E-commerce is throwing up a whole raft of issues that could end in
court - if you are not careful
Fear and distrust of litigation is commonplace and very
understandable. Everyone wants to be involved in constructive
projects which are creative, positive and have a good chance of
success. This is particularly so in the case of online traders and
the e-commerce sector generally.
Litigation is generally perceived as being the opposite of this
because it is a negative process often involving high cost, a lot
of management time spent dwelling on the mistakes of the past and,
above all else, it is risky. It is nonetheless a fact of everyday
e-business life and does need to be understood and addressed.
Areas of dispute
Examples of disputes that could arise include: disputes over the
legality of contracts concluded online; disputes over the quality
of products purchased online; disputes over the application of
terms and conditions that seek to disclaim liability in some way;
and disputes over the governing law and jurisdiction of the
contract.
Set out here are a selection of measures that can be taken to
manage the litigation risk, both before and after it arises:
- Design and implement a dispute resolution policy which is
clear, coherent and dynamic. It will need to evolve over time to
fit the changing circumstances of your business
- Do what you can to ensure that your contracts provide that any
disputes that do arise will be governed by the laws and
jurisdiction of the country of your choice. This should help in
avoiding the inconvenience and cost of having to fight litigation
under foreign law
- Ensure that the procedures for concluding online contracts are
made clear on your Web site. This should help avoid disputes over
when, where and how contracts were formed
- Put in place a document retention policy that enables you to
retrieve (in a speedy and reliable way) documents that may be
needed to help your case. This will be particularly important if
you are predominantly a "paperless" organisation. Pay particular
attention to e-mails, e-mail attachments and scanned documents.
Failure to retain evidence important to your case could harm your
prospects of success
- Ensure that different versions of online documents such as
terms and conditions of trading and any statements published about
particular products are kept.
- Ensure that you do not create damaging documents (such as
documents that contain admissions of liability) when disputes do
arise
- Remember that marking documents "strictly private and
confidential" does not affect their admissibility as evidence in
court
- Get to grips with the merits of the dispute at an early stage
and formulate a strategy for resolving it
- Consider all forms of dispute resolution when drafting your
terms and conditions or negotiating bespoke contracts. Put in place
an escalation procedure that suits you and the particular
circumstances of the type of business involved.
Without a clear, well thought out policy for resolving disputes
you will run the risk of making mistakes and compounding a problem
that may damage your business. The risk is manageable provided that
it is recognised and action taken to address it.
Summary
- E-business litigation can arise, for example, from disputes
over the legality of contracts concluded online and the quality of
products bought online
- Have a disputes policy in place
- Publish this policy on your Web site
- Retain documents as potential evidence
- Get to grips with the nature of a dispute at an early
stage.