Selling goods or services behind closed doors

Mon 12th Apr 2010
Date

Such rights now extend to dealings with customers ‘at a distance’. By that it means to sell goods or services to a customer without face-to-face contact. The most prominent examples of this are selling to customers using the internet or by mail order. However the Distance Selling Regulations seek to extend to all businesses selling to customers where the customer cannot see the products they are purchasing or meet with the business in person.

For any business contemplating a leap into such forms of selling, that business must be alert to the rights granted to the customer. These rights have been predominantly implemented by The Distance Selling Regulations. The aim of these Regulations have been to enable customers to have a greater confidence to buy goods and services from businesses that they have no physical contact with.

The Distance Selling Regulations can be loosely divided into 5 main customer rights within distance selling. These are:-

  • Pre and post contractual information
  • Default deadline for performance by the business
  • Cancelation rights/ The cooling off period
  • Refunds
  • Protection from payment card fraud

Failing to get these correct, businesses can risk losing their rights within a contract in favour of the customer.

Pre and post contractual information

Before entering into a contract with a customer for goods or services, you, as the business, must provide a sufficient amount of information to the customer.

The type of information required is to enable the customer to have a sufficient idea about you as a business, all the costs involved with the goods or services being purchased and their rights to cancel.

Then once the customer has committed to purchasing the goods or services from your business, the business must, in writing (or email), provide further information to enable any dialogue that may be required between the parties during the performance of the contract.

This may seem easy to overlook but if you fail to get this right, the customer may enjoy a period of up to 3 months and 7 days to cancel the agreement. Research by the Office of Fair Trading has stated that businesses online are not very good at this. This means that there are a lot of businesses exposing themselves to large customer cancelation periods and therefore an unnecessary degree of uncertainty in any transaction.

Default deadline for performance

If you, as the business, do not put into the terms of your agreement a time limit to deliver your goods or perform your service, you will have a statutory time limit of 30 days.

Failure to comply with this shall mean that the contract must be treated as not having been formed. Therefore, unless the customer agrees for an extension, they can legally demand their money back. You then have a maximum of 30 days to comply. This may be of little concern for a small purchase but for larger purchases, such a deadline can prove very tight. Therefore this is something you may consider varying in your contracts with the customers.

Cancellation rights or a “cooling off period”

When customers purchase goods or services at a distance, the law directs that they should be allowed a sufficient amount of time to “cool off”. This is because they cannot view the item until they have purchased it and therefore they may decide that they are not happy with it.

This right is unconditional. It is not dependant on there being any fault of the product.

If you are providing goods or services, the customer has seven working days after the day on which they received the goods or services. These cooling off periods are likely to be the best on offer for a business. If you fail to provide sufficient information, as stated above, such cooling off periods can be much longer. Additionally there are rather complicated exceptions and exceptions to the exceptions that a business should be aware of. Therefore it is important to read up thoroughly. As with the whole of this article, you must take this as a mere taster of the information you should know. For directions to more information please see the bottom of the article.

It must also be stated that even though you may have passed the Regulation’s deadlines, you may not yet be out of the woods. This is because the Regulations do not affect other other consumer rights. For example, if the goods or services provided by you develop a fault within the first 6 months, it is presumed that you sold it with the fault. You will then have to prove otherwise

Refunds

You are not generally allowed to withhold refunds, even if the customer damages the goods. Customers generally have an unconditional right to cancel a contract and demand a repayment within 30 days. This is again the legal starting position that businesses will have to try and move away from in order to keep hold of a refund.

If you are required to refund the goods or services, you can be required to repay the full price of the goods, or deposit and any costs of delivery.

The main exception to this rule is that you can claim that the customer has breached the statutory duty of care. But this will be a fight and you are on the back foot. It will be up to you to weigh the costs of claiming this breach of statutory duty against providing a refund.

Protection from payment card fraud

The final point to be addressed in this article is the rights of a customer who declares that your goods or services were purchased by someone else fraudulently using their payment card. In this event, quite simply, the customer will be entitled to cancel the payment with you. They will also be entitled to be reimbursed by their bank/card issuer. Therefore it is in your interest to ensure your method of selling has all the necessary checks.

For more information, go on to the Office of Fair Trading website: www.oft.gov.uk “Distance Selling Regulations” page. If you need to revisit your terms and conditions or if you have a dispute with a consumer contract please contact us at Coodes Solicitors, Elizabeth House, Castle Street, Truro, TR1 3AP.

Mon 12th Apr 2010

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