I : BACKGROUND The potential of E-commerce is no longer a matter of debate.

In fact, every fore cast has been proved wrong, with actual figures far exceeding the forecasts. Although it is ju st beginning to surface in India, the pace of growth predicted brings in an urgency to understan d the several legal issues that are associated with it. It is quite clear that if these issues are not resolved, it will affect the growth of E-commerce, whose present scale and future potential i nspire awe. There are technological issues involved, which the Government of India has addre ssed in the Information Technology Bill, which is being debated. Conference Re the need for developing an effective legal and policy framework, Infrastructu re Leasing & Financial Services (IL&FS), along with the Confederation of Indian Industry (CII ), is sponsoring a seminar on E-commerce, to be held on 15-16 June, 1999, under the ae gis of Global Information Infrastructure Commission (GIIC), which will examine its lega l and nonlegal dimensions. The seminar will be an ideal venue where participants from both the corporate sector and the government can voice their views and concerns. The conf erence will also afford an opportunity to understand the global experience in this area. IL& FS recognizes that these issues need to be debated amongst a wide audience before any conclusi ve policy changes take place. IL&FS trusts that the seminar will generate sufficient and f ruitful debate with clear pointers to the future. Discussion Paper IL&FS, in association with Nishith Desai & Associates, a leading international l aw firm, has made an attempt to put together a document detailing legal issues that affect bu siness through E-commerce, and that are of concern to the Government. While there are several i ssues, the scope of this document is restricted to the following issues : contractual, cont ent, intellectual property rights, transaction security, e-money and taxation. The draft report lo oks at both the Indian legal system and the relevant global laws, exploring the interface betwee n the two. It has made recommendations for consideration by the authorities Confidentiality This document is private and confidential and is not open to reproduction in any form whatsoever without the express consent of IL&FS.II : 4 Private & Confidential EXECUTIVE SUMMARY 2.01 Background: E-commerce involves a number of players such as the buyer, sell er and the Internet service provider (ISP). Each of these players has their own con cerns. Buyers and sellers will be concerned with validity and enforceability of contrac ts, together with issues such as evidence and security of electronic messages. ISPs

will be concerned about what their legal liabilities are. Content providers on the ne t may face copyright problems. Different laws govern each of these areas. The executiv e summary provides a bird s eye view of what this paper discusses. 2.02 Contractual Issues : (a) Validity of online contracts: The Indian Contract Act allows for certain contracts to be made in forms other than in writing. Hence online contracts may be valid as they may be considered to be in these other forms, but there are problems concerning the validity of contracts that need to be in writing. (b) Normal and Online contracts: There is a need to understand the difference between normal contracts and online contracts, especially with respect to the question of where and when the contract is concluded. In this connection, the paper discusses dispatch and receipt of data messages with reference to the UNCITRAL Model Law and the Information Technology Bill, 1998 and compares it with offer and acceptance under Indian law. (c) Evidence: The Indian Evidence Act requires documents to be proved by primary evidence, and the validity of data messages as primary evidence is uncertain. There is an allied discussion on how to adduce information stored in computers. 2.03 Content: Globally, content in cyberspace has generated considerable debate, specifically with respect to what would constitute an offence. The draft paper discusses the scope of the Indian Penal Code and the ability to punish acts committed outside India, 2.04 Intellectual Property Rights: E-commerce has opened up entirely different dimensions affecting copyright and related issues of intellectual property right s. (a) Fixation: Fixation is an important consideration for IPR in some countries, along with originality and creativity. The question is whether work displayed on a screen or captured temporarily in the memory of a computer would amount to fixation. This sensitive issue comes up for scrutiny together with a discussion of global practices and U.S. laws. 5 Private & Confidential (b) Publication: The Net, with its facility for simultaneous presentation from more than one source, raises the question of the time of publication. In the Indian context, there is the issue of what would constitute publication in India. The paper also analyses aspects of fair dealing and the notion of implied license, given the ease with which material can be downloaded and transmitted. (c) Liability of ISPs: The legal status of Internet service providers is another contentious issue. Their liability is discussed in the context of hyperlinking and framing. (d) Domain Names: Domain names are a matter of great concern as unallied parties have used registered trademarks as their domain names The paper observes that issuers of such domain names have to be adequately equipped to prevent such violation of trademarks. (e) Encryption: The federal Government in the US has already expressed its serious reservations on the right to encrypt, largely because of its implications for national security. On the other hand, courts have been against too many restrictions. The paper discusses the issue along with the question of digital signatures for ensuring the integrity of messages. 2.05 E-money (a) Private Issue of E-money: The idea of e-money is still new to India though foreign governments have already had to contend with it. The public policy implications of private issue of e-money are analysed. (b) Regulation: Before allowing the private issue of e-money several regulatory issues focusing on controlling and regulating private issuers require clarification. (c) Money Laundering: The paper discusses how e-commerce and e-money

impact money laundering and how governments the world over have been trying to grapple with the problem. There is also a related discussion on the various kinds of risks associated with private issue of e-money. 2.06 Privacy and Consumer Protection: The potential of the electronic medium to intrude into the privacy of individuals and corporations has already received considerable media attention abroad, along with its implications for political democracy. The paper discusses the need for checks and balances to ensure that privacy is not violated. It also discusses how e-commerce affects consumer protection. 6 Private & Confidential 2.07 Labor: The Net has altered the place of business . As a result, we are faced w ith the question: Will a web site constitute an undertaking ? The paper discusses this issu e from the point of view of the Shop and Establishments Act and the Industrial Disputes Act.