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What to know when setting up an online shop

Online shopping is the process through which consumers buy goods and services over the Internet.

It might seem easy to set up an online shop and trade but what are some of the legal requirements?
  • One must remember that an online shop is a trade like any other. Online traders should therefore pursue registration of their businesses whether as sole proprietorship, partnerships, or companies. The business must be set up legally for it to be in existence.

Note: A domain name has no recognition as a business entity, but rather is a tool for business. This is important if the online shop wishes to enter into contracts with third parties.

  • In Kenya, online trade is primarily governed by Kenya communication laws in as far as the use of   Internet is concerned. It is therefore illegal for an online trader to contravene the provisions of the Kenya Communication Act.
  • The online trader must also appreciate the primary law of his trade. For example, if it is a jewel 'miner', he must remember that the Mining Act still regulates his business.
  • The online trader must choose a domain name that is acceptable and does not infringe on well known trademarks. The laws of domain names are applicable for an online trader.
  • The online trader must also avoid using names of countries as his domain name.
  • The online trader must ensure he has adequately protect his business by use of intellectual property laws. A copyright and a trademark should be sort for the business.
  • It is illegal for an operator to divulge confidential information about his business to a third party, without the necessary authority. When it comes to e-commerce, the Kenya Communications Act (KCA) specifically legislates against hacking and unlawful intrusion of computer systems.
  • An online trader must understand that despite regulation through the KCA, the conduct of his business remains a challenge due to unique features of cyber law. For example, a single transaction may involve so many jurisdictions leading to a conflict in laws; the transaction may be legal in one country and illegal in another. When it comes to enforcement and interpretation, a conflict of laws will definitely crop up coupled with state sovereignty issues.
  • An online trader must know that the use of e-commerce has made infringement of copyright easier as the artistic work is in public domain. For example, a competitor may duplicate your services simply by checking your website. It is up to the online retailer to exercise some discretion in the kind of information he shall release to the public.

Setting up an online shop is cheap and fast way of conducting business, however it comes with legal requirements that are only strange to online traders


  1. In USA one can check U.S federal trademark database.

  2. In Kenya, The Kenya Industrial Property Institute (KIPI), is the agency that is responsible for the registration of patents.


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