Online retailing in India the mega picture and how important it is to legally secure business?

Indian retailers and entrepreneurs have finally caught on with the global economic trend and have started to venture and explore the avenues by setting up an e-commerce platform to sell their products. There has been a steady growth in the variety and volume of goods and services which are available on-line to both businesses and consumers, and on-line selling is increasingly seen as a major way for all businesses to save costs. Almost inevitably, as the practice of on-line selling proliferates so does the amount of legislation governing it. This article provides an overview of the issues that a business should consider before setting up an on-line sales process.

Legal aspects of online retailing.

It is important for e-commerce retailers to ensure that the contract which is formed with the consumer under the process described above is both legally correct and also affords the retailer the maximum protection. There are various ways in which the contracting process can be structured to be legally correct, and it is important to balance absolute best practice, and a more commercial approach which is still legally correct. Equally, it is surprisingly easy to structure the process in a way which is legally incorrect, and which exposes the company to more risk than is necessary.

Cyber crimes and financial frauds have further shaken confidence of Indian e-commerce customers in online payment methods. ATM frauds, credit card frauds, internet banking frauds, etc are flourishing in India as Indian banks and financial intermediaries are not paying enough attention to cyber security.

Cyber law due diligence in India is another area that e-commerce and online shopping platforms must take care of. Cyber law due diligence for Indian companies is one of the most frequently litigated aspect in India. Lack of cyber law awareness and cyber due diligence awareness is the main reason that many websites and companies have found themselves in the net of Indian laws.

Consumer protection regulations

These protect purchasers and consumers whether they are buying the goods over the counter of a shop or over the internet. For instance the Sale of Goods Act gives certain rights to purchasers about the quality of the goods they receive, and their rights if the goods fail to live up to these standards.

Online regulations

These regulations are new, and were brought into force largely to protect consumers' rights when they buy products either over the internet or by telephone. They largely derive from EU Directives, and include the E-commerce Regulations , the Distance Selling Regulations and the Electronic Signatures Regulations . These are the regulations that control the actual on-line sales process and they provide the starting block from which we can consider the practical business requirements of on-line retailers.

Information that must be supplied

1. Companies should not hide themselves from purchasers, and should provide as much information to purchasers as possible.
2. Company information that must be supplied under the E-Commerce Regulations
3. The E-Commerce Regulations require that all commercial web sites make the following information directly and permanently available to consumers via the website: the company's name, postal address (and registered office address if this is different) and email address; the company's registration number; any Trade or Professional Association memberships; the company's VAT number.
4. All of this applies regardless of whether the site sells on-line. In addition, any commercial communication – that is any email or even SMS text message – used in providing an "Information Society Service" must display this information.
5. The E-Commerce Regulations also require that all prices must be clear and unambiguous, and web sites must state whether the prices are inclusive of taxes and delivery costs.
6. Contractual information that must be supplied under the E-Commerce Regulations
7. When it comes to actually going through the contractual process the requirements for information increase once again and the consumers must be told:
8. the steps involved in completing the contract on-line;
9. whether the contract will be stored by the retailer and/or permanently accessible;
10. the technical means the site uses to allow consumers to spot and correct errors made while inputting their details prior to the order being placed;
11. the languages offered to conclude the contract;
12. The website must also provide links to any relevant Codes of Conduct to which the retailer subscribes and set out the retailer's Terms and Conditions, in a way which allows users to save and print them.

All of this information must be provided before the purchaser selects the product and starts the contractual process and it is possible to convey it early on in the sale, without deterring users with an unwieldy sales process. The most common route is to bundle as many of these details into the terms and conditions as possible, and ensure that consumers are appropriately directed to read them.

The terms and conditions of the site are very important, and will vary for every retailer. It is important that the terms and conditions are properly drafted, as poorly drafted terms and conditions will expose the retailer to unnecessary risk.

The terms and conditions should be as below:

1. make it clear who is selling the product, together with the geographical and email address;
2. describe clearly what the customer is getting and what it will cost, including all taxes and delivery costs; and
3. arrangements for payment and delivery; and
4. an intention to create legal relations, i.e. the parties must intend to enter into a legally binding contract.

Online shopping and e-commerce in India is rightfully being encouraged and the business is gradually growing, but at the same time it would be suitable to keep a watch on the cyber security issues and other legal aspects as well.