Every semester I discuss an Internet-sales hypothetical with my Internet law class, in which a consumer in State A purchases goods from a seller in State B, is unhappy with the purchase, and wants to pursue legal claims against the seller. The first question we discuss is “where did the transaction take place?” Some say the transaction takes place in the consumer’s state, some say it takes place in the seller’s state, some say it takes place wherever the retailer’s servers are located, and some say you can’t tell. The law has not provided a definitive answer to this question, nor does it need to. The law has been able to resolve whether State A could exercise long-arm jurisdiction over the seller or whether the seller must collect and remit to State B sales tax on the non-resident consumer’s purchase. Under current U.S. law an online retailer does not, by having an online sales presence alone, automatically subject itself to jurisdiction in every state in which its products are sold.
A proposed law would complicate this question in the European Union. As reported here by TimesOnline, the law would, in any business-to-consumer contract, make the contract subject to the law of the country in which the consumer resides. Critics argue that the law would limit the growth of EU e-commerce and limit consumer choice. Opposing the law, the British Retail Consortium stated that “[t]he sheer cost and uncertainty inherent in such a scenario is so high, that it is simply not credible to assume that companies, and small ones in particular, could engage in such trade.” Consumer advocates contend, on the other hand, that consumers might be wary about purchasing from other countries if they are not protected by their own laws.
I’m curious to see what happens.