Online contracts: formation and terms

There is a range of legislation that you are obliged to comply with when transacting online. The rules are designed to protect the purchasers' rights and to make it clear when a contract between a buyer and seller becomes binding.

• Contract formation: Ensure terms and conditions are incorporated at the time the contract is concluded by using clickwrap agreements (i.e., an agreement accepted by clicking a button or checking a box to indicate acceptance). You must ensure a buyer fully understands and agrees to your terms and conditions when they accept. Avoid solely relying on a click button or checkbox declaration they have read and understood the terms. You should actively highlight the terms and conditions to the buyer during the online buying process (e.g., display important contract details prominently beside product information on the website).
• Data Protection Act: You must comply with this legislation, which imposes conditions on both data processors and controllers. Read more on the Data Protection Act and UK General Data Protection Regulation.
• Intellectual property: Issues such as copyright and trade marks should be considered, not just for items displayed on your site, but also within any metatags. Understand the different types of intellectual property.
• Consumer protection legislation: the UK has several consumer protection laws, which you should comply with, this includes
  • Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013: This covers consumer contracts made on business premises, online or away from your premises. The regulations require detailed information to be provided to consumers and, in certain circumstances, a 14-day right to cancel. Read more on the rules of consumer contracts.
  • The Consumer Rights Act 2015: This sets out the rights of consumers when buying goods, services and digital content. It helps consumers to obtain redress when their purchases go wrong and also covers unfair terms in consumer contracts. It is in the interests of anyone who sells goods, services or digital content to understand the Act and their responsibilities.
  • The Consumer Protection from Unfair Trading Regulations 2008: This legislation controls unfair practices used by traders when dealing with consumers. It establishes broad rules outlining when practices are unfair. To comply, when forming online and any other type of contracts, you must ensure that information about the products you sell (e.g., the description and price) are clear and not misleading. Additionally, any terms and conditions you apply must be fair, easily understood and provided to the consumer before the contract is formed. Read more about the rights of customers.
  • The Consumer Protection Act 1987: This deals with product liability and creates strict liability for personal damage (e.g., death, injury) or damage to property caused by defective products. The Act must be considered when writing liability clauses.
  • The Business Protection from Misleading Marketing Regulations 2008: Prohibit misleading business-to-business advertising and impose further restrictions on how businesses compare their products to rival products from other companies.
  • The Unfair Contract Terms Act 1977: Regulates business to business contracts, limiting the extent to which one business can exclude their liability to the other. Understand the rules of business-to-business contracts.
• The Financial Services (Distance Marketing) Regulations 2004: Apply to the sale of financial services (e.g., insurance products) to consumers via means of distance communication (e.g., online). It requires that consumers are provided with detailed information and, in most circumstances, provides consumers with a 14-day right to cancel.
• Security: Be aware that selling online will necessitate the passing of sensitive data and payment instructions. An online vendor could be liable for breaches of security on their site.
• Exclusions on restricted goods: Some types of goods which are legal to sell in one jurisdiction may be prohibited in other jurisdictions.
• Specific regulation: Specific industries may be regulated. This is particularly the case with premium-rate internet sites or those aimed at children. There may also be implications as a consequence of competition law. Check each potential market sector carefully.
• Access agreement: It is important to have terms and conditions governing the use of your website. These must be set out prior to the customer proceeding to purchase - commonly, the customer must click on an 'I agree' button to proceed, indicating acceptance of the terms and conditions.
• Advertised delivery restrictions and surcharges: Any advertised delivery claims you make must be accurate. Any qualifications about delivery must not contradict the main claim. For example, claims about 'UK delivery' must apply equally across the whole UK including Northern Ireland and the Scottish Highlands.