ECommerce

Question 1

What regulated e-commerce?

Answer 1

The SOGA doesn’t regulate e-commerce in specific terms. Instead the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013) (“the EC Regulations”) must be considered and the Consumer Protection (Distance Selling) Regulations 2000 (SI 2000/2334) (“the Distance Selling Regulations”).

Question 2

What do the 2013 regulations apply to?

Answer 2

The 2013 Regulations apply only to consumer contracts. Certain types of contract are excluded (see discussion at I above). A distance contract is defined (reg 5) as a contract concluded between a trader and a consumer under an organised distance sales scheme without the simultaneous physical presence of the trader and the consumer, with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded.

The 2013 Regulations impose information obligations on the trader and provide a right of cancellation for the consumer where a distance contract is concluded. The information requirements are different for distance contracts and on-premises contracts (discussed at I above).

Question 3

What are the information requirements?

Answer 3

Reg 13 provides that before a consumer is bound by a distance contract the trader must provide information listed in Schedule 2 in a clear and comprehensible manner, and in a way appropriate to the means of distance communication used and the trader must give or make available to the consumer a cancellation form (which is set out in part B of Schedule 3). Schedule 2 requires a number of pieces of information to be given to the consumer including:

The main characteristics of the goods 

The identity of the trader

The trader’s address and, where available, the trader’s telephone and fax numbers and email address

The total price of the goods including taxes

All additional delivery charges and any other costs

The arrangements for payment, delivery, performance and the time by which the trader undertakes to deliver the goods

The trader’s complaint handling policy

The conditions, time limit and procedures for exercising a right to cancel and, where applicable, that the consumer will have to pay the cost of returning goods where the contract is cancelled

The existence and conditions of after-sales customer assistance, after sales services and commercial guarantees

The existence of relevant codes of conduct.

Reg 14 provides that where the distance contract is concluded by electronic means the trader must make the consumer aware in a clear and prominent manner of certain items of information set out in Schedule 2 (such as characteristics of the goods and price). This must be done directly before the consumer places the order. The trader must also ensure that the consumer when placing the order explicitly acknowledges that the order implies an obligation to pay. If the trader fails to do so he will be in breach of contract (reg 18).

In terms of reg 16 the trader must give the consumer confirmation of the contract on a durable medium. This confirmation must include all of the information set out in Schedule 2 unless the trader has already provided that information to the consumer on a durable medium prior to the conclusion of the distance contract. The confirmation must be provided within a reasonable time after conclusion of the contract but in any event no later than the time of delivery of the goods supplied under the contract. If the trader fails to do so he will be in breach of contract (reg 18).

Question 4

What is the right to cancel?

Answer 4

The right to cancel allows the consumer to cancel the contract without the need to give a reason within a set period of time. The right to cancel does not depend on the trader’s breach of contract.

Question 5

What contracts does the right to cancel NOT apply to?

Answer 5

The right to cancel does not apply to certain contracts for the supply of goods such as where:

the price of the goods is dependant on fluctuations in the financial market which cannot be controlled by the trader and which may occur within the cancellation period

the goods are made to the consumer’s specifications or are personalised

the goods are liable to deteriorate or expire rapidly (see reg 28)

Question 6

When is the right to cancel lost?

Answer 6

The right to cancel is lost where goods that are sealed for health protection or hygiene purposes are provided to the consumer and become unsealed after delivery; where sealed audio or video recordings or computer software is supplied and becomes unsealed after delivery; or where the goods supplied become inseparably mixed with other items after delivery (reg 28).

Question 7

What regulations govern the cancellation period?

Answer 7

regs 29-31.

Question 8

What regulations govern the exercise of the right to cancel?

Answer 8

reg 32.

Question 9

What regulations govern the effect of the cancellation?

Answer 9

reg 33 - 35.

Question 10

What do the EC regulations regulate?

Answer 10

The EC Regulations regulate providers of “information society services” (Regulation 2)
⁃ This covers almost all online commercial activities: sale of goods, sale of services, internet and email providers.[ This is the actual definition from the handouts below: it is very obscure!

This is a broad definition which covers any service normally provided for remuneration, at a distance, by means of electronic equipment for the processing (including digital compression) and storage of data, and at the individual request of a recipient of a service.]

The EC Regulations apply to contracts between businesses as well as contracts entered into between businesses and consumers.

Question 11

What transactions are excluded under the EC regulations?

Answer 11

Regulation 3: betting, gaming, lotteries.

Question 12

What do the EC regulations require?

Answer 12

The EC Regulations require sellers to provide certain information to buyers and to stipulate how the electronic contract can be concluded.

Question 13

What is the necessary information?

Answer 13

The necessary information specified in regulation 6 is:
⁃ 1. the name of the trader;
⁃ 2. the geographic address at which the trader is established;
⁃ 3. contact details of the trader, including email address, which make it possible to “contact him rapidly and communicate with him in a direct and effective manner”;
⁃ 4. details of any trade register in which the trader is registered and means of identifying it in that register;
⁃ 5. details of the relevant supervisory authority where the trader is subject to authorisation;
⁃ 6. where the trader exercises a regulated profession, details must be provided informing the customer of any professional body with which the trader is registered, including jurisdiction, and reference to the professional rules applicable in that jurisdiction; and
⁃ 7. where the trader is VAT registered, its identification number must be stated.
⁃ In addition, pricing information must be stated clearly and unambiguously and must state whether the price includes taxes and delivery costs.

Question 14

What does regulation 9 apply to?

Answer 14

Regulation 9 deals with the steps to be taken to conclude the online contract.
It applies to (i) all business to consumer contracts and
(ii) business to business contracts unless the parties agree otherwise. Traders are obliged to inform the customer “in a clear and unambiguous manner” of the different technical steps to be followed to conclude the contract.

⁃ Other related obligations under regulation 9 include informing the buyer:
⁃ 1. whether or not the concluded contract will be filed by the trader and whether it will be accessible (reg 9(1(b));
⁃ 2. how any input errors can be identified and corrected prior to the placing of the order (reg 9(1)(c));
⁃ 3. the languages offered for the conclusion of the contract (reg 9(1)(d)); and
⁃ 4. details of any codes of conduct to which the trader subscribes, together with details of how to consult those codes. (reg 9(2))

Question 15

What are distance selling regulations?

Answer 15

The Distance Selling Regulations only apply to consumer contracts. They encompass not only online transactions but any transaction that is concluded at a distance[ Mail order, telephone, fax etc.].

Question 16

How is a ‘distance contract’ defined?

Answer 16

Regulation 3 defines a “distance contract” as:
⁃ “any contract concerning goods or services concluded between a supplier[ A natural or legal person acting in a commercial or professional capacity.] and a consumer[ A natural person who is acting for purposes outside his business.] under an organised[ This means that very occasional distance sales by a trader (i.e. a type of sale that the trader doesn’t normally do) will not be caught within the ambit of the regulations.] distance sales or service provision scheme run by the supplier who, for the purpose of the contract, makes exclusive use of one or more means of distance communication up to an including the moment at which the contract is concluded”.
⁃ There are five aspects (in bold) and all of these must be satisfied in order for these Regulations to apply.

Question 17

What contracts are excluded from the distance selling regulations?

Answer 17

There are some contract which are specifically excepted from the ambit of the regulations, set out in Regulation 5:
⁃ contracts for the sale of land, contracts relating to financial services (these are separately regulated) and auctions[ This is important for things like eBay - if you are buying on sites like eBay in terms of an auction then the Distance Selling Regulations DO NOT APPLY.].

⁃ In addition the majority of the obligations[ This means that in these areas the Distance Selling Regulations are not excepted - it is just that significant aspects do not apply.] imposed on suppliers by the regulations are excluded in relation to contracts for accommodation, transport, catering or leisure services where the services are to be provided on a specific date or within a specific period – regulation 6.

Question 18

What obligations do the DSR impose on the seller?

Answer 18

The Distance Selling Regulations impose information obligations on the seller and provide a right of cancellation (a cooling off period) for the buyer.

Question 19

What information is required under the DSR?

Answer 19

In order to comply with regulation 7, the trader must provide the following information to the consumer in good time[ This means in time for it to be useful to the consumer - to allow them to make an informed choice, so prior to the conclusion of the contract.] prior to the conclusion of the contract:
⁃ “(a)(i) the identity of the supplier and, where the contract requires payment in advance, the supplier’s address;
(ii) a description of the main characteristics of the goods or services;
(iii) the price of the goods or services including all taxes;
(iv) delivery costs where appropriate;
(v) the arrangements for payment, delivery or performance;
(vi) the existence of a right of cancellation except in the cases referred to in regulation 13;
(vii) the cost of using the means of distance communication where it is calculated other than at the basic rate;
(viii) the period for which the offer or the price remains valid; and
(ix) where appropriate, the minimum duration of the contract, in the case of contracts for the supply of goods or services to be performed permanently or recurrently;
⁃ (b) inform the consumer if he proposes, in the event of the goods or services ordered by the consumer being unavailable, to provide substitute goods or services (as the case may be) of equivalent quality and price; and
(c) inform the consumer that the cost of returning any such substitute goods to the supplier in the event of cancellation by the consumer would be met by the supplier.”

⁃ Regulation 8 – this sets out further provision of information which can be provided pre or post contract, but if post contract it must be provided during the performance of the contract (services) or at the latest when good are supplied to the consumer. This information needs to be provided in writing “or in another durable medium which is available and accessible to the consumer”.
⁃ The information to be provided:
⁃ the information required under regulation 7(1)(a)(i)-(vi)
⁃ information about the conditions and procedures for exercising the right to cancel
⁃ address to which complaints should be addressed
⁃ details of any after sales service or guarantee

Question 20

How is the right to cancel governed by the DSR?

Answer 20

Regulation 10 concerns the right of cancellation: this is arguably the strongest measure of protection for consumers under the Distance Selling Regulations.
⁃ This allows the consumer to get the goods and inspect them before fully committing to the purchase because they are entitled to cancel the contract.
⁃ The right of cancellation is operative from the day the contract is concluded until (a) the day 7 working days after the date of delivery of goods; or (b) the day 7 working days after the contract is concluded in the case of services, unless the services have already been provided.
⁃ However, this 7 working day deadline does not apply where the trader has breached its obligations to tell the consumer about the existence of the right: if the supplier provides late notification of the right to cancel the right to cancel continues for 7 working days from the day after the consumer receives this notification; if the supplier never notifies the consumer of the right to cancel the right lasts for 3 months and 7 working days from the day after delivery of the goods – regulation 11.

⁃ The right to cancel is unavailable where the goods fall within the categories in regulation 13:
⁃ for the supply of goods or services the price of which is dependent on fluctuations in the financial market which cannot be controlled by the supplier;
⁃ for the supply of goods made to the consumer’s specifications or clearly personalised or which by reason of their nature cannot be returned or are liable to deteriorate or expire rapidly;
⁃ for the supply of audio or video recordings or computer software if they are unsealed by the consumer;
⁃ for the supply of newspapers, periodicals or magazines; or
⁃ for gaming, betting or lottery services.

⁃ If the customer exercises the right to cancel, regulation 17 provides that the consumer must restore the goods to the supplier - this doesn’t mean he has to deliver them back to the supplier (he must simply store the goods at his premises awaiting collection by the supplier - unless the contract provides otherwise).

⁃ Provided the contract isn’t cancelled by the consumer, then performance is required in terms of regulation 19 and the supplier is required to supply the goods or services within a 30 day period, starting the day after the consumer sent his order to the trader. Where the Distance Selling Regulations are not begin adhered to a consumer is not able to take proceedings against the seller direct - the consumer can complain to the “enforcement authority” - in Scotland this is the Director General of Fair Trading or the local authority. The enforcement authority can seek an interdict against any person who is or appears responsible for the breach.

Question 21

How do the EC regulations and the DSR interact?

Answer 21

While there is some overlap in terms of the information to be provided under both sets of regulations there are differences. As such suppliers cannot assume that compliance with one set of regulations will result in compliance with the other. Remember also the different scope of the regulations – the EC Regulations apply to both business to business and business to consumer transactions whereas the Distance Selling Regulations only apply to transactions with consumers; the Distance Selling Regulations apply to a wider category of transactions – not just those concluded online.