Online contracts: formation and terms

Online contracts can sometimes lead to disagreements about terms or performance. Here, we outline key considerations. However, for legal disputes, consult a solicitor.

If the contract has an international element, identifying the governing law and competent courts is crucial. There are significant exceptions in favour of consumers.

European Union (EU) jurisdiction

In the European Economic Area, parties can choose the governing law and the forum for dispute resolution - eg courts of a particular country, arbitration etc. The Rome Convention rules decide which law applies, although certain mandatory rules in a purchaser's country will always apply, for example for financial services or consumer protection.

Similarly, in the EU jurisdiction of disputes is determined by the Brussels Regulation. If the parties have not agreed jurisdiction, the basic rule is that a defendant may be sued where they live, or where the contractual obligation was performed.

Consumer protection laws

Consumers may invoke consumer protection laws either in their home jurisdiction or the supplier's jurisdiction, but almost always may only be sued in their home jurisdiction. Therefore, online businesses dealing with consumers must be prepared to comply with consumer protection regulations in each market to which they sell.

Reducing uncertainty

To reduce uncertainty in the event of a dispute, online sellers should specify in their terms and conditions the governing law and jurisdiction for disputes. However, if consumers have a right to take legal action against you in their home jurisdiction you cannot use any terms and conditions that would attempt to restrict or take that right away.

The law on jurisdiction can be complicated, especially when dealing with consumers outside of the UK and the EU. If you are unsure, you should seek legal advice from a solicitor before adding any contract terms in relation to governing law and jurisdiction.