Online businesses – what laws apply to virtual business ?

What law applies to virtual businesses ? Many laws that apply to traditional “bricks and mortar” businesses also apply to virtual businesses.  Virtual businesses are still expected to comply with basic contract law and where there is any divergence statutory law will step in and invalidate any unfair contractual terms. However, virtual businesses are subject

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What law applies to virtual businesses ?

Many laws that apply to traditional “bricks and mortar” businesses also apply to virtual businesses.  Virtual businesses are still expected to comply with basic contract law and where there is any divergence statutory law will step in and invalidate any unfair contractual terms.

However, virtual businesses are subject to unique statutory laws, including the Consumer Business Regulations, which covers distance selling, whether purchases are made online or through the telephone.  Under these regulations, businesses are expected to send a confirmation of the customer’s order (either by snail mail or email) and state that the customer has a right to cancel orders.

Virtual businesses are also subject to the E-Commerce Regulations, which govern business to business sales as well as business to consumer sales, whilst the Consumer Business Regulations cover business to consumer sales only.  As well as requiring written confirmation of orders to be sent, these regulations also require businesses to provide a physical address of their business on their website amongst other things.  However, the E-Commerce Regulations do not provide business customers with an automatic right to cancel orders once they are placed, although this can of course be agreed in a contract.

If I conduct business within the EU, which laws govern my business?

This is not always easy to answer.  Even if you state that contracts are to be governed by English law, under EU legal principles, consumers in other EU member states are may be entitled to invoke their own local laws and commence legal proceedings through their own courts.  This is particularly true where you have a physical presence in a particular country and pay taxes in that country too.

What information do virtual businesses have to provide?

Virtual businesses must provide access their full terms and conditions of trading before a purchase is made.  After an order is placed, confirmation of the order either by email or snail mail must be sent, which must state the customer’s right to cancel the order, details of the service or product ordered, the business’s details and details regarding delivery.

What rights do consumers have to cancel internet orders?

Generally speaking, consumers have a right to cancel orders within seven days of the delivery date in the case of products or seven days within the contract start date for services.  If the consumer is not informed of their right to cancel, this period extends to three months.

However, requirements can vary according to the nature of the goods or services.  Perishable goods, which might include food items, for example, can go off quickly naturally making seven days impractical.

If you need advice on contracts for your business or IP legal advice, we would be happy to discuss your requirements – please call or email me !

commercial law • David Swede

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