With the continued exponential growth of technology and social media, e-commerce has come to stay with us. One of the many branches of e-commerce is online shopping. E-commerce has really made shopping more convenient. Social media especially has significantly bridged the gap between buyers and sellers by creating a whole different value chain by which products move from the buyer to the seller with ease and in the process creating a market that transcends across geographical boundaries, time and distance.
The most popular social media platform employed by budding Nigerian entrepreneurs currently is Instagram. The reason is not farfetched. Instagram allows sellers to display pictures of their products to their customers (with specified description) and in essence allows the buyers to “inspect” (to some extent) the products they intend to purchase before making orders.
Buying and selling irrespective of the channel of communication between the buyer and the seller is basically a commercial transaction. This entails that it embodies the fundamental concepts of contract and commercial transactions. Although e-commerce is largely regulated separately from regular physical commercial transactions, the underlying ideology between e-commerce and regular commercial transaction is the same. However, there are variations and several grey areas which have not been cleared due to the absence of substantive legislation on e-commerce.
In regular commercial transactions, products to be sold are either ascertainable or unascertainable. Where products are ascertainable, the buyer has the opportunity to inspect them and from there be able to determine whether the products are fit for the purpose intended by the buyer among other things. For unascertainable products, the buyer relies on the description given or sample provided by the seller and it is expected that when the buyer eventually takes possession/delivery/title of the products, they are exactly as described by the seller.
For online shopping, it is not so clear. Products displayed online are ascertainable in the sense that the buyer can see what they are interested in purchasing. The buyer, however, has the misfortune of not being able to physically inspect the products due to the virtual nature of the products. This precludes the buyer from discovering defects that would have otherwise been detected by physical examination. However, products displayed are usually samples and often times, the buyer has to rely on the description of the seller. In this sense, e-transaction can be said to both ascertainable and unascertainable.
By the principles of contract, products that are the object of commercial transactions generally have to conform to certain standards. Fundamental standards that go to the very essence of the transaction are regarded as conditions. Other standards that are necessary but do not go to the very essence of the transaction are regarded as warranties. Examples of conditions are that the product is fit for the purpose intended, the product complies with the description and/or sample and that the product is of merchantable quality. These conditions do not need to be expressly agreed by the parties and are very fundamental to the transaction. Please note that the foregoing conditions need not be expressly stated. The breach of a fundamental term repudiates the transaction and the buyer is entitled to recover the purchase price from the seller. Warranties, on the other hand, do not affect the fundamental nature of the transaction and thus can be waived. Matters such as date and time of delivery, mode of delivery among others are regarded as warranties. In the event that there is a breach of warranty, the seller may waive this breach or proceed against the buyer for damages. Please note that apart from the regularly implied conditions, freedom of contract allows parties to decide what counts as a condition or a warranty.
As stated earlier, where there is a breach of a fundamental term (condition), the transaction stands repudiated and the buyer is entitled to recover the purchase price. Also for warranties, the buyer may decide to waive such breach of proceed against the seller for damages or losses incurred. Please note that for ascertainable products that have been inspected by the buyer, he will be precluded by law from repudiating the transaction. The transaction can only be repudiated when the buyer relied on the description provided by the seller or the bulk of the products did not conform to the sample provided by the seller.
It is to this extent that sellers formulated limiting terms and exclusion clauses in contractual relationships. The function of limiting terms and exclusion clauses is to either limit the liability of the seller or entirely exclude the seller from any liability. Such clauses include “products sold in good condition cannot be returned”, “the manufacturer is not responsible for any harm arising from the use of this product outside the manner listed in the guide”, “in the event of any damage, the liability of the manufacturer is limited to xxxx”.
This brings us to the recent foray of Instagram vendors boldly displaying such clause in the manner of “NO REFUNDS”. While a minute number of these vendors expressly state that there would be no refunds where products sold are delivered in good condition, the vast majority use the phrase loosely without necessarily stating the conditions that will warrant a “no refund” situation.
While it has been earlier mentioned that e-commerce and regular commercial transactions are regulated differently, the principles are largely the same with minimal variations based on the circumstances. Due to the inability of the potential buyer to physically inspect the product they want to purchase via Instagram although properly ascertainable as displayed, the potential buyer relies on the description and the sample posted by the seller. In most instances, the buyer relies on the skill and judgment of the seller as the seller sells such products consistently over time and generally in line with the seller’s business. When the buyer eventually makes an order, there is a reasonable expectation that the product ordered will conform to the sample displayed online in line with the description given by the seller.
In the event that a product has been purchased via Instagram, it does not preclude the product from having the implied conditions that it is fit for the purpose intended by the buyer, the product conforms with the description and sample as advertised and also of merchantable quality. If the product does not have these fundamental conditions, the buyer is entitled to treat the transaction as repudiated and is also entitled to the amount paid. It goes to no issue that the seller had earlier informed the buyer that they are not entitled to a refund. Simply put, a no refund policy will be inoperable where the fundamental conditions of a transaction have been breached.
So also, while sellers are expected to deliver goods that are not fundamentally defective, buyers are also expected to manage their expectations. Buyers are expected to be reasonable in their demands and not expect Utopia from their respective vendors.