Website Law

The Consumer Protection (Distance Selling) Regulations 2000 (the “Distance Selling Regulations”) came into force on 31 October 2000.  They implemented into English law the main provisions of Directive 97/7/EC of the European Parliament and the Council of 20 May 1997 on the protection of consumers in relation to distance contracts.

This post focuses upon the information that must be disclosed by a website operator where the Distance Selling Regulations apply.  I will cover the details of the right of cancellation under the Regulations in a future post.

The Distance Selling Regulations apply to “any contract concerning goods or services concluded between a supplier and a consumer under an organised distances sales or service provision scheme run by the supplier who, for the purposes of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded” (Regulation 3(1)).

However, there are certain classes of contract that always fall outside the Regulations in whole or part.

The following types of contract are entirely exempted from the Regulations: contracts for the sale or other disposition of an interest in land except for a rental agreement, contracts for the construction of a building where the contract also provides for a sale or other disposition of an interest in land on which the building is constructed, except for a rental agreement; contracts relating to financial services (these are subject to a separate set of regulations); contracts concluded by means of an automated vending machine or automated commercial premises; contracts concluded with a telecommunications operator through the use of a public pay-phone; and concluded at an auction.

In addition, the following types of contract are exempted from most of the provisions of the Regulations (including the disclosure provisions): timeshare agreements; contracts for the supply of food, beverages or other goods intended for everyday consumption supplied to the consumer’s residence or to his workplace by regular roundsmen; and contracts for the provision of accommodation, transport, catering or leisure services, where the supplier undertakes, when the contract is concluded, to provide these services on a specific date or within a specific period.

These exemptions are quite narrow, and most contracts made between suppliers and consumers via a website for the supply of goods or services will be subject to the Distance Selling Regulations.

Regulations 7 and 8 of the Distance Selling Regulations set out the disclosure requirements.  There are slightly different rules affecting disclosures required under the different Regulations.

Under Regulation 7, in good time prior to the conclusion of the contract to which the Regulations apply, the supplier should provide to the consumer the following information:

- the identity of the supplier and, where the contract requires payment in advance, the supplier’s address;

- a description of the main characteristics of the goods or services;

- the price of the goods or services including all taxes;

- delivery costs where appropriate;

- the arrangements for payment, delivery or performance;

- the existence of a right of cancellation (except excluded cases);

- the cost of using the means of distance communication where it is calculated other than at the basic rate;

- the period for which the offer or the price remains valid; and

- where appropriate, the minimum duration of the contract, in the case of contracts for the supply of goods or services to be performed permanently or recurrently

Also under Regulation 7, and also in good time prior to the conclusion of the contract, the supplier should: inform the consumer if he proposes, in the event of the goods or services ordered by the consumer being unavailable, to provide substitute goods or services (as the case may be) of equivalent quality and price; and inform the consumer that the cost of returning any such substitute goods to the supplier in the event of cancellation by the consumer would be met by the supplier.

The information must be provided in a clear and comprehensible manner “appropriate to the means of distance communication used”.  In the context of websites, this means, in my view, that the information should be provided in writing on the website and should be clearly signposted for users.

Under Regulation 8,  the supplier must supply certain additional information to the consumer in writing (or “another durable medium which is available and accessible to the consumer”).  In principle, the information may in some circumstances be supplied after the contract has come into force.  However, in the case of distance contracts entered into via a website, it is difficult to see why it should not always be supplied before the contract has come into force - particularly as a delay in supplying the information can lead to an extension of the cancellation period for the contract.  If you are a supplier and are considering supplying any of the information listed below after the conclusion of  contracts, you should look closely at the Distance Selling Regulations and take advice as necessary.

In any case, the additional information to be disclosed under Regulation 8 is:

- information about the conditions and procedures for exercising the right to cancel under the Distance Selling Regulations (including where a term of the contract requires (or the supplier intends that it will require) that the consumer shall return the goods to the supplier in the event of cancellation, notification of that requirement; and information as to whether the consumer or the supplier would be responsible under the Regulations for the cost of returning any goods to the supplier, or the cost of his recovering them, if the consumer cancels the contract under regulation; and in the case of a contract for the supply of services, information as to how the right to cancel may be affected by the consumer agreeing to performance of the services beginning before the end of the seven working day period).

- the geographical address of the place of business of the supplier to which the consumer may address any complaints;

- information about any after-sales services and guarantees; and

- the conditions for exercising any contractual right to cancel the contract, where the contract is of an unspecified duration or a duration exceeding one year.

Many contracts, and the vast majority of professionally-drafted contracts, contain what is known as a “choice of law” clause. Choice of law clauses specify the law that will be used to interpret the contract.

Choice of law clauses and choice of jurisdiction clauses (sometimes called choice of forum clauses) must be distinguished. Whilst choice of law clauses relate to the law that will be used to interpret a contract, choice of jurisdiction clauses specify the courts (or other decision making bodies) that will resolve disputes arising under the contract. For example, a contract could specify that it should be interpreted in accordance with English law, whilst at the same time granting exclusive jurisdiction to the courts of Germany to resolve disputes arising under the contract.

Like many other kinds of contractual clause, choice of law clauses are subject to a certain amount of judicial interference.

This note focuses upon the ways in which the English courts will interfere with choice of law clauses.

Some types of law will regulate contractual relations before the English courts irrespective of an express choice of law. For example, the following pieces of legislation may apply in whole or part to contracts which relate to England and Wales but which expressly choose another governing law:

• Competition Act 1998
• Unfair Contracts Terms Act 1977
• Unfair Terms in Consumer Contracts Regulations 1999

The ways in which the English courts will interfere with a choice of law clause depend to an extent upon whether the contract is a consumer contract. For example, the Unfair Contract Terms Act 1977 (UCTA) will apply to contracts that are not governed by English law where it appears to the court that the choice of law clause has been used for the purpose of avoiding the effects of UCTA, or where one of the parties is a UK consumer who took the steps necessary to enter into the contract in the UK. Note, however, that the UCTA rules on excluding and limiting liability do not apply to international supply (of goods) contracts.

National consumer protection measures may also apply more generally by virtue of the Rome Convention (which has been incorporated into English law via the Contracts (Applicable Law) Act 1990). Article 5(2) of the Convention provides:

“a choice of law made by the parties shall not have the result of depriving the consumer of the protection afforded to him by the mandatory rules of the law of the country in which he has his habitual residence:

- if in that country the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising, and he had taken in that country all the steps necessary on his part for the conclusion of the contract, or

- if the other party or his agent received the consumer’s order in that country, or

- if the contract is for the sale of goods and the consumer travelled from that country to another country and there gave his order, provided that the consumer’s journey was arranged by the seller for the purpose of inducing the consumer to buy.”

Where there is no express choice of law in a contract, the courts may still determine that there has been an implied choice of law if the circumstances warrant such a finding. For example, where a contract contains a choice of jurisdiction clause but no choice of law clause, then the law of the chosen jurisdiction may be deemed to apply. References to other national laws in a contract may also have an effect.

Where the courts are unable to identify and express or implied choice of law, the usual rule is that the governing law will be that law that is most closely connected to the contract. Article 4(2) of the Rome Convention provides:

“… it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration. However, if the contract is entered into in the course of that party’s trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other than the principal place of business, the country in which that other place of business is situated.”

Note, however, that there are a number of exceptions to this general rule.

The preponderance of the laws that regulate commercial conduct online are the same laws that regulate commercial conduct offline: contract law, the law of torts, commercial law, consumer law,  intellectual property law, and so on.

If you know a little (or a lot) about publishing law, you know a little (or a lot) about digital publishing law.

But doing business on the internet involves added complexity and added uncertainty.   Added complexity, because a new layer of laws veils the legal backcloth.  Added uncertainty, because the new and evolving technologies may not yet have been digested by the system of legal precedent - and by the time a recognisable body of jurisprudence about a technology has emerged, the technology may be obsolescent.

Complexity, uncertainty and evolution are three causes of widespread non-compliance with the law.

The extent of non-compliance should not be underestimated.  For example, the E-commerce Regulations demand, with the inevitable exceptions, that e-retailers must make available to their customers “appropriate, effective and accessible technical means” allowing the customer to identify and correct input errors before placing an order.  This may be dealt with by means of a “confirm your order” page: but anyone with a passing familiarity with online shopping will know that as often as not there is no pre-order correction procedure.

Some fairly common internet practices are outlawed. For instance, many websites will send marketing emails to users who do not opt-out – when in some cases they should only be sending the emails to users who opt-in.

One reason why online compliance is particularly important is that anyone can conduct an impromptu audit of your website – and potentially find you wanting.  This can be embarrassing.

For example, whilst writing this I visited the website of one of the most prestigious law firms in the world.   Under the Privacy and Electronic Communications (EC Directive) Regulations 2003, a person using a website that serves cookies should, amongst other things, be “provided with clear and comprehensive information” about the cookies.  (Cookies are sent by a web server to a web browser and then sent back to the server each time the browser accesses that server, enabling the server to recognise and track the browser.)

The law firm website uses site-wide session cookies and instructs Google to serve four persistent Google Analytics cookies to the user.  But the legal notice on the firm’s website says that the website doesn’t use cookies, other than session cookies in one particular part of the website.

I doubt whether the firm in question would welcome publicity about this kind of (albeit technical) non-compliance.

But there is more than just embarrassment at stake if you fail to comply with the laws relating to digital publishing.  Contracts of sale that can be rescinded at the option of your customers; Trading Standards investigations and prosecutions; investigations and adverse decisions of the Information Commissioner; and civil claims by customers: the risks are varied, and non-compliance can be expensive.

Because of regular changes in the law relating to the internet and the technologies from which it is built, digital publishers should ensure not only that they have the expertise to identify the issues, but that they regularly update that expertise and regularly audit their compliance.