The rise in purchases being made online is growing fast. If your business is new to or thinking about online selling, here’s what you need to know.
Information to be provided to consumers
The Consumer Protection (Distance Selling) Regulations set out the information that you must give to a customer prior to the conclusion of the contract. The regulations apply to anyone who supplies goods or services under a distance contract and you can’t opt out of them.
You must provide the information in a clear and comprehensible way that’s appropriate to the means of distance communication used. For example, you could include it on one of your web pages, provided that the information is brought to the attention of the customer before they enter into the contract.
The information that you will need to provide includes specific details of the goods or services in question, their price (including VAT) and delivery charges, as well as details of customers’ cancellation rights. You’ll also need to include full contact details for your business.
If the goods or services ordered by the customer are likely to be unavailable, you must tell them if you want to be able to provide substitute goods or services of equivalent quality and price.
The regulations also specify when information must be provided to the customer. If you’re selling goods or services online, you can provide the information on your website. But if you provide pre-contract information in a form that the customer can’t save or print, you must confirm the information in writing, or in another appropriate durable medium. This confirmation must be supplied either before the contract is concluded, or in good time afterwards. At the very latest, you must provide the information:
- once you have started carrying out the services; or
- when the goods are delivered (provided the goods are not for delivery to third parties).
If you don’t provide this information in time your customer will be entitled to an extension of the standard cancellation period of seven working days.
You must carry out the contract within the time limits agreed with the customer, as stated in your terms and conditions. If no time limit was agreed, the time limit specified by law applies. This is 30 days from the day after the day on which the customer sends the order to you.
Consumers’ cancellation rights
Bear in mind that the regulations give customers specific cancellation rights. Generally a customer has a period of seven working days within which to cancel the contract and return the goods to you. (You can of course offer a longer period if you wish.) There are a few limited exceptions to the right of cancellation, for example if you’re supplying perishable goods like fresh flowers or fruit.
If a customer decides to exercise their right to cancel an order and return the goods, you will automatically be liable for the cost of returning the goods unless your terms and conditions of supply expressly state that the customer will bear the cost of returning any goods already delivered. Products returned by a customer because of a defect must be refunded in full, including a refund of any delivery charges and of any costs incurred by the customer in returning the goods.
Details you must include on your website
The Electronic Commerce Regulations set out the information you must provide. All commercial websites must make certain information directly and permanently available to consumers via their website. This includes full contact details for the business, the legal status of the business, VAT and company registration numbers (if appropriate) and trade or professional association membership.
You will also have to include details if you are regulated by a supervisory authority or a professional body. You must include these details on your website whether or not any online trading is carried out via your website. The information must also be included in any commercial communications, such as business letters and documents as well as emails.
You must also make sure that all the prices you include on your website are clear and unambiguous, and you must state whether prices are inclusive of taxes and delivery costs.
The regulations also require your website to make sure the customer reads your terms of business (and can link to any code of conduct that applies to you) before they start shopping.
What companies must include on their websites
The Companies (Trading Disclosures) Regulations place additional requirements on company websites. If your business is a company, your website (and any website pages which your company has created/commissioned or authorised) must include the following company information:
- registered name;
- registered office;
- where in the UK the company is registered;
- registered number;
- if the company is exempt from the requirement to use the word ‘limited’ in its registered name, or it is a community interest company which is not a public company, it must state the fact that it is a limited company;
- if it is an investment company, it must state this fact;
- if a company discloses the amount of its capital on its website, that disclosure must relate to paid up capital; and
- if the company is being wound up, the website must include a statement to that effect.
The information must be provided in a form which is easily readable. Failure to comply with the regulations is a criminal offence, and both the company and its officers, including shadow directors, will be liable to a fine.
Making binding contracts online
When you are selling online, your terms and conditions will only be legally binding if they are brought to your customers’ attention before a contract is made.
You can achieve this by including a hyperlink on your website to a separate page where your terms and conditions are displayed, it doesn’t matter whether the customer chooses to follow the link or not. Alternatively you can require the customer to scroll through all the terms and conditions before they are able to place an order.
Many online suppliers feel that the scroll-through method is less user-friendly than including a simple link that the customer can choose to follow or not. So you may decide to require your buyers to click on an icon indicating acceptance of your terms, rather than forcing them actually to read or scroll through the terms.
Either method is fine, although bear in mind that customers may be able to argue successfully that the terms and conditions were not brought to their attention (and are therefore not binding on them) if the hyperlink to the terms and conditions page fails. There is little that can be done to address this risk, other than either to display the terms in full on the web page, so that the customer has to scroll through them, or display them inside a separate scroll-down window on the same web page.
There is also a wide range of other legislation that your business will need to comply with, including the Data Protection Act 1998; the Privacy and Electronic Communications (EC Directive) Regulations 2003; the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011 and relevant voluntary advertising or marketing codes.
For free access to more detailed information about this subject matter, other legislation and a wide range of legal forms, templates and guidance, please register on the Riverview Law website: www.riverviewlaw.com and you can follow them on Twitter @RiverviewLawSME.
About the author
Owain John is a member of the Riverview Solicitors’ team. He has particular experience in employment law, advising both claimants and respondents in a variety of contentious and non-contentions employment issues. Owain has also gained experience of conducting general civil litigation.