Electronic commerce has grown rapidly and brought about enormous change in business firms, markets and consumer behavior. To meet the increased demand, more and more business activities are moving to the World Wide Web because business activities can be reached everywhere and be performed more efficiently. <br /><br />Business rules technology is one of the most active research areas in e-commerce. It deals with representing and processing regulations and policies regarding how an enterprise conducts its business so that business activities can be carried out electronically. Abstracting business logic from the application procedures, business rule technology enables the fast development of applications that can be rapidly modified. Potentially e-business system based on business rules can explain themselves. The business rule explanation system of this thesis is a prototype system that provides a user with the justifications of the conclusions derived by a business rule system. The justifications are given in the form of the 'explanation tree' that provides 'how' dialogues to answer how a conclusion is derived, 'why not' dialogues to identify the missing criteria for achieving a goal and 'what if' dialogues to find out a complete set of preconditions that will be necessary to lead to the grant of a request. <br /><br />For e-business systems that deliver services over the Internet, a distributed architecture is required because a business activity sometimes needs to involve different partners under different contexts. The prototype is thus built upon the emerging Web Services standards. The next part of the thesis describes how business rules and Web Services technology work together to deliver a loosely coupled, distributed business rule system.