E-TAIL SPECIAL: The legal pitfalls of online selling

*Failure to have compliant terms and conditions.*

The law is considerably more protective of consumers (people purchasing outside their business or trade) than businesses and, consequently, you will not be able to restrict its liability or its consumer customers' rights as much as it would be able to in the case of business customers. The law also requires consumer terms and conditions of sale to be drafted and set out in a very straightforward and plain manner so that the customer can fully understand the contract which he or she is about to enter into with you.

If your terms are not 'consumer' compliant the contract for the sale of the goods is likely to be unenforceable (either in whole or in part). This could be disastrous given that your terms should govern not only the formation of the contract, but also the delivery, payment, liability and returns policy. The Office of Fair Trading can force you to change your terms.

Put yourself in the shoes of the consumer buying from your web site - do you understand the terms and are they fair? If you are in any doubt, the terms are probably unfair in some way.

*Failure to incorporate your terms properly*

A good set of terms and conditions of sale are only of use if they are effectively incorporated into your sale contracts. The courts generally expect a business that wants to rely on its standard terms and conditions to go to some effort to bring them to the attention of the customer. For example, it is not generally good enough for the terms simply to appear on the reverse side of an invoice. This is because the first time that the customer will see the invoice is usually after the contract has been made and performed by the seller.

If your terms and conditions don't appear on your web site at all, they will not be incorporated into any sale at all - the customer will only be obliged to pay a 'reasonable' price for the goods and your liability for those goods will not be limited.

Make sure that your web site tells the consumer that his or her purchases will be subject to your terms. Make the customer read and accept the terms - this needn't be too off-putting - just provide a link to the terms and an acceptance check box.

"I confirm that I have read and understand the terms and conditions of sale and accept that these will apply to any Contract formed with X Company Limited".

*Failure to tell consumers about their 'cooling off' right*

Sales to consumers over the Internet (and telephone) in relation to certain goods will trigger the obligation to provide the consumer with certain specific information about the contract formed over the Internet (or telephone) and about his or her legal rights under the Consumer Protection (Distance Selling) Regulations. The Regulations give rights to "consumers", including a 7 working days' "cooling-off period" in which the customer may return certain goods for any reason.

If you don't tell the consumer about these rights they will have a 3-month period in which to return those goods for any reason. Unless you state otherwise, you will also have to pay for the transport and delivery charges resulting from any return. You will not be able to resell the goods as 'new and you will lose hard fought for profits!

*Failure to tell customers how you use their personal information*

The Data Protection Act 1998 provides that all data controllers such as retailers must tell people what they will do with their name, address, telephone number, email address and other personal data.

If you don't provide this information, you will only be able to use customer data to deliver goods - you may not use it to market that customer or for any other purpose. You are likely to be fined £5,000 per breach by the Office of the Information Commissioner. You may also be stopped from using your customer database for such illegal purposes.

Are you registered under the Data Protection Act 1998 as a data controller? If not, it is likely that you will need to be - particularly if you use credit reference agencies or share your customers' data with group companies or any other third party. Also, ensure that you add the correct statements explaining how you wish to use customers information - ask for their consent by getting them to tick an 'opt-in' check box.

*Failure to comply with the E-Commerce Regulations*

The Electronic Commerce (EC Directive) Regulations came into force on 21 August last year and set out what further information must be provided by you on your web sites. Your site must give your full company details and give the customer full information in respect of his or her purchase and how to conclude that purchase and/or correct order mistakes.

Failure to comply with the Regulations could mean that your web site is ordered to stop trading illegally and to comply with the Regulations. Once again, you will be giving more weapons to a dissatisfied consumer to return goods and/or complain. Many of these regulations also apply to 'Business to Business' sales - don't get caught out!

*Failure to think ahead to the Disability Discrimination Act*

It is discrimination to treat a disabled person unfavourably (for a reason due to the disability) in deliberately not providing any service (such as your web site) offered to others or in providing inferior standard or terms of service. Service providers must make reasonable adjustments to procedures which make it impossible or unreasonably difficult for disabled persons to use services.

If your web site does not comply with these rules by October 2004, it may amount to discrimination of disabled users such as the visually impaired. Your duty will be to make "reasonable adjustments" to your web site to comply with the Disability Discrimination Act. If you are negotiating a web-design contract now, make sure that you place an obligation on the designer to comply with the Act.

Simon White is a solicitor with the firm Browne Jacobson, specialising in internet trading contracts also, advising on data protection, European Union competition and other regulations.

**This voice piece appears in our new E-tail Sector Report out next week**

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