If you are trading over the internet, you will need some carefully drafted e-commerce terms and conditions. There are two reasons for this; firstly the terms provide all the information that you are required by law to provide to your customers and secondly, they provide your business with important protections.
The law (namely the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013) and the Consumer Protection (Distance Selling) Regulations 2000 (SI 2000/2334)) requires you to provide very detailed information to your e-commerce customers – not less than 15 separate items to cover, including:
- A description of the different technical steps the customer must follow to conclude the contract.
- Confirmation of whether or not any contract will be filed by you and, if so, whether it will be accessible by the customer.
- If you subscribe to a code of conduct (such as the Direct Marketing Association code), the name of the code and how the customer can consult the code.
- Any arrangements applying to payment and delivery, or performance of the goods or services.
- A notice that the customer has the right to cancel the contract for any reason during the seven-days following the date of the contract.
- Where goods or services ordered are unavailable, whether you propose to provide substitute goods or services of equivalent quality and price.
- That the cost of returning any goods already delivered will be borne by the consumer (if you fail to specify this you will be liable for the cost).
The protections that you will benefit from by having well drafted e-commerce terms include the following:
- Making it clear that contracts with minors are subject to the consent of the parent or guardian.
- Disclaiming liability for breach of contract or statutory warranty by third party sellers (otherwise you could find yourself liable).
- Disclaiming liability for any links to other (sometimes affiliated) online suppliers under a commission or commercial affiliation scheme (otherwise you could find yourself liable).
- Ensuring that the cost of the customer returning the product is a payment to be borne by the customer (if you are silent, you will have to pay for it).
- Ensuring that the cancellation period can’t be extended beyond the 7 day period (if you don’t advise of the 7 day cancellation period, this will be extended to up to 3 months and 7 working days after delivery).
- Limiting liability for breach of contract to the purchase price of the product and to losses which are a foreseeable consequence of a breach of contract (otherwise you could be liable to an unlimited amount).
- Making prices contained on the web page subject to verification at the time the order is received and specifying that, in the event of a pricing error, the correct price will be set out in the dispatch confirmation (otherwise you could be forced to sell the item at the incorrect price).
To take just one of the above examples – limiting liability for breach of contract to the purchase price of the product – let’s say that you sell conference banner stands online. You make a mistake on the printing and misspell the name of the company. The company decides that it can’t use the banner and as a result withdraws from the very expensive conference. The customer could claim from you a refund of the price paid for the banner and also claim for the amount paid for the very expensive conference if you hadn’t limited your liability.
To ensure that customers are legally bound by e-commerce terms and conditions, they must be ‘incorporated’ into the contract between you. Terms and conditions will only be “incorporated” if the terms are brought to the customer’s attention before the contract is made. You should ideally require your customer to tick a box indicating that they accept the terms and conditions, before being able to place their order.