Chapter 1

Electronic Business and Legal Issues

Evolution and Development in E-Commerce
Paper Vs Paper less contracts
E-Commerce Models-B2B,B2C
E-Security
In this unit you will learn basic concept of e-commerce,e-business and legal issues.

1.1

Evolution and Development in E-Commerce

Electronic-Commerce is new ,emerging and rapidly changing area of Business Management

and Information Technology, E-Commerce include several field of Business and technology.

1.1.1

Introduction and Definition of E-Commerce

Transaction (sales and purchase) having the objective of supplying commodities(goods and
services) is known as commerce, E-Commerce (EC) is doing commerce with the use of computer,networks and commerce-enabled S/W.
EC describes the procedure in which transaction takes place over network,mostly the Internet.
It is the process of electronically buying and selling goods, services and information.Although
in most cases e-commerce and e-business are synonymous, yet e-commerce implies that goods
and services can be purchased online, whereas e-business might be used as more of an umbrella
term for a total presence on the Web, which would naturally include the e-commerce (shopping)
component.
There are so may definition of e-commerce:According to the editor-in-chief of International Journal of Electronic Commerce, Vladimir
Zwass, Electronic commerce is sharing business information, maintaining business relationships and conducting business transactions by means of telecommunications networks
Electronic Commerce (EC) is where business transactions take place via telecommunications
networks, especially the Internet.
Electronic commerce describes the buying and selling of products, services,and information via
computer networks including the Internet.
Electronic commerce is about doing business electronically.
E-commerce, ecommerce, or electronic commerce is defined as the conduct of a financial transaction by electronic means.
At first, the term e-commerce meant the process of execution of commercial transactions
electronically, using technologies such as:
EFT(Electronic Fund Transfer)
EDI (Electronic Data Interchange)
Electronic funds transfer (EFT) is the electronic exchange, transfer of money from one account
to another, either within a single financial institution or across multiple institutions, through
computer-based systems. for example Debit card, Credit card, online payment etc..
Electronic data interchange (EDI) is an electronic communication method that provides standards for exchanging data via any electronic means. By adhering to the same standard, two
different companies, even in two different countries, can electronically exchange documents
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(such as purchase orders, invoices, shipping notices, and many others)

The ability to use these technologies appeared in the late 1970s and allowed business companies
and organizations to send commercial documentation electronically.
What is E-commerce?
Define EDI and EFT.

1.1.2

Development and History of E-Commerce

Early 1970s Use of EFT

Late 1970s Development in EDI
In 1980s Use of telephone banking
In 1982 The Boston Computer Exchange, a marketplace for used computer equipment,
was one of the first known examples of e-commerce.
During 1990s Word e-commerce was coined, E-Commerce include ERP, Dataware housing, data mining etc. during this e-commerce started to become popular.
1994- 1999 this era was known as Dot Com bubble era, many companies invested huge
amount in e-business (On-line shopping and others services) without considering some
important fact like cost of delivery,selling price, budget for advertising etc.
In 1994-95 Two biggest names in e-commerce are launched which is Amozon.com and
eBay.com ( We can not think history of e-commerce without Amozon and Ebay :-) )
In 2000 dot-com collapse
In 2000s, the meaning of the word e-commerce has gradually changed. People began to
define the term e-commerce as the process of purchasing goods and services over the
Internet using secure connections and electronic payment services.
2003 Amazon had its first year with a full year of profit.
Write Short notes on history of e-commerce.

1.2

Paper Vs Paper less contracts

A business contract is a legally binding agreement between two or more parties to do or not to
do certain things. For example, a business contract could be for the sale of goods or supply of
services at a certain price.

There are many different types of contracts including:

The sale and purchase of a business agreement;
Partnership agreements;
Leases of business premises;
Leases of plant and equipment; and
Employment agreements.

1.2.1

Paper Less Contract

EDI is used for paperless transactions/contracts.

Minimizes the amount of time used in inventory.
EDI is commonly applied in execution and settlement phase of trade cycle.
Helps in Minimizing the cost.
EDI can be used for Pre Sale transaction there should be EDI messages developed for
transaction of such contracts.
Nowadays people implement and maintain contract in paper and electronic format (paper less
or less paper).
Sn. Attribute

Paper Document

Paper less/ Electronic Document.

Variety

Paper documents are ledgers,

his variety exists also in elec-

personnel
memos,
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Metadata

files,

notes,

tronic form.but more complex

letters,

articles,

and advanced. for example

papers, pictures, etc.

spreadsheets .

No meta data

It contains Information about

data, for example Name of
Author, date, time etc. this
can be used for searching purpose.

Backups

Costly and time consuming

Easy

Search

Searching require more time

Searching in Electronic document is easy.

redundancy

Less

More
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Define Business Contracts.

Write the Difference between Paper Document and Electronic Document.

1.3

E-Commerce Models

E-Commerce can be classified in to four models, this can be identified by party involved in it.
B2B (Business to Business)
B2C (Business to Consumer)
C2C (Consumer to Consumer)
B2G (Business to Government)

1.3.1

B2B/Business to Business

The B2B model involves electronic transactions for ordering, purchasing, as well as other administrative tasks between houses. It includes trading goods, such as business subscriptions,
professional services, manufacturing, and wholesale dealings. Sometimes in the B2B model,
business may exist between virtual companies, neither of which may have any physical existence. In such cases, business is conducted only through the Internet.
As an example, a wholesaler places an order from a companys website and after receiving the
consignment, sells the end product to final customer, in this case wholesaler is second business
organization and company is first organization

1.3.2

B2C/Business to Consumer

The B2C model involves transactions between business organizations and consumers. It applies
to any business organization that sells its products or services to consumers over the Internet.
These sites display product information in an online catalog and store it in a database. The B2C
model also includes services online banking, travel services, and health information.

Figure 1.1: B2B Model.

Figure 1.2: B2C Model.

C2B/Consumer to Business this model is similar to B2C but in this model Consumer is seller
and business organization is buyer.
another example is that, a consumer approaches website showing multiple business organizations for a particular service. Consumer places an estimate of amount he/she wants to spend
for a particular service. For example, comparison of interest rates of personal loan/ car loan
provided by various banks via website. Business organization who fulfills the consumers requirement within specified budget approaches the customer and provides its services.
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Figure 1.3: C2B Model.

1.3.3

C2C/Consumer to Consumer

The C2C model involves transaction between consumers. Here, a consumer sells directly to
another consumer. for example www.ebay.com, www.olx.com etc

Figure 1.4: C2C Model.

1.3.4

B2G/Business to Government

In this model, the business houses transact with the government over the Internet or other ecommerce technology.

Figure 1.5: B2G Model.

Model that involves transactions between the government and other entities, such as consumer, business organizations, and other governments. All these transactions that involve government as one entity are called e-governance.
The various models in the e-governance scenario are:
G2B (Government to Business )
Government uses B2G model website to approach business organizations. Such websites
support auctions, tenders and application submission functionalities.

G2C (Government to Citizen/Consumer)

Government uses G2C model website to approach citizen in general.Main objectives of
G2C website are to reduce average time for fulfilling people requests for various government services

C2G(Citizen /Consumer to Government) This is similar to G2C model but in this model
citizen approach to government through various E-Commerce Technology, like Internet

G2G(Government to Government)
This model involves transactions between 2 governments.

Figure 1.6: G2C Model.

Define e-governance.
Write short notes on e-commerce model.
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1.4

E-Security

The security of the transaction is the core and key issues of the development of E-commerce.Esecurity is protection of information against unauthorized disclosure,transfer, modifications, or
destruction, whether accidental or intentional.it not only provide protection but also provide
mechanism for prevention. E-Security is the method of securing internet systems from malicious use. It deals with the security of the information (in electronic form) that travels over the
Internet. So e-security involves securing both the information as well as the network through
which the information flows.
In E-Commerce there is four phase i.e. Pre Sales,Execution,Settlement, post sales, each phase
requires some security measures.
Pre Sales

Execution

This Phase In-

this

clude Search and

with order and

negotiation

delivery

Confidentiality,

Secure

Access Control

tract,Digital

is

involve

Con-

Settlement

Post Execution

invoice and Pay-

Warranty and ser-

ment

vices etc.

Encryption

Secure Contact

Certificate
Three types of security threats

Denial of Service
Unauthorized Access
Theft and Fraud
Denial of Service/DoS:- In computing, a denial-of-service (DoS) or distributed denial-of-service
(DDoS) attack is an attempt to make a machine or network resource unavailable to its intended
users.
Unauthorized Access:- Illegal access to systems, applications or data,Passive unauthorized access ,Active unauthorized access, Changes intent of message, Sniffers- software that illegally
access data traversing across the network. spoofing- sending a message that appears to be from
someone else., Software and operating systems security holes.
Theft and Fraud:- Fraud occurs when the stolen data is used or modified.Theft of software via
illegal copying from companys servers.Theft of hardware, specifically laptops.

Security requirements

Authentication

This ensure that genuine person/party is involve in electronic Communication. Technology used :-Digital Certificate,OTP, Finger print retina scan etc

Authorization

Authorization allows a person or computer system to determine if someone has the authority to request or approve an
action or information.Authorization is tied with authentication . If a system can securely verify that a request for information (such as a web page) or a service (such as a purchase
requisition) has come from a known individual, the system
can then check against its internal rules to see if that person
has sufficient authority for the request to proceed

Non-repudiation

Non-repudiation is the ability to guarantee that once someone has requested a service or approved an action, they cannot turn around and say I didnt do that!.

Integrity

Integrity of information means ensuring that a communication received has not been altered or tampered with.

Key Management

Provide secure distribution and management of key which

is require for secure communication.

Privacy

In online commerce, privacy is the ability to ensure that information is accessed and changed only by authorized parties.

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