Chapter 7: The Environment of Electronic Commerce: Legal, Ethical, and Tax IssuesObjectivesObjectives (continued)The Legal Environment of Electronic CommerceBorders and JurisdictionPowerPoint PresentationBorders and Jurisdiction (continued)Slide 8Jurisdiction on the InternetJurisdiction on the Internet (continued)Subject-Matter JurisdictionSlide 12Contracting and Contract Enforcement in Electronic CommerceContracting and Contract Enforcement in Electronic Commerce (continued)Slide 15Slide 16Slide 17Use and Protection of Intellectual Property in Online BusinessWeb Site Content IssuesWeb Site Content Issues (continued)Patent InfringementTrademark InfringementDomain Names, Cybersquatting, and Name StealingDomain Names, Cybersquatting, and Name Stealing (continued)Protecting Intellectual Property OnlineDefamationAdvertising RegulationOnline Crime, Terrorism, and WarfareEthical IssuesEthical Issues (continued)Communications with ChildrenTaxation and Electronic CommerceNexusU.S. Income TaxesSlide 36U.S. State Sales TaxesEuropean Union (EU) Value Added TaxesSummarySummary (continued)Chapter 7:The Environment of Electronic Commerce: Legal, Ethical, and Tax IssuesElectronic Commerce, Seventh Annual EditionElectronic Commerce, Seventh Annual Edition 2ObjectivesIn this chapter, you will learn about:•Laws that govern electronic commerce activities•Laws that govern the use of intellectual property by online businesses•Online crime, terrorism, and warfare•Ethics issues that arise for companies conducting electronic commerceElectronic Commerce, Seventh Annual Edition 3Objectives (continued)•Conflicts between companies’ desire to collect and use data about their customers and the privacy rights of those customers•Taxes that are levied on electronic commerce activitiesElectronic Commerce, Seventh Annual Edition 4The Legal Environment of Electronic Commerce•Online businesses:–Must comply with the same laws and regulations that govern the operations of all businesses–Face complicating factors•The Web extends a company’s reach beyond traditional boundaries•The Web increases the speed and efficiency of business communications•The Web creates a network of customersElectronic Commerce, Seventh Annual Edition 5Borders and Jurisdiction•Territorial borders in the physical world mark the range of culture and reach of applicable laws very clearly•European Union (EU)–Allows free movement within the EU for citizens of member countries–Adopted a common currencyElectronic Commerce, Seventh Annual Edition 6Electronic Commerce, Seventh Annual Edition 7Borders and Jurisdiction (continued)•Power –A form of control over physical space and the people and objects that reside in that space–A defining characteristic of statehood•Jurisdiction–Ability of a government to exert control over a person or corporation•Effects–Impact of a person’s behaviorElectronic Commerce, Seventh Annual Edition 8Borders and Jurisdiction (continued)•Legitimacy–Idea that those subject to laws should have some role in formulating them•Notice–The expression of a change in rules•Constructive notice–Individuals become subject to new laws and cultural norms when they cross an international borderElectronic Commerce, Seventh Annual Edition 9Jurisdiction on the Internet•Power, effects, legitimacy, and notice do not translate well to the virtual world of electronic commerce•Governments that want to enforce laws must establish jurisdiction over business conduct•Contract –Promise or set of promises between two or more legal entitiesElectronic Commerce, Seventh Annual Edition 10Jurisdiction on the Internet (continued)•Tort –Intentional or negligent action taken by a legal entity that causes harm to another legal entity•A court has sufficient jurisdiction in a matter if it has both subject matter jurisdiction and personal jurisdictionElectronic Commerce, Seventh Annual Edition 11Subject-Matter Jurisdiction•Subject-matter jurisdiction is a court’s authority to decide a type of dispute•Personal jurisdiction–Determined by the residence of the parties•Forum selection clause–States that a contract will be enforced according to the laws of a particular state•Long-arm statutes–Create personal jurisdiction over nonresidents who transact business in the stateElectronic Commerce, Seventh Annual Edition 12Electronic Commerce, Seventh Annual Edition 13 Contracting and Contract Enforcement in Electronic Commerce•Contract –Includes three essential elements•An offer, an acceptance, and consideration–Formed when one party accepts the offer of another party•Offer–Commitment with certain terms made to another party•Acceptance–Expression of willingness to take an offerElectronic Commerce, Seventh Annual Edition 14Contracting and Contract Enforcement in Electronic Commerce (continued)•Consideration–Agreed upon exchange of something valuable •Implied contract –Formed by two or more parties that act as if a contract existsElectronic Commerce, Seventh Annual Edition 15Contracting and Contract Enforcement in Electronic Commerce (continued)•Statute of Frauds–The following must be created by a signed writing•Contracts for the sale of goods worth over $500•Contracts requiring actions that cannot be completed within one yearElectronic Commerce, Seventh Annual Edition 16Contracting and Contract Enforcement in Electronic Commerce (continued)•A writing –Exists when the terms of a contract have been reduced to some tangible form•Signature–Any symbol executed or adopted for the purpose of authenticating a writing•Warranties on the Web–Any contract for the sale of goods includes implied warrantiesElectronic Commerce, Seventh Annual Edition 17Contracting and Contract Enforcement in Electronic Commerce (continued)•Warranty disclaimer–Statement declaring that the seller will not honor some or all implied warranties•Authority to bind–Determining whether an individual has the authority to commit a company to an online contract•Terms of service (ToS)–Intended to limit a Web site owner’s liabilityElectronic Commerce, Seventh Annual Edition 18Use and Protection of Intellectual Property in Online Business•Intellectual property –Includes all products of the human mind–Products can be tangible or intangible•Intellectual property rights –Include protections by governments through: •Granting of copyrights and patents•Registration of