THE CALIFORNIA LONG-ARM STATUTE
IVAN HOFFMAN, B.A., J.D.
California has passed a law that may have a substantial
impact upon site owners and their web site designers. On the face of the
statute, the law seems to apply not only to those sites within the geographical
borders of the state but potentially throughout the entirety of the electronic
world. If you are a site owner or a designer, no matter where you are located,
it appears this statutes is one to which you should pay some attention.
The statute, Business and Professions Code
§ 17538, reads in part (in typically legalese run-on):
(a) It is unlawful in the sale
or lease or offering for sale or lease of goods or services, for any person
conducting sales or leases by telephone, Internet or other electronic means
of communication, mail order, or catalog in this state, including, but
not limited to, the offering for sale or lease on television, radio, Internet,
or other electronic means of communication or telecommunications device
of goods or services which may be ordered by mail, telephone, Internet,
or other electronic means of communication or telecommunications device,
or for any person advertising in connection with those sales, leases, or
advertisements a mailing address, telephone number, or Internet or other
electronic address, to accept payment from or for a buyer, for the purchase
or lease of goods or services ordered by mail, telephone, Internet, or
other electronic means of communication or telecommunications device, whether
payment to the vendor is made directly, through the mails, by means of
a transfer of funds from an account of the buyer or any other person, or
by any other means, and then permit 30 days, unless otherwise conspicuously
stated in the offering or advertisement, or unless a shorter time is clearly
communicated by the person conducting the sale or lease, to elapse without
doing any one of the following things:
Let me stop here to digest this statute in its key
elements. The words
"in this state" are the key to the problem for
site owners and designers. Over the Internet these words may mean not only
having a geographical presence in the state of California, however pleasant
that may be to some, but having a site anywhere in the world that is accessible
to anyone who is in the physical boundaries of the state-which is of course
every site everywhere.
Thus, the statute's legal reach may apply to every
site owner in every place anywhere on the World Wide Web. Apparently, anyone
whose site deals in "goods or services" is in theory subject to
the provisions of the statute.
AS BETWEEN SITE OWNER AND DESIGNER
The statute goes on to say that if the offering party
does not fulfill the customer's order within 30 days or otherwise complies
with some alternatives to actually fulfilling the order, then the offering
party may be in violation of the statute. Now while this requirement may
not seem particularly onerous or indeed even novel, since it now may have
application all over the world, it is significant because of its reach
and because it imposes requirements on the site owner, and in turn the
site designer, to include some rather specific language on the site. Failing
to include such language is also a violation of the statute.
There are a great number of issues that arise with
regard to this issue including but not limited to the express language
of the contract which may shift the burden of such compliance to the site
owner. If there is any reason to have such a written and executed
web site design contract, this is it, although there are many other such
reasons. But without the contractual provision I mention, the designer
could find herself or himself in potential legal jeopardy. The site
owner may argue that he or she relied on the expertise of the designer
in all aspects when the site was created and that part of that reliance
was as to compliance with all laws.
The designer's reply may be that the designer relied
upon content created by the site owner and merely then embodied that content
within the HTML or other programming but otherwise the designer had no
discretion as to content.
While both arguments seem on their face to have some
merit, the contract may go a long way toward resolving this open question.
THE NOTICE REQUIREMENTS
If the statute applies to the site because it offers
goods or services, then the law requires that the site owner provide certain
notices to at least certain consumers who order over the site. The statute
states that this information must be provided either via email or in certain
specified locations on the site. This is where the designer's liability
may come into play.
The information required to be disclosed to a buyer
in California" is:
the vendor's return and refund
policy, the legal name under which the business is conducted and, except
as provided in paragraph (3), the complete street address from which the
business is actually conducted.
(2) If the disclosure of the vendor's
legal name and address information required by this subdivision is made
by on-screen notice, all of the following shall apply:
(A) The disclosure of the legal
name and address information shall appear on any of the following: (i)
the first screen displayed when the vendor's electronic site is accessed,
(ii) on the screen on which goods or services are first offered, (iii)
on the screen on which a buyer may place the order for goods or services
or (iv) on the screen on which the buyer may enter payment information,
such as a credit card account number. The communication of that disclosure
shall not be structured to be smaller or less legible than the text of
the offer of the goods or services.
(B) The disclosure of the legal
name and address information shall be accompanied by an adjacent statement
describing how the buyer may receive the information at the buyer's E-mail
address. The vendor shall provide the disclosure information to the buyer
at the buyer's E-mail address within five days of receiving the buyer's
Going back to the arguments each party, site owner
and site designer may raise, the owner may say that while he or she provided
content, it was the designer's responsibility to insure that the site complied
with the above provisions. Without a contract specifying anything to the
contrary, the situation is extremely cloudy.
There are a number of exceptions to the street address
information requirements. And there is an additional exception that may
make the statute inapplicable to the site in all respects but there are
requirements for this exception as well. They are contained in 17538.3
and you should read it fully to see if these exceptions apply to your circumstances.
And even these exceptions require an examination of whose responsibility
it may be to effect compliance with the terms of the exceptions.
The statute means business! This is what it provides
for a violation of its provisions:
(g) Any violation of the provisions
of this section is a misdemeanor punishable by imprisonment in the county
jail not exceeding six months, by a fine not exceeding one thousand dollars
($1,000), or by both that imprisonment and fine.
If the site owner has a successful claim against
the designer for failure of the designer to make the site comply with the
terms of the statute and the site owner is subjected to any of the penalties
provided by the statute, the designer may face a substantial liability
lawsuit by the owner for breach of a contract, of a warranty of merchantability
or otherwise, for misrepresentation, as well as for other various forms
Note here that there are two aspects to the liability:
the first is the failure to ship the goods or provide the services within
30 days. That liability it appears attaches to the site owner. But the
statute also provides that the site must comply with certain notice provisions
and it is this latter portion that may create the designer's liability.
And the penalty section applies to "any violation of the provisions
of this sectionů." meaning that both aspects may create liability.
Further, if the party uses a mail box, whether
a post office or a private mail box, there are additional requirements
for notice including but not limited to as to street addresses set forth
in section 17538.5 that also provide for criminal penalties for failure
to comply. It says:
Any violation of the provisions
of this section is a misdemeanor punishable by imprisonment in the county
jail not exceeding six months, or by a fine not exceeding two thousand
fivehundred dollars ($2,500), or by both.
All site owners and their designers should read this
statute including all its subparts with great care and seek the advice
of a lawyer with experience in this area of the law for its potential applicability
to the site, to the designer and otherwise.
Whether the statute is constitutional under United
States' laws is an open question. The current state of the law with regard
to jurisdiction on the Net, which laws apply to who and whether geopolitical
state and/or international boundaries have meaning any longer is much in
But no one wants to be the test case. And while it
may not be totally possible to avoid this occurrence, having a written
web design agreement that attempts to cover this issue may go a long way
toward resolving the question, at least as between designer and owner.
The issues raised in this article along with others about the effect of
the statute will remain however.
Copyright © 1997 Ivan Hoffman. All Rights
This article is not legal advice and is not intended
as legal advice. This article is intended to provide only general,
non-specific legal information. This article is not intended to cover
all the issues related to the topic discussed. The specific facts
that apply to your matter may make the outcome different than would be
anticipated by you. This article is based on United States law.
You should consult with an attorney familiar with the issues and the laws
of your country. This article does not create any attorney client
relationship and is not a solicitation.
No portion of this article may be copied, retransmitted,
reposted, duplicated or otherwise used without the express written approval
of the author.