Category Archives: ecommerce

WHY CHOICE OF LAW IS IMPORTANT IN CROSS BORDER CONTRACTS

Global business means global contracts.  Each of the parties are resident or domiciled in different countries.  As laws and legal language differs from country to country contracts need to reflect language that accommodates and clarifies provisions that might not be familiar in that foreign jurisdiction.  In addition, the cost of litigating in a foreign jurisdiction can exceed all expectations and thus is difficult to quantify.

The choice of law can be dictated by the contract itself, yet the choice of law can also be different than the place chosen for resolution of the dispute.  Thus, a foreign court could be in the position of, for example, an English court interpreting U.S. law.  In this example, parties before an English court are permitted to present experts to assist the court in interpreting U.S. law.  This can become a battle of the experts. 

Where a standard form is used, which is meant to provide a uniform interpretation providing some certainty, however, foreign courts are not necessarily familiar with such universal interpretation and may alter the operation and effect of the underlying agreement.

Contracts provide certainty in business.  Such potential alteration eliminates this certainty and creates risk that is difficult to quantify.  With regard to specific provisions, U.S. courts generally takes a broad view and interpretation of contract provisions and are willing to imply provisions, for example, good faith.  Yet courts in other jurisdictions are not willing to imply what is not spelled out by specific language.  Interpretations also varying with regard to specific legal concepts.  “Gross negligence” is a well-recognized legal concept in U.S. law, however, in England for example, there is no concept of gross negligence, rather this concept is replaced by a notion of serious error or conduct falling significantly short of expectations. 

Whenever possible, check with a lawyer in the foreign jurisdiction to ensure the differences are fully understood and clarified wherever possible.  If possible carefully draft provisions keeping in mind a foreign court may be interpreting the terms should a dispute arise.

 

 

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HOW FATCA REPORTING IS MAKING FOREIGN INVESTMENT CHALLENGING

U.S. citizens and permanent residents are required to report all income wherever earned together with the existence of foreign accounts and certain investments. In an effort to prevent U.S. citizens and permanent residents from avoiding taxation of foreign held assets, the U.S. government has obtained the agreement of many foreign governments to require local financial institutions to report account existence and activity.  FATCA, the Foreign Account Tax Compliance Act requires financial institutions that offer accounts to U.S. citizens and permanent residents identify and report account information to the Internal Revenue Service.  As a result, FATCA has made it increasingly more difficult to open a foreign account since it requires foreign financial institutions to undertake these reporting efforts, at their own expense, effectively making opening such an account extremely difficult and, often, those accounts are now unavailable.

Financial institutions, including, banks, stock brokers, insurance companies, mutual fund companies, are now required to report the following assets owned by U.S. citizens and permanent residents: cash accounts, stocks, bonds, options, derivatives, mutual funds, interests in foreign partnerships, pension plans and any financial instrument that has a foreign issuer, and real estate held by a foreign entity.  Financial institutions that do not participate in will be penalized by a withholding tax of an additional 30% on all U.S. source fixed and determinable, annual or periodic income. Other penalties may also apply making foreign financial institutions shy away from offering accounts to U.S. citizens and permanent residents.

There foreign assets that are exempt from the FATCA reporting requirements. Cash accounts with less than $10,000, gold, silver or other tangible assets held in foreign safety deposit boxes, real estate held in the name of the individual, personal property located in foreign countries provided these are owned directly in the individual’s name and some foreign investments held by a retirement plan, IRA, SEP or 401(k).

Investments in foreign countries are a very good way to diversify your portfolio and can provide excellent returns. If this strategy is attractive to you, consider investing in real estate or obtaining a safety deposit box where you can accumulate gold, silver or other tangible asset, such as diamonds or other gems. Please contact us if you have any questions or would like to discuss your options to discover great returns through foreign investment.

 

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Tips For Drafting Enforceable Contracts

Ensuring your Contracts are Enforceable.

Often when negotiating a contract the parties are on friendly terms and understand the intention behind each provision whether express or implied. The difficulty lies somewhere down the road should the parties dispute the meaning of one or more of those terms.  When drafting a contract you should be keenly aware that it will likely be construed by a court who has little knowledge of the party’s intentions and will have to assess the contractual language objectively, setting aside any subjective notion of the party’s intention.

Although the court is entitled to consider the objective commercial purpose, the origin of the transaction, and often its context in the marketplace. But it is prevented from looking at prior drafts, notes, emails, or other indicia of the negotiations.  The court interprets the contractual language in a clear and natural meaning of the language used.  The court will rely on the express terms, as drafted, providing clarity to those terms that are, perhaps less clear resulting in the dispute.

There is some precedence that the court may recognize implied terms in very specific and highly restrictive circumstances. The court will not conclude a term is implied unless a reasonable reader would consider the term to be so obvious as to go without saying or be necessary for business efficacy.  It seems the reasonableness standard is not applied lightly, rather the exercise of construction applying traditional notions of interpretation.

Thus when drafting a contract you should keep in mind the importance of the language used as well as what might be interpreted by a reasonable reader as obvious and necessary to fulfill the terms of the contract. One example of this might be, termination fees for early termination of a contract.

Here are a few tips:

  • Draft clearly using plain language and eliminate any ambiguity
  • Address issues that may be implied by the circumstances
  • Define the meaning of specific words to avoid confusion later
  • Use recitals to outline the background the more detail set out the more information the court has to determine relevant circumstances
  • When using dates, monetary payments, cure periods etc be very specific rather than language such as “On or before” or “commencing on”
  • When reviewing make certain there are no conflicts between the various provisions
  • Ensure all section/provision number references are correct

Please contact us if you would like any assistance with drafting your contracts, we would be happy to help.

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How changes to UK Consumer Law affects ecommerce businesses?

Effective earlier this year, the UK Consumer Contract Regulations came into force replacing the prior law on distance selling. Ecommerce businesses selling to UK customers will now need to review and update their sales process, terms and conditions of sales and refund policies to comply with the new regulations.

The Regulations were designed to implement the specific provisions of the EU Consumer Rights Directive (Directive 2011./83/EU). The directive applies to all consumer contracts for goods and services, including most particularly, online sales. The new regulations set out the information that must be provided to customers before the goods or services are purchased:

1. A specific description of the goods or services and the length of time any commitment on the part of the customer will last.

2. The total price of the goods or services, or manner in which the price will be calculated.

3. The cost of delivery and if the customer returns items, who will be responsible for the price of any return shipment.

4. Order cancellation details. Pursuant to the new rules the customer has no less than 14 days following receipt of the goods in which to cancel, this is an increase from prior law which mandated only 7 days.. There are exceptions to the 14 day right to cancel, including CDs, DVDs, or software if the wrapping seal is broken, the goods are perishable, tailor-made or personalized.

5. Information about the seller of the goods or services must be provided, including geographical location address and telephone number.

6. If the product is digital content, then the seller must provide information on the compatibility of the content with hardware and other software.

Sellers will no longer be able to charge a customer for an item that is selected for the customer as a pre-ticked box, rather the customer must actively tick the box. Finally, premium rate telephone numbers for help lines or other customer contact during the sales and return periods are no longer permitted.

Bottom line is that ecommerce companies selling to UK customers should review and revise, if necessary the terms and conditions of sale to ensure compliance with the new regulations. Failure to comply may result in contracts being unenforceable and criminal penalties may be imposed. Please let us know if you need any assistance or would like to discuss these new regulations to ensure your compliance.

UPDATE: Canada’s Anti-Spam Legislation is in full swing

This isn’t the first time we’ve addressed Canada’s increasing concern for personal privacy and data security as expressed in legislation. In particular, the Canadian Anti-Spam Legislation (hereinafter “CASL”) has finally come into effect and we’re learning about it as Canadians and those who advertise to Canadians spend time with the CASL.

CASL impacts those who use electronic and digital marketing and acts to protect Canadians from the impacts of spyware, phishing and the like. Violations of are expensive and therefore, companies were on the ball when CASL came into effect this June. If you’d like more information on CASL, please see our post “Coming to Canada this Year: The National Anti-Spam Law.

Networking. Consent can be obtained from word-of-mouth and conversations carried out on the phone or in person. Part of sealing the deal with these requests for commercial information is to obtain all of the requisite information for valid consent in the form of an email after the conversation.

Referrals. CASL allows a company to send one commercial electronic message as a referral. This must include the name of the person who referred the company to the individual. The referring individual and the company must have an existing business relationship and this relationship must be made transparent to the person obtaining the referral.

Social Media. Consent to advertise can be obtained through social media. Twitter, Facebook, Pinterest are crawling with companies wanting to advertise. If consent is given by an individual on a social media platform, the consent is limited to that social media platform. Messages posted on the public face of the platform are not under the jurisdiction of CASL, but private messages are.

Recording Consents. Because CASL requires that a company obtain consent before advertising to someone, the company must be able to prove that consent was obtained. This is easily proved when permission is obtained online or in written form, but permission can also be obtained by oral consent. In these cases, it is recommended that an email be sent after the conversation verifying that consent was given to advertise to them.

These are just some observations made by those engaging with the CASL so far. If you require more information about that CASL and your business in particular, please contact us! CASL is used to help keep the personal data of Canadians protected. For more information about data privacy, please check out our e-book! And here are the links to the Kindle edition on Amazon US and Amazon UK.

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Small to Medium-Sized Business with Data Security Worries?

Data security is not something that only large businesses and corporations need to be worried about. Any business with an online presence must be even more worried about it. However, securing customer and employee data is something that is either passed on to a third party to deal with or is largely ignored because businesses are unaware of their obligation to do protect the data or because it is just too overwhelming and confusing. It is true that data protection regulation and legislation can be confusing especially when having to meet the standards of both domestic and international legislation. A breach in data security could range from the system being hacked and held for ransom or a retired employee’s access not being closed by mistake. The result of misuse, loss or theft of data could be a lawsuit, loss of reputation and business or fines. Whilst these may not be devastating for a large business or corporation such as Google, a repeat offender, to a small to medium-sized business, the result could mean closing the doors.

Owing to these problems faced by the small to medium-sized businesses and even some of the newer larger businesses, two of our top consultants of Interstice Consulting have gathered together their valuable insight to help guide businesses through the process of setting up data security measure to meet the stringent requirements of legislation. Data Privacy: A Practical Guide examines global trends in data security and data privacy, analyses in depth the larger jurisdiction’s legislation and how to be in compliance, touches on business-to-business issues as well as data breach insurance, informs on what to do in the case of a data breach and provides ways to be continually updated. There is no to wait for your book to arrive in the mail because it is available immediately as an e-book only.

This guide will give small to medium-sized business not only the information they need to set up their data protection scheme but will also give them to confidence to be able to reach out to the authors should they have a more specific question or assistance in a jurisdiction not covered by this guide. By starting on the right path to data security for your business, you can assure your customers that they made the right choice to continue their business relationship with you.

To purchase your copy of Data Privacy: A Practical Guide, please follow this link: http://intersticeconsulting.com/ibtt/tradeandtaxation/data-privacy/.

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Choosing to Use Online Targeted Advertising.

Online targeted advertising, such as Google’s Adwords, uses potential customer demographics and behaviour online to specifically target brands, products and services to that individual. When using these services, a business can purchase advertising rights to certain searched words and locations and geographical locations. As courts around the world are finding, many businesses are choosing to use their competitor’s trademark in addition to their own for keyword searches that will trigger their own advertisement to be shown. Depending on where you are advertising and targeting, different rules and judgments will apply to what situations use of a competitor’s trademark as a keyword to activate your advertisement is allowed, because believe it or not, it isn’t always against the law.

In Australia, a high court decision of Google v. ACCC found that Google itself wasn’t responsible if an Adwords customer used an infringing trademark however, did not expand on whether or not the Adwords customer would be held liable for damages if using an infringing trademark.

In the UK, two cases have shone light on situations when it is legal and illegal to use a competitor’s trademark in online targeted advertising. The Interflora case gave a more specific guide in the case of business networks. In this case, Interflora is a vast network of florists that trade under individual names but all are part of the Interflora network. M&S, not a part of the Interflora network of florists, used the Interflora trademark as a keyword indicator for their advertisement. The court found that because of the nature of the business network, it was misleading to the customers that they did not indicate that they were not a part of the Interflora network and thus, the use of the trademark was illegal. In a case involving Amazon.co.uk and Lush, Amazon used Lush’s trademark in Google Adword advertising suggestive that Amazon had for purchase Lush products. The court determined that the average customer would not be able to ascertain without difficulty that the Amazon goods did not originate from Lush.

Whilst these decisions are based on different sets of laws, they do help to guide future customers of such advertising companies on the best manner in which to make use of trademarks. If you are advertising using Google Adwords or a similar company and want to get the most from your advertising or are unsure if your advertising constitutes a trademark infringement, or if you have found that a competing business has been using your trademark then please contact us so that we examine the situation and advise you further.

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Anonymisation of Personal Information, Can It Be Safely Used?

The EU Data Protection Directive applies to information concerning an identified or identifiable person. The principles set out by the Directive indicate that a person, the data subject, is identifiable if personal information, whether or not compiled from a single source or multiple sources, is identifiable from that information.  The principles would not apply to data rendered anonymous, such that a specific person is no longer identifiable even from data compiled from multiple sources and if stored in a manner that could not be re-assembled to identify a specific person, provided the risk of identification is “remote”.

Anonymisation of personal information is the stripping away of all personal identifiers such that the data subject is no longer reasonably identifiable or where the risk of identifiability is remote.  Such anonymised information is useful to identify buying patterns, popularity of consumer products and other consumer behaviour.

Personal information that is no longer needed for other purposes is often anonymised and since it is no longer protected, it is sold or shared with others freely.  There are no regulatory measures that limit retention by businesses or any subsequent use of anonymised information.  The question remains, how remote must the risk of identifiability be in order to ensure compliance with data protection regulation is not required.

Is absolute anonymity possible to achieve?  Or should any use of anonymised information be with made with caution?  Periodic reassessment should be undertaken as new technology becomes available to re-assemble or otherwise re-link anonymised information together to re-identify a data subject.

The European Union Agency for Fundamental Rights, the Council of Europe and the Registry of the European Court of Human Rights have just issued a new handbook on European data protection laws.  This non-binding guide is intended to “raise awareness and improve knowledge of data protection rules in European Union and Council of Europe member states”.  The new handbook sets out a different test for defining when personal data can be said to have been anonymised.

“Data are anonymised if all identifying elements have been eliminated from a set of personal data. …No element may be left in the information which could, by exercising reasonable effort, serve to re-identify the person(s) concerned. Where data have been successfully anonymised, they are no longer personal data.”

The standard then has moved from “remote risk” (of re-identification) to “reasonable effort” (to re-identify).  This seems to lower the bar, as may be expected, given the advances in technology over the last several years.  While the guidelines are not binding per se, it is likely that this definition will be given appropriate weight.

If your business relies on anonymised data, continually measure the risk of re-identification as new technology becomes available.

Please contact us if you have any concerns about use of anonymised data.

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Release of New Domains; Protecting your Brand in 2014

2014 will see the introduction of hundreds of new top level domains.  The popularity of these new top level domains won’t be apparent on release, but should be carefully followed.  Popularity may depend on how closely the business aligns with the descriptive domain.  Among the new domains of particular interest are: .email, .clothing, email, .graphics, .careers, .club, .uno, .ventures, .singles, .bike, .holdings, .plumbing, .guru, and .clothing.

Since registration of the new domains will be made on a first-come-first-serve basis, businesses should keep a watchful eye on the developments and ensure their brands are protected as the new domains are introduced.  Protection of your brand during this expansion will require prior registration on  the Trademark Clearing House’s ‘Domains Protected Marks List’.  Once your trademark is registered any subsequent applications to register domains that are identical or that contain the trademark will not be registered.

Cybersquatting has increased in frequency and breadth, costing businesses thousands of dollars every year.  Once a domain has been recovered from a cybersquatter, the business must pay the domain in perpetuity in order to keep the domain out of the hands others, even if there is no intention to use it.  The introduction of these new top level domains brings a renewed excitement around brands that can use them memorably, but also threatens more profound abuse, including phishing, trademark and copyright infringement, and counterfeit sales.

Consider stepping up trademark enforcement and monitoring.  Respond quickly to potential abuses and develop a “watch” program.  If you need assistance contact us.

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