Chapter 7 - The Environment of Electronic Commerce: Legal, Ethical, and Tax Issues

In terms of what four elements do legal scholars define the relationship between geographic boundaries and legal boundaries?

power, effects, legitimacy, notice

a form of control over physical space and the people and objects that reside in that space; a defining characteristic of statehood

power

the ability of a government to exert control over a person or corporation

jurisdiction

the idea that those subject to laws should have some role in formulating them

legitimacy

the expression that one set of rules has been replaced by a different set of rules

notice

people receive _______________ that they have become subject to new laws and cultural norms when they cross an international border, even if the are not specifically warned of the changed laws and norms by a sign or a border guard's statement

constructive notice

a promise or set of promises between two or more legal entities - people or corporations - that provides for an exchange of value (goods, services, or money) between or among them

contract

if either party does not comply with the terms of the contract, the other party can sue for failure to comply, which is called a _______________

breach of contract

intentional or negligent action (other than breach of contract) taken by a legal entity that causes harm to another legal entity

tort

a court has sufficient jurisdiction to hear a matter if it has both _______________ and _______________

subject-matter jurisdiction

personal jurisdiction

a court's authority to decide a particular type of dispute

subject-matter jurisdiction

a court has _______________ over a case if the defendant is a resident of the state in which the court is located

personal jurisdiction

one of the most common ways that people voluntarily submit to a jurisdiction is by signing a contract that includes a statement known as a _______________ that the contract will be enforced according to the laws of a particular state

forum selection clause

in the United States, individual states have laws that can create personal jurisdiction for their courts; the details of these laws, called _______________, vary from state to state, but generally create personal jurisdiction over nonresidents who transact businesses or commit tortious acts in the state

long-arm statutes

a tortious act can be _______________, in which the seller unintentionally provides a harmful product

negligent tort

a tortious act in which the seller knowingly or recklessly causes injury to the buyer

intentional tort

courts asked to enforce the laws of other nations sometimes follow a principle called _______________, which means that they voluntarily enforce other countries' laws or judgments out of a sense of comity, or friendly civility

judicial comity

in the United States, business is governed by federal laws, state laws, and local laws; these laws address the same issues in different ways, a situation known as:

conflict of laws

What are the three essential elements of a contract?

an offer, an acceptance, and consideration

a commitment with certain terms made to another party, such as a declaration of willingness to buy or sell a product or service

offer

the expression of willingness to take an offer, including all of its stated terms

acceptance

the agreed-upon exchange of something valuable, such as money, property, or future services

consideration

an _______________ can also be formed by two or more parties that act as if a contract exists, even if no contract has been written and signed

implied contract

most software sold today (either on CD or downloaded from the Internet) includes a contract that the user must accept before installing the software; these contracts, called _______________ often appear in a dialog box as part of the software installation process

end-user license agreements (EULAs)

a web site user can agree to that site's EULA or its terms and conditions by clicking a button on the Web site

click wrap acceptance

a web site user can agree to that site's EULA or its terms and conditions by simply using the web site

Web-wrap acceptance/browser wrap acceptance

many web sites have stated rules that site visitors must follow, although most visitors are not aware of these rules

terms of service (ToS) agreements

although these laws vary slightly, each _______________ specifies that contracts for the sale of good worth more than $500 and contracts that require actions that cannot be completed in one year must be created by a signed writing

Statute of Frauds

most courts hold that a _______________ exists when the terms of a contract have been reduced to some tangible form

writing

any symbol executed or adopted for the purpose of authenticating a writing

signature

a promise to which the seller can be held even though the seller did not make an explicit statement of that promise

implied warranty

a statement declaring that the seller will not honor some or all implied warranties

warranty disclaimer

an issue that arises when an employee of a company accepts a contract and the company later asserts that the employee did not have the authority to do so

authority to bind

a general term that includes all products of the human mind

intellectual property

a limited right to control others' commercial use of an individual's name, images, likeness, or identifying aspects of identity

right of publicity

a right granted by a government to the author or creator of a literary or artistic work; gives the author the exclusive right to print, publish, or sell the work

copyright

the _______________ of a copyrighted work includes copying it to use in specific restricted ways in criticism, comment, news reporting, teaching, scholarship, or research

fair use

an entity becomes liable for _______________ if it is capable of supervising the infringing activity and obtains a financial benefit from the infringing activity

vicarious copyright infringement

an exclusive right granted by the government to an individual to make, use, and sell an invention

patent

a patent which protects a specific set of procedures for conducting a particular business activity

business process patent

a person or company can buy patents from the original investors and then enforce the rights granted by the patents by suing others who use the patents without permission; these persons or companies will often purchase patents that they believe are being infringed, then threaten to sue the infringers in the hopes of extracting a cash settlement

patent assertion entities/patent trolls

a distinctive mark, device, motto, or implement that a company affixes to the goods it produces for identification purposes

trademark

similar to a trademark, but used to identify services provided

service mark

the name (or part of a name) that a business uses to identify itself

trade name

the part of British and U.S. law established by the history of court cases that has accumulated over many years

common law

the part of British and U.S. law that arises when elected legislative bodies pass laws, which are also called statutes

statutory law

the practice of registering a domain name that is the trademark of another person or company in the hopes that the owner will pay huge amounts of money to acquire the URL

cybersquatting

a problem that occurs when someone registers purposely misspelled variations of well-known domain names

typosquatting

occurs when someone other than the domain name's owner changes the ownership of the domain name

name stealing

occurs when owner information maintained by a public domain name registrar is changed in the registrar's database to reflect a new owner's name and business address

domain name ownership change

a technique to protect copyrighted digital works online in which a digital code or stream is embedded undetectably in a digital image or audio file

digital watermark

an electronic mechanism for limiting the number of copies that one can make of a digital work

copy control

a statement that is false and that injures the reputation of another person or company

defamatory statement

when a statement injures the reputation of a product or service instead of a person

product disparagement

in most cases, a person must establish that a defamatory statement causes injury, but most states recognize a legal cause of action called _______________ in which a court deems some types of statements to be so negative that injury is assumed

per sé defamation

the reduction of the distinctive quality of a trademark by alternative uses

trademark dilution

when the perpetrator offers to share the proceeds of some large payoff with the victim if the victim will make a "good faith" deposit or provide some partial funding first and then the perpetrator disappears with the deposit

advance fee fraud

includes threats, sexual remarks, or pejorative comments transmitted on the Internet or posted to web sites

cyberbullying

the practice of sending sexually explicit messages or photos using a mobile phone

sexting

when the company collecting information assumes that the customer does not object to the company's use of the information unless the customer specifically chooses to deny permission

opt-out approach

when the company collecting information does not use the information for any other purpose unless the customer specifically chooses to allow that use

opt-in approach

What are the five most commonly used privacy guidelines?

1. use data collected to provide improved service or other benefits to the customer

2. do not provide customer data to anyone outside of your organization without the customer's express permission

3. give customers a description of what data is collected and provide clear explanations about how the data is used

4. give customers the right to have any of their data deleted

5. train employees in how to keep customer data safe and secure

taxes that are levied by national, state, and local governments on the net income generated by business activities

income taxes

taxes, which include sales taxes, use taxes, and excise taxes, that are levied on the products or services that the company sells or uses

transaction taxes

transaction taxes are also known as _______________ because they arise when the ownership of a property or service is transferred from one person or entity to another

transfer taxes

taxes that are levied by states and local governments on the personal property and real estate used in the business

property taxes

a government acquires the power to tax a business when that business establishes a connection with the area controlled by the government; the connection between a tax-paying entity and a government is called a:

nexus

a tax levied by a state on property used in that state that was not purchased in that state

use tax

a few states have enacted laws that require large online retailers to collect and remit sales taxes in sales they make in their states, even though the online retailers do not have nexus with those states; these statutes are often called _______________ because they are directed at large online retailers such as Amazon

Amazon laws

many states have joined together to create the _______________, which would simplify state sales taxes by making the various state tax codes more congruent with each other while allowing each state to set its own rates

Streamlined Sales and Use Tax Agreement (SSUTA)

a tax levied on products as they enter a country

tariff/customs duty/duty