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  With technology, we can easily save a picture and download a song with the click of a mouse. We are free to access, share, copy and generate creative works as we like. We take these for granted and often neglect the phrase “this image is subject to copyright”.  We are not aware that our actions may infringe on someone else’s copyright. In the worst-case scenario, we may be sued for copyright infringement. This article aims to share with you the basics of Copyright law in Malaysia. Let’s be a responsible digital citizen and interact with creative works ethically and legally! What is copyright? It is an automatic right granted to the author or creator of the copyrighted work.  It prevents others from copying the copyrighted work without their permission. Depending on the categories of the copyrighted works, a copyright protection lasts during the lifetime of the author or creator plus around 50 years or more after his death.  For example, if you had created a piece of music in 2021 and published it online, you will have copyright over the song for your whole life plus another 50 years after your death.  What are some examples of copyright infringement? Posting a video that features copyrighted images or music. Using copyrighted images or music on your work or social media account. Downloading music or films without paying for their use. Copying any artistic work without a license. What rights are protected by copyright law? Economy rights: The copyright owner has the exclusive right to: reproduce the work in any material form; communicate the work to the public; perform, showing or playing the work to the public; distribute the work to the public by sale; and rent the work to the public based on commercial rental. Moral rights: The copyright owner has the right to: be identified as the author of the work; and prevent the copyrighted work from being distorted or modified in a way that affects his reputation. How can you “copy” the work legally? Understand copyright. Firstly, copyright in Malaysia is protected by the Copyright Act 1987. This right is granted to the author without any form of registration. Unlike purchasing a house, you must first be a registered owner before you can claim the house belongs to you. This Act was amended in 2012 where Parliament introduced a voluntary notification procedure. The author can submit a notification to the MyIPO to further protect their right. Secondly, copyright applies regardless of the quality and the purpose of creating the work. That means a ten-year-old child will have copyright over his superman drawing. As long as the author puts in efforts to create the work, he is entitled to a copyright protection. Thirdly, copy 20% of the work also amounts to copyright infringement. Many will think that copy a small portion of the copyrighted work is fine. It is a wrong assumption. Copyright infringement does not depend on the quantity you copied but the quality of the copyrighted work that you copied. If the copied work represents the most recognizable part of the copyrighted work, you are most likely infringing the copyright. Think twice and look carefully Before right-clicking your mouse, see carefully whether the work has been subject to copyright. If you search for an image on Google search engine, usually a copyright notice will appear together with the image that you search. Just because you are able to copy/download an image, it does not mean that the image is copyright free. Most likely than not, the image is subject to certain copyright protection. Obtaining permission Directly contact the authors who created the work and ask for permission whether you can use it. You can look carefully at the copyright notice. It may contain the information of the author. You can also directly contact the publisher if there is no information regarding the actual author or owner. Many have the misconception that attribution to the author is sufficient. That is not entirely true. Attribution and obtaining permission are two different things. You will still infringe the copyright even if you attribute the author in your work. However, permission from the author is not required if you used the work for: Research; Private study; Criticism; Review or reporting of news or current events. The above activities are non-commercial activities which amount to fair use. Fair use is a defense to a copyright infringement. That means an unauthorized use of copyrighted material is excusable if it falls under the principle of fair use. However, even though permission is not required when there is fair use, you must attribute the author as required by law. Use a copyright-free material All works that are in the public domain are no longer subject to copyright protection and hence they are free to use. For example, the work has passed the copyright protection duration as it was created long time ago after the passing of the author. In addition, there are certain platforms that offer licensing of copyrighted works, such as image library where by paying a fee, you will acquire a license to use the image in your work. If a work is distributed under a Creative Commons licence, you can also re-use it for free under the conditions set by the said licence. Copy the ideas and not the work itself Copyright protects only the expression of ideas, not the ideas themselves. For example, two artists may paint the same model picture but portray them differently. Both of them do not infringe the copyright of each other just because they may have the same kind of idea. Taking inspiration from someone else’s work is always acceptable. Copying blindly is not acceptable. Conclusion: Generally speaking, anything you see or read on the Internet is usually subject to some form of copyright protection. If you copy, reproduce, display, or otherwise hold out another’s work as your own, you are infringing someone’s copyrighted material even if you are not benefited financially from the use.

Have you ever wondered what happens to your online accounts after your death? Who can access to your online accounts after your death? Who gets to keep all the contents? Will your accounts be closed after a certain period of time? It is understandable that not many of us like thinking about death, especially our own. It is often a topic that people tend to shun away from, or they may think that while that day will come eventually, it may not be so soon, so why worry about it now? This is not quite true. Making plans for what happens after we have gone is important for the people we leave behind. That is why people make a will. It is never too soon to plan who can access your online accounts after your death. There is currently no law that regulates what happens to a person’s online existence after his death. It is entirely governed by the respective websites’ terms of service. Let’s take a look at the various service providers on how they handle online accounts after your death Email Gmail (and also Google +, YouTube, etc) Google launched the Inactive Account Manager in 2013. Basically, it is a service where users can instruct Google what to do with their Gmail messages and data from several other Google services if their account becomes inactive for whatever reason, including death. For example, users can choose to have their data automatically deleted after a period of inactivity (between 3 to 18 months), or they can select trusted contacts to download their data after a period of inactivity. Yahoo Mail According to Yahoo’s No Right of Survivorship and Non-Transferability clause, a user’s Yahoo account is non-transferable and any rights to his Yahoo ID or contents within his Yahoo account terminate upon his death. Yahoo will terminate and permanently delete the user’s Yahoo account upon receipt of a death certificate. Click here to read more. Outlook The Microsoft’s Next of Kin process allows for the release of Outlook.com contents, including all emails and their attachments, address book, and Messenger contact list, to the next of kin of a deceased or incapacitated account holder and/or closure of the Microsoft account, following a short authentication process. All contents will be downloaded onto a data DVD and then shipped to the next of kin. Microsoft will not release the deceased’s password or change the password. Social Networking Facebook There have been several cases where an individual was trying to gain access to his loved one’s Facebook account after the passing of the loved one. Facebook’s terms of service make it very clear that accessing an account that belongs to someone else amounts to a breach of the terms, which would enable Facebook to cut access to it. Like many other websites, Facebook will not disclose the deceased’s password even if such a request comes from family members of the deceased. In response to this, Facebook has provided several options: Family members can request Facebook to remove their loved one’s account from Facebook provided such request is accompanied with either a death certificate, court document confirming power of attorney, birth certificate or last will and testament. Family members and friends can request Facebook to memorialize their loved one’s account. The profile page will be turned into a memorial page for friends and family members to gather and share memories after a person has passed away. Some of the key features are such as the word “Remembering” will be shown next to the deceased’s name on his profile page, content the deceased previously shared will still be visible and that the memorialized profile will not appear in public spaces such as in suggestions for People You May Know, ads or birthday reminders so as not to upset the family members and friends. Facebook allows users to appoint a legacy contact i.e. someone that the user chooses to look after and manage his account if it is memorialized. Of course, the legacy contact will not be able to take full control of the account as if he becomes the new owner of the account. Twitter Twitter only offers one option: Family members or an authorized person who acts on behalf of the deceased can request to have the deceased’s account deactivated provided information such as a copy of the requestor’s ID and a copy of the deceased’s death certificate be submitted to Twitter. LinkedIn LinkedIn allows family members, friends and even colleagues to request LinkedIn to remove the deceased’s profile and close his account by filling out a death verification form and providing the necessary information to LinkedIn. Instagram Instagram also allows family members to request Instagram to close and delete the deceased’s account or have it memorialised. Instagram will also require proof of death such as link to an obituary or a death certificate and a legal document that shows that the request person is legally authorised to make such a request. Many of these websites claim that their users have placed a strong expectation of privacy and security when using their products/services. It is for this very reason that they will always refuse to disclose the deceased’s password to anyone. That said, they do provide ways for people to remove the deceased’s accounts. Some allow restricted access to certain information, while others only allow removal of account. What is certain is that none of the websites would allow full and unrestricted access to the account. “We spend a huge part of our lives online, so it is becoming more and more apparent that we should plan for our own deaths online” – James Norris, founder of DeadSocial, a UK company that helps individuals create social media “goodbye messages” for their loved ones. Proponents of the right to digital life after death advocate that since Internet companies often grant access to law enforcement agencies, it is only right that they should also grant access to family members of the deceased. Some of the states in the

In this world, nothing is certain except death and taxes – Benjamin Franklin (1706-90), one of the Founding Fathers of the United States. In October 2014, the Hungarian government submitted its proposed Internet tax law for 2015. One of the features under that tax law is the introduction of “Internet tax” that will be imposed on Internet users at a rate of HUF 150 (approximately USD 0.60) for every gigabyte of data or part thereof. For example, downloading a movie in HD quality (8.5 GB) would attract a tax charge of approximately USD 5. This proposal caused a huge uproar and received negative criticisms from the public and the industry players. It was even condemned by the European Union. Some people perceived this as a way for the Hungarian government to control the Internet and stifle free expression and access to information. The Hungarian government was later pressured into changing its stance slightly.  They did so by stating that the new tax will be capped at HUF 700 (approximately USD 2.8) for home users and HUF 5,000 (USD 20) for business users, with Internet Service Providers (“ISPs”) expected to pick up the rest of the tab. That did not help much as the public still believed that the ISPs will pass on the costs of complying with this law onto the consumers eventually. The Hungarian government has finally backed down and decided to shelve this law after large-scale protests from its people. From the inception of the Internet until the late 1990s, the Internet was free of regulation by governments all over the world. However, things began to change when the government realized that Internet services are a potential source of tax revenue, especially in the e-commerce sphere where the world is becoming one big marketplace. As a result, many governments have amended their Internet tax law to accommodate to this new way of doing business. In the United States, President Bill Clinton signed the Internet Tax Freedom Act into law in 1998, in an effort to promote and preserve the commercial, educational and informational potential of the Internet. This law bans federal, state and local governments from imposing a tax on internet access and other discriminatory Internet-only taxes such as bit tax, bandwidth tax and email tax. The law also prohibits multiple taxes on e-commerce, although it does not exempt sales tax made through online transactions. A tax on internet access is not the same thing as a tax on internet sales. The former is what the Hungarian government was trying to introduce, whereas the latter is becoming a norm in many parts of the world. Internet Tax in Malaysia Likewise, the Malaysian government is not left out when it comes to taxing internet sales. In March 2013, the Inland Revenue Board of Malaysia (“IRB Malaysia”) published a “Guidelines on Taxation of Electronic Commerce” (“E-Commerce Guidelines”) which as the name suggests, aims to provide guidance on the tax treatment of e-commerce transactions. E-commerce is defined to mean any commercial transaction conducted through electronic networks including the provision of information, promotion, marketing, supply order or delivery of goods or services although payment and delivery of such goods and services may be conducted off-line. The IRB Malaysia acknowledged that as there are no specific provisions under the Income Tax Act 1967 (“ITA”) that address e-commerce transactions, hence it is hoped that the E-Commerce Guidelines will provide the much-needed guidance to clear the confusion as to whether online businesses need to pay income tax or not. The E-Commerce Guidelines adopts the principle of neutrality where both conventional and online businesses are subject to the same tax treatment under the ITA. What this means is that there is no difference between a seller who sells goods in a physical shop and a seller who sells goods on a website (online shop) – both of them need to pay income tax. With the coming into force of the E-Commerce Guidelines, it signals an end of the tax-free ride era enjoyed by e-commerce players since the beginning of the e-commerce industry in 1997. In general, the income of a person accruing in or derived from Malaysia is subject to income tax in Malaysia. Where business operations are carried out in Malaysia, the income attributable to those business operations is deemed to be derived from Malaysia. Whether an income is considered to be derived from Malaysia or not is subject to the business operations test i.e. whether there are substantial business activities being carried out in Malaysia. Para 5.1 of the E-Commerce Guidelines states that a server/website by itself does not carry any meaning in determining derivation of income. Para 5.2 provides 3 examples of situations where income from e-commerce is deemed to be derived from Malaysia even though the company conducts business through a website which is hosted on a server located outside Malaysia. Para 6 examines the various permutations of e-commerce business models with varying assumptions, in each case, stating the IRB Malaysia’s position on whether or not business income is deemed to be derived from Malaysia. The Sales and Services Tax (“SST”) took effect from 1 September 2018, replacing the Goods and Services Tax (“GST”). SST comprises two legislative acts: The Sales Tax Act 2018 governing the manufacturing and oil and gas industries; and the Service Tax Act 2018 on selected service providers. The current version of SST is an enhanced version of the Sales Tax Act 1972 and Service Tax Act 1975. The tax rate for Sales Tax is 10% while the Service Tax is 6%. Unlike GST which is a multi-stage indirect tax, SST operates on a single-stage basis, which means that the sales tax or service tax is imposed only once at the manufacturing stage (sales tax), importer stage (sales tax) or service provider stage (service tax). The threshold for businesses to imposed SST is RM500,000 and above on taxable income. (For Foods and Beverages Business – threshold is RM1,500,000) For example, manufacturing will add in sales tax of 10%

The selection of a business structure for your business will be a key decision to be made when starting up your business. This decision requires careful thought and consideration as the consequences of choosing an unsuitable business structure could risk you losing your personal savings and even expose you to the risk of bankruptcy. The few primary aspects which you should take into consideration when choosing your business structure include: Budgets and procedures Firstly, ascertain the budget which you would allocate for the formation and running of your business. The costs of forming certain business structure are higher as it takes a longer time to set up and the process of setting up these business structures are more tedious. The operating and administrative costs are also higher as these business structures are required to comply with the mandatory bookkeeping requirements imposed under the law. Confidentiality concerns For certain business structures, information with respect to its owners and the basic financial information of the business is publicly available. If confidentiality is a huge concern for owners of the business, a business structure which does not require the information of its owners and its financial information to be published will be the more favoured option. Future funding If you aspire for your business to grow and expand, it is likely that your business would require additional funding and capital in the future. It is therefore important to choose the right business structure which will enable you to grow and expand your business. Certain business structures will render the business with limited access to capital where the owners will have to rely on their own funds or creditworthiness to secure a loan for growing or expanding the business. Business continuity/ transferability Certain business structures are closely connected to the identity of its owner(s). These are structures which will dissolve following bankruptcy, death or resignation of one or more of its owners. If your intention is to keep the business despite bankruptcy, death or resignation of the owners, choosing a business structure which provides for business continuity and allows for the ownership of the business to be transferred should be the key consideration. Liabilities of owner/ shareholders Certain business structures do not have not a separate legal identity from its owners. The owners of the business are responsible for all the debts and liabilities incurred by the business and must bear all losses of the business. This gives rise to the risk of bankruptcy of the owners as there is no distinction between the assets of the business and the owners. In Malaysia, the most common types of business vehicles are as follows: Unincorporated structures: (i) Sole proprietorship and (ii) Partnership Incorporated structures: (i) Limited liability partnership (LLP) and (ii) Private limited company (Sdn Bhd) A summary of the key considerations in respect of each of these business structures are as follows. ***** About the Author: This article was written by Zuan Yin, Poh (Spring),  Partner of LPP Law – law firm in Kuala Lumpur, Malaysia. The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.

The recruitment and retention of talents are common issues faced by many employers. If you are a start-up company which does not have the cash to pay larger salaries to your employees or a growth-stage company struggling with retaining talents, Employee Share Option Scheme (ESOS) may be used to motivate, retain and remunerate your employees in the longer term. What is an ESOS? An ESOS is a scheme operated by an employer where the employer grants options to its eligible employees to acquire shares in the company. This allows the employees to have the opportunity to participate in the financial success and profitability of the company through ownership of shares in the company. The terms and conditions of an ESOS are governed by what is known as the ESOS by-laws (“By-Laws”). Basic features of ESOS Eligible employees The employees eligible to the ESOS would be set out in the By-Laws. A set of criteria on eligibility and criteria for allocation (if any) is to be determined by the board of directors of the company. The criteria may include, but not limited to; Performance, Length of service, Seniority, Contribution; and Any other criteria determined by the board of directors. Exercise price The ESOS may grant the eligible employees the option to acquire shares in the company at a future date Nil-cost: at no cost. Market value: at the market value of the employer’s shares on the date the option is granted by the employer; or Discounted value: at an exercise price which is less than the market value of the employer’s shares on the date the option is granted by the employer. Transferability of ESOS option Typically, the By-Laws will restrict the eligible employees from selling, assigning, transferring or otherwise disposing of the option. The option can only be held and exercised by the eligible employees to whom the option is granted. Dividend or voting right The right to dividends and votes is attached to the shares, rather than the ESOS options. The eligible employees are not entitled to any dividends, rights, allotments, distributions or other entitlements on the unexercised option. Further, the option must not carry any right to vote at any general meeting of the company. The foregoing rights will only available to the eligible employees when the option is exercised. Moratorium The By-Laws may provide that the shares to be allotted and issued to the eligible employees pursuant to the exercise of the option under the ESOS are subject to a retention period or restriction on transfer. This is to prevent the eligible employees from disposing of the shares to another third party without the consent of the company. Dealing with leavers The By-Laws will typically provide for what happens when the eligible employee leaves the company. The general position is that the option will lapse upon the employee leaving the employment.  Nevertheless, exceptions may be made to the employee leaving the company by reason of retirement, ill-health, injury, physical or mental disability, retrenchment and other circumstances acceptable to the ESOS committee. Lapse of option The option will often lapse upon the occurrence of the following events: The eligible employee leaving the company The eligible employee fails to exercise the option within the option period; or The bankruptcy of the eligible employee. Termination of the ESOS The By-Laws may provide that the ESOS may be terminated upon the approval of the board of directors of the company and the board of directors may do so notwithstanding that there may be eligible employees who have yet to exercise their options. Requirements under Companies Act 2016 (CA 2016) Pursuant to section 129 of CA 2016, a company must maintain a register of the option granted to the eligible employees to take up unissued shares in the company. Further, the company must, within fourteen (14) days from the granting of the option to take up unissued shares in the company to the eligible employees, enter in the register the particulars including the details of the eligible employees entitled to the option, the date on which the option was granted, the number and the description of shares in respect of which the option was granted, the consideration for the exercise of the option (if any) and the period or time or the occurrence of any event of which the option may be exercised. Any contravention of this section will be an offense penalized under CA 2016. Conclusion The offering of share options to potential employees will aid the company in terms of recruitment and the provisions of ESOS that the option will lapse upon the employee leaving the employment can help the company in terms of retention of employees. By granting your employees the option to subscribe for shares in the company, you are telling your employees that you are willing to share the financial success and profits of the company with the employees. If your employees feel motivated, it is likely that the productivity in the company will also be increased. ***** About the Author: This article was written by Zuan Yin, Poh (Spring),  Partner of LPP Law – law firm in Kuala Lumpur, Malaysia. The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.

In this age of technology, the use of technology has become part and parcel of daily life to many people. One particular example is that more and more people are buying goods and services online, so what is your protection when you are doing online shopping? Electronic commerce (“e-commerce”) offers many benefits to consumers, such as convenience, easy access to a wide range of goods and services, and the ability to gather and compare information about goods and services. The Government also actively promotes the e-commerce industry and the use of e-Government services. To this end, the Parliament has enacted the Electronic Commerce Act 2006 and the Electronic Government Activities Act 2007 to give legal recognition and to facilitate all forms of electronic dealings. The Personal Data Protection Act 2010 is also enacted to protect consumers’ personal data, and this is important as large amount of personal data are transferred through e-commerce transactions. In terms of consumer protection, the Consumer Protection Act 1999 has also put in the relevant safeguards to consumers’ rights and interests when it comes to e-commerce. In this article, we talk about the legal recourse that a consumer has in the event of a dispute arising from an e-commerce transaction. Online Shopping Sites One of the most popular forms of e-commerce activity is online shopping. From buying books on Amazon, bidding for gadgets on eBay, shopping for goods on Taobao to downloading apps from app stores, people are getting more comfortable in doing transactions online. At one point in time, group-buying sites such as Groupon, MyDeal and Living Social became so popular in Malaysia, thanks to the large discounts and attractive deals that these sites offered. There are also online-only retailers such as zalora.com.my, lazada.com.my, blog shops such as stylesofia.com, peer-to-peer network sites such as mudah.my and eBay.com.my, as well as forums such as lowyat.net. In recent years, we have also witnessed the growth of many micro e-commerce models where private individuals do transactions and retails through social media platforms such as Facebook and Instagram and chatting sites such as WeChat and WhatsApp. Online traders are able to offer items with cheaper prices and still make a decent profit margin because they save on the expenses such as rentals, bills and employees’ salaries that they would have to pay if they were to set up physical shops. Online shopping provides an excellent alternative shopping avenue. One does not have to leave home to get the items that he or she wants. Most of the time, items bought are successfully delivered. But sometimes, customers receive items that are different from what they bought, or they never received their items at all. What recourses do consumers have if these incidents happen? 1. Read the fine prints Most of the credible online shopping sites have terms and conditions or fine prints prominently displayed on their sites. The first thing that customers should do is to read the refund or replacement policy carefully. Some sites offer a full refund or replacement with alternative products in the event of lost or faulty products whereas some sites state that items bought are neither refundable nor exchangeable. Some sites go even further to disclaim their liability in the event the merchants on their sites fail to deliver the products as promised or run away with money paid upfront by the customers. Under the law, once customers have agreed to the fine prints, they cannot subsequently turn around and say they did not read the fine prints or did not understand the clauses. That being said, if customers feel that the terms and conditions are substantially or procedurally unfair, they can challenge the terms and conditions on the basis that such terms are unfair under the Consumer Protection Act 1999. 2. Do research A quick Google search will show a whole list of product reviews of the items that other customers may have made. Read the reviews to understand whether the items are legitimate or usable as per what the merchants claim. Any good or bad reviews will usually be shared online via social media or forums. It is always worth the effort to spend some time doing research, and one should never fall into the marketing trap such as that “the offer is ending soon”, which often pushes customers to buy hastily. If the information on the sites is unclear or vague, drop them an email or give them a call to clarify. It may just be an oversight or miscommunication on the part of the sites. As the saying goes, if a deal looks too good to be true, it probably is. 3. Call to inquire In the unfortunate event that the items bought are not delivered to the customers, customers should always first call the sites to enquire the delivery status. Most of the time, they will entertain customers’ enquiry or complaint. A replacement or refund may be offered, depending on the terms and conditions that the customers have agreed to. 4. Legal action If despite calling the sites but the sites still fail to offer a replacement or refund, customers may consider taking legal action against them. Hiring a lawyer to file a legal suit for an RM200 item may seem a little impractical. Thankfully, Malaysian laws are quite pro-consumers. Aggrieved customers may file a claim with the Consumer Claim Tribunal (“Tribunal”), which provides an alternative forum for customers to file claims in a simple, inexpensive and speedy manner. A customer may file a claim with the Tribunal in respect of any claims not more than RM25,000 within 3 years of the dispute except for certain matters such as claims arising from personal injury or death; claims for the recovery of land, disputes concerning a Will, trade secret or other intellectual property, etc. A customer may file a complaint with the Tribunal claiming for any loss suffered arising from, amongst others: false or misleading conduct, representation or unfair practice; the safety or quality of goods or services; the goods

If you have ever purchased an item on the Internet or signed up for a service online, you have formed an electronic contract on the Internet. A contract is simply an agreement that would be enforceable under the law. Electronic contract or not, in general, contracts need not necessarily be in writing. An oral contract is legally recognised and enforceable, although proving its existence is another matter altogether. Overview An electronic contract is basically a type of contract formed by electronic means rather than traditional media – such as the exchange of signed written documents. Contracts formed through electronic (electronic contract) means (such as over the Internet) are legally recognised as valid and enforceable contracts in Malaysia under the Electronic Commerce Act 2006 (“ECA”). Only certain types of contract – such as contracts that involve disposition of lands or wills – are specifically required to be in writing and in physical copy as required by specific legislation. For other types of contract, where any law requires the information to be in writing, the ECA states that the requirement of the law is fulfilled if the information is contained in an electronic message that is accessible and intelligible so as to be usable for subsequent reference. \ It further states that where any law requires a signature of a person on a document, the requirement of the law is fulfilled, if the document is in the form of an electronic message, by an electronic signature which: is attached to or is logically associated with the electronic message; adequately identifies the person and adequately indicates the person’s approval of the information to which the signature relates; and is as reliable as is appropriate given the purpose for which, and the circumstances in which, the signature is required. An electronic signature is as reliable as is appropriate if: The means of creating the electronic signature is linked to and under the control of that person only; Any alteration made to the electronic signature after the time of signing is detectable; Any alteration made to that document after the time of signing is detectable. Offer and an invitation to treat Contracts are formed when the following elements are present, namely, offer, acceptance, consideration and intention to enter into legal relations. There is also a distinction between an offer and an invitation to treat in the eyes of law. Traditionally, case law has decided that the display of an item in a shop window is NOT an offer to sell that item, but rather it is an invitation to treat i.e. an indication by the seller that he may be prepared to sell the item to the buyer. The offer is ONLY MADE when the buyer picks up the item and approaches the counter saying that he would like to buy the item, and it is then up to the seller to accept the offer and close the deal. While this position has not been tested in our local courts, using the same analogy, the display of an item on a website will likely be treated as an invitation to treat, and a deal is only closed when the online seller accepts the buyer’s offer. This distinction is important because if the item displayed in the shop window or on the website is treated as an offer, then the moment the buyer accepts it, the seller would be bound by it and must perform the contract. This would be disastrous to the seller if, for example, there are only a limited number of items for sale, and the orders outnumber the items, which means the seller will be bound by contracts which he cannot fulfill. Online sellers should therefore ensure their terms and conditions state very clearly that the display of items for sale on a website is only an invitation to treat. If not, they must ensure that they have enough stocks to fulfil the orders. Acceptance and consideration Traditionally, the basic rule is that for acceptance to be effective, it must be communicated to the buyer. However, most of the online transactions nowadays are being processed automatically. This has blurred the line as to when an offer is accepted – is it when the seller presses the “Send” button, or when the credit card payment is accepted? The ECA states that unless otherwise agreed between the originator and the addressee, an electronic message is deemed sent when it enters an information processing system outside the control of the originator. An electronic message is deemed received: (a) where the addressee has designated an information processing system for the purpose of receiving electronic messages, when the electronic message enters the designated information processing system; or (b) where the addressee has not designated an information processing system for the purpose of receiving electronic messages when the electronic message comes to the knowledge of the addressee. That said, it would be prudent for the online sellers to state in the terms and conditions, the manner in which the contract is formed and the point at which acceptance takes place. Under Malaysian law, there must be a consideration for a contract to be valid and enforceable. Consideration simply means that each party must receive a benefit from the contract (regardless of whether it has monetary value). This is hardly an issue as the buyer receives the goods or services and the seller receives the payment. Intention to enter into legal relations is usually imputed unless proven otherwise. Incorporation of terms The terms and conditions on which the parties are contracting MUST BE agreed by both parties and incorporated into the contract. It may not be permissible to simply place the terms and conditions on a website or place a link to the page which contains the terms and conditions because the law requires that the terms and conditions must be shown to the customer and agreed by him before or at the same time when they are entering into the contract. It would be a good practice to