About Giles

Giles is the founder and managing director of ContractStore. It was his idea to set up a company selling documents online and he has played a major part in the company's development. He is an English solicitor, with over thirty years' experience of drafting and negotiating commercial and construction contracts in the UK and overseas. Giles has long been convinced that there is a quicker and simpler approach to the delivery and supply of most contracts, and he is an active proponent of the use of plain English in legal documents. He specialises in the drafting of construction and engineering contracts and as well as contributing contracts to the ContractStore website, he is co-author of the JCT Constructing Excellence Contract and of 'Exporting Made Easy' with Simon Bedford.

Consumer takes Bank to the Supreme Court and wins

The case of Durkin v. DSG Retail that was decided in the Supreme Court last week has the elements of a David and Goliath battle – in this case a consumer winning against a bank.

In 1998 Mr Durkin bought a laptop computer from PC World in Aberdeen. He wanted an internal modem and made this clear to the salesman. He paid a £50 deposit and signed a credit agreement for the balance of £1449 with HFC Bank. When he got home he found that there was no internal modem so he returned the laptop to the shop the next day when he asked for the return of his deposit and cancellation of the credit agreement. The shop refused.

Because Mr Durkin did not pay any money to the credit company, HFC, and they refused to cancel their agreement, they issued a default notice and indicated to the credit reference agencies that Mr Durkin was in default.  As a result, he found he could not get credit elsewhere. In 2004 he brought proceedings claiming £250,000 damages from HFC for negligence in claiming that he had defaulted on a contract which he was entitled to cancel. The court awarded him a total of nearly £120,000 which included £8000 for injury to his credit status and £102, 000 on the loss of a capital gain on a Spanish property on which he had been unable to pay a deposit because of his poor credit rating.

HFC won when they appealed against this decision in Scotland but on 25 March the Supreme Court in London unanimously held that Mr Durkin was entitled to rescind the credit agreement and validly did so. They made it clear that the purpose of a credit agreement of this type is to finance a transaction between the consumer and the supplier. Mr Durkin was entitled to cancel the purchase because the laptop was not what he required and in consequence he was excused from obligations under the credit agreement.

The original award of £8000 for damages to credit was upheld although Mr Durkin’s attempt to have the damages for loss of a capital gain on his Spanish property was not.

This case is an important one in linking the consumer’s rights under supply agreement with those under a related credit agreement.

For the full report http://www.supremecourt.uk/current-cases/case_2012_0135.html

Murder in South Africa – a legal perspective

The televised trial of Oscar Pistorius for the murder of his girlfriend Reeva Steenkamp in South Africa has attracted a lot of attention around the World.

For anyone who is interested in legal aspects, in particular the essential elements of the crime of murder, we  have received a very clear summary from Walkers,  attorneys in Cape Town.

Their item is in two parts, first defining the crime of murder and then dealing with a lesser known defence of non-pathological criminal incapacity. It begins:

“Murder is the unlawful and intentional causing of the death of another human being. The essential elements that the State must prove for a conviction are:

• that the perpetrator caused the death (killing) of another human being;

• that such killing was unlawful; and

• that such killing was intentional.”

 For the full article, click here

 

 

 

Pre-Nuptial Agreements to become legally enforceable?

In a report issued today, the Law Commission recommends that prenuptial agreements should become legally enforceable.  Up to now, although in some cases a ‘pre-nup’ has been upheld by the English courts in a divorce, there has been uncertainty as to their precise status.

The Law Commission is therefore recommending a change in the law and has published a draft bill which, if adopted, would make prenuptial agreements legally enforceable but subject to certain safeguards.

Aside from high-net-worth individuals who wish to protect wealth from sharing, the Law Commission believes that pre-nups may be suitable for couples who are each independently able to meet their own needs; for example, couples marrying later in life. They may also be attractive where one party has specific assets to protect. That might be inherited property; equally, couples who have children from a previous relationship might be particularly keen to ensure that property is passed to those children.

The proposed safeguards include the following:

(a) The agreement must be contractually valid (and able to withstand challenge on the basis of undue influence or misrepresentation, for example)

(b) The agreement must have been made by deed and must contain a statement signed by both parties that he or she understands that the agreement is a qualifying nuptial agreement that will partially remove the court’s discretion to make financial orders

(c) The agreement must not have been made within the 28 days immediately before the wedding or the celebration of civil partnership

(d) Both parties to the agreement must have received, at the time of the making of the agreement, disclosure of material information about the other party’s financial situation.

(e) Both parties must have received legal advice at the time that the agreement was formed.

The Law Commission has also recommended that it should not be possible for a party to waive their rights to disclosure and legal advice.

Also, they recommend that spouses and engaged couples should not be able to make contractually enforceable agreements that deal irrevocably with their future needs for housing, childcare, an income, or any other aspects of “financial needs”.

If you are thinking of entering into a pre-nup, ContractStore has some templates that you can find here

The Law Commission report can be found here

 

Validity of Wills – an important decision of the Supreme Court

Until now there have been limited circumstances in which a will can be ‘rectified’ by the court to make it valid when it would not have been otherwise.  But in the case of Marley v. Rawlings, decided on 22 January,  the Supreme Court decided to allow a will to be rectified so that a couple’s intended heir should not be disinherited despite the fact that the couple erroneously signed each other’s wills.

In the decision Lord Neuberger said ‘When interpreting a contract, the court is concerned to find the intention of the party or parties … When it comes to interpreting wills, it seems to me that the approach should be the same.’

In 1999 Mr and Mrs Rawlings wrote and signed identical wills. However, by mistake they signed each other’s will. This did not come to light until after both parties had died.  Mrs Rawlings died in 2003 and Mr Rawlings died in 2006.  Under the will that he signed, Mr Marley, who was not a relative, would have inherited Mr. Rawlings’ entire estate, worth £70,000.  The couple’s two sons challenged the validity of the will because they stood to lose the £70,000.

In 2012 the Court of Appeal upheld the decision of the High Court that Mr Rawlings had not intended to give effect to the will which he signed and that in any event the court does not have the relevant power to rectify the will.

The Supreme Court reversed this decision and allowed the will to be rectified to contain the typed part of the will corresponding to the correct signature. This is to interpret the will in accordance with the intention of the testator, in the same way as a contract is interpreted under the Administration of Justice Act 1982, s 21. There was no doubt from the face of the will, or the evidence, that it was the intention of the will maker at the time of signing the will that it should have effect.

Lord Hodge, in his decision, made it clear that he considered the decision of the Supreme Court could also apply in Scotland, where the law is different from England.

ContractStore has some standard wills both for England & Scotland, but don’t make the same mistake as Mr & Mrs Rawlings!

 

Exclusion Clauses – Ensure Explicit Drafting

Exclusion clauses in contracts need to be drafted very specifically and all limits on liability must be set out explicitly. The recent case of Markerstudy Insurance Co. Ltd v Endsleigh Insurance Services Ltd [2010] EWHC 281 (Comm) is a stark reminder of those principles.

Brief summary of the facts

The defendants, Endsleigh, were engaged by Markerstudy to provide claims handling services concerning a number of agreements. Markerstudy alleged numerous breaches of these agreements which whilst individually may not have been significant, collectively they amounted to losses of £14m. In its defence, Endsleigh sought to rely on numerous limitation and exclusion clauses contained in the contracts.

The court was required to determine two points of construction:

Firstly in relation to the exclusion of liability where the clause provided as follows: “Neither party shall be liable to the other for any indirect consequential loss (including but not limited to loss of goodwill, loss of business, loss of anticipated profit or savings and all other pure economic loss) arising out of or in connection with this Agreement.”  The claimant maintained that by virtue of this clause the defendant was exempted from liability for indirect and consequential losses only. The defendant submitted that it was also exempted from direct losses falling under the heads of loss specified in the clause.

Secondly in respect of the cap on liability; the clause provided that Endsleigh’s total liability in contract, tort, misrepresentation, restitution or otherwise, be limited to the aggregate amount of fees received under the contract. The defendant maintained that this cap of approximately £3.9m included any claims for interest.

The decision

On the interpretation of the exclusion clause, the court found in favour of the claimant, stating: “The use of the phrase ‘including but not limited to’ is a strong pointer that the specified heads of loss are but examples of the excluded indirect loss.” In respect of the cap on liability; the court found in the defendant’s favour in respect of contractual claims for interest.

What are the commercial implications?

This case clearly highlights the need to be explicit and to draft in express terms whenever you are seeking to exclude or cap liability under a contract. If you want to include specific exclusion then parties must consider the specific structure of the clause. Parties need to understand the risks they are accepting and that this allocation is reflected in the contract. SO

1 Consider the commercial negotiations as preparation for any contract;

2 Consider risk allocation – parties should consider how the allocation of risk should be apportioned appropriately between the parties and this allocation needs to be reflected in the contract in express and explicit terms;

3 Ensure that any limitation or exclusion in an agreement does not invalidate your insurance.

4 Know the heads of loss that you want to exclude and the precise nature of the cap on liability which should be stated explicitly in the contract.

5 The term indirect or consequential loss is not a precise term; it should only be used at the end of an exclusion clause as a final catch all precaution and to avoid the potential contamination of the entire clause.

Example of an exclusion clause

1. Neither party shall be liable to the other for any:

a) loss of goodwill

b) loss of business

c) loss of anticipated profit or savings

d) pure economic loss; or

e) any indirect or consequential losses arising out of or in connection with this Agreement.

With respect to any cap on liability, clearly state the precise nature of the cap on liability or a specific figure.

Contributed by Sharonjeev Benning-Prince

 

2013/4 Round up – Part 1. Some legal points from recent cases and a look into 2014

Acting in good faith

It is perhaps surprising, but English law does not generally require the parties to a contract to act in good faith in the performance of the contractual terms.  The parties are on the whole free to behave in accordance with the terms rather than the spirit of the agreement.  The concept of “good faith” is far too vague and it will be difficult for the courts to say exactly what the parties meant.  An express clause in a contract saying that one or other of the parties should act in good faith will be interpreted restrictively so that it will only be applied to the specific point covered by the clause.

The courts will also be reluctant to say that a clause should be implied into a contract that the parties should act in good faith unless the particular circumstances make it essential.  Contracts relating to trust matters usually fall into this category.

The position of the parties before they enter into a contract is much the same. There should, of course, be no misrepresentation or any attempt to mislead or hide the facts, but there is no duty to be fully open about matters and disclose everything.  Again, there is no legal duty to act in good faith in the negotiations.  It is up to each party to investigate the situation and ask questions and for the other to answer fully and accurately. There is one important exception to this rule.  A person wanting to take out an insurance policy should act with the utmost good faith towards the insurer, and disclose all matters which may be relevant, and even if not asked the direct question on the proposal form.

The courts will not, of course, allow an injustice and there are a number of principles which may be applied to ensure that justice is done.

With thanks to Paul Fowler http://www.pcbsolicitors.co.uk

Time to end the lease 

Most commercial leases contain a “break clause”.  This gives the tenant an option of ending the lease before the full term has expired.   It is essential that the tenant complies with the detailed provisions set out in the clause.  Most clauses say that the option should be exercised by the tenant serving a notice upon the landlord within a specified time frame.  The clause will probably say that there should be no breaches of any of the tenant’s covenants by the time the tenant wants the lease to end.  So, for example, there should be no rent arrears and the tenant should have paid all service charges up-to-date.  Payments have or have not been made, and so there should be no quarrel on that factual point.  However, it may be more difficult to say whether or not the tenant has complied with the repairing or decorating covenants, as opinions may differ. Was the right paint used and was the work carried out to a good standard?  Most break clauses provide that the tenant should give vacant possession on the last day and so no furniture should be left in the property and the keys should be handed over promptly.

 The clause may also stipulate what the notice should contain and how it should be served.  So, do not print the notice on blue paper and send it by email if the clause says that it should be printed on red paper and delivered by hand.

The landlord may reject the notice if the tenant fails to comply strictly with the provisions of the break clause.  If the tenant is in any doubt, the landlord should be approached and asked for clarification before the notice takes effect on the last day.

The courts will be reluctant to say that a notice is effective if the tenant fails to comply with the detailed requirements of the break clause.  Basic errors in the notice may not be fatal, if a reasonable landlord knew that the notice was clear.  However, a non-compliant notice may well be ineffective and the tenant will end up with the lease continuing and a huge costs bill for a failed legal case.

With thanks to Paul Fowler http://www.pcbsolicitors.co.uk

Commercial Rent Arrears Recovery – New Regulations in 2014 

One of the most effective remedies for a landlord, where a commercial tenant does not pay its rent on time, has been to exercise distress.  Distress is the common law right to recover rent arrears by seizing and selling a tenant’s goods.  This right will be abolished on 6 April 2014 when the Tribunals Courts and Enforcement Act 2007 is fully enacted and replaced with a new system of commercial rent arrears recovery (CRAR).

CRAR is a ‘self- help’ remedy that does not generally require the intervention of the courts.  The court retains power to intervene if the tenant applies for an order to prevent any abuse of the process or a potential breach of the European Convention on Human Rights.  CRAR can only be used to recover rent in relation to commercial premises not mixed use or residential premises.  The lease has to be in writing.

CRAR can only be exercised against basic rent together with VAT and interest payable on that amount.  It does not include payments such as service charge, business rates, repairs, maintenance or insurance even where they are reserved as rent.

For the right to apply, there will be a threshold rent test being a minimum of 7 days’ unpaid rent.  This is the minimum both when the notice is given and when control is taken.  The landlord must recalculate the net unpaid amount immediately before taking control of any goods.

When exercising CRAR, a minimum notice period of 7 days must be given to allow the debtor to seek legal advice before the enforcement agent is allowed to enter the premises.  The notice has to contain certain prescribed information including details of who the arrears are owed to and why, any court judgment if applicable, how the payment may be made, contact information for the enforcement agent including opening hours and what will happen if payment is not received.

There are also prescribed rules concerning the taking and sale of goods.

 With thanks to Judith M. Long, solicitor

What You Need to Know about Distributor & Reseller Agreements

 If you want to increase sales in a new area whether in your own country or overseas, there are two principal methods, apart from setting up a branch of your business there.  One is to appoint an agent who will promote your goods and find buyers for you.  The other is to appoint a distributor or reseller who will buy your products and then resell them in his territory.

 Once you have decided on the territory that you want to cover, you will need to find a suitable candidate to resell your products.  This is not an easy task and it certainly needs to be undertaken with care, and plenty of due diligence. There is advice on how to go about this in Exporting Made Easy , a book that I have co-written and it is available online at www.exporting-made-easy.com

Once you have selected your distributor, be sure to have a written agreement with him setting out the terms of the deal which allows you to bring the arrangement to an end if things do not work out satisfactorily. You should also get local legal advice before signing an agreement because there could be local laws which you need to take into account – for example, it might be necessary for a distributor to be owned by nationals of the country.

 Set out below are some of the main issues that you need to consider and to cover in your distributorship agreement.

Specify the products and the territory

if you have more than one product line, it may be sensible to restrict the agreement to one or two lines initially to see how things go. You can always add more products later. As for the territory, this needs to be clearly defined. 

Exclusive or Non-exclusive

Are you going to appoint the distributor on an exclusive or non-exclusive basis – i.e.will he be the only person in that territory who is entitled to sell your products. Even if you agree to an exclusive arrangement, you might want to reserve some existing customers to deal with direct, in which case cover this in the agreement.

Duration

What is the initial term of the agreement?   Make it long enough to give the distributor time to get established and into the market with your products, but no longer. It can then be renewable yearly if things work out.

Orders, Prices and Payment

The agreement should set out the arrangements for ordering products as well as prices and payment terms.   Depending on the nature of your business, it can be useful to have forward estimates of orders so that you will have sufficient stock to meet the distributor’s requirements.

It is usual to specify that each order which is accepted constitutes a separate contract between the two parties and that the sales are made on your standard terms and conditions.  You might want to attach a copy of these to the agreement.

There will probably be a schedule setting out the prices of the various products and this could include some trade discounts depending on volume etc.

As for payment terms, you do not want any more exposure than is necessary. Payment prior to shipment is one possibility and another is to have the distributor set up a confirmed irrevocable letter of credit.

It is not normally lawful to fix the resale prices that your distributor will charge so there is always a risk that he will offer your products at a lower price than another distributor.

  Sales Targets. 

You should certainly include some agreed sales targets in the agreement because this allows you to monitor the distributor’s performance. Coupled with the sales targets should be a provision that not only allows you to revise the targets but also entitles you to bring the contract to an end if, for example, minimum targets are not achieved for two or three consecutive quarters.

 General Obligations

It is sensible to identify what marketing material and technical data you will provide and if training of the distributor’s sales staff is needed.  You may also want to have terms that require the distributor to have a marketing budget, to report on sales on a regular basis etc.

 Intellectual property

Make sure that you protect your copyright, patents and trademarks. Your distributor should only be allowed to use them while the agreement remains in place and it is sensible to have a clause which requires him to notify you and to act to protect your interests if, for example, counterfeit goods appear in the market in his territory.

Termination

Always include a clause that allows you to bring the contract to an end if the distributor fails to meet his targets or commits some other breach of contract or becomes insolvent.   Terminating an agreement of this type in some countries might  lead to substantial compensation claims so you need to take legal advice before finalising the wording.

Non-competition and Confidentiality

You may want a clause that prevents the distributor from selling any products that compete with your own both during the agreement and, perhaps, for a period after it has come to an end. In addition, you will probably want to be sure that the terms of the agreement are kept confidential.

Dispute resolution and Governing Law

While you might want English law to apply and any disputes to be dealt with in the English courts, if the distributor is based overseas and has no assets in this country, getting a judgement and then enforcing it against him might prove rather difficult.  An international arbitration clause could well be preferable and we have some free information on our website concerning this topic.

Our template for appointing a distributor can be found here http://www.contractstore.com/A117-distributorship-agreement

What You Need to Know about Partnership Agreements

One advantage of setting up a business as a partnership is that, unlike a company, there is no need to register the business.

 

In fact there are very few formalities, which is one reason why it is sensible to have a written partnership agreement that sets out the basic rules between the partners for running the business.

The main difference between a partnership and a limited company is that a partnership does not have a separate legal personality apart from its members in a way that a limited company does.  (The situation is different for a limited liability partnership, but that is more like a company and has to be registered at Companies House).

So the partners are jointly and severally liable for the obligations of the partnership i.e. each partner can be sued for the full amount of any liability of the partnership. There is no limit on liability

Also, the partners are taxed on an individual basis, by reference to their share of the profits each year.

The law governing partnerships goes right back to 1890 and it is a lot easier to read than today’s statutes.  But while it has stood the test of time, the Partnership Act does not always deal with issues as the partners want to deal with them.

Why You Need a Partnership Agreement

Without an agreement, there can be uncertainties as to the relationship between the partners and how the partnership should be run.  For example, in the absence of a partnership agreement, on the death of a partner, the partnership has to be dissolved.  This might not be in the interests of the surviving partners who wish to keep the business going.

Similarly, in the absence of any agreement to the contrary, the partners have the right to share equally in the capital and profits of the business.

What specific terms should you consider for your partnership?

Here are some of the basics to cover in the agreement that all the partners need to sign.

  •  Name, Business, Start Date

When starting the business you need to agree on the name and start date of the business and the annual accounting year. Also, you need to agree on the scope of the business and write all these details down.

  • Capital & Profits

How much money or other assets – e.g. equipment or knowhow – will each partner put into the business to get it going?  Also, you should specify the profit shares – otherwise all profits are divided equally.

And if there are loans to the business form any of the partners, these need to be documented.

  • Drawings

In most modern firms, each partner will draw an agreed amount out of the income each month, rather like a salary, and his profit share will then be adjusted at the end of the year. But usually the agreement will say that if there is not enough money in the bank, drawings cannot be taken.

  • Management & decision-making

There should be an arrangement for holding regular meetings of the partners where the business will be reviewed and decisions taken. In a small firm this may mean that all the partners need to agree before any decision can be implemented.  But often there will be a majority vote on routine matters and unanimity reserved for the important issues – introducing a new partner, raising a loan or buying property etc.

If the partnership decides to delegate some decisions to an individual partner, this should be recorded – either in a partnership decision or in the agreement.  And it is advisable to require that partner to report to partnership meetings, so that all the partners know what is going on

The procedure for meetings, quorum, who will act as chairman, circulation of minutes etc. can usefully be covered in the agreement.

  •  Accounts

Preparation of regular management accounts is another important matter as well as having a firm of accountants appointed to prepare the annual accounts of the business.

  • Permitted partnership expenses

Petty arguments over what expenses can be charged up to the firm are best avoided, so spell out the main points in the agreement and decide any changes at a formal partners meeting.  Mobile phones, laptops, car expenses etc. can all be covered.

  • Holidays

As partners are not employees of the business they do not have any statutory rights so you need to set out the holiday entitlement of the partners, as well as maternity leave etc.

  • Retirement or death of a partner

With current legislation a fixed retirement age can be problematic, as the partnership may face a claim for age discrimination.  But you need to have a reasonable notice period if anyone wants to leave the partnership – maybe six months or longer, preferably to take effect at the end of the financial year.

If a partner dies, the agreement should say what happens to their share – it will probably need to be paid for by the surviving partners in proportion to their shares in the business.  This also applies when a partner retires.

Accounts will need to be prepared by the firm’s accountants when a partner retires, and the firm may want to retain enough to cover any tax liability that is anticipated before paying the retired partner’s final profit share.

Repayment of capital to a partner who retires or dies may be spread over a period

  • Expulsion

Hopefully there will be no need to expel a partner for misconduct but you should have a clause to deal with this possibility.  This will also specify how any money due to her will be repaid – probably only after any losses she caused the firm have been quantified and recovered.

  • Restrictions on partners

Serious harm can be done to a business if one of the partners, without any consultation, makes commitments to third parties, and you should include a clause designed to avoid those risks.  In addition, any partner who fails to comply should be required to indemnify the others so that they do not suffer loss.

Restrictions on a partner having an interest in any business that competes with the partnership may also be required, and this can be particularly important if a partner leaves, to prevent him/her from taking business away.  Departing partners should also be prevented from poaching staff.

  • Other clauses are needed to deal with issues such as confidentiality and disputes.

Related Downloads:

ContractStore has three forms of partnership agreement – for partnerships with two, three or more than three partners. We also offer partnership agreements for use in India

First Bribery Act Prosecution

Three individuals have been charged under the Bribery Act 2011 – two of them former senior employees of Sustainable AgroEnergy plc and one an independent financial adviser to the company.

This is the Serious Fraud Office’s first prosecution under the Bribery Act, which came into effect in July 2011.

These charges are part of a wider investigation into a suspected £23 million fraud at Sustainable AgroEnergy plc. The SFO’s investigation is focused on the promotion and selling of biofuel investment products to UK investors, which took place between April 2011 and February 2012.

The individuals have been charged with the offences of making and accepting a financial advantage, contrary to section 1(1) and section 2(1) of the Act.

When the director of the SFO, David Green, was appointed last year, we reported that he told the Financial Times that he was going to take a more aggressive approach to financial crime than his predecessor, remarking that “crooks are crooks no matter what colour their collar is.”

More recently he indicated that investigation of two companies for potential breaches of the Bribery Act are in progress.

Under the Bribery Act there are four new offences:

● Bribery of another person
● Accepting a bribe
● Bribing a foreign official
● Failing to prevent bribery (a corporate offence)

If a company does not have an anti-corruption policy in place, it could be in real difficulty if anyone connected with the company commits an act of bribery.

So, for any company that has not yet put appropriate procedures in place, a template Code of Conduct can be bought online at ContractStore: http://www.contractstore.com/bribery-code-of-conduct

What You Need to Know About Selling Online

Retail online is continuing to increase: with low setup costs and the potential to reach niche and mass markets worldwide it’s an attractive proposition. But if you are selling online there are some important rules you need to know about to protect your business – and your customers.

Your terms and conditions of sale must be displayed on your website where the goods are being sold and they must comply with the various regulations that apply.

The key features of the ‘Distance Selling’ regulations in the UK are:

  • you must give consumers clear information including:
    • details of the goods or services offered
    • delivery arrangements and payment
    • seller details including geographical address
    • the consumer’s cancellation right before they buy (known as prior information)
  • you must also provide this information in writing
  •  goods must be delivered within 30 days unless agreed otherwise
  • the consumer has a cooling-off period of seven working days. The cooling off period begins as soon as the order has been made. In the case of goods, it ends seven working days after the day of receipt of the goods. In the case of services, it ends seven working days after the day the order was made but if the consumer agrees to the service beginning within the seven days, the right to cancel ends when the service starts
  • where consumers notify the supplier in writing or another durable medium that they wish to cancel the contract, they must be refunded all money paid within 30 days.

So your Terms and Conditions need to cover all these points and useful clauses can also include:

  • Price – the price of goods must be shown clearly to the customer and make it clear whether VAT is included. If packing and postage is extra, this also needs to be shown.
  • Payment – it is usual to make it clear that payment must be made in full before the goods are dispatched. Sometimes a credit card transaction comes with a warning for the merchant that there is a doubt about the validity of the buyer, so you can do further checks before sending the goods if there is a potential problem
  • Force Majeure – If you are unable to deliver due to some unforeseeable event such as a fire at the warehouse or a hurricane, you can reserve the right to cancel or suspend the contract
  • Warranties – you have a legal obligation to deliver goods that meet the description on your website and are of satisfactory quality so why not say this in your T&Cs as it can give the customers some comfort.

In addition, a customer who wishes to purchase goods online, using a credit card or some other payment method, should be required to confirm that he/she has read the terms and conditions and accepted them before proceeding to the checkout. In order to have evidence that the customer is aware of the terms on which goods are sold, the usual system is to have a ‘tick box’ which must be ticked by the customer confirming that the terms and conditions have been read before the sale process can be concluded.

For more information on legislation and regulations governing the sale of goods and services and consumer protection, there are various Government and other websites that provide useful information including DirectGov – http://www.direct.gov.uk – and the Office of Fair Trading – http://www.oft.gov.uk/. There is also useful guidance in more detail at http://www.which.co.uk/consumer-rights/regulation/distance-selling-regulations/

ContractStore has created some ready-made documents for online retailers: