NYARARAI GOMBA

LML4810
ASSIGNMENT 1
Electronic commerce is about doing business electronically. It is based on the
processing and transmission of data, including text, sound and video. It encompasses
many diverse activities including electronic trading of goods and services, online
delivery of digital content, electronic fund transfers, electronic share trading, electronic
bills of lading, commercial auctions, online sourcing, public procurement, direct
consumer marketing, and after-sales service.1 E commerce through utilization of the
World wide web cuts the time lag between ordering, invoicing and delivery. E commerce
allows the vendor to have a global presence and ensures the buyer has more choice
and access to goods.
According to the Green paper 2the following are the subsets (types) of e-commerce:
Business to business (B2B): focusing on integrated values chains supplier and
customer base; Business to consumer (B2C): focusing on online shopping; Government
to business (G2B): focusing on e-procurement; Government to consumer (G2C):
focusing on services and programs like government online.
E commerce has certain regulatory challenges that it brings :
Consumer Protection and Privacy:
A critical legal challenge in electronic commerce relates to consumer protection and
privacy. As individuals engage in online transactions, they are required to divulge their
personal and financial information to e-commerce platforms, raising concerns about
data security, privacy breaches, and unauthorized use of consumer data. The collection,
storage, and utilization of consumer data by e-commerce businesses have implications
for privacy laws and regulations. Ensuring consumer protection in e-commerce
transactions is essential to build trust and confidence in online shopping. Issues such as
fraudulent activities, misleading advertising, unfair contract terms, and non-delivery of
goods or services pose legal challenges that necessitate robust consumer protection
laws and enforcement mechanisms in the e-commerce domain.
Taxation and Regulatory Compliance:
The intersection of e-commerce and taxation presents complex legal challenges for
governments, businesses, and consumers. The borderless nature of online trade
complicates the application of traditional tax laws and regulations, leading to concerns
about tax avoidance, tax evasion, and the erosion of tax bases. The determination of
nexus, the allocation of taxing rights, and the collection of value-added tax (VAT) or
sales tax in cross-border e-commerce transactions require international cooperation and
consensus to address the challenges of tax compliance in the digital economy. The
traditional source rules, as developed by the South African courts, emphasize the
activities and physical presence of the taxpayer. Schreiner JA’s statement in Epstein

1
Ulrike Baumõl, Thomas Stiffel & Robert Winter, A Concept for the Evaluation of E-Commerce-Ability, in Julie
Mariga (ed), Managing E-commerce and Mobile Computing Technologies (2003), 2-4.
2
Green paper at 9.
that the ‘taxpayer’s income originates not where he personally exerts himself but where
the business profits are realized.3 The challenge posed is that tax laws need to be
reavaluated to accommodate e-commerce the source based system mainly based on
connecting the income with the geographical location were the transaction occurs
needs to be revisited.
Lack of regulatory Framework: Africa is affected by an acute shortage of
competencies in the ICT sector, the shortage of qualified personnel is evident across
the continent to provide the support required for individuals to adopt E-commerce. Most
of the qualified personnel are more of hardware specialists and are not competent in
terms of programming. An inadequate legal framework for transacting business online
leaves African business people and their potential business partners or customers
worried about not having adequate remedies or recompense or even the means of
seeking redress where a particular transaction goes wrong. Several online scams and
online frauds have been reported and this has negatively affected the perception
towards online transactions which are generally perceived as being unsafe and
therefore people may prefer the slower conventional ways of conducting business.
Intellectual Property Rights:
The digital nature of e-commerce raises complex legal issues concerning intellectual
property rights. In the online marketplace, the unauthorized use of trademarks,
copyrights, patents, and trade secrets is a prevalent concern, leading to infringement
disputes and legal conflicts. E-commerce platforms are faced with the challenge of
policing intellectual property violations by third-party sellers and ensuring compliance
with intellectual property laws. The emergence of digital content distribution and
streaming services in e-commerce has brought forth new challenges related to
copyright infringement and digital piracy. The unauthorized reproduction, distribution, or
public performance of copyrighted works through e-commerce channels has significant
implications for the rights of content creators, copyright holders, and the digital economy
as a whole.
The application to electronic communications of statutory provisions which mandate
paper or paper-based concepts such as original, writing and signature. The challenge is
that tradional paper based transactions are deemed to be safer and more conventional
as opposed to the digital trail which is hard to trace.
In conclusion, the advent of electronic commerce brings about several challenges that
require to be looked into and also requires proactive measures to address wholistically.
Jurisdictional issues, consumer protection and privacy, intellectual property rights,
contract formation and enforcement, taxation, and regulatory compliance are among the
key areas where e-commerce intersects with the legal framework. As e-commerce
continues to evolve and shift the global economy, policymakers, legal practitioners, and
businesses must work together to develop robust legal solutions that promote trust,

3
Epstein supra note 23 at 234 in the SATC report.
fairness, and accountability in the digital marketplace. By resolving these legal
challenges, the potential of e-commerce to drive economic growth, innovation, and
inclusivity can be realized while safeguarding the interests of all stakeholders involved
in online trade.

1(b)
In South Africa , ecommerce transactions are regulated by the Electronic
Communication and Transactions Act.4 The ECT Act was assented into law on the 31st
of July 2002.5 The ECTA seeks to facilitate and regulate electronic communications and
transactions in South Africa by removing and preventing barriers to electronic
communications and transactions, and developing a safe, secure and effective
environment for the consumer, business and government to conduct and use electronic
transactions. The ECT addresses ecommerce challenges by promulgating legislation
that enables, promotes, acceptance and growth of electronic transactions.
Chapter I of the ECT Act: this part clearly articulates the objectives of the act. It
provides legal recognition of electronic transactions, digital signatures, and electronic
contracts. The Act also addresses issues related to data messages, electronic
signatures, and the liability of network service providers.
Chapter II of the ECTA: Maximising Benefits and Policy Framework
The objective is to maximize the benefits the Internet offers by promoting universal
access in under serviced areas and ensuring that the special needs of particular
communities, areas and the disabled are duly taken into account. The ECT Act required
the Minister to develop a 3-year national e-strategy for the Republic by no later than 30
August 2004. This was to, then, be submitted to the Cabinet for approval, which, on
acceptance, would declare the implementation of the national e-strategy as a national
priority. The national e-strategy was required to set out, the electronic transactions
strategy of the Republic, programmes and means to achieve universal access, human
resource development and development of SMMEs and ways to promote the Republic
as a preferred provider and user of electronic transactions in the international market.

Chapter III of the ECT Act: Facilitating Electronic Transactions

Chapter III aims to remove of legal barriers to electronic transacting and is comprised of
2 parts.
Part 1 provides for the legal requirements of data messages (a form of electronic
communication). Various sections are drafted from the perspective of where a

4
Hereafter referred to as ‘the ECT Act’
5
ECT Act 24 of 2002.
requirement is prescribed by “law”. It also attempts to create technology neutrality in
respect of the legal treatment of data messages.
Part I of the ECT legally recognizes electronic documents and recognizes that electronic
documents and signatures can serve as the electronic functional equivalent of the
paper-based counterpart. The Act provides a legal framework for the use of digital
signatures as a means of authenticating electronic documents. Provision is made for
the legal recognition of electronic signatures and the ECT Act does not prescribe what
type of technology must be used. Examples of electronic signatures include a typed
name at the of an e-mail, a scanned image of your handwritten signature pasted into a
Word document and a digital signature. The ECT recognizes that information can be
incorporated into a document through the use of hyperlinks and that contracts can be
performed by machines functioning as electronic agents for parties to an electronic
transaction. Businesses and individuals can now enter into contracts and conduct
transactions electronically with the confidence that their electronic records will be legally
recognized.
Chapter VII provides Consumer Protection. The ECTA includes provisions that are
designed to protect consumers engaged in electronic transactions and to safeguard
their privacy. It addresses the challenges in 1 (a) by mandating suppliers of goods and
services to provide consumers with a minimum set of information including the price of
the product or service, the name, contact details, and a brief description of the business,
and the right to withdraw from an electronic transaction before its completion. Such
legislation protects the consumer from any fraudulent activities. A cooling off period is
provided for in the chapter which allows the consumer to cancel certain types of
transactions concluded electronically without incurring any penalty. The act further
addresses the challenge of cybercrimes by protecting consumers from spam. It gives
the consumer the right not to be bound to unsolicited communications offering goods
and services. It makes it an offence for an individual to continuously send spam
whereby the consumer has refused such communications.
Chapter VIII: Personal Information and Privacy Protection
This Chapter provides a voluntary arrangement for protection of personal information.
Personal information includes any information capable of identifying an individual.
Collectors of personal information (data collectors) may subscribe to a set of universally
accepted data protection principles. The thought behind this section was that
consumers would prefer to deal with only those data collectors that have subscribed to
the recorded data protection principles. The challenge with the section is that the
sanction for breach of these provisions is left to the parties themselves to agree on.
Subscription to these principles is voluntary due to the fact that the South African Law
Commission’s investigation into privacy in South Africa.
Chapter X: Domain Name Authority and Administration
The ECT Act provides for the legal requirement for the creation of a Domain Name
Authority (the .za Domain Name Authority (Zadna) to assume responsibility for the .za
domain name space. All citizens and permanent residents of the Republic are eligible
for membership of the Authority and must be registered as members upon application
and on payment of a nominal fee. Registering the domain name gives the person or
company a personality and recognized identity and makes information about the owner
accessible to the public. This creates legal liability on the owner of the domain and also
fosters trust.
Chapter XI Limitation of Liability of Service Providers
Chapter XI deals with the limitation of the liability of service providers or intermediaries
in cases where they may otherwise have been liable for third party data hosted on their
servers. It creates a safe harbor for service providers who were previously exposed to a
wide variety of potential liability by virtue of merely fulfilling their basic technical
functions. The service providers may seek to limit their liability where they have acted
as mere conduits for the transmission of data messages. In each situation, the ECT Act
seeks to provide for specific requirements that the actions of the service providers must
meet before the clause may be invoked to limit his or her liability.

Chapter XIII ‑ Cyber Crime

Chapter XIII of the ECT Act makes the first statutory provisions on cyber-crime. The Act
seeks to introduce statutory criminal offences relating to the following: unauthorized
access to data (hacking and trading in passwords used to commit an offence).The ECT
Act prescribes the penalties for those convicted of offences which render a person liable
to a fine or imprisonment for periods not exceeding 12 months in certain circumstances
or five years in certain circumstances. Any person aiding or abetting another in the
performance of any of these crimes will be guilty as an accessory.

Although the ECT has ensured that significant progress is made in addressing the
challenges posed by electronic commerce, certain limitations and challenges are still
evident. Enforcement of the Act is difficult in the constantly evolving digital environment.
The enforcement of electronic transactions and the identification of parties involved in
electronic communications is difficult, particularly in instances where disputes arise.
Additionally, the Act may not fully address emerging issues such as electronic
currencies, blockchain technology, and other innovative forms of electronic commerce.
In conclusion, the ECT has played a positive role on the uptake of e-commerce in South
Africa. The legal recognition of electronic transactions, the regulation of electronic
communications, and the protection of consumer rights have contributed to the growth
and development of electronic commerce in the country. Technology continuously
evolves at a fast pace it is therefore pivotal that the acts are constantly amended and
new act promulgated to keep up and regulate technology. The Act has provided a level
of legal certainty and security that has bolstered confidence in electronic commerce and
has facilitated the expansion of online business activities.
 Bibliography
A green Paper on Electronic Commerce for South Africa, November 2000
Electronic Communications and Transactions Act, 2002.
Ndonga D, ‘E-Commerce in Africa: Challenges and Solutions’, Australia