Things to Consider When Trading Online | Commercial Law
For the foreseeable future, most of the shops will be closed so, with shoppers having little option other than to buy from the comfort of their sofas, what should you consider if you are going to trade online?
- Are you selling to business users or consumers?
You need to consider if the customer for your goods or services is using them for a personal or business need. A consumer is defined as an individual acting for purposes that are wholly or mainly outside of that individual’s trade, business, craft or profession. This is critical because there is a raft of legislation in place to protect consumers against business sellers, whereas if you are trading with a business user, there is a lot more scope for you to protect yourself by limiting and excluding clauses.
In addition, consumers will usually have a 14 day right of cancellation, which means you will need to have systems and procedures in place to comply with the legal requirements e.g. dealing with returns.
- Are you selling Goods or Services?
Again, this sounds like an easy question, however there is specific legislation applying to the nature of what you are selling. For example, if your customer has to pay a fee to access material on your website, is that goods or services?
Legislation includes provisions dealing with what information must be provided in advance to your customer, quality standards to which your goods and or services must comply and options with regard to cancellation partway through any contract.
- Who pays for delivery?
And I don’t just mean this in the sense of paying for the courier or postage costs. We have all seen the example of a frustrated delivery driver throwing parcels over a gateway or fence where there is no answer at the door. If the goods are damaged has your business taken into account the costs of replacement goods in its profit forecast? Will you have any rights against the courier and how can you prove where the fault lies?
- “Return Offenders”
Some shoppers will try to replicate the High Street experience by ordering multiple goods online, for example if they are not sure of the correct size, or to replicate the changing room experience “try before you buy”. These consumers are taking advantage of the 14 day cooling off period (there are only limited specific exclusions where consumers don’t have this right) and it’s a common problem for online sellers.
It is possible to provide that the customer has to pay the cost of returning goods, however is this enough of a dis-incentive? The seller still needs to have systems in place to deal with returned goods. What if those goods have clearly been used (the dress worn for Saturday night and returned on Monday)? To protect against this type of loss the seller needs to be very clear about making deductions from customer’s refunds where goods are not in a re-sellable condition.
- Possession is 9/10ths of the law
It may be an old adage, however it’s still pertinent in modern day trading. For any seller of goods or services, the best protection is to be paid in advance.
Since the introduction of the Consumer Credit Act 1974, a consumer who spends between £100 and £30,000 on items on their credit card, can hold the credit provider equally responsible if things go wrong. This is why there seems to be less fear around about paying for items that the buyer has no tangible evidence of. Beware, however that if there is a third party involved between the seller and the credit card (for example a payment processor such as Paypal) then these rights are lost.