Taking counsel: The legal protection of a consumer in the field of E-commerce

  • 2008-10-22
  • By Maksim KOZLOV [Glikman & Partners]
The internet is probably the greatest technological breakthrough since the industrial revolutions of the nineteenth and twentieth centuries. The amount of trade conducted electronically has grown extraordinarily since the spread of the internet. The European Interactive Advertising Association Online Shoppers Report 2008 showed in new research from the EIAA that a massive 80 percent of European internet users have bought a product or service online, which is 3 percent higher than in 2006 and twice as much as the  2004 figure of 40 percent. These European online shoppers made 1.3 billion euros worth of purchases in just a six months period, spending an average of 747 euros each online.

At the same time, the rapid progress in the field of E-commerce has the other side of the shield. EU Consumer Commissioner Meglena Kuneva has announced the results of two new EU wide surveys on retailers' and consumers' attitudes towards cross-border shopping. The figures show that even though e-commerce is taking off at national level, cross-border e-commerce is failing to keep pace. But what is the situation in the Baltic States?

According to the figures provided in the aforementioned EU surveys, the proportion of the consumers purchasing goods or services via internet is the following: in Estonia 22 percent of the consumers have bought goods from sellers located in Estonia and 7 percent from sellers located in another EU country. The figures for Latvia are 24 percent and 5 percent and Lithuania 7 percent and 3 percent respectively. Thus, consumers in Baltic States as in the rest of Europe do not hurry to use all advantages of E-commerce.

The possible reason of such a tendency is lack of confidence in shopping online. Probably, due to "untraditional" methods of purchasing goods online this still seems to be an uncertain or unsafe undertaking in the eyes of the consumer. But how far are these fears justified? What are the main legal instruments indicated to guarantee the confidence of the customer while purchasing online?

The Estonian Law of Obligations Act provides a number of fundamental legal rights for consumers in order to ensure high level of consumer protection. Pursuant to the law these requirements shall be applied to a consumer whose residence is in Estonia or in a Member State. Therefore, the consumers from the other Member States are protected with equal facilities as Estonian consumers.
Distance contracts are deemed to enable a consumer and a supplier who are not in the same place to organise the exchange of information necessary for negotiations and entry into a contract.

Some types of contracts are excluded from the provisions of the Estonian Law of Obligations Act. The exemptions include for example contracts which are entered into by using automatic vending machines, public telephone, contracts intended for construction works, immovables, food or lotteries etc.

When ordering goods online, it is important to remember some simple basic rules. First, the consumer is not required to make advance payments to an extent greater than half of the purchase price unless the parties have agreed otherwise. The supplier shall deliver goods within 30 days from the customer's order unless the customer and the seller have agreed otherwise. If the seller later finds that it is impossible to deliver goods within this time, he/she must inform the customer and grant the option of cancelling the order and getting a full refund.

According to, Article 54 of the Law of Obligations Act, before a contract is entered into, the supplier must inform the consumer about the consumer's right of withdrawal and other substantial information regarding the contract, including the name and address of the seller, the main characteristics of the goods and services, the price of the goods including taxes and other components of the price, delivery charge, existence and conditions of warranty. The information must be in writing and can either be submitted in a letter, fax, e-mail, advertisement or website.

The right of withdrawal is probably the most efficient example of a measure fostering confidence in distance contracts, as it enables consumers to see what they are buying and to reflect on whether they really made a good deal before making a final decision. Pursuant to Estonian law, a consumer may withdraw the agreement at any time up to 14 days after receiving the goods, without providing any reason of cancellation. A consumer is also entitled to withdraw from the agreement within 3 months if the supplier has failed to submit in  written form substantial information regarding the contract.

If a consumer withdraws from a contract, the paid sums must be refunded to him or her immediately but not later than within 30 days as of the withdrawal from the contract. In case of withdrawal the expenses relating to the return of the item or compensation for services shall be borne by the seller. However, in Estonia, the parties may agree that the consumer will bear the regular expenses relating to the return of the thing to the extent of a sum corresponding to 10 euros. In cases when the good delivered or service provided is not the one which was wanted and expected, the consumer is not obliged to pay expenses relating to the return in any case.

And finally, contract terms which impede the right of withdrawal from being exercised, in particular agreements pursuant to which withdrawal is bound to payment of earnest money or a contractual penalty, are void.
Given the laws, purchasing online in Estonia is quite safe and consumer-friendly. Still it is also necessary to consider other risks, such as fraud of a credit or a debit card. And prior to making any orders or transactions it is always advisable to check the reputation of the company.

Maksim KOZLOV is lawyer at Glikman & Partners, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms which includes Kronbergs & Cukste in Estonia and Jurevicius, Balciunas & Bartkus in Lithuania, dedicated to providing a quality 'one-stop shop' approach to clients' needs in the Baltics.