UNDERSTANDING LIABILITY IN E-COMMERCE TRANSACTIONS

E-commerce liability can arise from more than a missing parcel. A business may face responsibility for failing to deliver, providing inaccurate information, refusing a valid cancellation, misusing customer data or publishing material belonging to another person. The legal consequences may damage your business reputation and lead to enforcement proceedings. In some circumstances, a website operator may also face claims from people who were not customers for example, where its content infringes copyright, trade marks or another business’s reputation. Understanding where responsibility sits allows a business to manage the risk before accepting orders.

A business may use a marketplace to advertise products, a third-party supplier to fulfil orders, a courier to deliver goods, a payment provider to process transactions, or a designer to produce website content. These arrangements may divide responsibilities between the businesses involved, but they do not necessarily remove the obligations owed to the customer. If your business is identified as the seller, the customer may still look to your business when the goods are not delivered, the product is incorrectly described or the cancellation process is unclear. Your business may then have a separate contractual claim against the supplier or courier responsible for the failure.

The applicable legal principles

Under the Electronic Commerce (EC Directive) Regulations 2002, an online business is required to make specified information about its identity and contact details available. Prices must also be presented clearly and indicate whether tax and delivery charges are included. The Regulations require certain information about the electronic ordering process and provide remedies where the applicable requirements are not followed. These may include damages for breach of statutory duty, an order requiring contractual terms to be supplied and, in certain circumstances, rescission of the contract.

Where the customer is a consumer, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 provide additional protection. Before the sale, the customer should receive clear information about the product, total price, payment, delivery and cancellation arrangements. The goods remain at the seller’s risk until they are delivered. Therefore, where a courier loses the parcel before delivery, the seller cannot necessarily avoid responsibility to the consumer simply by blaming the courier.

Liability may also arise outside the immediate sales contract. Website photographs, written descriptions, logos and videos may be protected by copyright or trade-mark law. Using another business’s branding in a misleading way may also amount to passing off. An e-commerce business must therefore consider its obligations to customers and its potential responsibility to third parties whose rights may be affected by the website.

The most prudent approach is to identify the responsibilities at each stage of the transaction. Your customer-facing information should unequivocally specify the seller, provide an accurate description of the product, and elucidate the payment, delivery, cancellation, and complaint procedures. Additionally, your terms should accurately reflect the actual operational procedures of your business.

Separately, agreements with suppliers, couriers, and service providers should clearly delineate the parties responsible for delays, damaged goods, customer complaints, payment failures, and the utilization of third-party content. The business should also diligently preserve orders, payment records, communications, and the version of the terms accepted by the customer. These records may prove crucial in instances where responsibility is contested. Finally, photographs, product descriptions, and other website materials should be original, licensed, or utilised with the explicit consent of the rightful owner.

By identifying the seller, providing clear information, allocating responsibilities and protecting third-party rights, a business can reduce disputes and build a more reliable customer experience.