If you sell goods over the internet, it is crucial that your business understands the legal implications trading online presents.
Our internet law solicitors can help your business comply with the legal aspects of this constantly-changing environment.
About Trading Online
Most businesses now have an online presence, even if they do not directly trade over the internet. There are many laws relating to selling goods and services online, including:
- Data protection
- Electronically concluded contracts
- Distance selling
This means that additional consideration must be given to your presence on the internet and the potential legal consequences. It is vital that you are aware of the common problems and pitfalls that can arise when trading online.
The Difference Between Selling Online and Traditional Sales
Sales made over the internet to individuals are covered by the Consumer Contracts Regulations, which may cover any form of distance selling (for example, sales made over the telephone). These rules require you to send written confirmation of any order to the customer by mail or email, containing the necessary information (your name, description of the goods, etc.) and informing the consumer of any right to cancel the order, which may apply to it.
If you are selling internationally, it may not be clear where the contract and transaction occurs. In some countries, local laws will apply even if your terms and conditions specifically state that the the contract is governed by English law. For example, consumers in other European Union (EU) countries are protected by their local consumer protection laws and can take legal action in their local courts.
Transactions that take place where you have a presence in a foreign country (for example, an office located there) may also be subject to local regulation and taxation. You may also run into problems when you do not know who you customer is. For example, selling to minors may be illegal, depending on the country and what you are selling; contracts with minors are usually unenforceable. You should take local legal advice to ensure that you are aware of your legal obligations and any risks.
Enforcing a Contract Online
The same rules apply to contract formation using the internet as elsewhere: there needs to be an offer and an acceptance of that offer, plus an intention to create a legal relationship. Using the internet can lead to problems because of the written evidence trail left by email communication.
Common pitfalls include:
- Carelessly sending email messages that create a contract unintentionally
- Publishing information on your website that later forms part of contractual agreements without your wishing it to do so
- Poor website design allowing contractual obligations to be created unintentionally, or which are not covered by your preferred terms
All businesses that operate websites will need to be able to show that they have taken steps to comply with legislation. The Information Commissioner’s Office (ICO) has published guidance in relation to the regulations and recommends that all businesses take the following steps:
- Check what type of cookies and similar technologies you use and how you use them
- Decide what solution to obtain consent will be best in your circumstances
The ICO has also recommended a number of solutions in order to comply with regulations.
Registering and Protecting a Domain Name
To make it easy for people to find your website, and to minimise the risk of someone else using a similar domain name, some businesses register several domain names. For example, you might want to register ‘yourname.co.uk’ and ‘yourname.com’.
Registration itself is a fairly simple process, requiring the provision of various administrative details (for example, who own the domain name and contact details) and payment of a small fee. Once registered, you should receive a domain name registration certificate. Check the detailed terms of the registration to ensure that the domain name is properly registered to you.
The situation differs if your chosen domain name has already been registered by someone else or is already being used as a trading name or registered trademark. If there has been prior use of your proposed domain name in trade, or it is a registered trademark, you will not be able to use that domain name without the risk of a legal dispute.
Alternatively, unscrupulous registrants may have registered a domain name that is substantially similar to your own preexisting business name, which may also be protected by a trademark registration. You are able to stop such use and recover domain names that have been registered in bad faith if whoever has registered the domain name has a legitimate claim to it. Possible approaches to recovering the domain name include taking action under trademark legislation or the law of ‘passing off’. It is important you take legal advice to find out what best suits your circumstances.
Protecting Your Business Online
Should you wish to collect information on visitors to your website, perhaps through the use of a contact form or cookies, you must tell visitors and obtain their consent. It is important that you only collect the information that you need and adhere to the rules laid out in the Data Protection Act 1998 and the European Union’s General Data Protection Regulations (GDPR). You may also be required to register a notification with the ICO.
Our commercial lawyers will take the time to understand the way you interact with customers online, so we can help you comply with legal obligations that will suit your business.
Can consumers cancel purchases made over the internet?
Usually the answer is yes, but it depends on circumstances and the type of goods (or services) purchased. However, there are some exceptions where customers do not have an automatic right to cancel unless you agree otherwise. For example, sales of customised or perishable goods. Corporate customers have no special right to cancel unless agreed in the contract.
Customers who have a right to cancel an order are allowed a 14-day cooling off period to enable them to cancel the contract. The period is 14 working days from either the day after the date of delivery of the goods or the day after the date of the contract.
How can I ensure that e-commerce transactions are covered by my terms and conditions?
You need the customer to agree to your terms and conditions before you accept an order - this is known as incorporation. Simply hiding your terms and conditions somewhere on your website is not a good solution; instead, make sure that the customer has full notice of the terms and explicitly agrees, for example, by ticking a box to confirm that they have read and agreed to them.
Does having a website expose me to legal issues overseas and how can I protect myself?
Because websites are available internationally, you are exposing yourself to international legal risk, regulation and taxation. Unless you are trying to sell or promote products or services internationally, it is a good idea to ensure that your website clearly states that it is only for UK customers and that English law will be applicable.
Does having a website count as advertising and what are the rules?
A website does not in itself constitute an advertisement, but parts of the website that advertise your products or services do. You should ensure that any such adverts comply with Advertising Standards Authority (ASA) regulations. The basic rule is that adverts must be ‘legal, decent, honest and truthful’.
Are there any restrictions on the content of my website?
You must not use copyright material that you do not own without permission. This includes other people’s text and pictures. If you or your employees have not taken the photos or created the text or images appearing on your website, you do not own them unless the creator has signed an agreement transferring ownership to you.
Linking to other web pages in a way that makes them appear to be part of your site or modifies their appearance could constitute as passing off. If you do want to link to another website, it is safest to ask permission from that website’s owner.
Are there any legal issues to do with website design?
If you use a designer to create your website, ask them for a written guarantee to ensure the site does not breach anyone else’s rights and request a copy of any licences to use third-party images or third-party works, which the web designer has incorporated into your site.
To ensure you have the right to modify the site in the future, you will need a written agreement signed by the designer to transfer all copyright in the works on the site and the source code to you. Otherwise, the designer can stop you altering the website and can prevent you from instructing another designer to maintain and develop the website in the future.
What happens if my website contains incorrect information (for example, prices) or offers goods that are out of stock?
If this happens and a contract is concluded, you are normally contractually bound to supply these goods. One solution is to ensure that the information on your website only constitutes an invitation to treat and not an offer. This is an invitation for the customer to consider buying from you, which would then mean an order from the customer would constitute an offer rather than an acceptance of your offer.
To do this, you need to use careful wording. If your website does contain incorrect information, you will have the opportunity to not accept the customer’s offer to buy and to correct any mistakes or update old information.
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