Commercial Know-How: E-Commerce Website
In the second of our know-how articles on operating a business website, we look at e-commerce and outline the requirements imposed by the Distance Selling Regulations, new consumer regulations (coming into force in June 2014) and other issues.
If you missed our first article, dealing with the business information you must provide on your website and the need to have general terms & conditions, together with a privacy & cookies policy.
E-Commerce - The term “e-commerce” refers to the sale of goods and/or services via electronic methods and has become increasingly common. Whether you supply to businesses or to consumers, you should have clear terms and conditions which will apply to the contract you’re entering into. These terms and conditions will deal with issues such as:
- Formation of the contract – when is a binding contract formed, for example is it when the order is received by you or when you communicate that you have accepted the order?
- Payment – what payment options are available, when is payment taken (at point of ordering or prior to delivery), what happens if payment is declined?
- Delivery – will there be a fixed or estimated delivery date? What delivery options are there? Who pays the delivery charges? If supplying services, what will the start date be
- Cancellation/Returns – what is your policy on cancellation of orders and return of goods
- Liability – what is the extent of your liability, for example do you provide warranties and/or do you intend to limit your liability for losses?
It is no use attempting to impose such terms and conditions after the event. The terms should be clearly displayed on your website and the customer should be required to read and agree to them before being able to complete the transaction.
Consumer Terms - If you supply goods/services to consumers (meaning individuals not purchasing from you in the course of a business), you will need to ensure that your terms and conditions (and your selling practices) comply with the consumer protection laws imposed by UK legislation and EU regulations/directives.
Clear & Simple Language - Consumer terms must be sufficiently clear and comprehensible for the average consumer to understanding the meaning and effect of the provisions. If the terms use overly complex legal language, or are made difficult to access/read, it is possible that they will fall foul of the Unfair Terms in Consumer Contracts Regulations and will be unenforceable.
Right to Cancel - Consumer contracts completed via distance means, which includes online and via telephone, must give the consumer the right to cancel the contract after delivery of the goods or commencement of the services. This so-called “cooling off” period is currently 7 working days from date of delivery under the Consumer Protection (Distance Selling) Regulations 2000. This will increase to 14 calendar days from 13 June 2014, when changes introduced by the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 will come into force.
The cooling off period only starts running if the consumer has been provided with certain prescribed information prior to delivery. It is not enough to include such information in the terms and conditions; it must be actively ‘communicated’ to the consumer and is normally provided when the order is accepted and/or when dispatch of an order is confirmed. The information to be given includes:
- Identity of the supplier and the supplier’s address.
- A description of the goods.
- The price of the goods including all taxes.
- Delivery costs where appropriate.
- The arrangements for payment and delivery.
- The existence of the right to cancel.
You will also need to set out details of how to exercise the right to cancel. For example, by saying how you can be contacted, how goods should be returned, and who will pay the costs of returning the goods. If this information is not provided, the cancellation period will not begin to run until either the information is given or 3 months pass from date of delivery (12 months when the new regulations come into force).
In the case of supply of services, the consumer will not normally be able to cancel if you have given the prescribed information to them and have begun providing the services with their consent. There are also various exceptions to the right to cancel in relation to goods. For example, the right does not apply to personalised or made-to-order goods, to unsealed video/audio/software goods, or newspapers and magazines.
Liability – Unlike business contracts, where you are entitled to limit your liability (subject to reasonableness and certain exceptions), you are not able to do so except in very limited circumstances in consumer contracts. Also, you cannot exclude the application of the Sale of Goods Act 1979 or other legislation for the sale of goods/services.
Other Issues – The Consumer Rights (Payment Surcharges) Regulations 2012 came into force in April 2013 and prevent traders from imposing excessive surcharges for processing a certain form of payment. These regulations will apply to ‘micro-enterprises’ from June 2014. The new Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 will impose additional requirements on the provision of information to a consumer before they enter into a contract.
Conclusion - Whether you supply to businesses, consumers or both via your website, you should have full and comprehensive terms and conditions which apply to the contract and protect your position as much as possible. For consumer transactions such terms and conditions, which must be compliant with the consumer protection laws, are vital. Otherwise, you risk having contracts challenged and found unenforceable and/or investigation and penalties from Trading Standards.
Please note that this article is for general information only. It is not intended to be, nor should it be relied upon as legal advice. If you would like advice on the issues in this article, or are considering a review of your website terms, please contact a member of our commercial team.