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E-Commerce and
How it Impacts The Economy
Although electric-commerce (or e-commerce) helps to develop the market, it is a topic of debate because it needs to be regulated. E-commerce allows businesses to market their products on-line. This reduces marketing costs, which saves the company thousands of dollars. In addition, e-commerce is the easiest and most efficient way to distribute products.
Consumers can order products on-line, thus eliminating the hassle of going to a store to purchase goods. As a result, consumers might purchase more items, and the company's profits increase. Businesses can communicate with each other and export or import goods by way of the Internet.
E-commerce has become part of the global-economic trend because it produces benefits: "World Wide e-commerce sales will reach as high as $3.2 trillion in 2003, representing nearly five percent of global sales.... Likewise, governments all around the world have enthusiastically embraced e-commerce as a positive development that should be encouraged." (Loft and Hillbro, 1999)
Forrester Research, a technology consultant, estimated that e-commerce is increasing rapidly and will reach "hyper-growth," based on its current trend. It is likely that e-commerce will double over the next few years, and by 2003 will contribute $1.3 trillion to the U.S. economy. An example of the benefits of e-commerce is Forrest Researcher, who expanded from earning an annual income of $8 billion to $108 billion.
Potential Problems with E-Commerce--
Although e-commerce can be very helpful to the economy, many areas of e-commerce need facilitation in order to ensure its success: "taxation of e-commerce, jurisdiction over on-line transactions, data protection and data privacy, confidentiality of e-commerce transactions (including export controls of encryption products), unsolicited commercial e-mail, information security, and the enforceability of e-commerce." (Ibid.)
Various states want to enforce their own laws rather than a national law, despite a national consensus that concludes that e-commerce must be regulated. Along with the assistance of the American Bar Association, Utah was the first state to create an Act that controlled e-commerce. Following Utah's precedent, all 49 states created their own laws.
The 57 new bills created by these 49 states complicated the use of e-commerce. Therefore, the legislature drew up the Uniform Electronics Transactions Act with two specific purposes:
(1) to remove barriers (actual and perceived) to e-commerce, and
(2) to enable and promote the desirable public policy goal of e-commerce by helping to establish the 'trust' and the 'predictability' needed by parties doing business on-line."(Ibid.)
E-Commerce Signature Draws Policy Concerns--
One of the main concerns that lawmakers have about e-commerce is the signature policy. A signature, in terms of e-commerce, is represented in the form of numbers that identify the person who signs the electronic document. Signatures are needed for many reasons including documentation of contracts on the Internet, memos, creator verification of specific documents, and identification of parties involved in electronic transactions. Furthermore, signatures are intended to "identify the sender, to indicate the sender's intent (e.g., to be bound by the terms of a contract), and to ensure the integrity of the document signed." (Ibid.)
Despite all these precautions, there are major concerns that relate to signatures -- such as the legality, accuracy, and the policies of using a signature -- which the legislature must address.
It is difficult to determine if signatures that relate to e-commerce are legal because they are documented on a computer.
In the past, it was unclear if a signature on a computer was "original" because it was not done with a paper and pen: "In many cases, the law requires that an agreement be both documented in 'writing' and 'signed' by the person who is sought to be held bound, in order for that agreement to be enforceable," which was stated in The Statute of Fraud. (Ibid.)
The Legislature states: "It makes no difference whether the operator writes the offer or the acceptance . . . with a steel pen an inch long attached to an ordinary penholder, or whether his pen be a copper wire a thousand miles long." (Ibid.) The provision, however, leads to further debate because of the difficulty determining what form of electronic signature (i.e., fax, telephone, typewriter, telegram, etc.) will pass as a signature. Since the law does not offer an accurate response as to what qualifies as a signature, it poses a problem in determining policies for e-commerce.
The UNCITRAL Model Law--
Although it is unclear as to what constitutes a signature, the UNCITRAL Model Law has requirements on who can use a signature on e-commerce. Because signatures consist of numbers, a system must be developed in order to identify a person or group by their sign. In addition, if a signature is required for consent to an agreement then there "must be a method to indicate the signer's approval." (Ibid.) Also, the method must be clear to the signer.
However, the Legislature does determine the circumstances of e-commerce that require signatures, because it varies from one country to the other. For instance, in certain states a signature is only allowed if both the group that creates the policy and the group that accepts it are government agencies. On the other hand, some states require only one party in the transaction to be a government agency.
The Legislature has yet to define the question of trust when people use signatures on e-commerce. One the most important aspects to the prosperity of e-commerce is trust: "The first objective is to build trust and confidence. For e-commerce to develop, both consumers and business must be confident that their transactions will not be intercepted or modified . . . " (Ibid.)
Any documents that companies or consumers post on the Internet must be accurate. Furthermore, signatures must be authentic. For instance, if a customer orders a product on-line, the company trusts that the billing information the customer supplies is accurate and that the signature is not forged. Sometimes it is difficult to determine if a signature is forged through electronic communications. Because numbers represent signatures, it is possible for someone to make a mistake and type in the wrong number. Therefore, they might be punished for unintentionally committing a crime. If that should happen, then the defendant has the legal right to sue the company. In response, companies should save all records on its system for proof, just in case they face lawsuits.
Legislature defines Three Elements of Trust
So far, the legislature has stated three elements of trust needed when using e-commerce: The electronic signature must be:
(1) unique to the signer within the context in which it is used;
(2) used to objectively identify the person signing the electronic record; and
(3) must be under the sole control of the person using it.
Regardless of the laws that the Legislature enforces regarding e-commerce, it has to remain consistent in all of its laws. The Legislature must agree to technology neutrality. One reason technology neutrality is needed is to make sure that legislatures do not have a bias for or against any company or any form of electronic communication. For instance, legislature might create a law for electronic signatures, but it might affect other forms of electronic commerce that do not need adjustment. Technology neutrality will try to avoid specific types of errors. In addition, technology neutrality ensures that legislature will not favor one business and unfairly regulate another company in order to devastate production.
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