If you are thinking about becoming the next Amazon, Facebook or Google, you are probably working on designing a business plan that covers finances, marketing, and market research. The reality, however, is that there is an additional component to the ‘success equation’ as you will also need some guidance to understand the basic legal requirements to start your online business.
At this stage your budget will have been stretched to the limit since this is only the beginning of your journey, and let’s be frank – legal fees have discouraged Start Ups & SMEs from seeking proper legal advice. However, the old adage that “prevention is better than cure” is very true and legal issues cropping up later can and do often result in significant financial losses to your business.
Understanding how the Sale of Goods Act 1979, Customer Protection Act 1987 and the Consumer Contracts Regulations 2013 operate will hopefully help you grasp commercial law better and protect your business. Including some of these Top 11 Provisions in your Terms and Conditions will make your life a bit easier!
Provision # 1: ‘Who are we?’
Your clients must be given an introduction where you provide some basic information about your company. You must indicate if it incorporated as a Private Limited Company (LTD) or a Partnership (LLP). By law, you must also disclose the company’s registration and contact details. This includes revealing the names of your Directors or Partners (so that clients can look them up). Providing your telephone number or e-mail address is also indicative of the fact that you provide a personalised service and that you are keen on building a commercial relationship with your clients.
Provision # 2: Explaining the contract to your clients.
Online services and delivery may involve unforeseen challenges. Sometimes logistics and customs can delay product deliveries (see Provision # 5). You must be sure that your clients understand how you will accept your order, what order number they have been assigned and whether you provide worldwide shipping. If you want to go a step further, a tracking service is always highly appreciated.
Provision # 3: The product.
Photography and packaging may slightly vary from the pictures advertised on the website. It is important that you make clear when pictures are used for illustrative purposes only and that only reasonable reliance on marketing is acceptable.
Provision # 4: Right to make changes.
Some of your clients might want to change the product after they have ordered it and they are entitled to do so as long as they comply with the price, conditions and any deadlines you stipulate in the contract. Conversely, you also have the right to make minor or significant changes to the products. For example, in relation to regulatory requirements or product descriptions. You need to be aware of what the consumer regulations say about consumer cancellation rights. Your terms and conditions are subject to these de minimis rights.
Provision # 5: Providing the products.
Bringing your client’s attention to the delivery costs is an essential ingredient in your contract alongside collection policies (even when they are not at home!); reminding them that you require their full details and personal information. However, the tricky part of delivery services is any delay that is left outside of your control. You must clearly define the limits of liability and responsibility; for example: Will you be responsible if you deliver the goods late? When is your client responsible for the goods? When does the client own the goods? When does the risk associated with the goods transfer to the client/consumer? Are your terms and conditions clear on this?
Remember you may be entitled to suspend the supply of goods to your clients in specific circumstances i.e. technical problems, regulatory requirements, changes to the goods or no payment. This must be explicit in your T&Cs.
Provision # 6: The clients’ rights to end the contract.
Your client can always end the contract with you. Bear in mind that under the Consumer Contracts Regulations 2013, clients can exercise their right to change their mind within 14 days for non-face-to-face transactions (called a ‘cooling off’ period). However, there are exceptions to this rule and you need to understand what those exceptions are to minimise your liabilities to consumers. Explain to your clients the methods that you have chosen as appropriate for ending the contract with you i.e. phone, e-mail, online or via post and whether you will pay the costs of return, the charge of collection and refunds.
This provision may also include steps on how to suspend, or cancel and accept an order. You can also explain other situations that fall into this provision such as errors in pricing and description of the product. Remember the CCR 2013 is all about protecting the parties so you must demonstrate goodwill.
Provision # 7: Your rights to end the contract.
Yes, you are also entitled to end the contract! You can specify in what circumstances you consider that the contract has been broken and include them in the T&Cs. You may include compensation, withdrawal policies and obligations to return rejected products to protect yourself from any financial losses due to the break. Some clients may justify breaking the contract by saying that there is a problem with the product – be open to questions and complaints about the products and have a customer service team in order to balance both your legal rights.
Provision # 8: Price and Payment.
As obvious as it may sound, you must express where you can find the price of the product and the rate of VAT. Your clients must be able to know when and how they must pay and whether you will charge additional interest fees if they pay late. If there are any errors regarding price or the invoices you have provided, you can also include in this provision how the issue will be addressed.
Provision # 9: Losses and Damages suffered by your clients.
Sometimes businesses fail to comply with their own terms. If the losses or damages are caused by you and are foreseeable, you will be responsible. Additionally, the Consumer Protection Act 1987 protects clients if the product does not match the description, samples or quality provided. In this case, you are not allowed to exclude or limit liability in any way. These are known as “implied terms” i.e even when we do not wish to include them, the Statute obliges us to do so.
Provision # 10: Using your clients’ personal information.
Data Protection in the UK is a serious matter. It is important to indicate that the information that you client provides you will be used exclusively to supply the products and process payments only. Furthermore, you may also want to indicate that you will only give your clients’ personal information to third parties when the law either requires or allows you to do so.
Provision # 11: Other important terms
In this provision, you can include other terms you would like your clients to agree with. Some examples of these terms can include:
- Transferring Policies: Transferring the contract to someone else and the need for consent to transfer the rights to someone else.
- Third Party Rights Policies: Any third parties entitled to rights under the contract.
- Illegality Policies: If a court finds part of this contract illegal, the rest will continue to be in force.
- Further Delay Policies: Even if you delay enforcing this contract, you can still enforce it later.
- Legal Proceedings: Which country’s laws apply to this contract and where you may bring legal proceedings?
For further information and a free-of-charge initial consultation regarding this topic or any other Commercial matter, please contact Ms Joy Akah-Douglas – Department Head & Solicitor-Advocate; Paula Bayona – Legal Assistant, or any of our Hillary Cooper Law Team.