Mallinicks Attorneys Articles Menu Mallinicks Web Site

ELECTRONIC COMMUNICATIONS AND TRANSACTIONS ACT AFFECTS SMALL BUSINESSES

There has been a tremendous amount of hype recently about the Electronic Communications and Transactions Act No. 25 of 2002 ("the Act'') which was enacted by our President, Thabo Mbeki, on 31 July 2002. Funnily enough, the Act was enacted by means of an electronic signature by the President, which is one of the things the Act seeks to legitimize.

While many had hoped that the Act would be subject to more discussion and thought prior to its enactment, the Act has now, whether we like it or not, become of full force and effect.

While the more controversial sections of the Act relate to the creation of certain cyber crimes, and the establishment of a national domain name authority to administer the .za domain name, the other provisions of the Act are equally far reaching. In particular, the Act provides for how suppliers must now transact by electronic means. This would therefore apply to any business which offers any goods or services by means of a website. Amongst other things, a supplier must, on its website disclose:

  1. its full name and legal status;
  2. its physical address and telephone number;
  3. its website address and e-mail address;
  4. membership of any self-regulatory or accreditation bodies to which that supplier belongs or subscribes, and the contact details of that body;
  5. any code of conduct to which that supplier subscribes and how that code of conduct may be accessed electronically by the consumer;
  6. in the case of a company or close corporation, its registration number, the names of its office bearers and its place of registration;
  7. the physical address where that supplier will receive legal service of documents;
  8. a sufficient description of the main characteristics of the goods or services offered by that supplier to enable a consumer to make an informed decision on the proposed electronic transaction;
  9. the full price of the goods or services, including transport costs, taxes and any other fees or costs; and
  10. the manner of payment.

The supplier must also provide the consumer with an opportunity to review the entire electronic transaction, to correct any mistakes and to withdraw from the transaction, before finally placing an order. If all of the above is not adhered to, the consumer may cancel the transaction within 14 days.

The Act also provides that a supplier must utilize a payment system that is sufficiently secure with reference to acceptable technological standards at the time of the transaction and the type of transaction concerned. This clearly places an obligation on any supplier to ensure that, for example, its credit card payment mechanisms are at least of a reasonable standard. The Act now also specifically provides that a supplier will be liable for any damage suffered by a consumer due to a failure by the supplier to provide a reasonably secure payment system.

In addition to the above, the Act also provides that a consumer may, without reason and without penalty, cancel an agreement concluded over the Internet:

  1. in respect of an agreement to buy goods, within seven days after the date of the receipt of the goods; or
  2. in respect of services ordered over the Internet, within seven days after the date of conclusion of the agreement.

While these provisions in the Act have been designed to protect consumers who are very often coerced into transactions they do not really wish to conclude, these provisions of the Act may have very significant consequences for suppliers, especially relatively small suppliers which really cannot afford the consequences of cancelled orders.

It is therefore imperative that every supplier who sells or offers goods or services by means of the Internet, becomes immediately appraised of the provisions of this piece of legislation. A failure to do so might, in the virtual world, make your business, whether big or small, a virtual failure.

PREPARED BY ALEXIA CHRISTIE & LEANNE MOSTERT OF THE MALLINICKS I.T. LAW UNIT.
FOR FURTHER INFORMATION CONTACT 021-410-2200 © Mallinicks Inc.

'MALLINICKS'
ATTORNEYS
Members of the Mallinicks Women's Forum write the articles, which offer basic legal advice.
3rd Floor, Granger Bay Court, Beach Rd, V & A Waterfront, Cape Town 8001.
PO Box 3667, Cape Town 8000. E-mail | Web site