The Fine Print

When you make a purchase online a set of legal terms governs your transaction, whether you are aware of these terms or not.

What are the legal terms and why are they important?

Sellers usually include legal terms and conditions on their website. They use the terms to explain their shipping policies, any warranties that are included in the sale, and the remedies that you can pursue if the items that you purchase do not arrive or are defective. These terms affect your legal rights against the seller, so you should read them.

The statement of terms is often very lengthy and difficult to understand. If the item you are thinking of buying is expensive, it might be worth the effort of reading all the fine print, or asking a lawyer friend to help you. If the item is not very costly, you should at least skim through the terms and see what they say about the following:

  • Does the seller charge a flat shipping fee (for example: $5 per order), a per-item fee (such as $1 per book), or some combination of these?
  • Can you return an online ordered item to one of the seller's retail outlets for cash or credit?
  • Can you return a product if you've already opened it?
  • Will the seller deduct a "restocking fee" from your refund?
  • Will the company charge for a second shipment if it is shipping part of your order now and part later?
  • When will the seller charge your account: only when each item ships, or at some time before that?

Where can I find the terms?

Different websites have different ways of displaying legal terms; some ways are more conspicuous than others. You might find a link on the home page or order page to something like "Terms and Conditions" or "Legal Terms" or "Disclaimers." You'll be able to read the terms after you click on the link. Some "Terms and Conditions" apply to your use of the website itself, rather than to your purchase.

Some sites display legal terms on a screen that requires you to click on a button labeled "OK" or "I Agree" before you can proceed with the transaction. If you click on the button, the terms will very likely be binding on you. If you aren't comfortable with the terms displayed, you should shop elsewhere. It is a good idea to print out the terms if you intend to buy.

What if I don't see the seller's return and refund policies?

You may want to ask the seller, through an email or telephone call, to indicate where these policies are on the site or to provide them to you in writing.

What should I know about warranties?

If your purchase comes with a written warranty, the seller must make it available to you before you buy the product. You should be able to find the terms of the warranty either in the general "Terms and Conditions" of the website or in a link appearing with the product description.

If the product is manufactured by someone other than the retailer, it may have both a manufacturer's warranty and a retailer's warranty. You should read both. If the retailer does not provide a warranty, be sure to check out its return policies.

When you review a warranty, look for the same information when buying online as when buying from a store or catalog:

  • What does the warranty cover and how long does it last?
  • Whom do you have to contact for repair, refund, or replacement under a warranty?
  • Is the seller limiting its liability if the item doesn't work or causes damage?

If you are buying tangible personal property for personal, family, or household use (in other words, goods that you are not using for business), the seller must tell you whether the written warranty is "full" or "limited" if the goods cost more than $10.

A "full" warranty generally means that you're entitled to free repair of the product during the warranty period, and do not have to pay shipping, removal, or reinstallation costs. If the seller cannot fix the product after a reasonable number of attempts, you're entitled to a free replacement or full refund.

Any other warranty is "limited." As you'd expect, there are many more limited warranties than full ones. Nonetheless, limited warranties often provide substantial protection and value to a consumer.

If a product is sold "as is" or "with its faults" that means the seller gives no warranty. If the seller "disclaims the implied warranty of merchantability," that means the seller does not promise that the goods are fit for ordinary use. In some instances, the law provides that you must be given this warranty of fitness for ordinary use. In that case a disclaimer isn't effective. A lawyer could advise you on when this is so.

There are special state laws (called "lemon laws") that apply to the sale of new cars. You may have more extensive rights under these laws. (In some states, there are also more limited lemon laws applying to the sale of some used cars.) There are also laws against unfair and deceptive practices that may apply if there has been fraud or deceptive conduct by the seller.

Are there limitations of liability in the warranty agreement?

The seller's terms and conditions might say that if something goes wrong with the item you purchased, the seller is liable only for a fixed amount of money. Or they might say that the seller is only required to repair or replace the item. Even if you have suffered other damages-say you lost thousands of dollars in business because your computer crashed-you'd only collect for the value of the product or the cost of repair.

How can I preserve my right to receive what I ordered?

You will want to know what your remedies against the seller are if the seller does not deliver the product or if the product is defective. Often, you should be able to resolve your dispute by calling or sending an email to the seller. To preserve your legal rights, inspect your purchase carefully as soon as you receive it. Contact the seller as soon as possible if you discover a problem with it. Tell the seller in writing about any problem that you are concerned with, ask for a repair or refund and keep a copy of your correspondence.

What can I do if I am dissatisfied with the seller's response to my complaint?

If you cannot resolve the dispute informally, you might have to use a more formal dispute-resolution procedure. The terms accompanying the transaction will often tell you what procedures are available.

What is arbitration?

Some sellers' terms and conditions specify that you must give up your right to sue in a court of law and, instead, take your case to arbitration. An arbitration proceeding can be speedier than a comparable proceeding in court. An arbitration may also be cheaper or, depending on the situation, more expensive. With arbitration, one person (not a judge or jury) decides the case. Appeal of that decision is extremely limited, there is often no record made, and (depending on the agreement) you may lose your right to bring a class action.

Most arbitration clauses specify what organization is to set up the arbitration. Each organization has its own fee schedules and rules. This and other important information may be found on the organization's website. An example is http://www.arb-forum.com/. The arbitration clause may also specify the place where the arbitration must take place. This may be a place far from your home, making arbitration an expensive procedure.

There is much controversy over the use of "binding mandatory arbitration" clauses in consumer contracts. Many business groups support their use. Many consumer groups oppose the use of mandatory arbitration clauses. Some of the consumer groups have established www.givemebackmyrights.com, to provide information about these kinds of clauses and information to help you find sellers who do not require them.

What is mediation?

Mediation is a procedure in which disputing parties appear before a third party who attempts to help them resolve their dispute. Unlike an arbitrator, a mediator does not decide a dispute; she simply tries to help the parties reach a settlement. A mediator typically has no power to impose a solution if the parties cannot agree. In that sense, mediation is completely voluntary, and you typically have the freedom to walk away from it without settling the dispute. Many people have had good experiences with mediation.

If the seller's terms specify mediation, they may also require that you engage in this process and attempt a resolution before you go either to court or to arbitration for a solution. Check the terms to see where and how the mediation is to take place and how much it will cost.

How do the seller's terms affect my ability to bring a lawsuit?

The seller's terms may specify that you can only sue in a certain state. If it's not your home state, you might have to travel to that state or hire a lawyer there. If you have only a small claim against the seller, a requirement that you resolve the dispute in another state may mean that you cannot afford to bring your claim at all.

The seller's terms may also specify which state's law will apply to your case. This could result in a court located far from your home applying the law of a state that might be particularly unfavorable towards your case.

In most states, you have at most four years to sue if you think the seller has violated the warranty. If you wait longer, you've lost your right to sue. You may, however, have less time because the seller's terms and conditions may have reduced the period in which suit may be brought (or arbitration requested) to as little as one year. Any such time limits on when you can sue or demand arbitration should be in the seller's legal terms posted on its web site or specified in its correspondence with you.

For the Lawyers

Key Statutes and Cases:

Uniform Commercial Code §§ 2-313, 2-314, 2-315, 2-316

Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301 - 12

Federal Arbitration Act, 9 U.S.C. § 1 et seq.

AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011)

John E. Ottaviani, Online Contracting - Creating Enforceable Contracts, in Internet Law for the Business Lawyer (American Bar Association Section of Business Law 2d ed. 2013).

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