One of the many results of the pandemic has been the rapid move of traditional retailers into cyberspace and a record influx of consumers. Unsurprisingly, the increase in sales in the e-commerce sector has been matched by a corresponding increase in the number of consumer complaints to the State Consumer Rights Protection Authority. The growing number of complaints each year is an indication of the unpreparedness of traders in concluding the terms and conditions of sales and service contracts with consumers. Therefore, the Prevence team of lawyers will reveal how businesses can prepare the terms of their sales and service contracts in a high standard and provide recommendations on how to avoid possible disputes with consumers.

Even a favourable decision by an authority can damage your reputation

Consistently analysing the administrative and judicial practice in consumer disputes, we note that providers of goods and services often omit important aspects of consumer protection in their published e-sales rules, which are enshrined in the existing regulation. Commercial law expert – Simonas Milašius.

It is important to note that the content of a dispute between consumers and businesses, as well as the name of the company, becomes public during the dispute. This means that disputes with consumers, even if they are won, can damage the reputation of companies or trading platforms and potentially create a negative image for potential customers, giving the impression that the interests of customers and the disputes they have with the trader will not be resolved amicably. Therefore, orderly and balanced rules for both parties and the prevention of disputes or their timely and amicable resolution lead to a better customer experience on the e-commerce platform.

A common global e-commerce platform chooses to resolve consumer disputes or complaints immediately by neutralising the negative customer experience, offering discounts on future purchases, or any other clever way to try to stem the tide of dissatisfaction. In essence, some e-commerce platforms take advantage of a critical situation by demonstrating their utmost commitment to the customer and a positive customer experience, while others, especially in Lithuania, are still opting for a dispute resolution approach that is likely to have long-lasting negative effects.

It's not just the content of the documents that matters, but also their form

Traders drafting standard terms and conditions must take into account the fact that consumers are always considered to be the weaker party in a relationship, and therefore the content as well as the form of the rules must be taken into account when drafting standard rules.

The trader who creates standard terms and conditions (e.g. the rules of an online shop) has a duty to inform the consumer clearly and appropriately, so it is particularly important to avoid the complicated sentence structures used by traditional lawyers and to make the information as understandable as possible. The legal document design service ensures a consumer-oriented presentation of legal document information that is easy to read and presents the service provider in a high-quality manner.

Discerning users pay attention to the aesthetic form of documents. Experience has therefore shown that new criteria are emerging in the drafting of terms and conditions of sale and service:

  • Presenting information in a user-friendly and aesthetically pleasing format;
  • Easy readability of the content of legal documents;
  • An image that creates a successful and reliable transaction with the customer.

Among other legal services, Prevence offers a unique legal document design service, which is important for e-commerce platforms seeking to make sense of their customer relationships in a user-friendly format. Legal document design expert – Linas Jurevičius

Contract terms commonly used by businesses with consumers may be invalidated

Sometimes traders do not realise how much legal trouble standard and seemingly innocent contractual terms can cause, so here is an example of where terms in a business’s standard terms and conditions for the provision of trade and services have been found to be unfair and to give an undue advantage to a trader. The most reflective example occurred on 21 January 2021 when a consumer contacted the Authority about the unfairness of standard contracts used by a major e-commerce portal (the name of the company will be withheld for confidentiality reasons). Following the consumer’s complaint, the Authority assessed the rules published by the e-merchant on its e-shop and, by Decision No 10E-196, found that the clause stating that, once new standard terms and conditions of sale and purchase are published, they apply to all the consumer’s purchases from the moment of their publication on the website is unfair. This clause is considered unfair in two respects. Firstly, the consumer is not warned when consulting the rules of the website as to how he will subsequently be informed of changes to the rules of sale, and secondly, it places an undue burden on the consumer by making it in his interest to constantly check the seller’s rules for changes.

The Authority also examined why the sale and purchase agreement provided for the seller’s right to split the purchase into separate orders. The terms and conditions contained a clause which allowed the seller to split the basket into separate orders without the buyer’s consent. In the case of such splitting, the consumer is exposed to additional prices for services (delivery, takeaway, etc.). Such a clause, according to the Authority’s ruling, is detrimental to the consumer’s interests as it is not clear whether the charges for additional services are included in the order even if the consumer has not opted for them. The final price of the order and all the charges included in the price, including the additional services chosen, must always be known to the customer.

In the above-mentioned ruling, which assessed the fairness of online shop contracts, the Office also addressed the conditions for limiting the seller’s liability. The standard terms and conditions provided that, where the seller was held liable for the infringement, his liability was limited to the amount of the direct loss suffered. In the context of civil liability, the principle of full compensation for damages, which is based on the aim of restoring the injured party to the position it would have been in had it not been for the defendant’s injurious conduct, requires that the injured party be compensated for all the damage or loss (both direct and indirect). Moreover, according to the provisions of the Civil Code, where a trader fails to perform (or fails to perform properly) an obligation, he is liable in all cases unless he proves that the failure or improper performance was due to force majeure. The contract and the rules may not restrict the consumer’s right to claim damages for non-performance of the obligation or for the full amount of the damage suffered.

The rules of the online shop assessed by the Office also included a clause allowing the buyer to return unsatisfactory goods if they do not fall under the seller’s own list of non-returnable goods. It is important to note that the provisions of the Civil Code give consumers the right to withdraw from distance contracts (e.g. concluded online, not in a physical shop). Therefore, the Authority held in its ruling that the failure to expressly state that the clause does not apply to distance or off-premises consumer sales contracts is unfair. Moreover, according to the provisions of the Civil Code, if the consumer is not properly informed of the possibility of withdrawing from a distance contract, the consumer has the right to withdraw within 12 months.

In the light of the Authority's assessment, we would like to provide traders with a list of recommendations to help them draw up quality terms and conditions for the provision of sales and service contracts and to avoid potential disputes with consumers:

1. Specify the procedure for informing consumers about changes to the standard rules and provide for a period of notice of future changes.

2. It’s particularly important that changes to the contract between the parties are recorded in the same form as the contract between the parties, e.g. if, when creating an account, the consumer was required to accept the standard terms and conditions of sale in force at the time of registration by means of an active declaration of acceptance, then he or she should be informed of the changes to the terms and conditions, and should also be given the opportunity to express his or her acceptance or disagreement by means of an active declaration of acceptance or disagreement and to be given the possibility of deletion of the account.

3. We recommend that sellers obtain the buyer’s prior consent to splitting an order into multiple orders and incurring additional charges.

4. Traders must pay attention to the conditions for limiting the seller’s liability, which must not restrict the buyer’s right to full compensation for any damage suffered.

5. When concluding distance contracts with consumers, it is necessary to provide that the consumer has the possibility to withdraw from the contract (this right can only be limited in cases provided for by law, e.g. when ordering customised goods or selling perishable products at a distance).

An opportunity to learn from others' mistakes

The above examples show a paradoxical situation: when entrepreneurs seek to limit their risks and liabilities, the inclusion of such clauses in a contract may have negative consequences for the entrepreneurs. We note that a large part of the contracts used by sellers in e-commerce are not aligned with the interests of consumers. Therefore, in the event of a dispute with a consumer, the Office may declare such rules invalid.

Failure to protect business interests and to assess the compatibility of terms and conditions with consumers’ rights could result in the loss of quality and long-established relationships between businesses and their consumers. Founder and Managing Partner – Edgaras Margevičius.

We would like to stress that it is commercially important for every e-commerce trader to check the terms and conditions used to assess whether they are formulated in a way that takes into account consumers’ rights, whether the terms and conditions are sufficiently clear and understandable for consumers, and whether the terms and conditions do not impose any additional risks on the trader. Proper implementation of the interests of both parties will help businesses to adequately anticipate risks, avoid potential disputes with customers and ensure the smooth running of their business.