Define "separate contract" in this circumstance

[Price-Tracking]

From the Office of Fair Trading's guidance document on the Distance Selling Regulations, with regard to whether or not you have to refund the outgoing delivery charge if the customer has selected an expensive express delivery service:

What specifically do I have to refund to the consumer if they cancel?

3.49 If you provided additional services such as gift wrapping or express delivery that a consumer specifically requested, then you may withhold the additional charges incurred by the consumer for these services only if:

• the additional services were provided under a separate contract
• you had the consumer’s agreement to start the additional services
  before the end of the cancellation period, and
• you provided the consumer with the required written information
  before you started the additional services, including information
  that the cancellation rights would end as soon as you started to
  carry out the additional services.

So in relation to e-commerce sites how could we implement this? The 2nd point I assume could be dealt with in the T&C's and by the customer selecting the express delivery service, and the 3rd by a bit of text in the confirmation email.

But what does it mean "separate contract" in the first point? It would be completely impractical to get them to place an order for the goods then another order for the delivery charge, so is it possible to word the T&C's in such a way that if they select express delivery on their order it somehow forms a separate contract even though the item is on the same "order"?

It doesn't seem to make sense that they would specifically say that express deliveries could be excluded from refunds but then say "but only if you do it in a completely impractical way that will never work in practice"... :|

 

[dal]

My amateur interpretation would be that as the customer has the option to select standard delivery then selecting express delivery could be interpreted as a separate contract or clause.
I would predict you only need refund the standard delivery charge; but that's only my amateur interpretation.

 

[IANL]

My amateur interpretation would be that as the customer has the option to select standard delivery then selecting express delivery could be interpreted as a separate contract or clause.
I would predict you only need refund the standard delivery charge; but that's only my amateur interpretation.

Further to the previous answer. I would say that the way your terms and conditions are worded would be the key to this.

Words to the effect that

(c) "Company" may make part delivery of any Products and/or Services ordered by the Customer and any Products and/or Services so delivered shall constitute a separate contract upon these terms and conditions. As such, an invoice on any Products and/or Services part delivered is due in accordance with the agreed terms of payment.

You would be wise to get a lawyer to draft a clause that covers what you need.

I am not a lawyer.

 

[jules12345]

From the Office of Fair Trading's guidance document on the Distance Selling Regulations, with regard to whether or not you have to refund the outgoing delivery charge if the customer has selected an expensive express delivery service:
So in relation to e-commerce sites how could we implement this? The 2nd point I assume could be dealt with in the T&C's and by the customer selecting the express delivery service, and the 3rd by a bit of text in the confirmation email.

But what does it mean "separate contract" in the first point? It would be completely impractical to get them to place an order for the goods then another order for the delivery charge, so is it possible to word the T&C's in such a way that if they select express delivery on their order it somehow forms a separate contract even though the item is on the same "order"?

It doesn't seem to make sense that they would specifically say that express deliveries could be excluded from refunds but then say "but only if you do it in a completely impractical way that will never work in practice"... :|

Where in the distance selling rules does the OFT get the presumption that a seperate contract is required ?

S.9 of the DSR 2000

Written and additional information

8.-(1) Subject to regulation 9, the supplier shall provide to the consumer in writing, or in another durable medium which is available and accessible to the consumer, the information referred to in paragraph (2), either-
(a)prior to the conclusion of the contract, or
(b)thereafter, in good time and in any event-
(i)during the performance of the contract, in the case of services; and
(ii)at the latest at the time of delivery where goods not for delivery to third parties are concerned.

(2) The information required to be provided by paragraph (1) is-
(a)the information set out in paragraphs (i) to (vi) of Regulation 7(1)(a);
(b)information about the conditions and procedures for exercising the right to cancel under regulation 10, including-
(i)where a term of the contract requires (or the supplier intends that it will require) that the consumer shall return the goods to the supplier in the event of cancellation, notification of that requirement; and
(ii)information as to whether the consumer or the supplier would be responsible under these Regulations for the cost of returning any goods to the supplier, or the cost of his recovering them, if the consumer cancels the contract under regulation 10;
(c)the geographical address of the place of business of the supplier to which the consumer may address any complaints;
(d)information about any after-sales services and guarantees; and
(e)the conditions for exercising any contractual right to cancel the contract, where the contract is of an unspecified duration or a duration exceeding one year.

(3) Subject to regulation 9, prior to the conclusion of a contract for the supply of services, the supplier shall inform the consumer in writing or in another durable medium which is available and accessible to the consumer that, unless the parties agree otherwise, he will not be able to cancel the contract under regulation 10 once the performance of the services has begun with his agreement

http://www.legislation.gov.uk/uksi/2000/2334/regulation/8/made

 

[jules12345]

By S.14 (1) of the DSR 2000 and quite logically any amount paid for by the consumer must upon cancellation be returned - this would include express delivery charges etc as of course this would have been a part of the contract and where no separte contract exists.

The OFT is IMHO is referring to an offer for a special delivery for the price of normal delivery and as such you cannot charge for say a gold standard delivery if it was such an offer and for the same price as say a silver standard delivery.

For eg - if the product was 20 quid with silver delivery - but you said we will charge you 20 quid with gold delivery usually making a price of 25.00 pounds not 20 - then you would need a seperate contract to before you could charge the extra 5 quid to the consumer upon cancellation under the offer.

Recovery of sums paid by or on behalf of the consumer on cancellation, and return of security

14.-(1) On the cancellation of a contract under regulation 10, the supplier shall reimburse any sum paid by or on behalf of the consumer under or in relation to the contract to the person by whom it was made free of any charge, less any charge made in accordance with paragraph (5).

(5) Subject to paragraphs (6) and (7), the supplier may make a charge, not exceeding the direct costs of recovering any goods supplied under the contract, where a term of the contract provides that the consumer must return any goods supplied if he cancels the contract under regulation 10 but the consumer does not comply with this provision or returns the goods at the expense of the supplier.

(6) Paragraph (5) shall not apply where-
(a)the consumer cancels in circumstances where he has the right to reject the goods under a term of the contract, including a term implied by virtue of any enactment, or
(b)the term requiring the consumer to return any goods supplied if he cancels the contract is an "unfair term" within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999(1).

(7) Paragraph (5) shall not apply to the cost of recovering any goods which were supplied as substitutes for the goods ordered by the consumer.

(8) For the purposes of these Regulations, a personal credit agreement is an agreement between the consumer and any other person ("the creditor") by which the creditor provides the consumer with credit of any amount.

So in conclusion I would suggest that unless you are making a special offer delivery that you wouldnt normally make and included in the price you wouldnt need a separate contract..!

 

[jules12345]

Sorry my first post should have been worded in better english -

How does the OFT make the presumption...

The idea of separate contract in the OFT's wording would be applicable if you had a new/special contract for the special offer of gold delivery for the price of silver and included in the price - this might be with a special code promotion with which the new terms would be supplied in any email, the effective new terms and enterable code would be for all intense and purposes a new/separate contract.

So for EG -

Email

Hi customer eneter this code and get special gold delivery for the same price as silver.

Note - Upon cancellation of the contract a charge will be made for £5 to cover the extra expense of any product delivered under this offer by gold delivery.

Regards
Jules

 

[Price-Tracking]

So in conclusion I would suggest that unless you are making a special offer delivery that you wouldnt normally make and included in the price you wouldnt need a separate contract..!

so if we're talking about a regular style checkout (ie. no going back in to make another order, no manual amendments, no coupons - just go through the checkout and select the delivery option) was that a yes it can be done or no it can't? ie. default delivery is £3, but next day is £6, or AM delivery £12.

 

[jules12345]

so if we're talking about a regular style checkout (ie. no going back in to make another order, no manual amendments, no coupons - just go through the checkout and select the delivery option) was that a yes it can be done or no it can't? ie. default delivery is £3, but next day is £6, or AM delivery £12.

Yes IMHO it can be done without a separate contract (list the terms of each delivery with a clickable tab however and price once clicked add the item price onto the postage to get one total ) once clicked and paid for that IS the contract consideration, and as such the item price would be reimbursable upon cancellation in full, plus whichever postage they chose..!

Regards
Jules

 

[The Resolver]

Price-Tracking has raised a really interesting point that can help traders who outsource express delivery given that they cannot claim a return of fees (unless they are able to negotiate such a term into their outsourcing contract - unlikely) . But you have to take care and the OFT is trying to be helpful by pointing to a solution.

I'm sorry Jules but I really have to disagree with what you are saying. You DO need a separate contract. You query where in the DSD it says what the OFT claim. It doesn't and doesn't need to. Its basic. The OFT is simply making the point that as all monies are returnable under a consumer contract for the distance sale of goods, the only way delivery would be non-returnable would be if it formed part of a separate contract for the supply of services. If so, then a contract for the supply of services, assuming the proper info on cancellation is given, cannot be cancelled (and monies returned) once the service had commenced.

So the challenge is how to achieve this in a way that doe snot deter sales or overly complicate matters. One thing is clear in my view being that to simply say in the terms that the delivery is a separate contract does not make it such. If you asked for express delivery as part of the one transaction then its the one contract.

In my view the safest way is to have some dividing point between the two transactions but you still collect both parts of the cost. One way might be to have a dual checkout - ie select the goods which show at the checkout, then before transferring the customer to the payment platform, you display a delivery page which explains the choice and that express delivery is a separate service by a delivery company (ideal to name it). That page should display separate T&Cs for the express delivery which will cover the fact that such service is a separate contract and the charges are not returnable on any cancellation after commencement of delivery. Once selection is made you then take the customer to the payment platform for a single payment.

I appreciate that this may give a technical hurdle for your developer but I would have thought it was doable albeit by some programming rather than using a standalone payment facility. If you don't do this, then you would need to take customer twice to payment.

Happy to talk further and help with tweaking your t&cs if you wish

 

[Price-Tracking]

In my view the safest way is to have some dividing point between the two transactions but you still collect both parts of the cost. One way might be to have a dual checkout - ie select the goods which show at the checkout, then before transferring the customer to the payment platform, you display a delivery page which explains the choice and that express delivery is a separate service by a delivery company (ideal to name it). That page should display separate T&Cs for the express delivery which will cover the fact that such service is a separate contract and the charges are not returnable on any cancellation after commencement of delivery. Once selection is made you then take the customer to the payment platform for a single payment.

I appreciate that this may give a technical hurdle for your developer but I would have thought it was doable albeit by some programming rather than using a standalone payment facility. If you don't do this, then you would need to take customer twice to payment.

Thanks, that is what I feared. In reality such a checkout fudge would be a non-starter as a) we use an off the shelf checkout which we can't modify to that extent, and b) it would be confusing for the customers (and the more steps to a checkout the more people drop out already, without adding a confusing extra step or two to the process)

Unless there's a way of splitting the contracts using the text on the checkout page and/or the T&C's we're kind of stuffed.

 

[The Resolver]

Ok- well I said that was the 'safest way' . Plan B would be to amend your t&cs and add text to the site and to the checkout page to litter them with a number of phrases to try to draw a division between two contracts. I think its doable with the right words but not foolproof against a determined customer. You could then deduct the delivery charge and the ball is in his court to pursue. My guess is that if you can then put up enough of a argument in law, pointing out the clear nature of the words he agreed to, that it should deter a fair number of the less resilient and at least in this way justify having the new terms over not having them at all.

 

[jules12345]

A good way might be to only offer one form of delivery on the checkout page or as R says a separate page per delivery option on your checkout.

Whats a day or two between friends..!

Regards
Jules

 

[The Resolver]

Actually Jules raises a helpful suggestion for a Plan C. If you provide just the standard delivery option before payment and then,immediately afterwards, offer an upgrade to express ('are you in a hurry?') , whilst it is still time consuming for the customer, it doesn't risk losing the sale (since that was paid for with standard delivery) , just losing the express delivery part of the sale.

 

[Price-Tracking]

Actually Jules raises a helpful suggestion for a Plan C. If you provide just the standard delivery option before payment and then,immediately afterwards, offer an upgrade to express ('are you in a hurry?') , whilst it is still time consuming for the customer, it doesn't risk losing the sale (since that was paid for with standard delivery) , just losing the express delivery part of the sale.

But then that puts off all the people who really need it in a hurry and only see 'standard delivery' in the checkout and think express isn't available... The problem is that we're trying to guard against a very infrequent issue, and we risk alienating 'normal' customers if we faff them around.

So I think we might look at your plan B. Our T&C's have already been written by a professional legal company that specialise in ecommerce terms (though they seem to have stopped operating now). How much would you charge to review our terms (to make sure they're still up to date, check a couple of amendments we've made) and add additional clauses in to cover this thread?

 

[The Resolver]

Understood. Send me/point me to your existing terms ([email protected]) and I will email a fixed fee quote.

 

[scm5436]

Sorry to dig up an old thread, but while trawling through documents looking for an answer to another DSR related question I found this:

http://www.oft.gov.uk/shared_oft/business_leaflets/general/oft698resp.pdf

2.39 Some respondents questioned the refund of delivery charges following a consumer cancelling an order. Delivery was considered to be a separate element of the contract. One respondent whilst agreeing with our view that delivery forms an essential part of the contract disagreed with the view that additional services such as express delivery or gift wrapping could be treated as a separate contract. These 'additional services' were seen as options as to the manner of performing the contract and therefore refundable.
2.40 Our response: Almost every case of distance selling involves the delivery of goods ordered. Delivery is, therefore, an essential part of the same contract. Where, however, businesses choose to offer additional services outside their normal offering these may be considered separate contracts for the provision of services provided this is made clear to the consumer in the required written information before the start of the service

This would seem to indicate to me, if I haven't misread it, that the OFT consider that premium delivery services would count as a separate contract if you added something to that effect in your T&C's.

Now the referenced document is just giving their responses to feedback on the DSR document, so is not legally binding. But then the OFT's guide for business isn't legally binding either - it's just their explanation of their interpretation of the DSR. But as the OFT is the responsible body, their written guidence counts for a lot.

Hope that helps someone searching on this in future, if not other responders to the thread.