Growing fast? This could kill your business…

April 5, 2017

When you first start out, compliance is not top of the agenda when all you want to do is launch and start taking orders. But once you have sales, there are vital considerations and legislation that can derail your business overnight if you don’t know about them.

In this article, we cover the 7 Legal Acts that will impact how you sell your software or technology services B2B or B2C

 

Who are you selling to?

One of the key questions that need to be answered at the outset is “What is your marketplace?” Often as your product is developed over time the answer to this question can change. Your consumer product may turn out to be more suitable for other businesses to include as part of their products or you may find that your business product can be exploited directly to consumers. The question of whether to sell to businesses (B2B) or to Consumers (B2C), is fundamental in terms of product development, marketing, pricing and exploitation but most importantly, to create the correct legal terms and conditions for trading. Remember, for all your business transactions, irrespective of whether you’re trading B2B or B2C, it is wise to have contracts that cover all your business’s dealings both internally and externally. Nevertheless, B2C transactions are generally governed by much stricter consumer protection rules than B2B transactions although there are a range of rules that apply to B2B transactions as well which we will explore.

What are you selling them?

If you are selling to consumers (B2C) you must be aware of the The Consumer Rights Act 2015 (CRA), which replaced the Supply of Good Act 1979 for consumers, creates a host of rules and stiff penalties for breaching them. The CRA implies a whole range of terms (most used to be in the old Sale of Goods Act 1979) into your sales terms, for example, goods to be of satisfactory quality and fit for a particular purpose. The CRA sets the standards for supplying services to consumers with reasonable care and skill and can even affect fixing the price and the time in which to perform services.

Depending on whether you provide Goods, Services or Digital Content, there are a host of CRA requirements dealing with things such as returns, cancellations, cooling-off periods, delivery, repair and replacement that you need to be aware of. Prior to selling any of your B2C products, you must prepare your terms of sale or review your existing ones to be sure that you are compliant.

If you are supplying goods, the CRA implies the following terms (most used to be in the old Sale of Goods Act 1979) into your sales terms:

  • Goods to be of satisfactory quality
  • Goods to be fit for a particular purpose
  • Goods to be as described
  • Goods to match a sample
  • Trader to have the right to supply the goods

The CRA has also added new things such as:

  • Duty to provide certain pre-contract information
  • Goods must match a model seen or examined by the consumer
  • A standard for installed goods which must be installed incorrectly

Services: If you are supplying services to consumers you must perform the service with reasonable care and skill. Unless the method of fixing the price is set out in the contract, the consumer must pay a reasonable price for the services and unless the method of fixing the time it is set out in the contract, you must perform the services within a reasonable time.

Anything you say or write (about the trader or about the service) to the consumer, and which the consumer relies upon when deciding to enter the contract or make a decision about the service after the contract, is to be treated as a term of the contract

Digital Content: Because of the CRA, Digital Content is treated similarly to goods giving a consumer buying digital content the same rights as if she was buying goods, regardless of the way in which it is supplied.

If you supply Digital Content to consumers the following terms will be implied into your terms of sale: terms as to satisfactory quality, fitness for purpose, trader’s right to supply, compliance with description and compliance with pre-contract information provided under the CRA.

Depending on whether you provide Goods, Services or Digital Content, there are a host of other CRA requirements dealing with things such as returns, cancellations, cooling-off periods, delivery, repair and replacement etc that you need to be aware of. Remember that you can get LawBite to prepare terms of sale or review your existing ones to be sure that you are compliant.

Laws relevant to B2B trading

Even where your dealings are with another business and you are confident that do not need to adhere to the Consumer Rights Act 2015, your B2B contracts and trading terms are still affected by a wide range of regulations. For instance, the Sale of Goods Act 1979 (SGA) and the Unfair Contract Terms Act 1977 (UCTA) are of particular importance to B2B transactions.

The SGA implies a number of important terms into sale of goods contracts, particularly in relation to title and quality and it lays down a large number of presumptions, which, in the absence of express drafting to the contrary, apply to a sale of goods contract.

The UCTA limits the extent to which you can avoid liability for things such as breach of contract, negligence and other breaches of duty by putting clauses in a contract such as disclaimers, exclusion clauses and limitation of liability clauses.

The Equality Act 2010 deals with discrimination in the provision of goods, services and facilities and, amongst other things, prohibits service providers from doing anything that constitutes discrimination, harassment or victimisation.

The Late Payment of Commercial Debts (Interest) Act 1998 addresses implied terms dealing with interest, fixed sum and costs into business-to-business contracts for the supply of goods and services

The Bribery Act 2010 not only prohibits obvious bribery practices but you need to take care that what you consider to be normal corporate hospitality is not considered to be an offence under this Act. Taking a client for a nice meal is generally acceptable, but sending lavish gifts is a no no.

All websites (whether B2B or B2C) which use cookies need to provide information about what those cookies are and how they are used in order to comply with recent updates to the Privacy and Electronic Communications (EC Directive) Regulations 2003. This usually means having a cookie policy as part of your privacy policy on your website.

Phew! Well, those are the basics of what you need to know whether you’re selling your software to businesses or consumers. If you’re unsure on any of the above and would like a free consultation with one of our technology software experts, please submit an enquiry here or call us today on 020 7148 1066.

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