E-commerce: be prepared for court

E-commerce is throwing up a whole raft of issues that could end in court - if you are not careful

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.

  • Read more on Business applications

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