Updated: Aug 31
Many business owners recognise the benefits of operating their businesses online. In the wake of the Covid-19 pandemic taking a business online has, for many businesses, become a matter of survival and not just smart strategy. Retail businesses have been particularly impacted and many have found that operating online entirely or with a “click and collect” business model may be their best chance of riding out the crisis. However, be wary, an online business brings with it a number of unique legal issues which may not be obvious to a business owner transitioning from a physical retail space to a virtual one. In the course of this article we will list what we consider to be the top five legal issues to consider.
1. Rules and Regulations
All businesses providing goods and services are regulated by the common law and a wide array of Acts and Regulations. Every transaction, no matter how minor, is governed by law. The legal principles governing the sale of a pack of chewing gum are, when you come down to it, little different from those governing the sale of gold-plated Rolls Royce.
The key issue to remember is that when you transition to an “eCommerce business” you will be considered a “distance seller” and the contracts you conclude will be governed by the same rules applicable to telephone sales and ordering from catalogues.
The main pieces of legislation for you to consider are:
· Consumer Rights Act;
· Consumer Contract Regulations;
· eCommerce Regulations.
These regulations are mostly common sense business principles which you will already have in place as part of your standard operations. The emphasis is on the trader (ie you) providing easy, direct and permanently accessible information about your business on your website which includes:
· minimum information – the trading website must include:
o full name of business
o physical (geographic) address
o contact details which must include a functioning email address
· How to correct a mistake in a purchase;
· Clear process and contact details for resolving disputes about orders.
You must also be careful to acquaint yourself with the rules regarding commercial marketing information and the use of unsolicited emails particularly in circumstances where you may be serving customers located outside of the UK.
2. Website terms and conditions
In physical retail transactions it is rare to have any form of documentary “terms and conditions”. However, in the online space, clear and accessible terms and conditions are essential as a matter of law. These are nothing more than the terms on which you are doing business with a consumer. If you have a standard contract all you would need to do is place it on your website. This may be a good opportunity to run a “health check” on your standard trading documents to ensure that they are compliant with consumer rights law and the eCommerce regulations. Terms and conditions generally define:
· The parties to a contract;
· The services or goods being delivered
· How the goods or services will be paid for;
· Returns policies;
· The applicable law (if you are contracting with consumers outside the UK it is wise to include a clause that specifies that UK law will apply to the contract)
· Details on dispute resolution procedure in the event of dispute
3. Data Privacy – Policies and Security
Now that you are engaging with customers online (through your website and via email) you will find that you will amass a great deal of personal information about them. The collection, storage and distribution to third parties of personal information is regulated by:
· Data Protection Act 2018;
· General Data Protection Regulation (GDPR)
· Privacy and Electronic Communications Regulations (PECR)
Before we deal with your obligations in terms of the Data Protection Act and regulations it is will be useful to define “personal data”. Simply put it is any information which could identify a living individual. This data includes:
· Full name
· Physical address
· Phone number
· IP address of the device they are using to access your website;
· Credit card details.
· The information being collected from the customer;
· Where that information will be stored;
· What that information will be used for;
· For how long the information will be stored.
4. Website Cookies
Cookies are small pieces of software which are installed on a user’s device when they access your website. Cookies can be essential and non-essential:
· Essential – these cookies allow a website to function properly. For instance, it is cookies which allow an online shop to “remember” what a user has stored in their online shopping cart;
· Non-essential - these cookies make the website more user-friendly ie they “remember” a user to facilitate easier log in. These cookies can also be used to gather information about a user i.e. their location, IP address and browsing habits.
5. Intellectual Property – branding, copyrighting and trademarks
The most important piece of intellectual property you will have is your domain name. If you think it may be copied it might well be useful to register variations on your domain name and set them up to all redirect to your main website.
There are no special rules for intellectual property in the eCommerce space and the normal rules regarding passing off and trademark infringement will apply.
In setting up your online business you may be entering into software license agreements and perhaps developing bespoke technology solutions unique to your business. Care must be taken to ensure that you are aware of who holds the intellectual property rights, how they may be transferred and the consequences should you decide to sell or otherwise transfer your business.
This all seems like… a lot
We realise that all of this may seem rather bewildering at first. However, eCommerce set up packages can be bought virtually “off the shelf” and will contain all of the standard forms and notices you need. Your web developers too will be able to advise on the technical aspects of setting up your online business and ensure that all the tech solutions like cookie consent notices are functioning correctly.
As part of your overall set up process we recommend that you consult a solicitor to review your documents to ensure that you are compliant with the relevant regulations and will be able to conduct business efficiently. Prevention is always better than cure but if things do go wrong having all your standard form documents and notices in order will go a long way to resolving any disputes that may occur in your favour.
This article is provided for general information only and is not intended to be nor should it be relied upon as legal advice in relation to any particular matter. If you require specific legal advice on any issue relating to your online business or website, contact a member of the commercial law team at Serenity Law LLP who will be able to assist. Please contact us on 0800 019 7773 or book a 15 minute free consultation by clicking here to arrange a consultation.