Consumer rights Reforming statutory implied conditions and warranties

Overseas models

Europe and the United Kingdom

Businesses in the UK and other Member States of the European Union that sell goods or services online to a consumer may be subject to regulations relating to electronic commerce and/distance selling. Businesses must comply with the information disclosure requirements in both electronic commerce and distance selling regulations.

Electronic commerce

In the EU, the Electronic Commerce Directive (2000/31/EC) (EC Directive) creates a basic legal framework for Member States with regards to electronic commerce. The EC Directive sets out transparency requirements for online advertising and principles for contracting online. It aims, amongst other things, to generate consumer confidence when transacting online by clarifying the rights and obligations of businesses. The EC Directive is given legal effect through the Electronic Commerce (EC Directive) Regulations 2002 (EC Regulations). The EC Directive, and therefore the EC Regulations, apply to businesses which advertise or sell goods or services online, including online shopping, that are of a commercial nature.

The EC Regulations requires a business to disclose certain information to consumers, including its name, business address and email address, and the price of the product as well as any associated taxes and delivery costs.²²⁵ Before consumers place an order, businesses are required to disclose, in a clear, comprehensive and unambiguous manner, the process for concluding the contract, how consumers can correct mistakes when placing an order, and the terms and conditions of the sale.²²⁶

A business failing to comply with the EC Regulations could result in the consumer being able to walk away from the sale and legal sanctions being imposed (such as a ‘stop now’ order on the business).

Distance selling

The EU’s Distance Selling Directive (97/7/EC) (DS Directive) provides minimum protections to consumers in Member States in relation to distance contracts. The DS Directive is implemented by the Consumer Protection (Distance Selling) Regulations 2000 (DS Regulations). The DS Regulations apply to distance contracts, which are contracts for the sale of goods or services between a supplier and consumer using distance communication (and without the simultaneous physical presence of the consumer and supplier).²²⁷ The DS Regulations do not apply to the sale of food, beverages or other goods intended for everyday consumption, or to the provision of certain accommodation, transport, catering or leisure services.²²⁸

The DS Regulations require minimum information to be disclosed to consumers by suppliers in distance sales.²²⁹ The kinds of information required to be disclosed, in a clear and comprehensible manner, include:

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  the identity and address of the supplier;
  
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  main characteristics and price (including all taxes and any delivery costs) of the goods or services;
  
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  arrangements for payment, delivery or performance;
  
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  the right for the consumer to cancel the contract and the obligation for the supplier to bear the cost of returning the goods in the event of a cancellation; and
  
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  that substitutes will be provided where the goods or services are unavailable.²³⁰
  

In addition, before the contract is concluded, or at latest at the time goods are delivered or services are performed, consumers must be provided with the following information:

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  the process and conditions for cancelling the contract;
  
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  the supplier’s address where complaints can be forwarded to; and
  
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  any after sales services and guarantees.²³¹
  

Suppliers are also required to provide consumers with a written confirmation of the above information.²³²

The DS Regulations allow consumers to cancel the contract within seven days of receiving the goods or of the service contract concluding. However, where the supplier has failed to disclose all of the required information above to the consumer, the cancellation period is extended to three months.²³³ Upon cancelling the contract, the supplier must refund the price paid to the consumer within 30 days of receiving the cancellation notice.²³⁴ Consumers are required to take reasonable care of the goods and to restore them to the supplier.²³⁵

The DS Regulations also require suppliers to perform the contract within 30 days of an order being placed, and to refund the price paid within 60 days of the order being made where the order is unavailable (unless the contract allows substitutes to be provided).²³⁶

Canada

Canada has a sales contract template in place which is available for provincial governments to adapt and apply in their own jurisdiction in relation to regulating online sales. The Internet Sales Contract Harmonization Template sets out the minimum information which online suppliers of goods or services are required to disclose in sales contracts.²³⁷ The provinces of Alberta and Manitoba, for instance, have adopted parts of the Template and applied them in their consumer protection laws.²³⁸ Although each province determines the scope of the Template as it applies to their jurisdiction, including what types of businesses or products it should apply to, the requirements in the Template generally apply to the online supply of goods or services that are primarily used for personal, family or household purposes.²³⁹

The minimum information required to be disclosed by suppliers to consumers, in a clear and comprehensible manner, before entering into an Internet sales contract, includes:

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  the supplier’s contact details;
  
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  a fair and accurate description of the goods or services being sold, including any relevant technical or system specifications;
  
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  an itemised list of the price of the goods or services being sold and any associated costs payable by the consumer, including taxes and shipping charges;
  
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  a description of any additional charges that could apply, such as custom duties;
  
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  the total price of the contract or any periodic payments under the contract;
  
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  the terms, conditions and method of payment;
  
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  the date the goods will be delivered or services will commence;
  
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  delivery arrangements, including the mode of delivery, deliverer’s identity and place of delivery;
  
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  the supplier’s cancellation, return, exchange and/or refund policies; and
  
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  any other limitations or conditions which may apply to the contract.²⁴⁰
  

Suppliers are also required to provide consumers with an express opportunity to accept or decline the contract, and to correct any errors, before entering into the contract.²⁴¹

The Template allows consumers to cancel an Internet sales contract within seven days of receiving a copy of the contract where the supplier has disclosed any of the above minimum information, or within 30 days of entering into the contract if the supplier has failed to provide a copy of the contract to the consumer.²⁴² In addition, consumers may cancel an Internet sales contract any time before delivery of the goods or the commencement of services if there has been no delivery or commencement within 30 days of the specified delivery or commencement date (or within 30 days of entering into the contract if no delivery or commencement date has been specified).²⁴³

Where a consumer cancels an Internet sales contract, the Template requires the supplier to refund any price paid within 15 days of the cancellation.²⁴⁴ Consumers must return the goods to the supplier unused and in the same condition they were delivered to them, whereby the supplier must accept the goods and bear reasonable costs for their return.²⁴⁵

CCAAC’s view

The regulatory impact of allowing consumers a cooling off period for online sales is difficult to determine at this stage. CCAAC considers that providing for a cooling off period may allow consumers to seek a refund when they change their mind about a purchase, as opposed to when they have genuine issues with the quality or performance of a product. Accordingly, CCAAC recommends that the Government continue to monitor international developments in this area with a view to making amendments to the law if it becomes evident that a cooling off period is required for online transactions.