E-commerce is one of the main elements of e-business and covers any formі of business transaction concluded by electronic means instead of physical exchange or direct physical contact. The nowadaystrend is the transition of business into the on-line sphere, taking into account the need for almost 24/7 processing of client needs.
E-commerce means a term which refers to using the Internet for conducting business transactions between companies or between companies and consumers.
The main structural element of the e-commerce system is an on-line store.
The extraterritoriality of the internet space and the effective mechanisms for promoting the goods to new markets provide wide opportunities for business owners for development.
To a certain stage creation and functioning of on-line stores in Ukraine was almost unregulated by legislation and complicated identification system allowed to remove business entities from the viewpoint of fiscal and controlling authorities. It is for these reasons the idea of “free e-commerce” from state supervision and influence continues to exist.
Knowing the legal basics of on-line store is extremely important both for business owners who need to ensure that they comply with the legal requirements in the course of trade organization (this will help prevent potential violations during inspection by regulatory authorities), as well as for ordinary consumers, in order to know how protect your rights when purchasing goods via on-line store. This is very important because with the development of Internet Technologies, the number of transactions concludedin the Internet is growing rapidly.
Realizing the request of a wide range of entrepreneurs and consumers concerning regulation of the purchase of goods, works or services on the Internet, the Law of Ukraine “On E-Commerce” was adopted and is in force anddetermines the peculiarities of electronic transactions concluding and activities of e-commerce subjects.
At the same time, in addition to the above Law, activity of on-line stores is regulated by general provisions of the legislation, such as the Constitution of Ukraine (which stipulates the general right to business activity), the Commercial and the Civil Codes of Ukraine, the Law of Ukraine “On Consumers’ Rights Protection”, “On Advertisement”, “ On Electronic Documents and Electronic Document Flow”, “On Payment Systems and Funds Transfer in Ukraine”, “On Financial Services and State Regulation of Financial Services Markets”, “On Personal Data Protection”, etc.
The main message of this publication is that it is not enough to create simply an on-line store in the web space, but to bring its activities into compliance with the current legislation.
Having a business model, an entrepreneur relays it to the on-line space by doing the following actions:
1. Registration or purchase a domain name for future on-line store.
2. Choosing a hosting provider for operation of the web resource.
3. Structuring and information content of the web resource (images, information, design, etc.).
4. Launchingthe web resource and promotingon the Internet to find and get your consumer.
It is possible to create an on-line store on your own, having the basic experience in using of existing on-line platforms with full functionality of services for e-commerce development, as well as by attracting experts in the field of web design and web technologies, if it is necessary to receive an exclusive product (on-line store).
The first steps of any business activity, including those of an on-line store, begin with state registration.
Each on-line store shall have a specific entrepreneur or company, but not just an individual. Therefore, the first requirement for a person which opens an on-line store is to register a legal entity or individual entrepreneur in accordance with the established procedure. At the same time, registration as a taxpayer in the respective tax authorities takes place.
Activity of on-line store without state registration is an administrative offense which provideswhich responsibility – this should always be remembered.
According to legislation of Ukraine, sale of goods, works or services via on-line store is not subject to licensing. Therefore, you do not need to obtain a license when opening an on-line store.
At the same time, it should be remembered that certain types of business activities carried out by on-line store are regulated by the Law of Ukraine “On Licensing of Types of Business Activities” and other normative legal acts that determine the order of state regulation of certain types of business activities.
Such licensed activities include, in particular, retail of alcohol, medicines, any business activities carried out both within and outside the territory of Ukraine.
Responsibility for business activities carried out without a license is the same as for activitiescarried out without state registration.
A trade patent is not required for on-line stores.
According to the Law of Ukraine “On E-Commerce”, it is stated that following information should be placed on the web-site of the on-line store:
- full name of legal entity or name, surname, patronymic of individual entrepreneur;
- address of company or place of registration or residence of individual entrepreneur;
- e-mail address;
- identification code of legal entity or individual entrepreneur;
- if activity requires obtaining the license – it is necessary to determine information on such license, in particular, series, validity and date of issue;
- final pricing procedure concerning Inclusion (non-inclusion) of certain taxes in the value of goods;
- delivery cost.
Indication of information on the name, address, contact details is essential in order for the consumer to be fully aware of who is the contracting party for the transaction, to whom it is possible to request, to arrange a proper interaction.
Such a list of information should also be included when sending e-mails (mailing) with offers to potential consumers.
Intercommunication between on-line store and counterparty is on contractual relations in accordance with the general rules of civil law. But the specific nature of on-line store activity in the web space involves the use of such type of transaction as electronic.
In order to enter into an electronic transaction, name of the good, work or service, as well as theirprice, shall be indicated on the web resource. Placing of this information shall clearly indicate the seller’s willingness to meet the specified requirements for the sale and delivery of goods, work or service.
The Law “On E-Commerce” stipulates that in addition to the mandatory conditions, the following conditions could be specified, in particular:
- procedure for conclusion of the agreement (for example, obligation to make a prepayment is indicated, but such payment is made after seller’s confirmationof receipt of the order);
- possibility and procedure of making amendments to the agreement (for example, the possibility of replacing the good with a similar one in the absence of the order goodatseller’s warehouse);
- manner and procedure for accepting a proposal to conclude an electronic agreement (for example, a proposal is accepted by sending a letter via e-mail or filling in a form);
- procedure for information exchange between the buyer and seller during the execution of the contract (for example, information on correspondence addresses and terms of response);
- procedure for actions, if the buyer provided incorrect information about the conclusion of the agreement as such (placed the order incorrectly) or about its specific terms (for example, incorrect delivery address).
Specific conditions that will be mandatory components of an electronic agreement between the buyer and the seller could be specified in a separate electronic document (file) as the reference for the buyer.
After conclusion of the agreement on the Internet, the buyer shall receive from the seller prompt confirmation of receipt of the order, as well as the terms of agreement to prevent their further unilateral change. Such confirmation may be, for example, an e-mail confirming and indicating the product being purchased, its specifications, prices, terms of payment and delivery, as well as links to other terms of the agreement that may be placed on the web-site of on-line store.
In addition to confirmation of receipt of the order, upon fulfillment of the contractual obligations (for example) the seller shall provide alreadyconfirmation of the transaction, for example, electronic document, receipt, bill or check, ticket, coupon. Moreover, such a document shall include the procedure for exchange or return of goods, refusal of work or service, seller’s address and contact details, as well as warranty obligations.
It should be remembered that relations between sellers and buyers in on-line stores are fully regulated by the Law of Ukraine “On Consumers’ Rights Protection”. In particular, activity of on-line store should be carried out in accordance with the right to use the objects of intellectual property and copyright. This issue has been more and more relevant recently.
Awareness of the possible adverse consequences provided for by the current legal acts in the context of civil, administrative and criminal liability is an important point in organizing the activity of on-line store which helps to carry out its activities in compliance with the rules of legislation.
Compliance with the requirements of the LAW in carrying out the e-commerce is the key to successful operation of the business model in off-line and on-line space.