Web site "Case Studies"
Please note, these are fictional situations created to illustrate the legal risks associated with web sites and the potential consequences of a failure to have legal terms and conditions which comply with South African legislation and adopt best practice.
Joe Soap's B&B
Joe has a web site advertising his B&B, with online booking facilities. Joe has no terms and conditions and has not complied with the ECT Act Ch. VII. He does have a 20% cancellation fee if people book and then cancel at the last minute, to cover the costs of a room standing empty. However, because Joe has not complied with Ch. VII, anyone booking on the site may cancel up to 14 days before time, and despite the cancellation fee, they will not be liable for a cent. Joe has no legal recourse, only empty rooms.
Fred's Hardware Store
Fred has a web site where he advertises his power tools. The site gives a picture and a description of each, but is not an e-commerce site, as you cannot order off the site. There are no terms and conditions on the site or any disclaimers. A customer views the site and goes off and buys the "Super Powersaw 2003", have being led to believe by the site that it will saw through thick steel. The saw fails to cut the steel and the customer loses business. The customer reasonably relied on the information supplied by the site, which had no disclaimer, and therefore can sue Fred for the loss which he has sustained.
Tracy's Televisions
Tracy has an e-commerce web site, which does not comply with the ECT Act, that sells televisions. By mistake a new television is advertised at R2.99 instead of R299.00. Mr Smart sees this and orders 100 televisions, paying with his credit card, so the money is deducted immediately. If Tracy's web site had complied with the act, under section 46 she could withdraw from the transaction. Likewise if she had a correctly worded disclaimer on the site. But because she did not, she could be liable for a lot of very cheap televisions!
In a similar situation, even if there was no mistake with the price, and Mr Smart ordered 100 televisions, which Tracy imports specially, Mr Smart could return the televisions within 14 days for no valid reason and at no cost to himself and Tracy would be left with a lot of stock that she may have a problem selling.
Dave's Investments I
Dave has a web site advertising his investment business which runs as a (Pty) Ltd. He sends the site address to potential clients so they can know more about his business. In terms of section 171 of the Companies' Act 61 of 1973, unless his site has the names of all the directors of his company together with other prescribed information, his company is guilty of an offence and may be liable for a fine!
Dave's Investments II
One of Dave's clients gets very excited by the investment opportunity and emails Dave saying that he would like to invest in one of the products. The product is unfortunately no longer available as all shares have already been sold. Dave's secretary, who often deals with such enquiries, does not know this and replies by email in the affirmative. Because of the Doctrine of Functional Equivalency, she has accidentally entered into a contract with the client, who can then potentially sue Dave's Investments for breach of contract. An email sent on a company email address has the same power in law as a letter sent on a company letterhead.
Alan's Info Site
Alan has a web site that provides a portal to a number of medical information sites. He allows free entry to the site, but potential clients must fill in a datasheet about themselves to get a password to enter the site. Alan collects this data and he uses it to persuade potential advertisers to advertise on his site. One of the unscrupulous advertisers gets hold of the list and uses it to send spam to the clients. Because Alan did not have a clear privacy policy and did not subscribe to the principles of Ch VIII of the ECT Act, he could be held liable in delict for any damages which the parties suffered from the spam.
These are just a few of the potential problems that could be caused by a web site. The cost of ensuring your site complies with the relevant legislation and has the correct legal terms and conditions is minor compared to the potential liabilities!
02 Dec 2003
This article is intended to provide general guidance and does not constitute professional advice relating to specific instances. Should you wish to place any reliance on the information presented in this article we strongly advise that you consult your legal advisor or the Electronic Law Consultancy - info@e-lawconsultancy.co.za
