a saudi company located in saudi arabia need's the folwing · Setting up of Legal Entity in 9 countries as listed. (Business Nature : Commercial Services) · Legal Formalities To be handled and executed and complete registration process · Minimum Capital Requirement for Limited Liability Company · Representation - Sole or With Local Partner · Government Fee · Duration for Registration · Foreign Taxation & Zakath · Office Rental · Lawyers Fee Countries Proposed: · Indonesia · Egypt · Kuwait · Pakistan · Iran · Philippines · Yemen · Malaysia · Sri Lanka,

Yasser 

MOBILE PORNO

HOW TO PROTECT YOURSELF IN CYBERSPACE

Introduction

Internet is a global connection of networks and, therefore, it is difficult to exercise control over the Internet. Yet, control is necessary. To exercise maximum control, it is important to take actions at three fronts simultaneously,

1.     Legislation: laying down the rules and regulations as well as the policy;

2.     Technology: developing software programs;

3.     Information and education: making people aware as to the dangers of the Internet

        and the steps the legislative, executive, and the judiciary should take.  Also, raising awareness in society.

Legislation must be enacted so that Internet offences are punished. Fortunately, amendments to the Surinam Criminal Code have made some Internet offenses punishable. In addition, the government should lay down policy guidelines for ISPs (Internet Service Providers) to make cyber space safer.  For instance, ordering that certain software is installed as a filter to minimize the visiting of undesired sites such as those that incite to commit suicide or child pornography.

Regarding technology, software programs must be developed to make cyber space safer, but hackers are not just sitting around doing nothing. That is why this will remain an  ongoing activity to work with up to date software at all times and to continue monitoring that the software used is still valid. 

The most important of the three fronts is information and education; that is, awareness-building. The more aware people are of the threats and how to deal with these, from the President to the youngest Internet visitor, the better they will be able to safeguard themselves to maximally benefit from the use of the Internet and suffer minimal harm. Promoting cyber ethics, by encouraging people to make the “right choices” when searching for information on the Internet or establishing contacts via the Internet. 

In 2007 the Surinamese society was confronted with a new phenomenon.

A pornographic movie made by Surinamese youngsters was circulating on mobile phones. In January 2007, the first mobile phone movie circulated in Suriname whereby Surinamese youngsters were involved in pornographic behavior. In February, April, and November there were again new movies in circulation. In June 2007 there were two cases of which one was prosecuted. In January 2008 there were six new cases of which one was also prosecuted; four in February and one in March and April.  This situation was of great concern for the Surinamese community in general and, in particular, the government. It was even discussed in the Parliament. One person undertook an awareness campaign aimed at tackling this issue in a sensitive way. Two months after the start of this campaign, to be more specifically, after April 2008, up until today there were no longer pornographic movies of Surinamese youngsters in circulation on mobile phones. This paper, therefore, deals with the question whether or not it was because of the awareness campaign undertaken that it came to an end, eventually. Hereinafter follows an outline of the results with regard to this campaign.

Awareness project “Mobile Porno? Count me out!!! And its impact

This project was initiated by an employee of TELESUR (incumbent Telecom operator), Mrs. Marijke Etnel – Cairo. She has been working for TELESUR for over 20 years. When she was confronted for the first time with such a porn film, as a mother of three daughters, many things went through her mind. What’s happening with our youngsters, what can be done about it? Judge, condemn? Why they are doing it? That is when she got an idea! If you want to solve a problem, you have to find the root cause first. What urges a child to do something like this? Then, discuss it with your target group (youngsters at school) and find a solution together. In order to reach your target group you need to go to the schools. You need to have an open ear for the youth. Listen to them and let them know that we care about them. She thought it would be a good idea to go to the schools with a panel; have sessions at schools with the panel members, parents, teachers, neighborhood manager, and anybody who wanted to join.

This plan was shared with the Managing Director of TELESUR who fully supported this initiative. Given the complexity of this issue, she could not do it on her own. The project was thus undertaken in joint cooperation with TELESUR, the Police Force and the Ministry of Education.

Structure of the project

A meeting with the school management; afterwards, a talk with the children alone.

Why do you do it? What are the consequences? Talk with each other open and honestly. What makes a boy or girl take part in mobile porn? You get different answers because different factors and aspects lead to this phenomenon. No adults, teachers, parents are present during this stage. The children get the chance to vent themselves. What is shared within the group is confidential. The session is held at a designated school.

The session

A session like this is simple and much will be improvised. 30 pupils participate in the session. They are wearing a t-shirt saying: porn is not cool.

The panel consists of the following persons:

Central:           the Managing Director of TELESUR, and a representative of the Police

                        Force of Suriname (KPS)

Alternating:     a priest or minister

                        the head of the school

                        a social worker

                        a representative of the National Youth Parliament

                        a role model

Guests:            five parents whose children attend that school

five teachers

2 neighborhood managers from the area of the school

10 other persons

During a session, 2 to 3 questions are asked. Mobile porn is not discussed yet at this stage. We get to the subject subtly. The children get the chance to answer questions and to express their opinion. After that, the panel members, parents, teachers get the chance to give their opinion. The discussion is in a relaxed atmosphere, perhaps with a drink and a snack.

The Project

The project started on February 29, 2008, at Mulo Latour, a secondary school. Noteworthy, most of the schools are schools for education at secondary level. There was an introductory talk with 350 pupils.

In the panel were the Managing Director of TELESUR, a representative of the Police Force, the Head of School and Vice Chairman of Parliament.

The 3 questions that were asked:        Can the situation at home be the reason for

                                                            children making bad choices?

                                                            Are children today really materialistic?

                                                            Who is responsible for joining in? the boy or the

                                                            girl?

The pupils’ participation was really good. There were heated discussions.

The press was very well represented.

After this first school ten other secondary schools participated in this project. At every school there were questions asked to made children think about the subject and draw there own conclusions.

Apart from the schools that were included in the project, Major Kolf and Mrs. Etnel also held other sessions on Educational days of companies, schools and other institutions where youth participated.

Evaluation

The response from the community was very positive. The main objective was achieved for 100%, namely to make the children more aware of their self-respect, making the right choices, and to say no to mobile porno. On all the schools questionnaires were submitted to the pupils. The result of the survey is the following:

76%   children feel that they do not have a stable situation at home

69%   are living under sexual pressure

78%   are being abused by their parents

79%   are neglected

58%   are neglected because their parents spend too much time in casinos

80%   do not have any social supervision at home                         

62%   get derailed because they are looking for love and affection. 

In the meantime a foundation was established from the project, namely: M.A.T.I. fu te go, which stands for moral, attitude and integrity for a better community for the Suriname youth.

The project had a great impact on the community. It even received reactions from people abroad. Other projects are already in the making to make children and parents aware of the problems that our children are dealing with. Children are learning how to protect themselves against sexual molestation.

The foundation M.A.T.I. fu te go, with chairperson Marijke Etnel  wants to be a true friend (mati) for all Surinamese children!

Conclusion

As indicated before, two months after the start of this campaign there were no longer pornographic movies made by Surinamese youngsters circulating on mobile phones.

The lesson learnt from the project of Mrs. Etnel is that, indeed, the most important front to keep ourselves and children safe is by educating them, raise the awareness of the pitfalls they can encounter in life and on the Internet, give them a sense of pride and self-respect. Because of the broad media coverage the Surinamese society was now thinking of and discussing with each other. The youngsters became aware of the consequences and were better equipped to make the right choice.

Marjorie S. Rieskin

Despite its seeming anonymity, Internet use can be traced by government authorities and private companies. Online advertising companies, search engines, and, in general, those engaged on Internet advertising collect Internet users’ searching data.  This is called behavioral advertising. After you searched for classical music; did you received an e-mail offering the best classical music selection? Well, this is precisely what behavioral advertising does. It traces people’s Internet use so it can be utilized on advertising campaigns. Is behavioral advertising an invasion of privacy?  No yet.  The United States (U.S.) Congress is considering a bill that would regulate behavioral advertising. The U.S. Federal Trade Commission- FTC- already adopted some guidelines on this issue. Likewise, the New York legislature introduced a bill in 2008 that regulates this practice; this was the first U.S. state to adopt measures against this activity. This article offers general information on behavioral advertising in the United States.

U.S. Congressmen are drafting a bill that would regulate behavioral advertising.  The bill requires companies to disclose users that their Internet activity is being tracked for behavioral advertising purposes.  Congressmen involved in drafting this bill have stated that Internet users must know who is collecting their information, what information is being collected, and how that information is being used.  These measures will empower Internet users with control over their privacy.  Some of the Congressmen involved in this bill are Rep. Rick Boucher, D.-Va and Rep. Cliff Stearns, R.-Fla.  Critics say this bill may prove ineffective because advertising campaigns using behavioral advertising may be launched from foreign countries so the strict U.S. rules are avoided.  Online advertising companies oppose the bill claiming that it does not benefit consumers. Consumers’ opinions are divided.  

The U.S. FTC has been involved in the behavioral advertising issue for long time.  The FTC defines behavioral advertising as “the marketing technique [that] relies on sophisticated technology to analyze consumers’ online activities and provide advertising identified as relevant to their interests.”  In 2007, the FTC proposed some principles regarding behavioral advertising.  For instance, (1) websites collecting information for behavioral advertising purposes should provide a clear and conspicuous statement informing users that data is being collected for advertising, and these sites should provide consumers the ability to opt-in; (2) company’s websites collecting consumers’ data should provide reasonable security for that data and should only retain data as long as it is necessary to fulfill a legitimate business or law enforcement purpose; (3)  companies collecting and using consumers’ data should obtain affirmative consent before using data for purposes other than the ones specified when collecting the data; (4) collecting sensitive consumer data may be prohibited rather than subject to consumers’ choice. Yet, the FTC invited public comments on what may constitute sensitive data.  The FTC has issued a report on behavioral advertising.  This report collects public comments on the subject and provides suggestions.  See report at http://www.ftc.gov/opa/2009/02/behavad.shtmhttp://www.ftc.gov/opa/2009/02/behavad.shtm.

New York is the first state issuing a bill that regulates behavioral advertising within its state boundaries.  The bill was called the Third Party Internet Advertising Consumers Bill of Rights Act of 2008.  The bill establishes strict requirements for the use of behavioral advertising.  For instance, no sensitive medical, financial data may be collected; data collected must be protected; online privacy guidelines must be imposed; special rules are set for third party companies collecting consumers’ data; consumers should be aware of the data collection, use, delivery, and reporting policies and practices of the company collecting data; and concrete rules on third parties use of merged data (data transferred).   The bill authorizes civil actions against those companies that violate this law, with a maximum penalty of US$1,000 per violation or $3,000 when a company engages in a pattern of violations.  

Behavioral advertising will become the most common topic for the years to come.  Tracking Internet users’ activity is the goal of any company offering products or services.  Yet, consumers are entitled to privacy and governments should step in and protect individual’s privacy.  U.S. consumers have enough with turning the TV and enduring these innumerable “paid programs.” Should we endure innumerable spam after searching the Web?  There must be a middle line and hopefully it will be reached.  

A Ponzi scheme is a pyramid-type investment where investors are paid profits from newly attracted investors and offered large returns on their principal investments. Most Ponzi schemes are not supported by any underlying business venture; it derives benefits from other investors but not from a business undertaking.  Thus, those on the top of the investment are the ones receiving most of the benefits, and obviously, they are the brilliant minds behind the scheme.  The goal is to recruit as much investors as possible so everyone in the pyramid can receive returns. When the pyramid collapses, investors lose their principal investment. The brilliant minds behind these schemes know that sooner or later investors will lose their principal. Thus, when authorities confirm, with evidence, the existence of a Ponzi scheme, a presumption of actual fraudulent intent is applied.

The Security and Exchange Commission (SEC) is the United States (U.S.) authority that investigates and files law suits against those conducting Ponzi schemes.  On July 9, 2007, SEC filed a lawsuit against a company involved in a Ponzi scheme on the Internet.  Defendants were fraudulently selling unregistered securities via the Internet. Defendant's assets were frozen by a District Court order and defendants, through their receiver, filed petitions under chapter 11 of the U.S. Bankruptcy Code. CEP Holdings Inc., v. All Defendants in the Adversary Proceedings, CASE Nos. 07-71810 and 07-71813 (Bankruptcy Court, Northern District of Georgia).  Defendants operated three websites, colonendparenthesis.com, coasting88.com, and CEPcoast.com, through which they invited the public to participate in investment programs.  Initially, investors paid through PayPal or E-Gold, but later payments were made through accounts opened at CEP trust (CEP.com), an online payment processor. The website did not call these payments "investment," but they did promise high returns on the principal paid by participants. Indeed, at trial, defendant did not contest that their activities constituted investment activities.  Participants transferred funds to CEP.com and promised daily earning of 2% or 60% per months on deposited funds, for a period of six to twelve months.  Earnings were to be credited to the participants' account in CEP.com. The three websites mentioned above offered different clever ways to entice participants.   

On trial, it was discovered that none of these three websites or business had financial statements, or supporting ledgers, or balance sheets, no real estate property, and none of them had bank accounts.  Monies entered CEP trust account and then were transferred to defendants as profits or earnings. Over U.S. $17 million were deposited in these accounts and transferred to defendants' accounts as earnings.  It was also discovered on trial that defendants had no source of income other than these "earning" transfers from the Ponzi scheme websites.

SEC proved with preponderance of evidence that defendants operated a Ponzi scheme through these websites and that these websites did not represent legitimate businesses. Due to this holding, the bankruptcy held that defendants were insolvent within the period of time the operated this Ponzi scheme.

The name of the Ponzi website or how these websites call the investment, "membership fee," or "registration fee," is irrelevant for purposes of SEC scrutiny.  In this case, defendants did not call participants' fees investment and had notices informing participants that this was not a Ponzi scheme website. Yet, the fraudulent activity is what the law sanctions, no matter how wisely the Internet transaction is structured and the name assigned to participant's investment funds.  Once, it is proven that the transaction constitutes a Ponzi scheme, fraudulent intent is presumed.

European Convention on Human Rights v. Privacy Violations and Data Held by Internet Service Providers

European citizens claiming violation of privacy have looked for legal remedy on articles 8 and 13 of the European Convention on Human Rights when their domestic legislation does not provide effective response to their claims.  Although member states have adopted the European Convention on Cybercrime and directives on privacy, certain violations of privacy arising out of the use of the Internet remain unpunished due to legal technicalities. In these cases, individuals seek readdress before the European Court of Human Rights; specifically, articles 8 and 13 of the convention.  These articles provide an example of a European Union case involving data held by Internet Service Providers (ISPs), Internet calumny, and violation of privacy.

In KU v. Finland [2008] ECHR 2872/02, the European Court of Human Rights held that there was a violation of articles 8 and 13 of the Human Rights Convention when an ISP refused to provide the identity of an individual who published a sexually explicit advertisement (Ad) involving a minor.  An unidentified individual published an Ad on an Internet dating site on the name of a 12-year old minor.  The Ad mentioned the minor’s age, date of birth, physical characteristics, phone number, and had a link that lead to the minor’s picture.  The Ad stated that the minor was looking of intimate relationship with a boy his age.  Some people responded to the Ad by calling the minor. The minor’s father reported the incident to his country’s authorities and initiated legal action.  The father’s minor requested the ISP information on the individual publishing the Ad but the ISP refused to provide this information invoking privacy directives.  The domestic courts in Finland, where the action took place, held that the Ad was an act of calumny and, as such, the authorities did not have the legal tools to force ISPs to disclose this information without violating privacy laws.  The minor’s father sought legal remedy before the European Court of Human Rights (ECHR) invoking violation of articles 8 and 13.  Despite Finland’s opposition to this violation, the ECHR interconnected articles 8 and 13 of the Human Rights Convention with other European laws and concluded that there was a violation of article 8 as applied to the specific facts of this case.

Article 8 of the Human Rights Convention Article 8 provides that “[E]veryone has the right to respect for his private and family life, his home and his correspondence.” This article also establishes that “[T]here shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others."  Article 13 provides that "[E]veryone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity." To reach its holding, the ECHR combined these two precepts with the following European laws.

1. The Council of Europe adopted Recommendation No. R (89) 9 on Computer-Related Crime.  This recommendation recognizes the need to respond rapidly and effectively to new technologies crimes.  Also, the Committee of Ministers adopted Recommendation No. R (95) 13 concerning criminal procedure law for information technology crimes.  Recommendation No. R (95) 13 impose obligations on service providers who offer telecommunication services to the public through public or private networks, to provide information to identify users when ordered by competent investigating authority. These recommendations also state that domestic legal systems allow investigating authorities to order persons to submit data under their control in computer systems.  Investigating authorities should have the power to order persons to provide data in computer systems under their control and to provide all necessary information to enable access to a computer system and the data therein. 

2.  The ECHR also mentioned the European Convention on Cybercrime when deciding this case.  The court stated that the Cybercrime Convention requires member states to adopt legislative measures to establish the powers and procedures for criminal investigations regarding criminal conducts committed through the use of computer systems, and the collection of electronic evidence. Article 12 (1) and (2).  Article 18 of the Cybercrime Convention establishes that member states may empower public authorities to order submission of public data under their control and stored in computer systems or any other electronic means; and order “a service provider offering its services in the territory of the Party to submit subscriber information relating to such services in that service provider's possession or control.”  Article 14 and 15 describes the type of subscribers’ information that can be ordered. This includes, telephone numbers, names, addresses, billing and payment information, etc.

3. The ECHR mentioned the "Guidelines for the cooperation between law enforcement and internet service providers against cybercrime," adopted at the global conference "Cooperation against Cybercrime" held in Strasbourg on 1-2 April 2008.  These guidelines allow cooperation between investigating authorities and ISPs against cybercrime.

4. The United Nations General Assembly resolutions 55/63 of 4 December 2000 and 56/121 of 19 December 2001 on "Combating the criminal misuse of information technologies" were quoted by the ECHR.  Resolution 55/63, in particular, recommends that “[L]egal systems should permit the preservation of and quick access to electronic data pertaining to particular criminal investigations."

5.  Directive 2006/24/EC on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks, amending the previous data retention Directive 2002/58/EC are other European laws that require ISPs to make available retained data for purposes of criminal investigations.  The ECHR particularly quoted the following article 5 provision: "[M]ember States shall ensure that the following categories of data are retained under this Directive: (a) data necessary to trace and identify the source of a communication: ... (2) concerning Internet access, Internet e-mail and Internet telephony: … (iii) the name and address of the subscriber or registered user to whom an Internet Protocol (IP) address, user ID or telephone number was allocated at the time of the communication."

Therefore, the ECHR found enough legislation to support member states authorities’ request of data from ISPs when it is required in the course of a criminal investigation.

The IRC § 162(a) allows deductions for ordinary and necessary expenses incurred in carrying on any trade or business.  Yet, IRC § 262 does not allow deductions related to personal, living, or family expenses, the June-8-notice states.  Also, the notice says that IRC § 274 allows deductions for listed property provided that taxpayer substantiates these deductions.  Cell phones and any other telecommunication devices are considered listed property under the IRC.  Cell phones are considered "fringe benefits" under the IRC listed property items, and they may not be regarded as part of the employee"s gross income when they constitute a "working condition fringe." In other words, employers may deduct employee's business use of cell phones as working conditions fringe, instead of including them as employees' fringe benefits. Employers, however, would need to substantiate deductions of working conditions fringe under current complex rules. Three are the tests that include the proposed IRS rules to substantiate deductions of employer-provided cell phones (as working condition fringe).

The first test is called Minimal Personal Use Method. This test includes two proposals to consider employer-provided cell phones as business usage: (1) the entire amount of the employee's use of the employer-provided cell phone would be considered for business purposes if the employee can state and prove with sufficient records that the employee maintains and uses a personal (non-employer provided) cell phone for personal purposes during the employee's work hours; (2) an amount of minimal personal use would be defined to disregard it from the employer-provided cell phone.  For example, the notice says, "'minimal' could be defined by reference to a particular number of minutes of use or for certain personal purposes."

The second test is called the Safe Harbor Substantiation Method.  Under this method, the employer may consider certain percentage of the employee's use of an employer-provided cell phone as business usage.  The remaining amount of use would be considered personal. The IRS proposed a business use percentage of 75% percent.

The third test is called the Statistical Sample Method.  This method proposes statistical sampling techniques to measure employee's personal use of employer-provided cell phone. The employer would multiply the percentage time value of each employee's total usage to determine the value of personal usage. The remaining amount of the employee's usage would be deemed for business purposes.

The IRS is expected public comments on these three test methods; specifically, the IRS wants answers to the following questions:

1.      "The specific provisions that should be required to be included in an employer's written policy prohibiting personal use of employer-provided cell phones;

2.       The types of employee records sufficient to establish that the employee maintains and uses a personal (non-employer-provided) cell phone for purposes of the first proposed minimum personal use method contained in this notice;

3.       How to define a specified amount or type of "minimal" personal use (e.g., a maximum number of minutes of use or a list of acceptable personal uses) that should be disregarded in determining the amount of personal use of an employer-provided cell phone for purposes of the second proposed minimum personal use method contained in this notice.

4.       The business use percentage that should be applied in the proposed safe harbor substantiation method contained in this notice and the data and rationale upon which it is based;

5.       The methods currently used by employers to determine the fair market value of an employee's use of an employer-provided cell phone; and

6.       Whether a simplified method of determining the fair market value of an employee's use of an employer-provided cell phone would be appropriate, and, if so, suggested simplified methodologies for determining such fair market value."

Comments may be sent before September 4, 2009, IRS, attn: CC:PA:LPD:PR (Notice 2009-46), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

 The first method could be a great solution for large corporations. Yet, for small businesses and one proprietor businesses, the second method may be more advantageous.  Small companies may use just one cell phone for business purposes and for personal use.  This method is a clear rule on the percentage that would be allowed for deductions.  The third method does not seem very practical and may be too complex to apply for both large corporations with several executives using employer-provided cell phones, and for small businesses that do not need these complex rules.

1.         Introduction

Purchasing goods and/or services online is quick, convenient and allows the purchasing or selling of services and/or goods outside the borders of a country.[1] The online parties, especially the purchaser, generally known as the consumer,[2] is seldom concerned with the meaning of the term, 'e-commerce'[3] and the legal ramifications of online purchasing but is more interested in the advantages[4] of cyber shopping that can vary from purchasing a plane ticket to books or accommodation to software.

However, once the parties encounter a problem with the online purchase, they look for direction from the commercial law to provide a solution to address the legal pitfall.

This discussion will be an overview of the pitfalls that may be encountered with online purchasing within the context of the South African law. The discussion relating to the law governing online purchasing in South Africa is not only of importance to a non-South African consumer who trades with a South African based website, but it will also affect a website owner who wishes to trade outside the borders of his country with South African consumers.

The discussion focuses on the online contract of purchase between a consumer (offeror) and an merchant and vendor and/or electronic supplier (offeree) of goods and services, so called business to customer ecommerce (B2C ecommerce).

Obviously, not all the pitfalls can be discussed in depth. Central to online purchasing is the contract of purchase that embodies the legal relationship between a consumer and an online merchant or vendor. Although a contract may be valid and enforceable, pitfalls such as dispute resolution, consumer protection, privacy protection, security of payment and crime detection and prevention, to name but a few, may nonetheless be encountered with the B2C contract of purchase.

Much has been written on the online contract per se, but these discussions lack an overview, however brief, of the legal pitfalls facing online B2C purchasing on a domestic and international level. Such a discussion, although quite ambitious, goes a long way in facilitating an understanding of the laws that regulate the various issues in respect of online B2C contracts of purchase by focusing on the problems that may be encountered from the South African legal perspective. It also illustrates which trust-enhancing mechanisms should be part of an online B2C e-commerce.

2.         The Internet in South Africa[5]

2.1       Legal regulation of the Internet

The history of the origin of the Internet[6] is certainly well known and for that reason will not be discussed.

However, one must be mindful of the remark by Oliver Wendell Holmes, a former judge of the United States of America, that "(w)e must study the history in order to understand the path of the law."[7] One cannot have a true understanding of the evolution[8] of legal regulation in South Africa without giving a historical perspective on the commercialization of the Internet.

The legal position in South Africa from 1993 to 2002 serves as a good example of the consequences of inadequate legal protection in respect of conduct on the Internet. When the Internet became commercial in South Africa in 1993, the Internet became part of society without much fanfare. Very little attention was given to the Internet, probably a consequence of the fact that South Africa was involved in a process of political transformation and constitutional development. South Africa was furthermore urged not to regulate the use and access to the Internet and warned that "excessive regulation or control of the Internet would backfire."[9] The warning went as far as to state that "the Internet and its technology would render the controls worthless" and that regulation should be conducted "not with fear and prejudice."[10]

The result of not regulating the Internet in South Africa was legal uncertainty in respect of various e-commerce aspects, for example, it was not clear whether a valid online contract could be concluded by means of an electronic communication.[11] South Africa may be a developing country, but the government realizes the advantages of the development and growth[12] of e-commerce and that includes establishing legal certainty by means of state regulation of conduct and information on the Internet.

The implementation of the ECT Act in 2002 was a major step forward in establishing an e-commerce legal framework by addressing various aspects of e-commerce. The ECT Act was also the first comprehensive[13] legislation that deals exclusively with an electronic medium.

2.2       The effect of foreign and international legal regulation of the Internet

South Africa has the advantage that international law and foreign law may be considered in the process of drafting its own e-commerce legislation. This illustrates the effect of globalization on a country. In respect of state regulation[14] of the Internet, three dominant powers or approaches to Internet regulation have developed, namely the approach of the European Union (EU), the United States of America (USA)[15] and China. Other countries align themselves with one of these approaches. As indicated, the focus in the discussion will be on the South African legal framework governing B2C contracts of purchase with a comparative analysis, where relevant, to the legal position in the EU and the USA.

The Constitution is the supreme law in South Africa and therefore when it comes to the drafting and interpretation of legislation, all legislation must comply with the South African Constitution. Section 39(1) of the Constitution provides that when the Bill of Rights is interpreted, the legislature or court or any other tribunal may consider foreign law and it must consider international law.[16]

Part 1: An overview of the legal pitfalls in respect of online B2C purchasing within the context of the South African law

In part 1 the focus will not be on a discussion of the various issues relating to online purchasing but the emphasis will be on the problems that can be experienced with online purchasing. These problems are embodied as legal pitfalls.

3.         Understanding the problems in respect of an online contract

3.1       Introduction to the online contract

Central to online purchasing, is the legal relationship between the contracting parties, namely the consumer (offeror) and online merchant or vendor (offeree). The legal relationship is embodied in an online B2C contract of purchase. Establishing the validity and enforceability of the contract of purchase is the starting point in respect of B2C e-commerce.

A contract of purchase may be defined as an agreement that creates legal obligations which is, or intended to be enforceable in law.[17] An online contract of purchase means that the contracting parties made use of electronic communications to conclude the contract of purchase. This means that the parties moved from a physical medium, which consists mostly of paper-based, face-to-face negotiations to an electronic medium which is a global, paperless, faceless and in many instances, cross-border conclusion of a contract.

2.2       Sources of an online contract

The sources of the online contract are the South African common law (unwritten law that derive from the Roman-Dutch and English law) and legislation, namely the ECT Act.

In general the national laws of a country govern the main aspects of contract law and that is also the legal position in respect of the South African law of contract. The International Chamber of Commerce (ICC)[18] supports freedom of contract as a general principle that should drive decisions in respect of choice of law and forum. In a nutshell,[19] a binding contract comes into existence when two or more parties with appropriate legal capacity reach consensus regarding the terms of the agreement. Consensus is expressed by means of an offer made by the offeror and acceptance by the offeree.

2.2.1        Common law requirements

The South African law of contract requires that the following common law elements of a contract be present for it to be a legally binding agreement between parties, namely the capacity to act, consensus, lawfulness and physical possibility.[20] If the electronic communication between two or more parties complies with the common law requirements for a contract, then it may be inferred by taking cognizance of the provisions of the ECT Act, that a valid electronic contract of purchase has been concluded.[21]

2.2.2    Brief overview of the provisions of the ECT Act

Chapter III of the ECT Act consists of two parts and addresses the following aspects:

i.                     Chapter III part 1 confirms that a valid online contract may be concluded by means of an electronic communication.[22]

Normally the online purchasers in a B2C contract do not sign the contract but express their intent to contract by clicking the mouse on a specific icon on the screen. The ECT Act[23] provides that such conduct constitutes a valid purchase and sale agreement, although an electronic signature[24] was not used. This conduct can be compared to the use of click-wrap (web-wrap) and shrink-wrap agreements. Although there has been no court case in South Africa on the validity and enforceability of shrink-wrap and click-wrap contracts, click-wrap agreements should be enforceable. The South African courts may, in respect of shrink-wrap agreements, follow an approach similar to that of the United States courts that take a cautious approach to shrink-wrap contracts by evaluating the facts on the basis of each case.[25] It is advisable for a South African based website to make use of click-wrap agreements in the light of the United States judgment, Specht v Netscape Communications Corp[26] where the court stated that a click-wrap contract used by a software company was invalid and unenforceable.

ii.          Chapter III part 2 consists of the so-called default provisions. These provisions are only applicable where the parties in an online contract of purchase did not agree on the time and place of contract conclusion. In the latter instance, time and place will be determined by section 22(2) of the ECT Act that provides: "An agreement between parties by means of data messages is concluded at the time when and place where the acceptance of the offer was received by the offeror." After much debate,[27] it has been accepted that the absence of a contractual provision in respect of the place and time of contract formulation, the information (reception) theory is applicable and not the expedition (postal) theory. The contract is formed in the country (place) where the offeror (buyer) receives the acceptance, in other words, where the offeror's computer is located. E-mail acceptance is deemed effective from the moment that the e-mail drops into the recipient's mailbox and not when it is actually read. Snail[28] considers section 22(2) a modified version of the information (reception) theory. It is interesting that South Africa deviated from the UNCITRAL Model Law on E-Commerce that does not prescribe such a stipulation as to not interfere with the existing national laws of the various countries.[29]

2.3       Effect of international law and foreign law

2.3.1    International law

In accordance with section 39(1) of the Constitution, a South African court must take note of the international law when interpreting statutory legislation. Similarly the international law plays a role in respect of the validity and enforceability of electronic contracts.

The United Nations Commission on International Trade (UNCITRAL) adopted in 1996 and amended in 1998 the UNCITRAL Model Law on E-Commerce[30] to assist countries in drafting and enacting laws to enable electronic contracting. In 2001 the UNCITRAL Model Law on Electronic Signatures (UNCITRAL Model Law on E-sign)[31] was drafted. The United Nations Convention on the Use of Electronic Communications in International Contracts[32] followed the two Model Laws. The United Nations Convention aims to harmonize the provisions of the two Model Laws to form an international law instrument that provide guidance on electronic cross border contracts.

It is important to note that although the two Model Laws and the United Nations Convention on the use of Electronic Communications in International Contracts are not legally binding on South Africa, it influenced the drafting of the ECT Act and as already indicated, form the basis of many provisions in the ECT Act that addresses the recognition, validity and enforceability of the electronic contract. The latter has the benefit of aligning the South African law of online contracts with similar legislation worldwide.[33]

2.3.2    Foreign law

Section 39(1) of the Constitution also states that the court may take note of foreign law, which includes foreign case law. To ensure valid and enforceable contracts, it is advisable for the South African website to take note of the United States judgments[34] that stated that disputes may be prevented if the terms and conditions on a website are not only clearly visible on the homepage but before proceeding through the site, the visitor must click on an "I agree" button.

3.         Consumer protection

Closely related to a B2C purchase contract, is consumer protection.

3.1       Brief overview of the provisions of the ECT Act

A ‘consumer' in terms of the ECT Act refers only to natural persons and does not apply to transactions between suppliers and companies.[35] Chapter VII of the ECT Act contains consumer protection provisions aimed at ensuring trust and confidence in the use of online shopping. A contract may be valid and enforceable, but if it does not provide the necessary consumer protection, the consumer may cancel the agreement.

Chapter VII determines that a business selling goods or services over the Internet must supply the online consumer with 18 specific pieces of information.[36] The South African website must also provide additional information, either required in terms of other South African legislation or which is necessary to protect the organization in the way it interacts with consumers and surfers on its website.[37] If the South African e-vendor fails to provide all the information or the consumer did not have the opportunity to review the entire transaction, to correct any mistakes, and to withdraw from the transaction before finally placing an order, then irrespective of the nature of the goods and/or services involved, the customer can cancel the electronic transaction within 14 days of receiving the goods or services in question. If the transaction is cancelled, the consumer must immediately return the goods and/or stop using the services and the e-vendor must refund the payment made by the consumer minus the direct cost of returning the goods.

Since a consumer cannot evaluate the goods online, chapter VII contains a ‘cooling off' period of 7 days for goods and services purchased over the Internet for the consumer to cancel the transaction.[38] If the consumer cancels the transaction, the vendor must refund the consumer within 30 days of cancellation.

The ‘cooling off' period excludes certain electronic transactions, such as, to name a few, accommodation, transport, catering, the selling of newspapers and provision of financial services. However, the supply of digital goods such as digital music downloads, e-books and software are not included in the list of exclusions. Such goods may be purchased, installed and used by the consumer who may then elect the ‘cooling-off' right and return the goods to the supplier. The effect is that the market for digital downloads in South Africa is not profitable.[39]

A South African consumer will be afforded the consumer protection even when contracting with a vendor in a foreign jurisdiction with a different legal system.[40] However, it is uncertain how this provision will be enforced on an international level. It may