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28 Nov 2000, UK

Dear Dr E-Commerce,

What problems may arise when I enter into an on-line contract? What are the EU and UK legislation related to the formation of electronic contracts? If a dispute arose between me and an on-line retailer what law should apply? Would the situation differ if the company was established outside the EU, in the US for instance?

Sami

Dear Sami:

Contracts, whether on-line or off-line, are generally subject to private international law. You can normally indicate which law applies in the general terms of the contract and this is usually the location of the vendor.

However, in Europe there are a number of laws designed to protect the consumer when it comes to contracts. For example, consumers must be allowed seven days to cancel any 'distance contract' - this can be an electronic contract or an order to a mail order company or a purchase agreement made over the telephone - without giving any reason. Consumer contracts in Europe cannot deprive consumers of this right to cancel.

More controversially, and presently being debated in Europe, is the question of where jurisdiction should be in electronic contracts with consumers. Should it be the country of the consumer or the country of the vendor? It's a hot debate and it's hard to guess which way it will go.

However, these restrictions only apply to B2C contracts. B2B contracts have far fewer restrictions and you can certainly indicate jurisdiction on your B2B contracts.

An American company is not subject to European law provided it does business in the USA. If the company is based in the USA and web site primarily targets Americans, it would certainly be perceived as a US company.

For more information on contract law as applied to e-commerce please download and read the booklet, Don't Panic Do E-commerce.

All the best,

Dr. Ecommerce