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Setting up and operating a website: contractual issues

Statistics released last month show that online shopping in the UK has hit £31.5 billion in the first half of 2011. The figures, from the IMRG Capgemini e-retail sales index, also revealed that growth in online sales was bigger that seen on the high street, and actually exceeded figures from 2010 by more than 20%.

It is unsurprising, therefore, that so many businesses are looking at websites, particularly fully transactional ecommerce websites, as a means of growth, re-gaining sales being lost through traditional retail methods, an alternative to the traditional retail model altogether.

If you are thinking of setting up a website, whether it is intended to be a fully interactive e-commerce website or a brochure website used as an source of information about the company, there are several things to consider. Whilst setting up an online business has become much more accessible over recent years, with a number of affordable platforms that allow you to start set up shop and start trading far quicker than if you were opening a physical shop on the high street, it is important to remember that legal issues still apply at every stage of the process, from the outset to the sale of goods.

Considerations:

  1. How is the website to be designed and constructed and who is to do this for you? You may need to agree a website design and development agreement with a company offering website design services to cover matters such as ownership and modifications.
  2. Depending on what text, photos, audiovisual material and software you have on the website, you may need to enter into website content licences with third parties in order to licence the content from those third parties.
  3. Once the website is up and running, it is advisable for you to have terms dealing with access to and use of the website.
  4. If the website is to be used for the sale and purchase of goods via the website then specific terms and conditions of sale should be considered for use on the website. These are governed by different rules to those relating to ‘non web-based’ businesses.

In order to ensure that customers are bound by the terms and conditions, the terms need to be brought to the customers’ attention before the contract is made. In an online scenario, this means the customer should be made to either tick a box indicating that they accept the fact that the contract will be governed by website terms and conditions before being able to place their order. They should also have to tick a box to say they have read the terms and conditions and/or scroll to the bottom of the terms and conditions and click ‘accept’.

Any terms and conditions of sale should deal with the supply, price and payment for the goods, restrictions on your potential liabilities and also address issues relating to contracts made at a distance (pursuant to the Consumer Protection (Distance Selling)  Regulations 2000, in particular contracts made on the internet, including

  • a description of how the online contract is formed.
  • how the contract is made with minors and people situated outside the UK.
  • information about the consumer’s right to cancel the contract, where applicable.
  • time limits for cancellation for goods and for services, where applicable.
  • whether you require the goods to be returned by the customer and if so who will pay for the return.

For more information regarding the legal implications of launching a website or an online business, please contact an ecommerce law solicitor from our commercial team.

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