E-COMMERCE

Electronic Commerce
The use of modern means of communication such as electronic
mail and electronic data interchange (EDI) for the conduct of
international trade has been increasing rapidly. Electronic commerce
offers significant advantage over the traditional methods of doing
business. It requires new skills, strategies and technologies. It is a
new business, and not new way of doing old things. However, the
communication of legally significant information in the form of
paperless messages may be hindered by legal obstacles to the use of
such messages, or by uncertainty to their legal effect and validity.
The purpose of the Information Technology Act is to remove such
obstacles and to create a more secure legal environment for what
has now become known as electronic commerce. For doing
business, we require a buyer and a seller. We also require some
agency to bring them together and transact business. In the case of
E-Commerce, it is the Internet Service Provider (ISP). We also
require

enforceable.

legal

system

Buyers

and

to

enable

sellers

are

contractual
mainly

relationship

concerned

with

enforceability of the contract, security and confidentiality of

message and transactions. ISP is concerned with its legal liabilities
and obligations. The modern means of communication such as
electronic mail and electronic data interchange for the conduct of
international trade transactions are different from the traditional
means. Computer based information and paper based documentation
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make the difference. The traditional means depend upon written

and signed or original documents. 1
The modern means is a paperless regime. Steeped as we are in
the traditional way of doing business that we need assurance about
the confidentiality, authenticity and integrity of our communications
which paper based documentation assures. A legal system is
therefore needed to deal with such concerns. There was therefore a
need for Information Technology Act. The existing legislation
implicitly imposes or implies restrictions on the use of modern
means of communications, by prescribing the use of written,
signed, or original documents. Though certain aspects of
electronic commerce are permitted, there was no legislation dealing
with electronic commerce as a whole. In its absence, uncertainty
existed as to the legal nature and the validity of information
presented in the form other than a traditional paper document. The
approach of the said Act, is therefore, functional equivalent and is
based on an analysis of the purposes and functions of the traditional
paper based requirement. It ensures such purpose and functions by
extending the meaning of such expressions as signed, written,
documents, evidence, etc. as common to the law based on paper
based communication to paperless transactions and communication.
The functions served by a paper document are to: Provide that a document is legible by all;
Provide that document remains unaltered overtime;
1 D.P. Mittal, Law of information technology. 4th edition, Vakul sharma.
Page | 2

 Allow for reproduction of a document so that each party holds

a copy of the same data;
Allow for authentication of data by means of signature;
Provide that a document is in a form which is acceptable to
public authorities and courts.
The Information Technology Act ensures the above mentioned
functions of the paper. Electronic records provide the same level of
security and in some case, a higher degree of reliability and speed,
especially with regard to identification of the source and content of
the data. The Act gives legal recognition of electronic records and
digital signature. 2
1. INTRODUCTION OF E-COMMERCE
In recent years the internet has grown exponentially and is
clearly transforming global markets. The most important trend is the
increasing digitization of business, which is driven by the consumer
demand side in which consumers use their internet for their
purchases, and marketing and supply side in which electronic
commerce has emerged as the mission-critical application. The US
e-commerce industry Ranks as the worlds 18th largest economy
behind Switzerland and ahead of Argentina, according to the study
conducted by the University of Texas Centre for Research in
Electronic Commerce. E-commerce is sharing business information,
2 D.P. Mittal , Law of Information Technology, Taxman publisher, first edition 2000, pg.
no.25
Page | 3

maintaining

business

relationships,

and

conducting

business

transactions by means of telecommunication networks.

Electronic commerce involves any electronic business action
such as an inquiry about a product featured purchase order an
invoice delivery. Although technologies such as fax and telex are
extensively used in this business world, they are not considered
electronic commerce since they include the use of paper as an
output, which hinders the interaction of electronic media and thus
prevents data exchange on electronic basis. Ecommerce is a way to
open new markets, improve communications, speed delivery times,
simplify

business

processes,

streamline

supply

chains,

and

maximize customer relationship marketing.

2. HISTORY OF E-COMMERCE
The history of ecommerce is a history of how Information
Technology has transformed business processes. Some authors will
track back the history of ecommerce to the invention of the
telephone at the end of last century. EDI (Electronic Data
Interchange) is widely viewed as the beginning of ecommerce if we
consider ecommerce as the networking of business communities and
digitalization
commerce

of

was

business
identified

information.
as

the

Originally,

facilitation

of

electronic
commercial

transactions electronically, using technology such as Electronic

Data Interchange (EDI) and Electronic Funds Transfer (EFT). These
were both introduced in the late 1970s, allowing businesses to send
commercial

documents

like

purchase

orders

or

invoices
Page | 4

electronically.

The

growth

and

acceptance

of

credit

cards,

automated teller machines (ATM) and telephone banking in the

1980s were also forms of electronic commerce. Another form of ecommerce was the airline reservation system typified by Sabre in
the USA and Travicom in the UK.
In 1990, Tim Berners-Lee invented the World Wide Web browser
and transformed an academic telecommunication network into a
worldwide

everyman

everyday

communication

system

called

internet/www. Commercial enterprise on the Internet was strictly

prohibited by NSF until 1995. Although the Internet became popular
worldwide around 1994 with the adoption of Mosaic web browser, it
took about five years to introduce security protocols and DSL
allowing continual connection to the Internet. By the end of 2000,
many European and American business companies offered their
services through the World Wide Web. 3 Since then people began to
associate a word "e-commerce" with the ability of purchasing
various goods through the Internet using secure protocols and
electronic payment services.
The introduction of Electronic Data Interchange (EDI), its use
extended to producers, retail traders and other services. Its use kept
on spreading in many different areas such as stock trading, travel
reservations etc. The term 'E-commerce' has come out of the term
'e-mail' which means doing online business with the help of
computer, e-mail, fax, and telephone lines. In 1972, IBM used the
term 'e-commerce and with the invention of computers in 1973 the
311.Information technology law and practice, 3rd edition, vakul sharma pg. no.32
Page | 5

first successful transaction was carried out between USA and

European Union.
With the commercialization of internet at the outset of 1990
decade, a new term e-commerce was tossed and thereafter the use of
this term enchased enormously. One of the reasons for increasing its
enormous use is the development in the field of networking,
protocol and software. The other reasons are the rising pressure of
trade

and

competition.

During

1995

and

1999,

many

new

experiences and inventions came up ranging from advertising to

auctioning in the world of e-commerce. By the year 2000, the ecommerce reached out to millions of users through World Wide
Web. Now e-commerce is going hand in hand with business motive.
It incorporates profits motive and it has impact of national and
international regulations.
3. DEFINITION OF E-COMMERCE
E-commerce, e-commerce, or electronic commerce is the conduct
of financial transactions by electronic means.

With the huge

success of commerce on the Internet, ecommerce usually refers to

shopping at online stores on the World Wide Web, also known as ecommerce Web sites. E-commerce can be business to business (B to
B) or business to consumer (B to C).
Conducting business online. Selling goods, in the traditional
sense, is possible to do electronically because of certain software
programs that run the main functions of an e-commerce Web site,
including

product

display,

online

ordering,

and

inventory
Page | 6

management. The software resides on a commerce server and works

in conjunction with online payment systems to process payments.
Since these servers and data lines make up the backbone of the
Internet, in a broad sense, e-commerce means doing business over
interconnected networks generating online advertising revenue

accepting credit cards for commercial online sales

trading stock in an online brokerage account information
through a company via its intranet selling to consumers
on a pay-per download size through a websites. 4
E-commerce is a pre-eminent buzzword of the online business
revolution. It captures the excitement and focus of this fast
emerging market. But it is more than a slogan or glib party line. At
its core it embodies a concept for doing business online. Electronic
commerce is the paperless exchange of business information using
electronic

data

interchange

(EDI),

e-mail,

electronic

bulletin

boards, fax transmissions, and electronic funds transfer. It refers to

Internet

shopping,

downloading
documents,

and

online

stock

selling

of

graphics,

music,

and

soft
etc.),

bond

transactions,

merchandise
and

the

(software,

business-to-business

transactions. The concept of e-commerce is all about using the

Internet to do business better and faster. It is about giving
customers controlled access to your computer systems and letting
people serve themselves. It is about committing your company to a
serious online effort and integrating your Web site with the heart of
4 D.P. Mittal, law of information technology.
Page | 7

your business.
The Internets role in business can be compared to that of the
telephone. It is a way for people to communicate with each other. It
is also a way for a consumer to communicate with a companys
computer systems without human intervention. In fact, the Internet
is a communication medium like the many others we use in business
every day. The Internet is a reasonable alternative to all of those
means of communication. Any place and any way that your business
communicates with its customers, you should think about how you
could have done it online. That is the power of e-commerce. Cant
meet face to face? Send an e-mail with an attached photograph.
When it comes time to pay for merchandise, use a secured server to
pay by credit card, or even digital cash!
The opportunities and situations in which online business is
possible are limitless. Every era of business yields new strategies
and new ways of doing business. With the advent of radio and
television came the first mass-market advertising. Now, the Internet
has so radically changed business that the rules for corporate
strategy that held for the last 50 years (since the dawn of televise to
crumble. There are some literal elements of commerce that are
necessary for any transactions to take place, which are as true for
regular bricks-and-mortar commerce as they are for e-commerce.
First, whether you are doing business online or in the real world,
you have to have a product to sell or a service to offer. Then, you
must have a place from which to do business.

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In the traditional world of commerce this can be a physical

store or, in a more figurative sense, a catalog or phone number. In
the world of e-commerce the place from which you do business is
your Web site. Most businesses already exist in the bricks-andmortar world of commerce. Adding a Web site is a means to enhance
their business. For Internet startups, the Web site is the place that
they do business. In both regular commerce and e-commerce you
need to find a way to attract customers to your place of business.
This is embodied by your marketing strategy, and everything from
advertising to word of mouth fits into this category. In order to do
business, you also need a way to take orders and process payment.
In a retail store there are no orders. Customers simply find the
products they want, get in a line at the register, and pay the cashier.
In e-commerce, orders have to be placed and items shipped. Orders
are usually handled through interactive, online forms.
Money is another issue easily handled in traditional commerce.
Customers in a retail store pay by check, cash, or credit or debit
cards. Online customers cannot pay by cash or check, only through
electronic means. Also, there are issues of security that surround
online payment that do not come into play in the traditional bricksand-mortar world. E-commerce transactions have to take place
through

secure

electronic

connections

and

special

merchant

accounts for accepting payment. Once payment is collected,

delivery of the product must take place. Fulfillment in traditional
stores is as easy as putting the item in a bag and handing it over to
the customer. Fulfillment in the world of e-commerce is more
Page | 9

difficult, requiring shipping and transportation similar to catalog

and mail order. 5
DEFINITIONS GIVEN BY SOME ORGANIZATIONS
The World Trade Organization defines e-commerce as, ecommerce is the production, distribution, marketing,

sales or

delivery of goods and services by electronic means.

The

Organization

Development (OECD)

for

Economic

defines

Co-operation

e-commerce

as

and

commercial

transactions, involving both organizations and individuals, that

are based upon the processing and transmission of digitized
data, including text, sound and visuals images and that are
carried out over open networks (like, the internet) or closed
networks (like, AOL or Mintel) that have gateway onto an
open network. The meaning of electronic commerce has
changed

over

the

last

30

years.

Originally,

electronic

commerce meant the facilitation of commercial transactions

electronically, using technology such as EDI and EFT. These
were both introduced in the late 1970s, allowing businesses to
send commercial documents like purchase orders or invoices
electronically.
The growth and acceptance of credit cards, automated teller
machines (ATM) and Telephone banking in the 1980s were also
forms of electronic commerce. From the 1990s Onwards, electronic
commerce would additionally include enterprise resource planning
5 www.google .com wikipedia
Page | 10

systems (ERP), data mining and data warehousing. A wide variety of

commerce is now conducted in this way, such as, Electronic funds
Transfer (EFT) supply chain management, Internet marketing,
online transaction Processing electronic data interchange (EDI),
inventory management systems. E-commerce now a days operates in
all four of the major market segments: business to business,
business to consumer, consumer to consumer and consumer to
business.
4. ADVANTAGES

AND

DISADVANTAGES

OF

E-

COMMERCE
The invention of faster internet connectivity and powerful
online tools has resulted in a new commerce arena:- E-commerce. Ecommerce offered many advantages to companies and customers but
it also caused many problems.
ADVANTAGES OF E-COMMERCE
Faster buying and selling products
Buying and selling 24/7
More reach to customers, there is no theoretical geographic
limitations.
Low operational costs and better quality of services.
No need of physical company set-ups.
Easy to start and manage a business.
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Customers can easily select products from different providers

without moving around physically.
1. LOWER COST
Doing e-business is cost effective; it reduces logistical
problems and puts a small business on a par with giants such as
Amazon.com or General Motors. In a commercial bank, for example
a basic over-the-counter transaction costs 0.50 to process; over the
Internet, the same transaction costs about 0.01. Every financial
transaction eventually turns into an electronic process. The sooner it
makes the conversion, the more cost-effective the transaction
becomes.
2. ECONOMY
Unlike the brickandmortar environment, in ecommerce
there is no physical store space, insurance, or infrastructure
investment. All you need is an idea, a unique product, and a well
designed web storefront to reach your customers, plus a partner to
do fulfillment. This makes ecommerce a lot more economical.
3. HIGHER MARGINS
Ecommerce means higher margins. For example, the cost of
processing an airline ticket is 5. According to one travel agency,
processing the same ticket online costs 1. Along with higher
margins, businesses can gain more control and flexibility and are
able to save time when manual transactions are done electronically.

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4. BETTER CUSTOMER SERVICE

Ecommerce means better and quicker customer service.
Online customer service makes customers happier. Instead of calling
your company on the phone, the web merchant gives customers
direct to their personal account online. This saves time and money.
For companies that do business with other companies, adding
customer service online is a competitive advantage. The overnight
package delivery service, where tracking numbers allow customers
to check the whereabouts of a package online, is one good example.
5. QUICK COMPARISON SHOPPING
Ecommerce helps consumers to comparison shop. Automated
online shopping assistants called hop bots scour online stores and
find deals on everything from apples printer ribbons.
6. PRODUCTIVITY GAINS
Weaving the web throughout an organization menas improved
productivity. For example IBM incorporated the web into every
corner of the firm products, marketing, and practices. The
company figured it would save $750 million by letting customers
find answers to technical questions via its website. The total cost
savings in 1999 alone was close to $1 billion.
7. TEAMWORK
Email is one example of how people collaborate to exchange
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information and work on solutions. It has transformed the way

organisations interact with suppliers, vendors, business partners,
and customers. More interactions means better results.
8. KNOWLEDGE MARKETS
Ecommerce helps create knowledge markets. Small groups
inside big firms can be funded with seed money to develop new
ideas. For example, DaimlerChrysler has created small teams to
look for new trends and products. A Silicon Valley team is doing
consumer research on electric cars and advising car designers.
9.

INFORMATION

SHARING,

CONVENIENCE

AND

CONTROL
Electronics marketplaces improve information sharing between
merchants

and

customers

and

promote

quick,

justintime

deliveries. Convenience for the consumer is a major driver for

changes in various industries. Customers and merchants save
money; are online 24 hours a day, 7 days a week; experience no
traffic jams, no crowds, and do not have to carry heavy shopping
bags. 6
DISADVANTAGES OF E-COMMERCE
Any one, good or bad, can easily start a business. And there
are many bad sites which eat up customers money.
There is no guarantee of product quality.
6 www.legalindia.com
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 Mechanical failures can cause unpredictable effects on the

total processes.
As there is minimum chance of direct customer to company
interactions, customer loyalty is always on a check.
There are many hackers who look for opportunities, and thus
an ecommerce site, service, payment gateways, all are always
prone to attack.
1. SECURITY
Security continues to be a problem for online businesses.
Customers have to feel confident about the integrity of the payment
process before they commit to the purchase.
2. SYSTEM AND DATA INTEGRITY
Data protection and the integrity of the system that handles the
data are serious concerns. Computer viruses are rampant, with new
viruses discovered every day. Viruses cause unnecessary delays, file
backups, storage problems, and other similar difficulties. The
danger of hackers accessing files and corrupting accounts adds more
stress to an already complex operation.
3. SYSTEM SCALABILITY
A business develops an interactive interface with customers
via a website. After a while, statistical analysis determines whether
visitors to the site are onetime or recurring customers. If the
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company expects 2 million customers and 6 million show up,

website performance is bound to experience degradation, slowdown,
and eventually loss of customers. To stop this problem from
happening, a website must be scalable, or upgradable on a regular
basis.
4. E-COMMERCE IS NOT FREE
So far, success stories in ecommerce have forced large business
with deep pockets and good funding. According to a report, small
retailers that go headtohead with ecommerce giants are fighting
losing battle. As in the brickandmortar environment, they simply
cannot compete on price or product offering. Brand loyalty is
related to this issue, which is supposed to be less important for
online firms. Brands are expected to lower search costs, build trust,
and communicate quality. A search engine can come up with the best
music deals, for example, yet consumers continue to flock to trusted
entities such as HMV.
5. CONSUMER SEARCH IS NOT COST EFFECTIVE OR
SEARCH EFFICIENT
On the surface, the electronic marketplace seems to be a
perfect market, where worldwide sellers and buyers share and trade
without intermediaries. However, a closer look indicates that new
types of intermediaries are essential to ecommerce. They include
electronic malls that guarantee legitimacy of transactions. All these
intermediaries add to transaction costs.

Page | 16

6. CONSMERS RELATION PROBLEMS

Not many businesses realize that even ebusiness cannot
survive over the long term without loyal customers.
7. PRODUCTS PEOPLE WONT BUY ONLINE
Imagine a website called furniture.com or living.com, where
venture

capitalists

are

investing

millions

in

selling

home

furnishings online. In the case of a sofa, you would want to sit on it,
feel the texture of the fabric etc. Beside the sofa test, online
furniture stores face costly returns which makes the product harder
to sell online.

Page | 17

8. CORPORATE VULNERABILITY
The availability of product details, catalogs, and other
information

about

business

through

its

website

makes

it

vulnerable to access by the competition. The idea of extracting

business intelligence from the website is called web framing.
9. HIGH RISK OF INTERNET START UP
Many stories unfolded in 1999 about successful executives in
established firms leaving for Internet startups, only to find out that
their getrich dream with a dot.com was just that a dream. 7
5. TYPES OF E-COMMERCE
FIVE DIFFERENT TYPES OF E-COMMERCE
E-commerce is the process of buying and selling of various
products and services by businesses through the Internet. It deals
various kind of business concern, from retail site of the consumer,
which includes auction. The main focus is to concentrate on
business substitutes involving goods and services between various
corporations.
E-commerce is the purpose of Internet and the web to Conduct
business but when we concentrate on commercial deals among
organizations and individuals demanding selective information
systems under the guarantee of the firm it accepts the form of e7 www.R&J.COM

Page | 18

business. Nowadays, the word e is hitting momentum. If youre

looking to get into this business, one of the fore most thing you
have to have is a Virtual Private Cloud Hosting keeping the traffic
in mind and respecting customers valuable. Five types of ecommerce are as follows:
Business to Consumer (B2C)
B2C stands
for

Business

to

Consumer as the
name suggests, it
is

the

model

taking businesses and consumers interaction. Online business sells

to individuals. The basic concept of this model is to sell the product
online to the consumers.B2c is the indirect trade between the
company and consumers. It provides direct selling through online.
For example: if you want to sell goods and services to customer so
that anybody can purchase any products directly from suppliers
website.Directly interact with the customers is the main difference
with other business model. As B2B it manages directly relationship
with consumers, B2C supply chains normally deal with business that
are related to the customer.
m-Commerce
It deals with conducting the transactions with the help of
mobile. The mobile device consumers can interact each other and
can lead the business. Mobile Commerce involves the change of
Page | 19

owners.

Page | 20

Business to Business (B2B)

B2B stands for Business to Business. It consists of largest
form of Ecommerce. This model defines that Buyer and seller are
two

different

entities.

It

is

similar

to

manufacturer
issuing goods to
the

retailer

wholesaler.
deals

or
Dell

computers

and

other

associated
accessories online but it is does not make up all those products. So,
in govern to deal those products, first step is to purchases them
from unlike businesses i.e. the producers of those products .
It is one of the cost effective way to sell out product through
out the world
Benefits: 8
Encourage your businesses online
Products import and export
Determine buyers and suppliers
8 www.R&J.com
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 Position trade guides

Consumer to Consumer (C2C)
C2C

stands

Consumer

for
to

Consumer. It helps the

online

dealing

goods

or

of

services

among people. Though

there

is

no

major

parties needed but the

parties will not fulfill
the transactions without the program which is supplied by the online
market dealer such as eBay.
Peer to Peer (P2P)

Page | 22

It is a discipline that deal itself which assists people to

instantly shares

related

computer

and

files

computer

sources

without having

to interact with

central

server. If you

are

implement this

model,

sides

to

demand

expected

web

going

both

install

software

to

the
so

that they could able to convey on the mutual platform. This kind of
e-commerce has very low revenue propagation as from the starting
it has been tended to the release of use due to which it sometimes
caught involved in cyber laws.
6. LEGAL ISSUES IN E-COMMERCE
As the e-commerce is becoming more and more popular, the
opportunity for its misuse is also increasing. Instances of hacking
are increasing at alarming rate. Computers hackers illegally access
to computer systems and violate privacy and temper or destroy
records.
The cases of viruses and worms are also increasing. Viruses or
worms can replicate and spread from computer to computer, they
erase information and causes malfunctions in computers, sometimes,
the viruses completely destroy the data in files. Everyday new type
of virus comes up and makes the existing antivirus tools make
ineffective. E-commerce depends greatly on data and information on
Page | 23

computers and internet.

Such data and information can be damaged due to many reasons
such as power failure, viruses, hacking, physical damage etc. parties
e-commerce involved sends and receives information which they do
not want to disclose to anybody. The information involved in ecommerce may be very crucial such as credit standings to the
parties, private keys and passwords used in e-mails, debit cards,
credit cards, etc. it is possible to retrieve such critical information
and misuse them causing losses to the people whose information is
stolen and misused. International facilities enable the world to
become interconnected. The world of internet is open to all,
anytime, anywhere in the world. The whole world can see the
information available on the internet but all information available
on the website is not good and reliable. Sometimes information
providing misleading information which causes parties to indulge in
trading which ends up in cheating sometimes goods are put on
online sale, the payments is received from the buyer through credit
card but the goods are either not delivered or if delivered they may
be of very poor quality. After making good enough money such
online sellers disappear leaving no track of getting traced. Due to
such misleading information sometimes heinous crimes such as
theft, fraud, and extortion can occur in great magnitude within a
matter of seconds. These days obscene material is being published
on the websites which tend deprave and corrupt persons who are
likely to read, see or hear the matter contained in it. Sometimes,
porn words or photographs cause embarrassment when the internet
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is being used in the public or in the family. To cope up the various

issues discussed above, multiple efforts are being made. As the ecommerce is becoming increasingly popular, it has becoming
imperative to provide legal rights and obligations that flow from
them. In an endeavor to give thrust to government's IT policy, the
Indian parliament enacted a comprehensive Information Technology
Act, 2002. This act provides legal recognition for transaction
carried out by means of e-communication. This act has taken
various illegal activities into its purview. Now if sometimes
knowingly or intentionally conceals, tempers, destroys or alters any
computers source code, it is consider an offence. Similarly hacking
is an offence.
The government of India can declare any computer system or
computer network as protected system. Only authorized person can
have access to the protected system. If some unauthorized person
tries to access a protected system it is an offence. The above
offences are punishable with imprisonment ranging up to ten years
along with fine which may extend up to 2 lac rupees or with both.
For the purpose of electronic affairs such as electronic records,
documents, signatures, some amendment have been made the
advancement of technology is also developing various ways to make
e-commerce secure. The system of password is being improved time
and again to make them more protected. Further various websites
and media is making untiring efforts to make people aware of
various steps that equip them to protect themselves from cyber
crimes.
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7. LAWS FOR PROTECTION OF E-COMMERCE

The validity of electronic transactions is established under the IT
Act. The act establishes that an ecommerce transaction is legal if
the offer and acceptance are made through a reasonable mode. For
instance, a communication sent by an offeror to an offeree through
indirect means, such as an email that passes multiple servers and
spam mails, is not regarded as a reasonable mode under the IT Act.
Reasonable modes of acceptance in an ecommerce transaction
are:
Direct mail from the offeree to the offeror.
Acceptance by conduct, which is pressing an Accept button
to an offer.
Additionally, the IT act governs the revocation of an ecommerce
offer and acceptance. An ecommerce transaction is said to be
complete when the offeror receives acknowledgment of the receipt
of the offer. Besides, an offeror has the liberty to terminate an offer,
provided its acceptance has not been communicated by the offered. 9
Information

Technology

Act

Amendments

for

Ecommerce

Transactions. The Information Technology (Amended) Act, ITAA,

was

amended

in

2008

to

increase

security

of

e-commerce

transactions, with special provisions for legal recognition of digital

signatures and electronic documents. Section 43A of ITAA holds
9 Information technology act law and practice. Third edition, vakul sharma
Page | 26

ecommerce companies accountable for protection of personal data.

The government is aware of the increasing misuse of the
electronic media and online frauds. Therefore, the government of
India has passed the Information and Technology Act to keep a
check on the transactions carried on via the electronic media and to
make the process of Ecommerce safe and reliable. The Act imposes
heavy penalties and punishment on those who try to misuse this
channel for personal benefit or to defraud others. The law has also
established the authentication of the electronic records.
Increase in the Cyber-crimes in Ecommerce is causing concern
among the credit card users in India. Now, the government has
opened Cyber Crime Police Station. Online complaints can be filed
for both cyber and Non Cyber-crimes, through an online form which
is available at http to accept complaints filed with digital
signatures.
The Government of India has decided to impose service tax on ECommerce transaction and that will result in making the net
shopping expensive. The United Nations General Assembly by
resolution A/RES/51/162, dated the 30 January 1997 has adopted the
Model Law on Electronic Commerce adopted by the United Nations
Commission on International Trade Law. This is referred to as the
UNCITRAL Model Law on E-Commerce.

Following the UN

Resolution India passed the Information Technology Act 2000 in

May 2000 and notified it for effectiveness on October 17, 2000.The
Information technology Act 2000 has been substantially amended
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through the Information Technology Amendment Act 2008 which

was passed by the two houses of the Indian Parliament on December
23, and 24, 2008. It got the Presidential assent on February 5, 2009
and was notified for effectiveness on October 27, 2009.
Information technology Act 2000 consisted of 94 sections
segregated into 13 chapters. In the 2008 version of the Act, there
are 124 sections (excluding 5 sections that have been omitted from
the earlier version) and 14 chapters. Schedule I and II have been
replaced. Schedules III and IV are deleted. Four schedules form part
of the Act.
Information Technology Act 2000 addressed the following issues:
1. Legal Recognition of Electronic Documents
2. Legal Recognition of Digital Signatures
3. Justice Dispensation Systems for Cybercrimes
4. Offenses and Contraventions
ITAA 2008 (Information Technology Amendment Act 2008) as the
new version of Information Technology Act 2000 is often referred
has provided additional focus on Information Security. It has added
several new sections on offences including Cyber Terrorism and
Data Protection. The Government of India has brought major
amendments to ITA-2000 in form of the Information Technology
Amendment Act, 2008.A set of Rules relating to Sensitive Personal
Information and Reasonable Security Practices (mentioned in
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section 43A of the ITAA, 2008) was released in April 2011. 1 0

8. THE FUTURE OF E-COMMERCE
E-Commerce has revolutionized the 21st century in a way that
few other technologies have. Over the past decade, the phenomenon
of e-commerce has developed into a full-blown industry. Once used
solely for business-to-business purposes, today nearly everyone has
made at least one purchase using an E-COMMERCE platform.
E-Commerce appeals to the population at large for several key
reasons:
It is the most convenient way to shop.
It doesnt involve lines or long drives.
E-Commerce typically offers a larger selection than brick
and mortar stores.
E-Commerce offers the ability to shop 24 hours a day
Most E-Commerce stores offer bigger discounts and savings
on their products.
Comparison-shopping is simple because of the vast selection.
Even more than benefiting the average consumer, e-Commerce
makes doing business easier and more economical for merchants and
retailers. Advancements in technology have provided a fast, cheap
10 www.legalservices.com
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way to sell and market products. Because of the mass appeal of the
Internet and the enormous visibility, advertising and marketing has
become an integral part of the ecommerce business model.
Ecommerce also offers less overhead, a wider marketing base, and
eliminates the need for a physical storefront. Those with the brick
and mortar storefront also have ecommerce sites; this is the greatest
proof that ecommerce is here to stay it is just easier and much
more efficient to find, compare and decide. The greater visibility
ecommerce offers will mean that many businesses can expand far
beyond their limits of a physical store, but it also means a market at
risk of becoming saturated which is why internet marketing is one
of the most essential aspects of the E-Commerce business model.
On the surface, the future of E-Commerce looks bright. There
are benefits for both the retailer and the consumer. In many ways,
E-Commerce is becoming a self-fulfilling prophecy:

as more

consumers are drawn to the internet for their shopping needs, more
and more retailers begin doing business on the internet, which leads
to more consumers. However, there are some major obstacles facing
E-Commerce in the future. One of the major issues that must be
addressed is that of market saturation. In any given niche, there may
be millions of similar sites, and only effective marketing can give
one site a lead over another. There is also the inability of consumers
to view a product in real life, or try it out. This can lead to high
return ratios for businesses, and inflated costs for consumers.
Finally, many consumers are growing disturbed by the large number
of email, spam or other marketing material that they begin receiving
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after making a purchase. These issues may eventually lead to

significant changes in the ecommerce model.
FUTURE OF E-COMMERCE IN INDIA
If Indian companies are to complete in international markets,
they cannot ignore e-commerce. The future of e-commerce in India
is very bright. The following points may be put forth to support this
view. E-commerce is directly connected with the field of IT
(Information Technology). As per an estimate IT sector has to face
acute shortage of skilled person in the year to come. Although
Indian IT sector is providing training to more persons as compared
to other countries, but there is dearth of trained personnel in this
sector. According to business world estimate near about Sixty
thousand new jobs will be created for the internet world alone in the
next two years. In India communication resources are required
physically infrastructure is developing by leaps and bounds and it is
hoped that India will soon Catch up with the developed countries.
India has greater number of English speaking people as compared to
neighboring countries. Due to this endowment, many advanced
countries are outsourcing their jobs to India. This is the main reason
of success for India as compared with other countries. Some
government policies are also contributing to promote e-commerce in
India. The government of India has given tax exemption to those
companies which export Information Technology. The government
has launched the special policies for call countries. 1 1

11.www.google.com wikipedia
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The e-Commerce scenario in India

According to a 2005 Report brought out by the Internet & Online
Association (IOAI), Indias Internet population has crossed the
milestone 25 million mark and is expected to gallop to a 100 million
by 2007. The Study also reveals the following:
1. E-Commerce transactions are expected to cross the Rs. 2300
crore milestone in 2006-07, a jump of around 300 percent from
the 2004-05 figure of Rs. 570 crore.
2. The average number of online transactions has increased from
4.4 lakhs in 2004-05 to besides individuals, even businesses
have been quick to embrace the Internet. Most organizations,
including large and SME companies have a Web presence.
3. Around 7.95 lakhs per month in 2005-06, a growth of a healthy
80 percent SMEs in fact, have found the Internet a viable
platform for establishing their brand at loIndias Tier II towns
and cities are experiencing an increase in their online retailing
activity and increased transactional values were infrastructure
and marketing costs Clearly, the advantages offered by the
Internet to Indian businesses are many. The Net allows
companies to:
a) Address an ever rising population of online users.
b) Access unlike main beyond the boundaries of operational
timings and geographic distances.

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c) Limited shelf space.

d) Cater to countrywide city markets (for consumers and
suppliers) at low costs deliver digital content online.
e) Conduct online sourcing or public procurement.
f) Take the instance of a portal like eBay, which has enabled
hundreds of smaller Indian companies and individuals to
sell their products or procure them over the Net. At the
level of individual buyers, the Internet and e-Commerce
enables people to access a 24-hour shopping environment,
where anything can be purchased from anywhere.

The

result is that consumers are transacting over the Internet

and trading in goods and services, transferring funds
electronically and availing of crucial Government services.
At the end of the day, there is a growing realization that the
opportunities presented by e-Commerce are big and will get bigger.
Provided applications of mass usage are developed and made
available, e-Commerce can truly take off in India. The countrys
citizens needed easier access to the Net, navigation and ease-of-use,
factors that are critical for the quick adoption of e-Commerce.
Convenient and secure modes of payment are a must, as is the need
to explore other facets of e-Commerce such as mobile.

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Bibliography
Books Referred:
D.P. Mittal, Law of Information Technology .
Nandan Kamath, Law Relating to Computers Internet and ECommerce.
Nandan Kamath, Guide to Information Technology Act,
2000.
Vakul Sharma, Information Technology Law and Practice .

Websites Referred:
www.legalservicesindia.com
www.indlii.org.in
www.legalindia.in
www.google.com
www.wikipedia.com
www.R&J.com

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