreements need to address urgency, how support will be provided (onsite - remotely)

• Information - gathering info is one key benefit of having a web site agreements for third party should include off site storage, backup, security, and security of data and access controls

• Integration - the ability to collect and harness information in the business process to make purchasing, marketing and other business decisions.

• Agreements with each provider of a piece of the system need to cover who will solve any problem that arises.

• Business interruption insurance can be valuable to cover the risk of loss of operations.

Web Site Issues• Copyright - Who owns work product when a person is

hired to create a web site. This needs to be spelled out in contracts

• Licenses - media that can be presented through a web site can have licensing issues if it requires proprietary, song clips are a clear example. Any license issue related to a web site that can be identified should be addressed via agreement or license.

• Patents - now that a patent has been issued for an algorithm there has been a rush to patent new ways of doing business.

Disclosures• Terms and Conditions of Use - content

ownership, right to edit, passwords, contest rules, email storage, security, limits on liability,

• Privacy - What data is required and what is voluntary to use site, how data will be used, whether it will/can be sold, what limits can be placed on the conveyance of data and any retroactive steps offered to have data removed from a database.

• Domain Names - need to be reviewed along with Trademarks to ensure that rights are protected and site does not infringe

• Advertisement - traditional contracts - what services will be provided, what costs who owns rights and licenses

• Online Advertisement - cost, size, placement, location, use of cookies, frequency

• Linking/Framing - agreements cover issues like the use of intellectual property, placement of links, consideration for the use

• Affiliate Programs - show products available for sale on your site but direct consumer to vendor’s site to make purchase. Terms - commission, tracking, reporting, payments, termination, indemnification.

• B2B - standing agreements

• Click here to Accept - this form of establishing terms has yet to be sorted out legally.

• B2C - US courts seem to accept site terms if dealing with other countries should learn whether special protections or requirements are extended by their laws.

• Capturing data on the location of customers can help with this effort

• Payment - upfront fees by credit card companies can be costly especially in the event of rejected or canceled transactions review of terms and related to currency fluctuations can help

• Agreements with trusted delivery service can aid in handling problems caused by fraud artists.

Emerging Areas

• Regulating data collected from children

• Disclosures - truthful, ethical, meaningful

• Standardization - EU and UNCITRAL

• Taxation - It might be coming - investigate jurisdiction without taxes.