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From weekly groceries to gifts, internet sales are increasing each year. Yet, distance selling has been part of the marketplace long before the internet became popular. Years ago, many traders used letters to exchange goods which they would never be able to physically handle in person. The original Scots law stance on this was simple: caveat emptor–“let the buyer beware”. Buyers and sellers will be relieved to hear that the law has developed since then.
Most people will be familiar with buying and selling goods and the contracts that are involved. However, very few individuals are aware of their rights and the risks involved in the process. This is especially true of distance selling, where a buyer trusts the seller to send them the product they requested and for it to meet the standard expected. Unfortunately, this does not always happen. To combat this, the UK Parliament has implemented European regulations which means individuals are now protected more than ever. This guide will focus on the European Union regulations in relation to distance selling.
Currently, sales and purchases made in the United Kingdom are mostly regulated by the Sale of Goods Act 1979. The Sale of Goods Act 1979 lays the essential groundwork for all domestic (i.e. UK-based) consumer contracts for goods. Goods are defined as all tangible items except money - which means all products and produce offered for sale, covering anything from clothing to electronic equipment.
A consumer contract for goods is completed only when the sale is completed (this includes the transfer of the goods). A contract may also be an agreement of a future action, known as ‘an agreement to sell’.
The contract requires the goods be of a satisfactory quality and they must match the description given. This is because, when an individual orders goods without ever seeing, touching or smelling them, they are creating a trust relationship with the seller. They become dependent on the seller that their purchased goods are up to the reasonable standard expected and fits the description given. If it does not, then the trust is broken.
Under EU law (EU Directive (2011/83/EU)), a distance contract is any contract concluded without the people involved being physically present in a shop, such as over the phone, mail order, internet, or even the television.
It specifically covers goods which are chosen based on their descriptions and then ordered through a digital medium (online, email, post, fax, phone or SMS). It also covers service contracts, which are where a trader supplies or agrees to supply a service, rather than a product.
Until the 1970s, the only act in place to safeguard the rights of buyers and sellers was the Sale of Goods Act 1893 which, by this time, was out of date due to the introduction of telephone sales. The Sale of Goods Act 1979, which consolidated the 1893 Act, put new and expanded regulations in place. While tremendous advancements were made by the act, the European Union (EU) helped make distance selling become even easier and safer for the parties involved by introducing specific directives. Its goal was to create a harmonised internal market, free of barriers.
The latest Directive put in place is the Directive 2011/83/EU, adopted in October 2011, and implemented in the UK through The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. Without these regulations in place, there would be no protection for buyers or sellers.
Through the Acts and Directives, the EU and the UK Parliament have attempted to harmonise the way sellers and buyers interact when dealing cross-border in the European Economic Area (EEA), while at the same time giving the national courts discretion to determine disputes.
Buyers have seen an increase in their rights since the days of “caveat emptor”, and can be sure they will be given the same protections through the European Union.
The most important change is that the buyer’s right to withdraw from the sale has been extended from seven to fourteen days. Withdrawal allows a buyer to change their mind about whether or not they want the goods. However, they must withdraw from the sale by using an acceptable method –for example, a phone call is unlikely to be sufficient unless the seller specifically states it is. To find out what method of withdrawal is acceptable to the seller, it is necessary to look at their terms and conditions.
The buyer should keep evidence of their attempt to cancel, just in case the seller does not respond in time or refutes. If the buyer does make a phone call, they should keep a written log of this, but it would be best to use another method of cancellation.
The buyer’s right to cancel is unconditional. If they do so before the arrival of the goods, the total cost and shipping must be refunded. If the goods arrive, they can refuse to accept delivery. If the goods are lost in transit, the seller must either send new goods or offer a full refund including delivery charges. However, the buyer may be liable for shipping costs in certain circumstances. This information must be provided by the seller, usually through their terms and conditions. If it is not, the buyer will have a claim against the seller.
The risk involved in transporting the goods remains on the seller upon giving the goods to the carrier. However, if the carrier is chosen by the buyer and it is not one of the seller’s usual carriers, the risk then passes to the buyer, who is held liable for damages by the carrier.
It is the duty of the buyer to take reasonable care of the goods if they choose to return them. They must not be damaged. If they are, the seller may have a claim. And if the buyer fails to return the goods and a refund has been issued, the seller has a claim.
If the buyer receives the goods in a damaged condition, the buyer has a claim against the seller. If this is the case, it is advisable to document the damages before requesting a refund. It is also a duty of the seller to provide a way of packaging for return –but they are not obligated to do so. And if the buyer decides to return the goods, the onus is on them to package it correctly to avoid damage while in transit.
Finally, made-to-order goods and requests (those which are tailored to the buyer’s needs) are not refundable. But, bear in mind, if the goods are made from ‘off-the-peg’ options and combined to make a product, they may be returned. It is wise to check with the seller whether they consider the goods or product ‘made-to-order’. This is a grey area and the buyer may be at a disadvantage if it is not explicitly agreed what is a made-to-order item and what is not.
While there is no requirement for a seller to list all of the EEA languages on their product, the buyer should be aware that member states will most likely have their own domestic laws in place regarding this fact and their language of nationality will likely be available on request.
The new regulation sets out several new requirements for sellers in distance selling contracts. They now need to list the main characteristics in the goods’description; the details need to be clear and concise; and the total price and any extra obligations must be specified.
In the case of digital content (downloads and streamed content), the seller must give an accurate description of both the product and its functionality.
Under no circumstance may the seller add in additional fees which are not obvious to the buyer, or after the transaction has concluded. This rule ensures full transparency and protects the buyer from incurring any unwanted or uninformed charges. It also protects the seller from any claim of negligence from the buyer. In addition to initial costs and extra obligations, any costs which the buyer may potentially be charged must be clearly illustrated. If the exact amount cannot be calculated at the time of the transaction, a close estimate is good enough.
Sellers must inform the buyer of their right of cancellation –if one exists. And they also must provide a model cancellation form, which can be used if the buyer decides to cancel the goods or services. All buyers have the right to return goods and the seller must inform the buyer of any costs which they may be charged if they choose to do this.
The seller must contact the buyer within a reasonable timeframe to confirm the transaction and pre-contract information. This must be done in an acceptable way. Expecting the buyer to click on a hyperlink is not acceptable. All contact information as well as any information regarding the product must be clearly accessible.
Finally, the last new provision stops sellers from pre-checking boxes with any obligation to pay, even if deferred. If a seller continues to have a pre-checked box in their transaction, the buyer is not bound by the contract. A key example of this is a button which says ‘pay now’ for other products they did not plan to buy.
Sellers are under an obligation of full disclosure. While this may seem like common sense, many buyers are often duped as to who they are buying goods from. Full disclosure includes the name of the business, main features, legal status (for example, sole trader or limited company), address, where to file a complaint, trade of public register name and number, VAT (if applicable), and type of EEA institutional registration (if applicable). This ensures the buyer is able to file a claim with the relevant company or credit institution.
If a seller feels uncomfortable providing their exact address then a geographical location is acceptable. Sellers must also provide information on how a buyer can amend their order in case of error –if this is not clearly explained then the buyer has the right to cancel the contract. And, as stated above, the laws of common sense apply. For example, the description must be accurate and accessible so that the buyer knows exactly what they are receiving. The rule of thumb is: the more information that is provided, the better.
After a transaction has been completed, the seller has a 30-day deadline to deliver the goods if no specific date was agreed. Thirty days allows for postal problems or any other issues. The 30 days protects the seller. Not every delay in delivery is the seller’s fault and the selling regulations have taken this into account. If, for example, the seller cannot complete the transaction (they cannot provide the goods by the specified date or umbrella 30-day period), then the seller must inform the buyer before the 30-day deadline. A refund must be made as quickly as possible within the maximum of 14 days. It may help to remember the ‘14-30’ rule: 14 days to refund or come to an agreement with the buyer, 30 for everything to be completed.
The law regarding transactions taking place outside of the EEA depends on jurisdiction. It also differs slightly between England and Wales, Scotland, and Northern Ireland primarily through domestic statute, but the process is extremely similar.
When a buyer based in the UK wishes to file a claim against a seller outside of the EEA then Schedule 8 to the Civil Jurisdiction and Judgements Act 1982 applies.
The basic rule is the claimant (the buyer) must sue in the jurisdiction of the defendant (the seller). This also applies to the supply of goods, although exceptions are sometimes available.
The process normally begins with the claimant filing a claim, which should be addressed to the place of business of the defendant. The claim will be handled in the jurisdiction of the defendant. It is highly advised to check with the distance seller as to how to handle the complaint. This could help avoid any court fees or auxiliary headaches.
The Hague Conference on Private International Law and the United Nations have made several attempts to regulate the contract of sale of goods internationally through various acts. None have been adopted by the United Kingdom as yet. Until then, UK consumers are encouraged to follow the current rule of law.
Nothing in this guide is intended to constitute legal advice and you are strongly advised to seek independent advice on matters that affect you.
"A truly insightful and helpful guide to navigating the legal minefield for anyone involved in ecommerce or distance selling online. At a time when there is so much uncertainty around selling online overseas, this little guide covers the main elements. Thanks team at Unlock The Law for a handy guide. Gillian Crawford Director Lily Blanche and Vice Chair British Association of Women Entrepreneurs (BAWE Scotland)"
