Trading Online With Your Small Business, Demystified.

July 31, 2014

You’ve developed your product, set up your website, got some funding and are ready to go to market. Very exciting. Anything you may have missed? Yes. If you’re trading online there are a number of legal issues you will want to address. Here are just a few – there is much more detail behind this summary.

Website T’s & C’s

First of all you will want a contract with your users governing use of your site. These “T’s and C’s” are a common feature of most websites and typically ensure that the user is clear what they can and cannot expect from the site. For example;

  • The user is only allowed to use the site on the basis of the T’s and C’s;
  • The user is not guaranteed uninterrupted access to the site (which may be taken down for maintenance or because of an outage, without liability to the user);
  • Liability to the user from use of the site is limited or excluded;
  • The user cannot misuse the site by introducing viruses or hacking.

These T’s and C’s will typically be supplemented by additional policies, such as;

– An “acceptable use” policy which makes clear that users mustn’t copy the site, break any laws, send spam, add contributions to the site which infringe copyright or breach anybody else’s rights;
– A “cookies policy” which clarifies which cookies a site uses, what they do, and how a user might disable them;
– A “Privacy Policy” which clarifies what data the site collects about its users, how that data is used, (for example to provide details about new products from the site), where the data is stored, who it may be disclosed to, where it is kept. This policy will in the UK need to show how the site is compliant with the Data Protection Act. The DPA provides 8 guiding principles as to the collection and processing of data, and if you engage in these activities you need to register under the DPA. The 8 principles are;

– (i) personal data must be fairly and lawfully processed
– (ii) it must be obtained and used only for specified purposes
– (iii) it must not be excessive to its stated purpose
– (iv) it must be accurate and up to date
– (v) it must not be kept longer than for the purposes for which it is collected
– (vi) it must be processed in accordance with the rights of data subjects
– (vii) there must be appropriate measures in place against unlawful processing
– (viii) it must not be transferred outside the EEA unless the country of destination has appropriate protections in place

As well as these various Ts and C’s, if you are trading online you need to comply with a number of other pieces of legislation. Here is a list of potential legislation which may apply to what you do and a brief summary of some relevant terms;

1. The E-Commerce regulations

These regulations cover virtually every commercial website, whether or not they are buying and selling (eg information providers are covered too).

Among other requirements, service providers must provide minimum information clearly to users including name, address, registration number, any supervisory body they operate under, VAT number and prices. Spam must be clearly identified. If contracts are made online then specific information must be provided upfront including the steps required to conclude the contract, whether the contract will be fulfilled directly by the service provider or someone else, the technical means for identifying and correcting errors before an order is placed. Receipt of orders must be identified electronically. Procedures for taking payment and giving refunds must be clearly set out.

2. The Consumer Contracts Regulations

These apply to protect consumers when they shop online or enter into contracts at a distance from the supplier. Most consumer contracts are covered with just a few exceptions (eg contracts for leisure or accommodation services where the service is provided within specific dates are excluded).
Again there are strict provisions on the upfront information which must be given to consumers, including a description of the services, pricing, the existence of a right to cancel, the duration of any contract, responsibilities for returning goods and the cost of return in the event of cancellation. This must all be provided in writing, normally prior to the contract being formed. A right of cancellation (a cooling off period) of 14 calendar days must normally be given from the date of delivery or (if the required consumer information is given after delivery) then 14 calendar days after the information is provided. Similar provisions for cancellation apply to service contracts. There are exceptions to the right to cancel – eg where goods are perishable and can’t be returned, or where performance of a service has begun with the consumer’s consent prior to the expiry of the cancellation period which would otherwise apply. Refunds must be given – normally within 14 days of due cancellation, and performance of the contract must normally be carried out within 30 days after the order is made.

3. Unfair Terms in Consumer Contracts

Finally, online services will need to be aware of the Unfair Terms in Consumer Contracts legislation. This outlaws a number of pro-supplier terms in consumer contracts. For example;

(i) A business cannot exclude liability for death or personal injury through negligence;
(ii) A business cannot “unreasonably” exclude liability for breach of contract, or provide a substantially different performance than that expected or provide no performance at all
(iii) A business is not allowed to exclude provisions under the Sale of Goods Act, for example by seeking to exclude liability for ownership of the things it sells, or for the description, quality, and fitness for purpose of its goods.

So, there is plenty of scope for messing up your online trading with serious consequences. You can be fined for breach of the Data Protection Act, your offending provisions will not apply under the Unfair Terms in Consumer Contracts legislation. The Office of Fair Trading monitors compliance with the Consumer Contracts Regulations and can seek court orders and fines for non-compliance. Make sure that if you trade online you get these things right first time..
Don’t worry! LawBite’s expert solicitors have done the work for you.. our up-to-date website protection bundle is ready-made for your business so you can get trading online.

 

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