Legal Differences of Electonic Commerce and "Normal" Trade

20 March 2017
Nowadays, it is quite difficult to imagine the life of an ordinary man without the Internet. With the help of the Internet we learn the latest news, exchange information, communicate with customers, etc. At the same time, trade in the Internet is especially active. Buying goods via the Internet saves a lot of time: we no longer need to stand in queues, run from the store to the store in search of a suitable thing and commit a number of other time-consuming actions.

Considering the rapid development of Internet commerce, the legislator decided to systematically resolve this phenomenon, which resulted in the adoption of the Law of Ukraine "On Electronic Commerce" (hereinafter - the Law), which entered into force on 30.09.2015. 

In this Law, such concepts as "electronic commerce", "electronic contract", "electronic transaction" and others are fixed. 

After the adoption of the Law, it became necessary to differentiate the legal regulation of electronic commerce and "traditional"; cases where we are dealing with electronic commerce and cases where ordinary trade is carried out. For example, does e-commerce, in the understanding of the current legislation, mean the sale of goods using the Internet showcase?

To answer this question, I suggest firstly to understand what the concept of "electronic commerce" means in general and under what conditions relations within the Law arise.

And so, e-commerce means aimed at making profits relationships, raised by making transactions, the purpose of which is to acquire, change or terminate civil rights and obligations, committed remotely with the use of information and telecommunications systems, as a result of which the participants of such relations have property-related rights and duties .

A feature of e-commerce is the fulfillment of electronic transactions, a kind of which are electronic contracts. Electronic agreement, as well as "normal", is an agreement of two or more parties aimed at establishing, changing or terminating civil rights and obligations. Such an agreement is concluded by a proposal of one party and its acceptance by another party. However, an electronic contract has a number of features, we consider the main ones:

1. The parties of an electronic contract are: the seller, supplier, executor (hereinafter - the seller) - a legal entity, an individual entrepreneur and a buyer, a consumer (hereinafter - the buyer) - physical person. That is, according to the law, electronic commerce is exclusively a relationship of B2C.

2. The subject of an electronic contract is the sale of goods, the work performance, the provision of services (hereinafter - the sale of goods).

3. The proposal to conclude an electronic contract must contain all the essential conditions of the relevant agreement and can be made in two ways:
- By sending a commercial electronic message, for example directly to the buyer's email;
- By placing a proposal on the Internet or other information and communication systems, for example, on the seller's Internet shop.

4. Acceptance can be granted by:
- Sending an electronic message;
- Completion of the application form on the acceptance of such an offer in electronic form;
- Performing actions considered as an acceptance of a proposal to conclude an electronic contract, if the content of such actions is clearly explained in the information system, that is, by joining to the contract with conclusive actions (for example, "clicking").
We pay special attention to the fact that in case of concluding an electronic agreement in the information and telecommunication system of an e-commerce subject, to accept a proposal to conclude such a contract, a person must be identified in such system, for example, go to the "personal cabinet".

5. The acceptance in the form of sending an electronic message and filling in the form is signed with the help of:
- Electronic signature or electronic digital signature;
- One-time signature (for example, buyer identification via SMS)
- Analogue of a handwritten signature (facsimile reproduction of a signature by means of mechanical or other copying, another analogue of a handwritten signature) by a written agreement of the parties, which should contain samples of the corresponding analogues of handwritten signatures.

6. An electronic contract shall be considered concluded from the moment the person who sent the proposal to conclude such a contract receives a response on acceptance of this proposal in the manner specified in the part 6 of this article.

7. The buyer (customer, consumer) must receive the confirmation of the electronic transaction in the form of an electronic document, voucher, purchase or cash receipt, ticket, coupon or another document at the time of the transaction or at the time of performing responsibilities to deliver the goods to the buyer by the seller.
Confirmation of an electronic transaction must contain the following information:
- Conditions and terms of item(s) exchange (return) or refusal to perform work or provide services;
- Vendor name (name of an executor or supplier), its location and the procedure of accepting a claim on goods, work, services;
- Warranty obligations and information about other services related to the goods maintenance or repair, work performance or service provision;
- The procedure for termination of the contract, if its validity is not determined.

8.  According to the Law of Ukraine "On the protection of Consumer rights", the buyer (customer, consumer) of goods, work, service in the field of electronic commerce in terms of his rights and obligations is equal to the consumer while concluding a contract outside of commercial or office premises and in case of concluding a contract at a distance.

That is, e-commerce is carried out through the conclusion of electronic contracts, which have a number of features. As a general rule, e-commerce is carried out through Internet shops, through which buyers can choose goods and conclude an electronic contract.

However, the sale of goods through the Internet shop should not be identified with the sale of goods and online storefront.

To this extent, the online storefront is a catalog in which all the company's products are collected. A potential buyer can review the provided goods and choose for himself the necessary one. Online storefronts help to significantly advance your business and also cost much less than the development of other Internet shops. The main difference between an online storefront and an Internet shop is that it only represents the company's goods without selling them, that is, the online storefront does not have an online ordering option.

As a rule, online storefronts are intended for wholesale buyers, because wholesale order is preceded by long telephone and personal negotiations, clarifications, approvals, conclusions of contracts. Therefore, the creation of the mechanism of online order (the basket) in this case does not make much sense.

That is, the purchase of goods using the online storefront does not provide the possibility of identifying a person on the site and processing an online order, and therefore the conclusion of an electronic contract. The contract using the online storefront can be concluded by signing it directly or in a simplified way (accepting an execution order in support of which a consignment note and an invoice can be issued), but without making electronic transactions.

Thus, the process of concluding contracts using the online storefront  is not regulated by the Law.

So, e-commerce stipulates the mandatory conclusion of an electronic contract in the manner specified by the Law, and as a rule, it is the use of an Internet shop. On the other hand the sale of goods using the online storefront is not regulated by the Law, provides the demonstration of the goods through such a showcase in the absence of the conclusion of an electronic contract.

Yan Nechval,
Junior Associate of IMG Partners

Specially for "ЮРИСТ&ЗАКОН"