© Copyright 2014 by K&L Gates LLP. All rights reserved.
20 January 2015
Contracts, Consumer Rights
and Trading Online
LEGAL BACKGROUND – SETTING THE
SCENE
Contracts – what are they ?
How Does a Contract Come About
Offer – acceptance – intention to create legal relations
“Offer” an “invitation to treat“ ?
Freedom of Contract:
You can agree whatever you like, except …..
Unlawful acts – common law
Reasonableness – UK statutory approach
SUPPLY OF GOODS AND SERVICES ACT
1982
Applies to contracts for the:
supply of a service; or
supply a service where goods are transferred
Implies into contracts that the supply of services will be:
carried out with reasonable skill and care
within a reasonable time
for a reasonable price (where no price is agreed)
For consumers, where a service is supplied and goods are transferred it implies :
satisfactory quality and fit for purpose
title, quiet possession and no encumbrances
correspondence with description, and with sample
UNFAIR CONTRACT TERMS ACT 1977
Prevents:
Exclusions of liability for negligence causing death or personal injury
Exclusions of liability for negligence for other losses unless reasonable
to do so
Exclusions of liability for breach of contract in contracts between traders
and consumers unless reasonable to do so.
Exclusions of the implied terms in supply of services referred to above
PACKAGE TRAVEL REGULATIONS 1992
The key consumer protection legislation for the travel industry. Prohibits the provision of misleading information
Specifies what information must be provided to consumers and that brochures must be legible comprehensible and accurate
Provides remedies for pre-departure cancellations or alterations Provides remedies for post departure changes
Requires bonding to protect consumers in the event of insolvency Currently being revised – but new Regulation won’t come before late
2016/2017
CONSUMER RIGHTS (PAYMENT
SURCHARGES) REGULATIONS 2012
Came into force 6 April 2013
Applies to all traders acting personally or through an agent
Prohibits surcharges imposed by trader on consumers in respect of the use of a given means of payment where surcharges exceed cost to trader
CONSUMER CONTRACTS (INFORMATION,
CANCELLATION AND ADDITIONAL
CHARGES) REGULATIONS 2013
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Came into force 13 June 2014
Information requirements (description of services, identity of trader, price)
Cancellation rights
Inertia selling, additional payments, help line charges Complaints and enforcements
Exceptions
Does not apply at all to packages as defined by the PTD
Provision of information provisions do not apply to providers of passenger transport services except for distance contracts
concluded by electronic means
Cancellation rights do not apply to (i) passenger transport services, or (ii) the supply of accommodation, vehicle rental services, catering or services related to leisure activities if the contract provides for a specific date or period of performance
CONSUMER CONTRACTS (INFORMATION,
CANCELLATION AND ADDITIONAL
Data Protection Act 1998
Unfair Terms in Consumer Contracts Regulations 1999 Consumer Protection (Distance Selling) Regulations
2000
Electronic Commerce (EC Directive) Regulations 2002 Consumer Protection from Unfair Trading Regulations
2008
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CONSUMER RIGHTS BILL
Language harmonised so more consistent with EU terms
Applies to all supplies of goods, services and digital content to consumers
Includes all goods even if the goods are transferred under a contract for services (i.e. no longer under different Acts)
Services:
To be supplied with reasonable care and skill
To be reasonably priced if no price stated
To be provided in a reasonable time
Any statement oral or in writing to consumer will be binding if certain conditions are met
Rights to repeat performance or price reductions if the service does not comply with the contract
No exclusions permitted
Cannot limit liability to below the contract price, certain limitations are not binding and unfair terms provisions may apply
CONSUMER RIGHTS BILL - STATUS
8 December 2014 - Third reading in House of Lords. Will "ping pong" between Commons and Lords until agreed and ready for Royal Assent
12 January 2015 - House of Commons consider latest amended draft
October 2015 – BIS intend the Bill to come into force, subject to Parliament
CONSUMER CONTRACTS ONLINE
Technical steps
Content of terms and conditions
Incorporation of terms and conditions of
business
CONSUMER CONTRACTS ONLINE
Entering into an online contract:
Description of the technical steps to conclude contract, e.g. progress bar on each page
Means to identify and correct errors before placing order, e.g. final summary of order with review and amend function
CONSUMER CONTRACTS ONLINE
Incorporation of terms and conditions
Proper incorporation ensures customers are bound
Bring T&Cs to customers’ attention before entering contract
Consider:
CONSUMER CONTRACTS ONLINE
Before contract is entered into:
Identity of trader and any other provider
Main characteristics of goods/services
Price, including VAT and all charges (no pre-ticked boxes)
Details of right to cancel and means of payment accepted
Express consent to payment – button to place order and pay
CONSUMER CONTRACTS ONLINE
Contents of terms and conditions:
Information about trader, goods/services and price
Complaints handling policy and how to complain
Arrangements for payment, delivery and performance
Details of right to cancel and cancellation form or express statement where no right to cancel
Any deposits to be paid by customer
Duration of the contract
CONSUMER CONTRACTS ONLINE
Acting as an intermediary:
Contract between you and service provider setting out each party’s obligations and liability
Clear to customer who is providing services before entering into contract
Customer agrees to provider’s terms and conditions
Customer provided with information about how to contact provider and how to complain
WEBSITE COMPLIANCE
Terms of Use
Rules for use of website
Ownership of website and restrictions on copying
Privacy Policy
What personal data collected, how used, which third parties have access
Cookie Policy
Information about cookies used on website, draw to users’ attention
ADVERTISING AND MARKETING ONLINE
Online Advertising
Advertising regulation – websites and social media
Direct Marketing
Email communications and consent
Search engine advertising
Competitors’ trade marks
ONLINE ADVERTISING
CAP Code covers trader’s own websites and
social media – ASA can take action to ban
Recognition of Marketing Communications
Misleading advertising
Criminal offences under Consumer Protection
from Unfair Trading Regulations
Unfair commercial practices, misleading actions or omissions, aggressive practices
ONLINE ADVERTISING
Sponsored tweets, blogs, advertorials and vlogs
Oreo cookies – ASA banned because vlog did
not make clear its commercial intent
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ONLINE ADVERTISING
Snickers viral campaign – sponsored celebrity
tweets
ONLINE ADVERTISING
Reviews and testimonials
Capable of being substantiated
Have documentary evidence that review is genuine and contact details for reviewer before publishing
Promotions, price guarantees
Ensure any conditions or limitations are sufficiently prominent in marketing communications
DIRECT MARKETING
Consent to receive marketing emails
Explicit consent
Unless “soft-opt in” applies and customer has not refused consent at time email address provided
“Unsubscribe” on all emails
SEARCH ENGINE KEYWORD ADVERTISING
Competitors’ trade mark keyword triggers advert
Google places no restrictions on practice
Interflora v Marks & Spencer
M&S using “Interflora” as Google AdWord
High Court: Infringement – users think M&S part of Interflora network
Court of Appeal: Errors in law – ordered retrial
