Enthusiasm for e-commerce is so great that the law is not able to keep pace with developments creating huge liability headaches for UK company directors, according to City law firm Barlow Lyde & Gilbert.

Partner Bridget Treacy said there are contractual dangers with doing business over the web – particularly in the interpretation by parties to a deal over what constitutes an "offer" and what constitutes an "acceptance" with regard to a transaction completed over the internet.

"The display of goods in a shop or an advertisement that goods are for sale do not usually amount to an 'offer' to sell but are characterised as pre-contractual 'invitations to treat'," said Treacy.

"Is the offering of goods or services over a web site merely an invitation to treat or does it amount to an offer capable of acceptance by a single click of the mouse," added Treacy.

The other key issue, said Treacy, is that the internet does not recognise country borders so whose consumer law must a retailer in one country selling to a customer in another abide by is a further issue.

"For suppliers based in the UK, the prospect of litigation in a far-flung corner of the globe with a very different system of law, is hardly attractive," Treacey said.

While the EU has published proposals for an EU directive on the matter, company directors need to be aware that trading over the internet may leave them exposed to risks which they were completely unaware of. "The potential implications for directors are considerable... It is one thing for a director to say in defence that having made a reasonable assessment of relative risks and rewards, a decision was taken in the best interests of the company to trade on the internet," said Treacy.

"It is more difficult for him or her to argue that the company was doing it 'because everyone else was'."