Regulations and legislation are part and parcel of any business and trading online is no exception. Healys solicitors have extensive experience in IT, e-commerce law and software development agreement. Here they sketch out some of the key factors you need to consider when trading online.
Legal considerations when setting up an online business
The remote nature of the transactions poses a number of challenges for the e-trader and, as one might expect, a number of legal factors need to be considered before launching an e-commerce website.
E-marketing is regulated by several pieces of legislation, chief of which are the Electronic Commerce (EC Directive) Regulations 2002 (“the Regulations”).
The original EU directive, from which the Regulations derive, applies to all Member States of the European Economic Area (EEA), which consists of all the 27 Member States of the EU plus Norway, Iceland and Liechtenstein.
Which websites have to observe the Regulations?
If you sell goods or services to businesses or consumers on the Internet, (or by email or SMS) chances are that the Regulations will apply to you.
What do I need to have on my website?
The Regulations identify certain information which the e-trader must provide to his customers. There are also requirements regarding what must be done in relation to marketing the business.
The e-trader should also ensure that all prices stated on his website are unambiguous (including whether or not the price stated includes VAT and/or delivery).
The e-trader needs to be very careful before openly advertising on the net. There is a wealth of legislation governing online marketing and privacy issues (Privacy and Electronic Communications Regulations for example). This article is only concerned with the broad principles/requirements set out in the Regulations:
Emails and SMS (text) messages are likely to be regarded by the Regulations as “commercial communications”. Any such email and or text message advertising must identify clearly the business (or person) on whose behalf it is being sent. If appropriate, the email or text should, if it is a promotion, contain details of the offer.
Unsolicited email marketing
Unsolicited email marketing or “spam” is also covered by the Regulations. The e-trader must ensure that all communications are identifiable from the subject line of the email (i.e. without the need to read the whole of the message).
The Consumer Protection (Distance Selling) Regulations 2000 (“Distance Selling Regulations”) were implemented to protect those customers who are not present (with the seller) at the time of purchase. Therefore they do not only apply to online sales but also to purchases made over the telephone and by mail order.
It is worth noting that the Distance Selling Regulations only apply as between businesses and consumers and do not cover business-to-business contracts.
Under the Distance Selling Regulations, consumers must be given a cooling-off period during which he can cancel the contract (without reason). This cooling off period is 7 business days. which runs from the day after the date of the contract, in the case of services, or in the case of goods, from the day after the date of delivery of the goods in which to cancel the contract.
Furthermore, the consumer is entitled to receive a full refund for a cancelled contract within 30 days.
Terms & Conditions
Professional advice should be sought when drafting terms and conditions in order to ensure that a) the trader is as protected as he can be and; b) the website’s terms are clear and compliant with the relevant law.
This article barely scratches the surface of the legal issues to be considered by the budding entrepreneur setting up his (or her) online business. Indeed, each of the headings above could be (and have been) the subject of articles in their own right.
The correct legal advice will ensure that your new business gets off on the right foot.
© Healys 2009
This article is for general information only and does not constitute legal advice. Healys accepts no responsibility for inaccuracies. You should not rely on the content of this article and you are advised to seek professional legal advice before taking any action as a result of your reading of it.