Cautious e-commerce

One of the fastest growing methods for transacting business is e-commerce, which includes business-to-business transactions and business-to-consumer transactions via the Internet.

Many people are turning to the Internet not only to transact business, but to make purchases and gather information.

The Internet is a great way to market a business and sell products or services. However, as with all great technological advances, it’s not without pitfalls. Whether you are considering developing a Web site for your business or already have a site established, consider the legal ramifications associated with operating a business over the Internet.

If you hire someone to develop or maintain your site, you need a solid contract that clearly sets forth the terms of the services to be provided; compensation to be paid; ownership rights for the created work; responsibility for approving content on the site; and responsibility for monitoring the site.

You also need to protect your company’s intellectual property assets used in creating the site, and, more important, to verify that the graphic art and text do not infringe on the copyright or trademark ownership rights of third parties.

You may need to provide a privacy statement on your site to tell users how your business collects, uses and discloses personal data about its users. If your site is used by children, there are very specific regulations established by the Federal Trade Commission that must be followed. If you allow users to order products online, you must use adequate security and encryption methods to protect confidential information transmitted by the user.

Properly drafting enforceable online contracts, generally referred to as click agreements or clickware contracts, is vital. The enforceability of click agreements is uncertain, although several courts have held that such agreements are enforceable if the user has the ability to accept or reject the contract.

The enforceability of click agreements becomes important when a “choice of forum” clause is included. This sets forth the state law and jurisdiction that govern the transaction. Because your site is available to users worldwide, you may subject your company to the jurisdiction of courts around the world. A choice of forum clause may assist you in limiting that jurisdiction.

Jeannette L. Knudsen is an associate attorney in the intellectual property department and corporate and business law department of Buckingham, Doolittle & Burroughs, Akron. Knudsen can be reached at Buckingham, Doolittle & Burroughs LLP at (330) 643-0350 or by e-mail at [email protected]