Electronic Commerce on the Internet
By Catherine Sansum Kirkman
For businesses trying to maximize commercial Web applications, electronic commerce is an essential element. Consumers are beginning to use credit cards for transactions over the Internet, but security and consumer confidence issues remain. This column discusses some of the legal issues that arise when a Web storefront supports sales transactions over the Internet.
It is common for a Web-site owner to outsource various elements of the site, often including its design, development, and hosting. A Web merchant using electronic commerce may outsource various elements involved in operating a Web storefront. A Web-site developer may be hired to create the online ordering system and interface, pursuant to a standard development contract.
Once the online system is implemented, it may be necessary to hire the Web-site developer, or another third party, as a fulfillment vendor for the site. These terms are not always seen in a Web-site development and hosting agreement, but are becoming more prevalent as turnkey Web-commerce solutions are offered.
A Web-commerce agreement covers the nuts and bolts of services to be rendered by the sales-fulfillment entity. Following are contractual terms covering the primary concerns in a situation where the fulfillment party holds the merchant's inventory and handles all fulfillment services, but the credit-card transactions are made between the customer and the merchant. This is similar to a consignment relationship, but there the fulfillment party actually makes the sale and then accounts to the merchant for its share of the transaction.
