In 2006, IDC Malaysia reported that “six million unique buyer identities” conducted online transactions, or e-commerce in ordinary language.
Here are some statistics from the report:
- Malaysia’s population: 26.6 million
- Growth of e-commerce spending: 70%
- Malaysian business funds spent online in 2006: RM47.6 billion
- Percentage of Internet access by mobile devices: 45%
Today, the amount of online transactions in Malaysia have skyrocketed.
The statistics show that every year, the number of online transactions in Malaysia, and South East Asia in general, have been increasing year on year. EC Insider reported that in 2017, 5% of the total retail sales in Malaysia was through e-commerce.
Our law firm does advise e-commerce companies. For example, in 2017, we were privileged to serve an e-commerce provider called MIL CITY by drafting the terms and conditions for their online store. In the same year, we also served as the legal advisors for a Blockchain startup called HADA DBank and a crypto exchange called CoinBene.
Online transactions are a part of every e-commerce experience. Basically, to have e-commerce, you need to have online transactions. This whole article about online transactions is really about e-commerce in Malaysia, and some related points of law.
So, just what is an online transaction?
An online transaction occurs when a transaction is concluded online. A transaction represents a contract, which is consisted of several elements:
First, there must be an offer.
When an online store places an offering online, to sell or offer to sell a certain product, or service, that is an offer.
When a user of a platform for sales like EBay or Mudah makes an advertisement to offer a product or service for sale, that is an offer.
Offers can be any web page offering to sell something. It can also be a page on an online store.
Next, there must be an acceptance.
The user must agree to buy the product or the service. Without this agreement, there is no acceptance.
The user has not accepted the online transaction if there is no action on his or her part to accept it.
A website which says, “If you do not opt-out, you are deemed to have accepted this offer” — such a term is illegal.
Third, there must be valuable consideration.
Valuable consideration means something which is paid in return for the product or service being offered. In most cases, this might be money.
However, in a constantly changing world, this might include alternatives, such as Bitcoin. As you may know, Bitcoin has not been regarded as legal tender by the Malaysian government.
Anything which is valuable and capable of being offered as a payment to the offeror can be regarded as valuable consideration.
However, due to the nature of online transactions, the acceptable form of the payment is often dictated by the offeror.
Finally, there must be an intention to create legal relations.
If the offeror made his offer in jest (as a joke), it might be argued that there was no intention to create legal relations.
The intention to create legal relations is something that can be proven by the conduct of the parties.
Hence, when an e-commerce system requires a seller to confirm, his or her intention to sell a certain product or service, it proves intention. Even if the system only requires a tick and the click of a button.
When an e-commerce system requires a buyer to confirm, his or her intention to buy a certain product or service, it proves intention. Even if the system only requires a tick and the click of a button.
When online transactions are valid contracts, legal action can be enforced.
This is simply to say, don’t simply enter into online transactions and hope that you don’t have to make good on your promises.
When a man agrees to sell his very valuable house or car on an online store, for a song, and someone accepts, it forms a valid online transaction.
When the seller later reneges the sale, or disputes the sale, due to miscalculation of price, or drunkenness, it’s arguable that the seller will lose.
Because online transactions are valid contracts, when made properly within the context of the law.
Online transactions are enforceable contracts, even though they may only be online.
And even though, the buyer and seller have never met.
For the sellers, they should feel more motivated to get the terms and conditions of their online store looked at.
For the buyers, they should feel motivated to ensure their rights are not removed in any disclaimer.
And if you run an e-commerce store, we want to help you minimize the problems that you will have from the online transactions on your store.