E-commerce New legal regulations have been established by amendments and changes made on June 17, 2016, to the Civil Code of the Republic of Armenia and the Law on Trade and Services of the Republic of Armenia, which attempt to transfer e-commerce into the legal regulation field, which today does not lag behind traditional commercial relations conducted in real time in terms of its development pace. The expansion of e-commerce worldwide, alongside the development of the Internet, requires that trade also be subjected to appropriate legal regulations.
E-commerce, E-commerce, E-trade means the buying and selling of goods via the Internet and is mainly associated with online trade. Among the various forms of e-commerce, B2B – business-to-business, B2C – business-to-consumer, and C2C – consumer-to-consumer types of e-commerce predominantly prevail.
The current statistics of e-commerce indicate that about 41% of Internet users have purchased some goods through e-commerce, exceeding the figure of 1 billion transactions conducted, with continuous growth trends:
Examples of popular e-commerce platforms include giant companies such as Amazon and Alibaba, which act as B2C e-commerce platforms, and of course eBay as a C2C e-commerce platform, facilitating the sale of goods through auctions:
In Armenia, e-commerce is in the initial stages of development, and consumers are relatively cautious about making electronic money transfers or using their payment card information on e-commerce platforms.
The establishment and expansion of a legal regulatory framework for e-commerce can significantly contribute to its development, and the changes made in the RA Civil Code and other laws are signs of its successful launch in this regard:
One of the most important prerequisites for the development of e-commerce is the presence of developed payment systems. The most widespread payment system worldwide, PayPal, does not fully operate in Armenia, lacking the ability to receive funds if the account holder is a citizen or resident of Armenia, only maintaining the possibility of making payments. The application of the PayPal system in Armenia will primarily contribute to business development, local product sales, and an increase in conducted commercial transactions. Economic operators in Armenia will have the opportunity to offer their products not only on local but also on international e-commerce platforms and receive money transfers.
Officials from the Central Bank note that PayPal is a private company and decides its own policies. The Central Bank of Armenia has approached this company for cooperation. 'Despite the willingness, they could not reach a common agreement.'
Unfortunately, this is part of our reality, where the state-representing Central Bank cannot even reach an agreement with a private company on such an important issue for us, yet it successfully undertakes the function of protecting the rights of commercial banks. Perhaps the problem lies among the administrative personnel, and over time it may be resolved. Nevertheless, without the development of international payment systems, e-commerce will be limited only to our country's territory with limited opportunities and limited monetary circulation. The alternative to the current situation is clear: that monetary circulation is irrevocably directed to bank accounts of companies opened abroad, where they have managed to reach an agreement with PayPal...
The fact that the increase in electronic payments leads to a reduction in the shadow economy and an increase in paid taxes is no longer a secret in any country, thus states are primarily interested in regulating and developing the e-commerce sector:
New legal regulations introduce a number of new terms that have not been operational in civil circulation until now.
E-commerce platform. A site where the sale of goods takes place www....am
The concept of the E-commerce platform and platform operator is provided by the regulation on procurement in connection with the treaty on the Eurasian Economic Union.
'E-commerce platform (electronic platform)' is a website on the Internet that has been determined by the procurement legislation of the member state for the implementation of purchases in electronic format. Moreover, the procurement legislation of the member state may stipulate that the Internet portal is an e-commerce platform (electronic platform), as well as the limited number of e-commerce platforms (electronic platforms) must be determined.
'E-commerce platform (electronic platform) operator' is a legal entity or a physical person conducting entrepreneurial activities, who, in accordance with the legislation of the member state, manages the e-commerce platform (electronic platform), the software and hardware necessary for its operation, and/or ensures its operation.
The responsibility of the operator or operator of the e-commerce platform is provided by Article 416.2 of the RA Civil Code.
The operator of the Internet site or electronic application serving as a platform for concluding or executing contracts with third parties (the operator of the e-commerce platform) shall not be liable for obligations arising from contracts concluded between third parties unless otherwise provided by law or by the contract concluded between the operator of the e-commerce platform and the third party:
The first part of this article does not apply if the operator of the e-commerce platform has operated the e-commerce platform in violation of the law's requirements:
This means that the site has limited liability regarding the transactions carried out, and any claim against the site is only possible if the site has violated the requirements of the legislation:
Such limited liability has also been established for the provider of electronic communication services (a service that is usually provided for a fee and consists entirely or partially of the transmission of signals over electronic communication networks, and in appropriate cases, the routing of signals, but does not include services that provide or exercise editorial control over the content transmitted over electronic communication networks.)
This refers to operators providing Internet services. For example, if your operator is Ucom, and you conduct a transaction on any site using Ucom's connection, then the latter bears no responsibility for that transaction.
The provider of electronic communication services shall not be liable for the content of the electronic document transmitted through its information system by third parties, as well as for obligations arising between third parties through its transmission, unless otherwise provided by law or by the contract concluded with the service provider:
Electronic contract
It is an amendment to the third part of Article 450 of the RA Civil Code.
3. A contract may be concluded in writing by signing a single document by the parties, as well as by exchanging information or messages (documents) through postal, telegraphic, telephonic, electronic communication, or other means of communication that allow confirming its authenticity and accurately determining that it originates from the contracting party. When concluding a contract through a communication that ensures electronic communication, if no other requirement regarding the form of such a contract is established by law, an electronically unprotected electronic document has the same legal significance as a document signed by hand:
The amendment equates an electronically signed contract to a handwritten signed contract, even if it does not have an electronic signature. The amendment mentions the concept of 'an electronically unprotected electronic document'...
Receipt of the offer
The second paragraph of Article 451 states, 'When concluding a contract through a communication that ensures electronic communication, the offer is considered received at the moment it enters the information system specified by the addressee, or the addressee discovers it if it has been sent to an information system not specified by him.':
In simpler terms, the offer is considered received from the moment the letter is received at the electronic address.
Changes in the sent offer
Article 452 is supplemented with the following content in the second part: '2. When concluding a contract through a communication that ensures electronic communication, the offeror and the offeree have the right to correct their errors, typos, and mathematical mistakes in the offer or acceptance, provided that it is done immediately upon discovering the error, typo, or mathematical mistake, and the other party has not undertaken actions aimed at fulfilling the contract (loading goods, performing work, providing services, making payments, etc.), which has led to expenses.':
This allows both parties—the offeror and the offeree—to make changes to their offers within a reasonable period if there are errors. This period is limited by actions already undertaken by the other party.
Receipt of acceptance
Article 454 is supplemented with the following content in the fourth part: '4. When concluding a contract through a communication that ensures electronic communication, the acceptance is considered received at the moment the electronic notification regarding the actions to fulfill the conditions of the contract specified in the offer enters the information system specified by the person who sent the offer, or it is discovered by the person who sent the offer if it has been sent to an information system not specified by him.':
The offer is considered received from the moment the letter regarding acceptance is received at the electronic address of the person who sent the offer.
Possibility of replacing or returning goods
The buyer has the right to return a non-food product of proper quality within 14 days from the moment it is handed over to him, unless the seller has declared a longer period, to return or replace the purchased product with another size, shape, color, or similar configuration, with the necessary recalculation of the price difference with the seller:
2. The buyer's request for returning or replacing the product is satisfied if the product has not been used, its consumer characteristics are preserved, and there is evidence of purchasing the product from that seller:
3. The list of products that cannot be returned or replaced based on the grounds established by this article is determined by law or by the procedure established by the Government of the Republic of Armenia:
4. The costs associated with delivering the proper quality non-food product to the seller's location for the purpose of returning or replacing it are borne by the buyer unless otherwise provided by mutual agreement:
Here, attention should be paid to the following two options:
Returned products have defects. Improper
Returned products have no defects. Proper
In the first option, the seller bears the costs of replacement or return, while in the second option, the buyer is obliged to carry out the replacement or return of the products at his own expense. For example, if the product was delivered to the home, in the first case, the seller is obliged to deliver the proper product again at his own expense or to eliminate it and return the paid amount:
In the second option, the return or exchange of the product is possible only under the simultaneous presence of all the following conditions; the absence of any one allows the seller not to accept the product back:
- The product has not been used
- The consumer characteristics are preserved
- There is evidence of purchasing from that seller
In the case of the first option, however, only the presence of 3 of the above 3 points is essential, as often only through use can the fact of the product's improper nature be revealed. For example, when the purchased item breaks down upon first use.
Operator's obligation to monitor those selling on the Platform
1. The operator of the e-commerce platform is not obliged to monitor the legality and compliance of the content presented by the platform users with the legislation of the Republic of Armenia, except in cases where the operator of the e-commerce platform has known or should have known about the obvious illegality, obvious unreliability of the content presented by users, or its obvious non-compliance with the legislation of the Republic of Armenia.
2. The operator of the e-commerce platform is obliged to display the mandatory information about the seller (performer of works, provider of services) as stipulated by law and to retain the seller's (performer of works, provider of services) information for the entire period of registration on the platform and for at least 1 year after its termination, unless a longer period is provided by law or by the contract concluded with the operator of the e-commerce platform:
Although the first part discusses the Operator's limited liability, the second part is an important addition to its responsibility, stating that it is obliged to take appropriate measures to ensure that the mandatory information about the seller (performer of works, provider of services) is displayed on the platform, even if they delete their information, the platform operator is obliged to retain it for at least one year and, if necessary, provide it to the person making the request. These are the types of information that allow for the identification of the person who conducted the sale of the product. Failure to comply with this requirement may raise the issue of the liability of the platform operator under Article 416.2 of the RA Civil Code.
The Law on Trade and Services of the Republic of Armenia stipulates that issues related to trade and services conducted through a communication that ensures electronic communication are regulated by Chapter 4.1 of the same Law. The rules of Chapter 4.1 of the Law apply to television trade unless otherwise provided by law, or if the application of the specified rules does not contradict its essence.
1. When conducting trade and/or services through a communication that ensures electronic communication, the buyer must have access to the following information:
a) The sequence of actions necessary to conclude a contract, including precise information regarding the action considered an offer or acceptance, which must contain sufficient and specific information about the moment the contract is considered concluded, as well as information about the action that will create a payment obligation.
b) Restrictions on the delivery of the product (performance of work, provision of services) to the location specified by the buyer before the buyer initiates the action of purchasing the product.
c) Information related to the requirements for exchanging or returning the product.
d) Restrictions on the accessibility of the website's operation, if any.
e) Restrictions on compatibility or interaction of the website's operation with equipment or software that the seller (performer of works, provider of services) is aware of or should reasonably be aware of.
f) The extrajudicial procedure for examining complaints and resolving disputes.
g) Any other mandatory information provided by law or other legal acts:
2. The website or electronic application (e-commerce platform) may provide a link to another electronic document containing the terms of the contract to be concluded. The website or electronic application must ensure the technical accessibility of that link and the timeframes:
3. The website or electronic application must allow the buyer to retain the concluded contract or make it available to the party in a reasonable time after the conclusion of the contract, but no later than the commencement of the performance of the contract:
4. Individuals may only conduct the sale of goods through the e-commerce platform as entrepreneurial activity if they are registered in accordance with the procedure established by the Government of the Republic of Armenia (having a taxpayer account) and have electronic accounting documents issued. In cases where individuals sell personal property and items through the e-commerce platform, a separate section (subsection) is provided in the e-commerce platform to differentiate transactions related to personal property.
For the sale of personal property, it is not required to have individual entrepreneur status or to be a legal entity, but the platform is obliged to differentiate the sale of personal property from the sale of commercial property by providing a separate section:
Changes and additions have also been made to the laws of the Republic of Armenia regarding the 'Use of Cash Register Machines' (it has been established that the use of cash register machines for conducting sales through electronic communication, including television, is not mandatory) and 'Consumer Rights Protection' (additional provisions have been established regarding the replacement or return of products sold on electronic platforms, the provision of information to consumers by the seller, as well as additional provisions aimed at protecting consumer rights).
E-commerce platform operators must promptly make the necessary changes to their sites to avoid future legal issues.