Selling online: consumer contracts

If you allow customers to place orders online, you must ensure that the terms and conditions of the contract are set out on the website and can be accessed and downloaded. Even where the website is simply used as an advertising tool, it is still advisable to set out your terms and conditions clearly.

Are online contracts legally binding?

Contracts that are formed on the internet are legally binding and enforceable when the following conditions are satisfied:

• offer - one party must contract with the other, eg offer to buy goods
• acceptance - the other party must expressly accept the offer
• intention to create legal relations - both parties to the contract must intend the contract to be legally binding
• consideration - there should be some consideration being exchanged between the parties, eg money paid for goods

You should note that there is no general requirement for contracts to be in writing or for the parties to actually sign a contract.

When is the contract formed?

Generally an advertisement on a website will not constitute a formal offer to contract (although care should still be taken when creating an advertisement). A contract would be formed once a customer makes an offer by placing an order and the supplier accepts this offer.

The terms and conditions about when the contract is formed should be clear - for example when the supplier sends back a confirmation email. This will help to avoid situations where you are unable to meet the customer's expectations, if circumstances change.

However, automatically generated confirmations of orders can potentially cause confusion about when the contract is formed. So you should ensure that you word them in such a way that they are not legally an acceptance of a customer's offer.