Distance selling: an overview
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Introduction
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There are a number of acts and regulations governing the
law on distance selling. They include, but are not limited to: The
Distance Selling Regulations 2000, Electronic Commerce Regulations 2002,
The Trade Descriptions Act, and the Sale of Goods Act 1979.
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This guide is for anyone who will be selling goods, and or
services via distance selling. Links to other relevant articles are at
the end of this one.
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We provide six articles on distance selling. The others
are linked on the right:
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- The Distance Selling
Regulations;
- Distance Selling:
cancellation;
- Distance selling:
financial services;
- Distance selling:
refunds.
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Advantages and disadvantages of distance selling
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The laws on distance selling covers any purchases made:
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- By telephone;
- Using direct mail;
- Through a website or
using email marketing.
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The advantages of distance selling are:
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- Reduced costs;
- No need for a middleman;
- Staff numbers kept low.
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The disadvantage is that you can't demonstrate your
product and therefore it will be difficult to gain the customer's trust.
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Formation of online contracts
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Your terms and conditions should always be set out on the
website and be easily downloadable, even where the website is simply used
as an advertising tool.
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Are online contracts legally binding?
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Any sort of contract, as everybody knows, compromises four
elements, all of which need to be present for the contract to be legally
binding and enforceable.
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- Offer - one party must
contract with the other, for example, offer to buy goods;
- Acceptance - the other
party must expressly accept the offer;
- Intention to create legal
relations - both parties to the contract must intend the contract to
be legally binding;
- Consideration - there
should be some consideration being exchanged between the parties,
for example, money paid for goods.
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There is no requirement for contracts to be in writing or
for the parties to actually sign a contract.
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The Regulations The Consumer Protection (Distance Selling)
Regulations:
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- Apply to businesses that
sell to consumers by mail order, phone, fax, over the Internet or on
digital television;
- The regulations apply to
both goods and services where a contract is made without �fact to
face' contact between supplier and consumer;
- Certain goods are exempt
from the regulations;
- The Office of fair
trading is the enforcing agency for the United Kingdom.
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They require you to:
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- Provide customers with
specified information before they order;
- Send them an order
confirmation - for services this should be provided in good;
- Time, and before the
services finish;
- Give them the chance to
cancel the contract.
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The Electronic Commerce Regulations
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These place a number of additional requirements on
businesses that sell or advertise products or services to consumers using
the Internet, email, interactive digital television or mobile-phone SMS
text messages.
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For businesses selling via the Internet, mobile phones or
digital television many of the rules are similar to those they must
comply with under the Distance Selling Regulations.
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You must:
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- Give customers the full
name of your business as well as your;
- Geographic address and
email address;
- Give your VAT number, if
applicable;
- Give a clear indication
of prices if you refer to them, together with details of any
associated taxes and delivery costs;
- Provide details of trade
associations, professional bodies or authorisation schemes the
business belongs to;
- Inform customers of the
steps involved in completing a contract;
- Acknowledge receipt of
orders electronically and without undue delay;
- Make sure customers can
store and reproduce any terms and conditions you supply by
downloading onto their own computer and printing them off, for
example;
- Make it easy for
customers to check orders and correct errors before they complete
the order;
- Say whether or not the
completed contract will be filed by the seller - either in hard-copy
or electronic form - and whether it will be accessible;
- Indicate which language
can be used to conclude the contract.
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The Sale
of Goods Act 1979
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The Act requires you to ensure that:
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- Goods are fit for their
purpose and of satisfactory quality;
- Services are carried out with
reasonable skill, in a reasonable time and at a reasonable price.
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The Trade Descriptions Act
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Requires you to ensure that products are exactly as you
describe them.
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UK television
advertising rules
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The non-broadcast media standards authority covers UK
advertising. They set out the rules that all advertisers must comply
with. It requires all advertising to be honest, fair and decent.
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Where you will be broadcasting over the radio channels,
the regulating body is OFCOM. The Trade Descriptions Act 1968 makes it an
offence for a trader to apply any false or misleading statements and
therefore your advertising ploys must be unambiguous.
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Other matters to consider when selling online:
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- Data Protection Act: -
you should comply with this legislation, which imposes conditions on
both data processors and controllers;
- Intellectual property:
issues such as copyright and trademarks should be considered, not
just for items displayed on your site, but also within any Meta tags;
- Consumer protection
legislation: legislation such as the Unfair Contract Terms Act 1977,
the Unfair Terms and Consumer Contracts Regulations 1999 and the
Consumer Protection Act 1987 apply equally to goods sold over the
Internet. Some of this protection is also extended to business
purchasers;
- Security: be aware that
selling online will necessitate the passing of sensitive data and
payment instructions. An online vendor could be liable for breaches
of security on their site;
- Exclusions on restricted
goods: some types of goods which are legal to sell in one
jurisdiction may be prohibited in other jurisdictions;
- Specific regulations:
specific industries may be regulated. This is particularly the case
with premium:rate Internet sites or those aimed at children;
- There may also be
implications as a consequence of competition law. Check each
potential market sector carefully;
- Access agreement: it is
important to have terms and conditions governing the use of your
website;
- These must be set out
prior to the customer proceeding to purchase - commonly the customer
must click on an "I agree" button to proceed, indicating
acceptance of the terms and conditions.
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