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47 Managerial L. 168 (2005)

handle is hein.journals/ijlm47 and id is 1 raw text is: E-Commerce: Managing the Legal Risks
Roger Reinsch, U.S.A.
E-Commerce plays an important role in today's business environment, and that role will
continue to grow each year. eMarketer predicts that by 2004, worldwide e-commerce reve-
nues are expected to total USD 2.7 trillion.  E-commerce continues to grow in the United
States. The Census Bureau of the Department of Commerce announced today that the esti-
mate of U.S. retail e-commerce sales for the first quarter of 2004, not adjusted for seasonal,
holiday, and trading-day differences, was $15.5 billion, an increase of 28.1 percent (+2.9%)
from the first quarter of 2003.2 According to a new study by RoperASW and AOL Time
Warner, Europeans spent on average EUR430 on line between August and October 2002.
This compares with an average spend of EUR543 per head in the US over the same period.3
One of the strategic imperatives for an organization is to seek new markets. As a do-
mestic market matures, it is increasingly difficult to generate high revenue and profit
growth. It is a natural extension that e-commerce then has become one of the major meth-
ods that businesses use to expand their markets and sell products and services around the
world. This paper will address the problem that by engaging in e-commerce a business per-
son faces unknown legal risks due to the lack of a comprehensive and uniform set of legal
rules that apply. After addressing each of the legal issues there will be an attempt to provide
prophylactic devices that a business person may use to reduce some of those legal risks.
These prophylactics will not provide one hundred percent protection from the unpredict-
able legal environment of cyberspace, but their use will reduce and control some of the
In this article the legal issues, analysis and recommendations are from a U.S. per-
spective, but much of the material applies to businesses engaged in e-commerce in other
countries because the basic legal problem is that e-commerce is borderless and the vari-
ous laws that might apply were created in an environment that had borders. E-commerce
changes the historical law and physical border relationship because a website is accessible
anywhere in the world, so the actual physical location of the website is somewhat irrele-
There have been numerous articles published in regard to the legal environment of
e-commerce. Most of these discuss some of the legal issues that are created by the border-
less environment of e-commerce, but very few offer specific suggestions to business per-
sons as to what will reduce the legal risks of engaging in e-commerce.
This article attempts to be fairly comprehensive as to the legal issues and offer rea-
sonable suggestions for reducing those risks to help control some of the unknown. How-
ever, all that possible today is to try to reduce the risks. The fact is that many of the legal
issues discussed here will continue to exist until some comprehensive set of truly interna-
tional rules are created. Whether or not such a set of rules will ever be created is highly

Volume 47 Number 1/2 2005


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