10 Online Business Laws You Need to Know for E-commerce.

. 6 min read
10 Online Business Laws You Need to Know for E-commerce.

What Are The Laws Of E Commerce?

  • Legal compliance is one of the most crucial things when running any business.
  • Any fault in this can lead to hefty fines, endless litigation, and bring immense disrepute to your business.
  • Hence being aware of all relevant laws is very important for any business.
  • While you can always hire a lawyer for all your legal needs, you must also be aware of every step to keep your business in check.
  • E-commerce in the present day is evolving so much that many countries have introduced specific laws governing e-commerce businesses.
  • Along with that, many other laws are relevant and applicable to e-commerce businesses.
  • This article will briefly deal with these laws and how they affect an e-commerce business:

1. Company Law

  • Every country has its Company law.
  • The Indian Companies Act, 2013 governs Indian companies.
  • This act deals majorly with the registration and governance of companies.
  • An e-commerce business also constitutes a company, and therefore you may have to register your business with the ministry.
  • Company law will also provide details concerning the various procedures that need to be followed about Annual General Meetings, Appointment of Board Members, Removals, etc.
  • These details often have to be filed with the ministry annually.
  • Hence compliance with company law is important for any e-commerce business.

2. Contract Law

  • The Indian Contract Act, 1872, governs all contract related transactions in India.
  • Every sale made via an e-commerce platform constitutes a valid contract.
  • Therefore, businesses need to frame precise terms and conditions and other policies.
  • Contracts need to be drafted very carefully, and each word must be thought out thoroughly.
  • In one of the most famous cases known as the "Oxford Comma" case, a multi-million dollar suit arose only because of a comma's improper placement in the contract.
  • Thus, drafting contracts clearly and concisely is critical for an e-commerce business.
  • Generally, e-commerce contracts are standard form; i.e., they remain the same for every customer.
  • So it is better to ensure that the agreement is drafted in a way to suit every customer.
  • Don't forget to include clauses for arbitration, governing law, and jurisdiction.
  • This is to avoid paying additional legal fees if a dispute gets registered in a completely different place.

3. Consumer Protection Laws

  • As the name suggests, consumer Protection Acts are meant to protect the consumers and hence are made in a way that they remain very easily accessible to the public.
  • So all businesses need to make sure that they are delivering their services as per the contract.
  • Consumer protection laws also require businesses to maintain certain standards and quality regarding specific goods like food, cosmetics, etc.
  • Hence keeping those in mind and ensuring proper quality checks can help you avoid unnecessary litigation.
  • It also helps you serve quality goods and services and grow your business as well.
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4. Information And Technology Laws

  • Since e-commerce businesses run entirely online, it is vital to keep track of the information and technology laws.
  • The law in India provides for the procedures to obtain e-signatures and provides penalties and punishments for various cybercrimes.
  • E-commerce entities are often subjected to malware attacks, DDoS attacks, privacy breaches, and other cybercrimes.
  • Therefore, businesses must be aware of their rights in such a situation and protect themselves from any such crimes.

5. Competition Law

  • Competition Law or Anti-trust Law is a law that governs fair competition in a market.
  • This law prohibits the creation of cartels, anti-competitive agreements, etc.
  • Cartels, simply put, are formed when competitors come together and form a group to exploit the customer further.
  • Since this is harmful to the economy, businesses are penalised for it.
  • An essential aspect of this law is that it does not look into whether the company intended to enter into a problematic agreement.
  • Even an unintentional understanding that leads to a cartel can lead to hefty penalties.
  • In recent years, competition law has become especially strict concerning e-commerce companies.
  • Many e-commerce entities who have merely used similar algorithms for pricing products have been brought under this law and have been penalised.
  • Therefore, it is imperative to look out for any such antitrust risks.

6. Intellectual Property Law

  • Intellectual property is one of the most crucial tools to protect your business identity and make it grow.
  • Consumers often connect to brands and develop loyalty towards them.
  • This is achieved by having a strong brand identity.
  • This brand identity must be protected at all costs so that no one else can copy and steal your ideas.
  • This is where the law on the intellectual property comes into effect.
  • These are mainly three types of Copyrights, Trademarks, and Patents.
  • Trademarks are generally the essential IP for an e-commerce business since it protects their brand logo, name, etc.
  • So it would be best if you got your trademark registered and ensure there is no theft of your brand identity.

7. Privacy Laws

  • This is one of the latest pieces of legislation which have become applicable to many online businesses.
  • These privacy laws majorly deal with how companies should deal with the data collected by them, protect the data from leaks, etc.
  • Even if an unintentional data leak occurs in a company, it can cost businesses a lot.
  • E-commerce businesses need to take care of data privacy laws since their online business requires them to store sensitive information about various people like their credit card details, addresses, phone numbers, etc.
  • So being compliant with these laws is very important.
  • Along with that, data privacy laws often have an international application.
  • That means even an Indian company may be made accountable under the EU General Data Protection Regulation if someone from the EU visits your website.
  • So even if your own country does not have a law on data protection, it is necessary to keep the law of other countries in mind as well.

8. Tax Laws

  • Tax laws are self-explanatory.
  • Everyone is aware of them.
  • You must take into account your Business income tax and other indirect taxes like GST to ensure you are not missing out on filing any taxes.
  • Hiring a qualified Chartered Accountant is necessary to maintain all accounts and pay all necessary taxes.

9. Banking Laws And Regulations

  • Online banking and UPI systems have made e-commerce usage very simple for both business owners and customers.
  • However, there are certain compliances necessary before introducing a new payment system on your website.
  • Always ensure that your payment systems are verified by the government, legal, and are operating smoothly.
  • Improper bank transactions and frauds can lead to financial problems and reduce the trust of your consumers.
  • Thus, it is essential to keep banking laws in mind as well.

10. Labour Laws

  • E-commerce businesses often have large teams of employees, technicians, delivery agents working for them.
  • Labor laws ensure that your company provides them with a safe environment, proper remuneration, equal rights, etc.
  • A business with a healthy and happy team is significant for the growth of the business.
  • So do not treat labor laws only as a compliance necessity, but use them to provide good opportunities for your team.
  • This will help your business and your team grow.
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  • Laws and Regulations can seem daunting to understand.
  • However, learning about them will only ensure that you run your business more smoothly.
  • This article is only intended to provide you with information and does not constitute legal advice.
  • It is always best to have a lawyer to take care of the vast number of compliances.
  • But businesses themselves should never remain unaware of the legal systems in place.
  • These laws may seem like a barrier initially but are only meant to protect everyone and run businesses more efficiently.
  • So never ignore any legal requirements and take them very seriously!

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