From physical to ebusiness, How Zimbabwean businesses can legally transact online

Contributors: R F Mushoriwa, (LLB & LLM) – Partner

Nathanael Manjoro, LLB – Associate

Date of publication: 19/04/2020

INTRODUCTION

Technology has changed the face of business in ways previously unimaginable. Buyers and sellers can now initiate and conclude a transaction without ever meeting, thanks to the power of the internet and related technologies. The present threat of the Covid-19 pandemic may yet force more businesses to go online rather than risk physical interactions in the course of doing business, and this progression may be good for businesses in Zimbabwe that were in truth, lagging behind international business norms. However, online business is risky. From the possibility of con artists setting up false websites and promoting non-existent goods and services, to identity theft, card fraud and other forms of online crime, the risks are endless. It is for this reason that the legislature enacted the Consumer Protection Act [Chapter 14:14], (hereinafter, The Act) which contains rules of how businesses should play the e-commerce game. While there are various enactments that have an impact on the conduct of e-business, this article shall focus on the basic legal requirements imposed by the Act for doing business online.

SCOPE OF TRANSACTIONS COVERED UNDER THE ACT

The Act applies to what are called ‘consumer contracts’ and these are widely defined in the Act as contracts for the sale or supply of goods or services or both, in which the seller or supplier is dealing in the course of business and the purchaser or user is not, but does not include— (a) a contract for the sale, letting or hire of immovable property; or (b) a contract of employment. A “consumer” is defined as any natural person who enters or intends entering into an electronic transaction with a supplier as the end user of the goods or services offered by that supplier[1]. Therefore, any person who sells goods or services to the public in the ordinary course is subject to this Act.

This article seeks to provide guidelines to business on how to comply with the law while migrating to, or maintaining e-business structures.

EXECUTIVE SUMMARY

In brief, this Article will look at various forms of electronic business. It will also look at the obligations imposed by the Consumer Protection Act which include the obligation of disclosure which sets out 18 requirements that must appear either on the website or other electronic medium through which business is conducted. Non observance of this constitutes a criminal offence. We also cover formalities required before a contract is consummated, and also look at the cooling off period which is a statutorily provided time in which a buyer can cancel a contract after receiving goods purchased online. Finally, we deal with the right to privacy which accrues to all customers who deal with vendors on electronic platforms. It is easy to comply with this law, and potentially ruinous not to do so.

HOW COMPANIES CAN DO BUSINESSES ONLINE

Companies can take advantage of various online platforms to either take advantage of wider markets, or just to sustain activity in times of unexpected physical restrictions such as those imposed in response to the Covid-19 pandemic. The internet has become an essential tool in the modern world hence its availability makes it easy for business not only grow, but survive. Companies can make use of;

Online platforms to sell products and merchandise via websites (online shopping)- This platform only requires a website to be setup where online payments and electronic transactions can be made. Once a client has identified a particular product they desire they can purchase it anytime and it can be delivered without any physical contact. This platform is available for all companies that sell goods or services to the public. Online platforms do not require the exchange of physical cash for transactions. In order to make payments various means can be used such as online banking, mobile money banking and other transactions which are safe and secure.
Concluding and negotiating different types of electronic Contracts-

There are four different ways of e-contracting:

The first and most important method of contracting on the Internet, is similar to a negotiation of one or more infrequent transactions by exchange of letters and documents or email contracting. In this method the parties can exchange e-mails and even attachments setting out the terms and conditions of their contract in detail. This is quite similar to offer and acceptance between the parties.
The second method is contracting on the World Wide Web (www), which is similar to a mail order. In this method, one party maintains the website at which he advertises his goods and services. The prospective buyer accesses the website and then completes an electronic form, whereby he orders goods or services from the seller.
The third manner is where the parties trade under the framework of an Electronic Data Interchange Agreement (EDI). EDI can be defined as computer-to-computer transmission of data in a standardized format‟. EDI enables businesses to exchange documents over either the internet or their private networks.[3]. Private networks EDI is used by large businesses when buying goods but smaller businesses and individuals prefer to use EDI as it reduces costs[4]. This is the primary electronic commerce medium; it is only applicable and valid between the contracting businesses that have assented to it.
Natural persons whilst chatting online in a virtual chat-room can make legally relevant agreements that are valid and binding. This is the final and the fourth method of contracting electronically[5].

Online meeting with various applications – Meetings are widely conducted through various online platforms such as Zoom, Skype and others. They are affordable and make it easier for anyone to have that face to face interaction whilst doing business. It is convenient for doing business on the go.

Social media platforms to market products- several business brands now have a social media handle, account or platform. Social Media continues to dominate in the world because everyone has inexpensive access to it. It is therefore an easy, fast and accessible platform to market any product.

All the above innovations and options must however be used in line with the laws of the land, and the basic requirements imposed on a business can be found in the Act. These are set out briefly hereunder.

THE LAW ON CONSUMER PROTECTION IN ELECTRONIC TRANSACTION IN ZIMBABWE

The Consumer Protection Act [Chapter 14:14] provides the regulations and requirements for any company or business conducting electronic transactions in Zimbabwe, in particular section 52 – 54. Any business intending to mitigate losses that may arise from loss of physical traffic by venturing online must become conversant with the requirements of this law.

The legal requirements for electronic transactions

Duty of Disclosure on the Seller

In terms of Section 52 of the Consumer Protection Act a supplier offering goods or services for sale, for hire or for exchange by way of an electronic transaction must make certain information available to consumers on the website where such goods or services are offered. Section 52 (1) (a)-(r) of the Act provides a list of 18 pieces of information that must be disclosed on the website or platform where the supplier offers its goods or services. This information includes the following;

the full name and legal status of the supplier,
the physical address and telephone number of the company.
Website and email address.
Membership of any self-regulatory organisation or accreditation body of which the vendor is a member plus their contacts;
Any code of conduct to which supplier subscribes and details of how it can be obtained;
In the case of a juristic person like a company, its registration details, registered address and office bearers;
Address where seller will receive service of documents;
Sufficient description of goods and services sold by the seller to allow buyer to decide on the proposed e-transaction.
Full price of the goods including transport, taxes and other fees and costs.
Payment methods;
any terms of agreement, including any guarantees, that will apply to the transaction and how those terms may be accessed, stored and reproduced electronically by consumers; and
the time within which the goods will be dispatched or delivered or within which the services will be rendered; and
The usage of the term “on the website” is indicative thereof that this section will only affect suppliers that are conducting sales on a website.
the manner and period within which consumers can access and maintain a full record of the transaction; and
return, exchange and refund policy;
any dispute resolution code and how it may be accessed by buyer;
the security procedures and privacy policy of that supplier in respect of payment, payment information and personal information; and
where appropriate, the minimum duration of the agreement in the case of agreements for the supply of products or services to be performed on an ongoing basis or recurrently; and
the rights of consumers in terms of section 53, where applicable.

What is evident is that the lawmaker has placed a heavy burden of disclosure on the suppliers of goods and services who decide to use online methods of doing business and it is easy to see why this is so. There are many cases of online fraud that have occurred worldwide and the problem is not getting any smaller. As long as the buyer has some information about the person or entity from who he is buying, then there is a chance of not only authenticating the transaction before entering into it, but also a chance of tracing any fraud or malfeasance by the seller. The law is there to create a balance between the power of the seller and the vulnerability of the buyer and give an aggrieved buyer a chance at obtaining justice. It is also important to note that the 18 requirements are not alternative but cumulative in that all 18 requirements must be present on the website itself. Compliance with only 17 would be insufficient as all are mandatory requirements. Non-compliance carries with it the criminal sanction of a fine or prison or both and it is for this reason 6that every business executive must take their online presence seriously to avoid potential criminal sanction.

What is Acceptable Level of Disclosure?

The question that arises is what is the level of disclosure is sufficient for purposes of this Act? How does a seller know that he has supplied enough to avoid falling foul of this law? The test that the court applies in order to determine whether the information that is provided is sufficient is the test of reasonableness. The document itself should be sufficient to gain the attention of a reasonable customer, and the terms and conditions provided should be visible and readily available to the consumer. These principles were applied in the matter of Durban’s Water Wonderland (Pty) Ltd v Botha & another[6].

Formalities Required Before Conclusion of E-Contract

Before the contract is finally concluded, Section 52(2) obliges the supplier to provide the consumer with an opportunity to review the entire electronic transaction, to correct any mistakes or to withdraw from the transaction, before finally placing any order. Should the supplier fail to comply with the 18 requirements, the buyer may cancel the agreement within 7 days of receiving the goods or services under the transaction, and must return the goods to the supplier or, where applicable, cease using the services performed by the supplier. In this case, the seller is obliged to refund the buyer less the direct costs of returning the goods. The final and critical requirement under s52(5) is that the seller must provide a secure payment system, failing which the seller is liable for all damages that accrue to the buyer arising from losses related to insecure payment structures.

Cooling-off period

Section 53 provides a cooling-off period which simply allows a consumer the chance to cancel the purchase within a prescribed period of receipt of goods purchased from electronic platforms. Cooling-off periods have two objectives. Firstly, they can force people to delay action against one another until the cooling-off period has lapsed, and secondly, they offer the consumer the chance to consider the advantages and disadvantages of the agreement having received the goods and juxtaposing these with the information about the goods supplied on the website. If unhappy, the consumer will then be entitled to cancel the contract within this given time period for no reason and with no penalty to such customer.

Rights Accruing to Consumers

Right to Privacy viz Unsolicited Marketing

The business world is tough and sellers invariably must use tactics which some may view as unwarranted. Unsolicited marketing tactics where emails or other communications are sent to the potential buyers are common. The Customer is protected against these types of tactics by being accorded certain privacy rights under this Act.

Section 54 deals with unsolicited direct marketing. It obliges any person sending an unsolicited marketing document or communication to ensure that same has the option to unsubscribe from the mailing list, and a right to inform such customer of where their personal details were obtained from. In the event that a recipient does not respond to whatever offer or content is in the communication, the contractual rules that could lead to a contract being consummated as a result of such inaction are interfered with by law and no contract arises in such cases. A contravention of these provisions exposes the marketer to a level 5 fine or 6 months’ imprisonment or both.

CONCLUSION

Electronic business is the future and this has been proven world over. The safety and security of those participating in it is promoted by laws which impose varying degrees of obligations on the parties. In this case, we have focussed on the Consumer Protection Act [Chapter 14:14] whose requirements should when met, allow a seller to avoid penalties of non-compliance while chasing business via electronic means.

[1] Section 2 Consumer Protection Act {Chapter 14:44}

[2] Pistorius, 1999, p 286

[3] Shim, et al., 2000, p 141

[4] Nagalingam, 2000, p 6

[5] Loetz & Plesses, 2004, p 4

[6] Supreme Court of Appeal 1999 (1) SA 982 (SCA).

Mushoriwa Pasi Corporate Attorneys is a top commercial law firm in Zimbabwe which provides quality legal services within the jurisdiction and beyond and has offices at 37 Lawson Avenue, Corner Bates Street, Milton Park, Harare, Zimbabwe. Contact us on +263 242 793322(3) or visit www.mushoriwapasi.co.zw

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