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How to make sure your contract complies with the law and is ‘bullet-proof’ ?

How to make sure your contract complies with the law and is ‘bullet-proof’ ?

Your terms and conditions, and your ordering process, constitute a contract with your customer. If your terms and conditions are clear and the ordering process is transparent, this will cement the relationship with your customers and be an incentive to them to come back to your website and make more purchases. Here it is also important that you match the checkout and contract visualization with your site’s look and feel. Studies revealed that when there is a visual mismatch or disconnection between the checkout experience and the rest of your site, this can contribute to abandonment/withdrawal.

Content wise, in order for the contract to be valid and to minimize the risk of mistakes and misunderstandings, you must comply with a set of information requirements during the ordering process.

Provide the necessary information on your website

In addition to the general contact information that you should also make available when contracting with your customers, you must provide the following information in clear and understandable terms on the transaction you are concluding with the customer:

•    The main characteristics of the product/service;
•    The price of the product/service – inclusive of all additional charges – taxes, delivery costs, etc.;
•    The arrangements for payment, delivery, performance, the time by which you undertake to deliver the goods or to perform the services, and your policy for handling complaints;
•    The duration of the contract and the conditions for terminating it, including whether it imposes any obligations on the customer for a certain minimum period;
•    The charges to the customer for communicating with you when concluding the contract if these are above the basic rate (e.g. premium rate call charges for contracts concluded over the telephone);
•    The existence and conditions if there is a deposit to pay or if another financial guarantee has to be provided;
•    Information on any legal guarantee of conformity for goods, and the conditions of any after-sales service or commercial guarantees;
•    The terms on which the customer has the right to withdraw, including: time limits and procedures, any specific withdrawal form (find a model), the customer's obligation to pay for returning goods, if applicable. If the goods are bulky, you must provide information on the cost of returning them, or at least an estimate (based on the delivery cost). These terms must also cover the customer's obligation to pay proportionate costs for any services already provided during the withdrawal period (in cases where you have, at the customer’s request, started providing the service they ordered before the expiry of the withdrawal period);
•    Any exceptions to the right of withdrawal
•    Information on out-of-court schemes for resolving disputes.

Note that your customers are protected against unfair clauses. If the contract contains unfair terms, your customers are not bound by them. A clause is defined as unfair when any imbalance between your customer’s rights and yours puts them at a significant disadvantage. (Find out more on Your Europe.)

Note that some Member States have exempted contracts of low value from some information requirements. Furthermore, not all types of contract are covered by these rules: for example, contracts related to social and healthcare services; gambling and lotteries; financial services; immovable property and construction; package travel; certain telecommunications services and other types of contract do not come under these rules. However, other laws on information to be provided may apply for these kinds of consumer contracts: thus, as a trader, it is important to keep the duty to inform the customer and find out the rules which apply to your business.

Please note that the Commission is currently working on a proposal for a regulation to promote fairness and transparency for business users of online intermediary services. Thus, in the future, certain online platforms intermediating sales as well as search engines, may become subject to further standards regarding the transparency of their general terms and conditions in relation to their business users. The Commission has also adopted a decision setting up an Observatory that should, inter alia, assist in the monitoring of the implementation of the proposed regulation, once adopted (for more details please visit this page).

If the price is not predetermined at the moment of the transaction, and your customers request for the information, you must provide them with the method for calculating the price or a detailed estimate.

Inform your customers before they place the order

Before your customers place an order, you must communicate the following information in a way that will help your customer to navigate easily through the contracting process on your website:

•    The different steps involved in completing the purchase (such as ‘selection of the items’, ‘registration’, ‘indication of the delivery address’, ‘choice of means of payment’, etc.);
•    Whether or not you will store the contract and how the customer can access it;
•    The option for the customer to review the order details before placing the order (e.g. offering a “clear” button while filling in the order form). This enables your customer to identify and correct any mistakes they have made while inputting the details;

You should disclose any relevant code of conduct or set of proper business practices to which your business is subject and provide the info source where they can be consulted. Finally, you must also provide your customers with contract terms and general conditions in a way that they can save and print these as they may need to be able to consult them subsequently.

Make sure the order is confirmed

Confirmation of the order by your customer

So that the customer understands clearly that they are confirming an order (and concluding a contract), you should display an ‘acknowledgement page’. You use this page to confirm the details of the purchase clearly and prominently, i.e. the characteristics of the goods or services, the total price, the duration of the contract, the conditions for terminating the contract and any minimum duration of the customer’s obligations.

On this page, you should also give your customers the opportunity to acknowledge that placing the order obliges them to pay. This can be done, for example, by including a clickable button saying "buy now", "pay now" or "confirm purchase" (more about online payment).

Finally, you should make sure your customers are appropriately directed to read and accept the contract terms and conditions. This enables you to avoid any claims from your customers that they did not have the opportunity to read your terms.

One approach is to ensure that they must scroll through the terms and conditions as a compulsory stage of the transaction and make them click on an ‘accept’ button before placing the order and starting the contractual process. Another, more user-friendly, approach is to include a link to the terms and conditions and have the customer tick a box to confirm they have read and accepted them.

Confirmation via ‘durable medium’

You should use a ‘durable medium’ (e.g. letter or e-mail) to provide your customer with a confirmation that the order has been well received and placed. This must be done at the time the contract is concluded, or at the latest at the moment of delivery or before the service begins.

You should indicate clearly and legibly from the beginning of the ordering process whether any delivery conditions apply and which means of payment are accepted.

Respect your customer’s right of withdrawal

Your customer has the right to cancel the contract within a period of 14 days without giving any reason and without incurring any penalty (‘the cooling-off period’).

Unless you have agreed to bear the cost of returning the goods or failed to inform the customer that he/she has the obligation to pay for this, the customer must meet this cost.

You must reimburse your customer for all the payments you have received from them no later than 14 days from the day on which you were informed of the customer’s decision to withdraw from the contract. If the customer paid with a credit card, you must reverse the transaction. The reimbursement must include (if applicable) the costs of delivery. The exception to this general rule is when goods are returned. As a trader you can issue the refund once the goods are received or when you receive proof that the goods have been sent; whichever is earlier.

There are circumstances under which your customer cannot benefit from the right of withdrawal. Examples include contracts concluded for a service you have already started to provide, a tailor-made product, newspapers and digital content. Find out more on Your Europe.

If you fail to inform your customers about the withdrawal period, the withdrawal period expires 12 months from the end of the initial withdrawal period. If at some point during those 12 months, you do provide the necessary information, the withdrawal period starts at that time.

Sources of information

Provide with the necessary information on your website

•    Consumer Right Directive (2011/83/EU), Article 6
•    Services Directive (2006/123/EC)
•    Your Europe, Unfair contract terms
•    Your Europe, Distance Selling
•    Proposal for a Regulation on promoting fairness and transparency for business users of online intermediation services (COM (2018) 238 final)
    
Information to be provided before they place the order

•    E-commerce Directive (2000/31/EC), Article 10-11
•    Unfair Commercial Practices Directive (2005/29/EC)

Make sure the order is confirmed

•    Consumer Right Directive (2011/83/EU), Article 8
•    Your Europe, Distance Selling
•    Selling online: an overview of the rules