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.
Total Plc must quickly move past one of its toughest year yet
Total Plc’s revenue plummeted by 30% in 2020 compared to 2019.
The reliance on and importance of PMS – gas and diesel in Nigeria cannot be overplayed. The deplorable state of our electricity ensures at the very least that oil companies like Total plc stay in business. Afterall, what business or household can thrive without power?
2020 has been shocking. The sort of year wherein businesses suffer shortages in the shadow of plenty and the oil sector is no exception. The performance of oil particularly, in 2020 was dreadful, to say the least. Total plc as a case in point suffered severe cutbacks in revenue from all of its operating heads. The general consensus is that this poor return is clearly product of the instabilities experienced through the course of the year. Covid-19 did wreak havoc on lives and livelihood necessitating various restrictions within the country. The restrictions meant decreasing activities which as a consequence upset travels, the operations of businesses and individuals. For Total Plc it meant just one thing – DWINDLING TURNOVER.
Total plc has hitherto been a leader in its sector. They generate revenue from three major expenditure heads namely Network, General Trade and Aviation.
Sales from Network refers to the turnover total generates from sales to service stations. General Trade refers to revenue obtained from its sales to corporate customers excluding aviation. Aviation, as the name implies refers directly to revenue obtained from its business with customers in the aviation industry.
Revenue generated from these segments coupled with proper cost monitoring has hitherto placed Total Plc at the summit as industry leaders. However, this year tells a different tale.
Total Plc’s revenue plummeted by 30% in 2020 compared to 2019. The company made N292billion in 2019 and N204billion in 2020 FY. The respective operating segments each suffered some responsibility on this. Sales from Network (its most fruitful revenue source) made only N143billion in FY 2020 whereas it made 205billion in 2019, that’s 30% reduction. Aviation and General Trade weren’t spared. Aviation dropped 54% from N26billion to N12billion while General Trade was only able to generate N49billion against N61billion in 2019.
These poor records were always going to reflect in closing figures at FY and pile further misery on investors who have endured what seems a horrid year. Total Plc finished with a position 1.5% worse off than they did in 2019 at N2.2billion. But to their credit, the extent of reduction was pleasantly a far-cry from what the differences in revenue had suggested. This is due to proper handling of expenditure heads particular finance costs.
Total Plc recorded N2.9billion as finance expenditure in repaying interest on loans and overdraft, compared to the N7.9billion it made in interest payments for year 2019. This singular factor amongst some others made for a more presentable finish to this year’s campaign. The slow but steady restart of activities offers the inclination that improvements are at the very least an expectation this year. We will see from first quarter results.
CBN’s Open banking regulation creates opportunity to usher in the next big FinTechs
Through Open Banking regulations, FinTechs can now help you to view all your bank accounts in one central location.
The Central Bank of Nigeria (CBN) continues to enhance the payments and financial markets infrastructure in Nigeria by facilitating innovations which produce exciting and world-leading payment services and solutions.
What exactly is Open Banking?
In its simplest forms, the objective of Open Banking is to have a payments and markets infrastructure which provides end-users with the ability to review ALL their banking and financial information in a CENTRAL location.
This is regardless of how many bank accounts they use, and which financial institution is used.
As an example, almost everyone in Nigeria has two or more accounts. You receive funds in multiple accounts and make expenditure across the same multiple accounts. When you need to track inflows, outflows, check your balances, reconcile customer payments etc., you must log into the separate banking products just to perform mundane clerical tasks.
Consequently, from an end-user perspective (think MSMEs, entrepreneurs, HNWI etc.), keeping track of your various inflows, outflows, balances, and due liabilities across all your suite of banking products is simply time-consuming.
Now imagine a product/service that allows you click on one simple dashboard and you see ALL your inflows, outflows, balances, and liabilities ACROSS ALL BANKS.
That is the aim of open banking. The implementation of Open Banking requires adoption of common standards for technology use, agreements on data sharing and regulatory guidelines.
Who else has open banking?
Most advanced countries already have a form of open banking in place (UK, UK, Europe, Japan, Singapore, China). However, in Africa Nigeria continues to pioneer innovative payments infrastructure solutions.
Benefits and Opportunities
The ability for end-users to view consolidated information about ALL their financial products across ALL authorized providers in a single location will yield productivity benefits for end-users whilst creating new opportunities for service providers.
Specifically, MSMEs; Sole-Entrepreneurs who leverage the output/solutions from Open banking will benefit from the convenience of having a consolidated view of their banking activities (i.e., balances, inflows, outflows etc.). Furthermore, the reduction of time-consuming manual and administrative efforts required during reconciliations will be a productivity benefit.
For Service providers, financial institutions will be able to sell more products (including cross-sell opportunities) as they gain more insights into their customers and worry less about overwhelming their customers with new accounts.
Think about platforms being able to suggest what insurance products or type of savings accounts your customers qualify for given the consolidated view of customer net worth.
One interesting opportunity is the potential for credit growth. A consolidated view of a customer’s net worth should allow Financial Institutions better analyze the creditworthiness of potential clients. Thus, align CBN’s financial inclusion objectives with its desire to increase credit to the real sector.
What happens next?
For those excitedly asking what happens next, i.e. when do these products start becoming widely available and easily accessible? The answer appears to be soon, especially as the CBN has finally published a regulatory framework.
Successful implementation of Open Banking is wholly dependent on collaboration between Technology providers (FinTech), Financial Institutions and the Regulator (CBN).
- From a Technology perspective, as mentioned before the capability already exists globally. Also from a Nigerian perspective the Open Banking Foundation of Nigeria has been a strong advocate.
- From the Financial Institutions perspective, SOME banks already have shown willingness to partner with FinTech to deliver a “LITE” version of Open banking.
As an example, Banks currently send SMS text messages which applications such as REACH APP can analyze and transform for insightful expense tracking.
- Finally, from the Banking Regulator perspective, the CBN release of a regulatory framework outlines how the CBN intends to supervise participants in this sector.
Specifically, the highlights of the open banking regulatory framework, the CBN aims to
a) Provide standards for the safe utilization and exchange of data and services. ,
b) Define data access levels (i.e. what bank data can be shared and who can get it)
- There are four data categories of what can be shared (PIST, MIT, PIFT, PAST)
- Each category of data is assigned a risk rating (Low risk, moderate-risk, high and sensitive-risk data)
- There are also four (4) groups of participants who can get your data (Tier 0, 1, 2 and Tier 3)
c) Establish scope of financial services
- In scope, for now, are Payments/remittance services; Collections and disbursement services; Deposit-taking; Credit; Personal Finance advisory and management; Treasury management; Credit ratings/scoring; Mortgages; Leasing/Hire-Purchase at this time.
In other words, the key stakeholders are now ready, and we simply await the collaboration necessary to deliver the desired outcome.
Why this matters
As part of its financial inclusion goals, as well as, payments system vision strategy (PSV 2020; PSV2030), CBN continues to welcome financial technology providers (FinTech) as key participants into the payments infrastructure in Nigeria.
- Recent entrants into this Payments infrastructure include Mobile Money Operators (MMOs such as PagaTech, eTranzact), as well as Payment Solutions Service Providers (PSSPs such as Paystack, Flutterwave).
- Each category of participants within the Payments infrastructure is preceded by the CBN releasing a regulatory framework. (as examples since 2010, we have seen Agent Banking Framework, Super Agents framework, Regulatory Framework for Mobile payments services in Nigeria amongst others).
- So, the recent announcement of an Open Banking Regulatory Framework created a buzz as it signals new entrants and new services are in the pipeline for the average consumer of banking services.
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