Internet Sales Models for Minnesota Businesses

Small business owner

Business to Consumer (B2C) Sales Model

It is important to remember that most of the current commercial transactions on the Internet, and most of the anticipated transaction growth, occur as business-to-consumer sales. In such cases, the selling business wants to create on the Internet a virtual storefront allowing for anytime sale of products.

Business to Business (B2B) Sales Model

It is also important to remember that most of the earlier models of electronic commerce involved business-to-business transactions using electronic data interchange. In that model, a producer of goods, for example a parts supplier to an original equipment manufacturer, would negotiate via traditional means (meetings, mail, phone, fax) a trading partner agreement providing for terms of ordering, sale, delivery, payment, returns, warranties and the like. This agreement manifested the intent of the parties to contract and to be bound by the terms of the agreement. The mechanics of the transaction -ordering and payment, for example -were then done electronically (originally by proprietary system, and more recently, via the Internet).

Online Contracts

Since the online business-to-consumer seller wants to reach the largest possible audience, and wants to make the transaction as constraint-free as possible, such sellers sometimes try to avoid having any terms and conditions of use or transaction displayed at their Internet site. In this view, web site design makes the purpose of the site clear: to offer to sell a particular product. When the consumer enters his credit card and clicks on a sale indicator, that consumer is giving his acceptance of the transaction and approval for payment. The major contract elements of offer, acceptance and consideration are met. While there are good reasons for even a virtual storefront seller of hard goods to have terms and conditions of use and sale (it aids, for example, in “branding” the site), it is useful from a liability avoidance position to have web site disclaimers and notices. For example, warranties, remedies, restrictions on use (if any), or limitations of liability should also be considered when creating an online contract. What, if any, negotiation of terms can be accomplished online? These contract issues and terms of use notices are even more important when the transaction involves contracts for the online licensing and distribution of digital products like software, music, video or text.

This and the following posts have been copied or adopted from A Legal Guide To The INTERNET – Sixth Edition, published through a collaborative effort by the Minnesota Department of Employment & Economic Development and Merchant & Gould.