Business to Business e-commerce – Legal issues

Online Safety Bill

The Online Safety Bill (OSB) requires internet companies to take measures to keep all users safe and deal with all forms of illegal content and content harmful to children.

Information society services providers (ISSPs) require user to user services to design and operate their systems to:

Prevent users from facing priority illegal content.
Prevent children from facing harmful
Minimise the presence of illegal and harmful content and its immediate removal.

Under OSB user to user services are also required to identify and remove terrorism content and child sexual exploitation and abuse content.

Formation of online contracts

The key issue faced by e-commerce businesses is the formation of contracts between them and consumers/other businesses. Generally, a simple contract can be made in writing, by word of mouth, by conduct or combination of them.

At the same time, the enforceability of a contract must contain the following elements:

Offer and acceptance.
Promise which is capable of being contractually enforced.
Intention to create legal relations.
Sufficient certainty, and
Not being otherwise unenforceable.

Offer and acceptance

The trader should clarify the status of emails and terms that may have legal effects, as well as make sure that the staff is capable of professional correspondence.

It is recommended that each trader has his or her own terms and conditions, which will clarify the offer and acceptance process and specify the moment of order acceptance.

To mitigate risks and facilitate the order acceptance process, traders specify acceptance upon confirmation email receipt or goods dispatch and use a ‘click wrap’ agreement for consumer acceptance, where users actively consent by clicking ‘I agree’ or a similar button.

Unenforceable contracts

In the following situations, an agreement may not be enforceable:

Whether it fails to include the terms and conditions in full or in part.
One participant cannot possess the legal capacity or authority to enter into the agreement.
The agreement must follow the necessary formalities, such as being in writing or being executed in the form of an act.
The agreement must be in line with laws that protect consumers’ rights against unfair terms and conditions.

Therefore, traders are to ensure that:

Ensure proper inclusion of standard terms.
Highlight onerous terms.
Notify consumers of any changes.
Obtain explicit agreement, e.g., through a click wrap method.

Unenforceable unfair terms under consumer laws

Some contractual terms may be deemed unfair and, as a result, unenforceable. The Consumer Rights Act 2015 (CRA 2015) and The Consumer Protection from Unfair Trading Regulations 2008 (CPUTR 2008) establish and regulate the fair conduct of traders towards consumers.

According to the CRA 2015, unfair terms or notices that cause a significant imbalance are void. The law contains a list of potentially unfair terms. Some terms are automatically void, such as those that exclude liability for death or personal injury.

In turn, the CPUTR 2008 establishes criminal liability and allows consumers to recover damages for deceptive or aggressive practices. Such actions include:

the general prohibition on unfair commercial practices.
misleading actions
misleading omissions
aggressive practices
blacklisted practices

Browse wrap and click wrap terms.

There are 3 general methods to incorporate the terms into a website e-commerce:

‘Browse wrap’ or ‘click free’.
simple form ‘click wrap’.
sophisticated ‘click wrap’.

Browse wrap

Browser wrap is a useful method to incorporate terms on websites, but challenges include establishing user intent to create a legal relationship, acceptance of the terms, and proper incorporation.

Recent reports indicate that browse wrap licenses probably do not have the status of contractual terms, so it is recommended to use the other 2 methods.

Click wrap

As opposed to browse wraps, click wraps can be incorporated by reference if it is clear enough that something is being agreed to and complies with applicable law.

Tips for creating the conditions:

1) Adopting a more sophisticated click wrap approach (e.g., requiring the consumer to scroll through the terms and conditions before clicking on the “accept” button)

2) Providing short texts about the content of each clause

3) Be short and clear

4) Use a concise input during registration

5) Do not conceal and make the key points of the terms and conditions explicit

6) Take mechanical measures to reduce risks

Information disclosure requirements

Companies operating e-commerce websites may be subject to general disclosure obligations under the following laws:

the Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015, SI 2015/17 (Names and Trading Disclosures Regulations 2015).
the Consumer Contracts Regulations 2013.
the Electronic Commerce (EC Directive) Regulations 2002.
the Provision of Services Regulations 2009.

General information to be disclosed on e-commerce websites

The general information to be provided by an e-commerce operator should be easily accessible and include:

Name and identification details.
Physical address.
Contact details.
VAT
Trader registered in a public trade or similar register available to the public.
Service subject to an authorisation scheme or similar.
Trader exercising a regulated profession.
Redress systems.

Transaction information to be disclosed on e-commerce websites

The trader must make the following information transparent and easily accessible on the website:

Price
Services
Terms and Conditions
Insurance and Guarantees
Redress systems

Conclusion of the contract:

Cost of using the means of distance communication.
Technical steps.

Description of the product:

Characteristics
Functionality
Interoperability
Promotional offers.

Performance of the contract:

Delivery and payment.
Complaint handling.
Financial guarantees.
Legal guarantee.
Commercial guarantee and after-sale services

Validity of the contract in time:

Duration and termination of the contract.
Cancellation rights.

In addition, you should provide other information relating to consumer protection and dispute resolution.

Distance selling

A “distance contract” is an agreement between a trader and a consumer concluded through means of remote communication, without their physical presence, within the framework of an organised scheme of distance sales or services.

The key information should be provided:

Information before entering into a contract: Clear details before the consumer makes a contractual obligation.
Post-contractual information: Provided after the contract is concluded.
Clear confirmation of payment: Consumers must clearly confirm their obligation to pay.
Right of cancellation: Consumers can cancel the contract within 14 days, if the information is missing, this period can be extended.
No hidden costs: No additional charges without the express consent of the consumer.

Regulation of information society services

Information society services include e-commerce websites, apps, e-marketplaces and platforms, and have to:

Provide accessible information to the recipient of the services and law enforcement agencies.
Include the necessary information in “commercial communications”, including unsolicited electronic messages.
Provide information to the parties to the transaction via electronic means before placing an order.
To comply with obligations when placing electronic orders, in particular in relations with email service providers.

Regulation of online platforms

The majority of legal acts regulating online platforms are aimed at the perceived imbalance between the providers of e-commerce platforms and online search engines and their commercial customers and include rules to promote:

fairness and transparency.
rights of redress for businesses.
impacts on a number of aspects of the operations and conduct of online platforms.

B2C cross-border e-commerce

Country of origin and its limitation

The EU E-Commerce Directive allows information society services (ISSPs) established in one EU Member State to operate across the EU without complying with other Member States’ laws, under the “country of origin principle.” However, this principle has limitations. From January 1, 2021, UK ISSPs in the EEA must comply with individual EU Member State laws, and EU E-Commerce Directive liability limitations no longer apply to them.

The EU Geo-blocking Regulation

The EU Geo-Blocking Regulation (2018/302) prohibits unfair geo-blocking and discrimination based on the place of establishment in the EU. Since January 1, 2021, this regulation no longer applies in the UK. UK merchants may offer different terms and conditions to UK customers than in the EU, but UK businesses operating in the EU must comply with the regulation.

EU Digital Single Market strategy

The European Commission has introduced two directives on the sale of goods and digital content to enhance cross-border trade, which entered into force on June 11, 2019.

In April 2023, the Commission proposed amendments aligned with the European Green Deal, emphasising the repair rather than replacement of goods to reduce the environmental impact. UK traders serving EU clients should be aware of these changes, even though the UK is not a member of the EU.

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