If you are selling online, you need to ensure that the products you are selling are legal. Some types of product – nuclear warheads, etc – are clearly illegal; others are potentially legal, subject to compliance special regulations. Pharmaceuticals, food and toys fall into this category. Then there’s a residual category of products, not given any special treatment, but nonetheless subject to the general law on product safety and quality.
This is the second in a series of articles. The first article considered in general terms the legal implications of selling online. The next few will examine other aspects of regulatory compliance, civil liabilities and online contracts in more detail.
Case studies
I’ll consider in this article the various categories of product, using the ToyZio (online toy seller) and Creel (fashion accessory supplier) businesses as case studies.
I’ll begin by looking at the laws that apply to all or most products, and gradually get more specific. Towards the end of the article, I will look in detail at how toy safety is regulated.
One important distinction which runs through much of the legislation is between products intended for or used by consumers, and products used exclusively by businesses. As you would expect, the former class of products is subject to much heavier regulation. ToyZio sells exclusively to consumers, while Creel sells to both consumers and businesses, so both are subject to the more onerous regulatory regime.
Product quality
Much of the law in this area is concerned with product health and safety, but there are also some general legal requirements concerned with quality.
Sale of Goods Act 1979
Under the Sale of Goods Act 1979, products must generally be of satisfactory quality and fit for purpose.
The requirement of satisfactory quality is an implied term of the contract of sale. Goods will be considered to be of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price and all the other relevant circumstances.
Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought, there is usually an implied term that the goods supplied will be reasonably fit for that purpose.
Under the Unfair Contract Terms Act 1977, these implied terms cannot be excluded in B2C contracts, and can only be excluded in B2B contracts where the exclusion is reasonable.
Health and safety: general rules
Consumer Protection Act 1987
Although we are moving a little away from pure regulatory compliance toward questions of liability, it is worth mentioning the Consumer Protection Act 1987. Under that Act, there are wide-ranging potential liabilities for producers, importers and those who hold themselves out as producers of defective products. There are also potential liabiltiies for other suppliers of defective products, if they fail to identify the producer etc responsible for a defective product. Liability is strict and cannot be excluded by contract or otherwise. Liability arises where a product causes damage, defined as including death, personal injury, or damage to private property (subject to conditions).
General Product Safety Regulations 2005
The General Product Safety Regulations 2005 apply to most products sold in the UK, including most second hand products. They implement EU Directive 2001/95/EC, and so similar rules can be found in other EU member states.
The GPSRs apply to products supplied in the EEA and intended for consumers or likely to fall into the hands of consumers. So, the categories of products covered include those supplied by both ToyZio (toys) and Creel (fashion accessories).
Where the GPSRs are more demanding that specific regulations, then the GPSRs will apply in addition to the specific regulations.
GPSRs: Producers and distributors
The primary obligations under the GPSRs fall on producers. An online retailer established in the EEA will be treated as a producer of a product if:
- the retailer manufactured the product;
- the retailer presents itself as manufacturer by putting its name or trade mark on the product;
- the retailer repairs or reconditions the product, or its activities otherwise affect the safety of the product; or
- the manufacturer is not established in the EEA and does not have a representative in the EEA, and the retailer imports the product into the EEA.
Accordingly, Creel Leather Ltd, which imports products bearing Creel branding from outside the EEA will be treated as a producer under the GPSRs in relation to those products. ToyZio Ltd, on the other hand, buys stock direct from UK wholesalers, and so will not be considered to be a producer under the legislation.
Retailers such as ToyZio that aren’t producers will be distributors under the legislation. The obligations on distributors are not so onerous as the obligations on producers.
GPSRs: producer obligations
Producers must not place on the market, or offer or agree to place on the market etc, any product that is not safe. To be safe, products must present no risk, or only the minimal risk compatible with the product’s use, and they must be consistent with a high level of protection for consumers.
If there are no specific EU laws governing a product’s safety, then compliance with specific UK laws governing health and safety in relation to the product will mean that the product is deemed to be safe under the GPSRs. Similarly, in some circumstances non-statutory standards compliance can lead to deemed safety.
Producers are subject to the following supplemental obligations:
- to provide relevant information to enable consumers to assess non-obvious risks associated with a product through its normal / reasonably forseeable period of use, including information on the precautions to be taken in relation to a product; and
- to take such measures as are necessary to ensure that the producer is aware of the risks that the product may present and to enable the producer to take appropriate action (e.g. product withdrawal) in the event of a problem.
Such measures may include:
- sample testing;
- investigating and recording complaints;
- keeping distributors informed; and
- marking products with producer details, product references and batch numbers.
These aren’t universal requirements: the measures taken should be commensurate with the risk presented by the products. In relation to a low risk product, minimal measures may be sufficient; in relation to a high risk product, extensive measures may be required.
Turning to our second case study, the Creel business, our first task was to assess the risks presented by the products. The launch product is a bifold wallet constructed largely of salmon leather and silk. We assessed the product as low risk (because it is designed for adults, is soft, is to large to swallow, and has no small detachable elements) and formed the view that we could comply with the regulations by:
- careful analysis of safety aspects of the design and construction of the product;
- testing the products in use over a period;
- maintaining a system for logging and investigating any complaints; and
- creating and keeping records of the stockists and customers to whom the products are sold.
The appropriate measures for another product may of course be different.
GPSRs: distributor obligations
Distributors obligations are not quite so demanding as those of producers. Distributors must help to ensure product safety by:
- not selling products that they know, or should have presumed, to be dangerous;
- participate in safety monitoring, by passing on to customers information on any risks posed by the product, passing to producers complaints by consumers, and cooperating with the authorities and other actors in the supply chain;
- keeping documentation necessary for tracing the origin of products; and
- producing such documentation when required by the producer or an enforcement authority.
The ToyZio business counts as a distributor and not a producer under the legislation. It fulfils these requirements by:
- only purchasing products from reputable UK manufacturers/wholesalers;
- examining products for any obvious risks;
- checking that product labels and warnings are adequate;
- reproducing warnings as appropriate; and
- fully documenting supplies and sales.
Indeed, all product safety policies and procedures should be properly documented.
GPSRs: obligations on both producers and distributors
Further notification obligations apply to producers and distributors in the event that they become aware that an unsafe product has been placed on the market.
Health and safety: specific rules
In addition to the general product safety rules, there are specific sets of rules for some products, including:
- pharmaceuticals, regulated inter alia under the Medicines Act 1968;
- electronic equipment, subject to the Waste Electronic and Electrical Equipment Regulations 2006 (see also the amending regulations);
- food, subject to the Food Safety Act 1990 and related regulations; and
- products subject to the CE marking regime.
CE marking
A wide range of products are subject to regulation under the CE marking rules. CE stands for “Conformité Européenne” and means “conforming to EC law”. The purpose of the CE rules is to ensure minimum standards of health and safety and environmental-friendliness. For the most part, CE involves self-certification, rather than approval by an outside body.
Affected products include (but are not limited to):
- fireworks
- machinery
- measuring instruments
- medical devices
- construction products
- personal protective equipment
- toys
The manufacturer (or importer into the EEA) of the product will in the first place be responsible for applying the CE mark to the product and for abiding by the relevant directives in the production of the product. However, there are obligations on others, including retailers, under the CE marking laws.
The specific obligations will depend upon the products in question. So, if you are an online retailer selling any products that fall within the CE marking rules, you should makes sure you are familiar with the rules specific to your products.
In terms of the number of products involved, toys probably form the largest category of products subject of CE marking. They are also the stock in trade of the ToyZio business. So it is to the specific regulation of toys that I now turn.
The regulation of toys
The Toys (Safety) Regulations 2011
The Toys (Safety) Regulations 2011 regulate toys that are designed or intended for use in play by children under 14, with certain minor exceptions. There are both general and particular standards that toys must meet (collectively referred to as the “essential safety requirements”).
The general standards under the TSRs are summarised below.
- Toys must not jeopardise the safety or health of users or third parties when they are used as intended or in a foreseeable way, bearing in mind the behaviour of children.
- The ability of the users and, where appropriate, their supervisors must be taken into account, in particular, in the case of toys which are intended for use by children under 36 months or by other specified age groups.
- Information about the inherent hazards and risks of harm involved in using the toy and the ways of avoiding those hazards and risks must be marked on toys (or their labels or packaging) and any instructions accompanying the toy, must be preceded by the word “Warning” or “Warnings”, and must be marked in English in a clearly visible, easily legible, understandable and accurate manner.
The specific standard are set out in the second annex to Directive 2009/48/EC (the directive that was transposed by the TSRs). The particular requirements are relatively detailed, including some obvious requirements, such as “toys … must not present a risk of strangulation”, and some less-obvious requirements, such as “toys shall not contain … oakmoss extracts”.
Toys that conform to harmonised standards – such as the EN71 standards – are presumed to comply with the essential safety requirements “to the extend that those requirements are covered by the standards”. This is a rebuttable presumtion – not to mention an apparent tautology.
Any person manufacturing toys or importing them into the EEA should be very familiar with both the general and the particular safety requirements.
TSRs: manufacturer obligations
In the context of the TSRs, “manufacturer” means a person who: (i) manufactures a toy or has a toy designed or manufactured; and (ii) markets that toy under that person’s name or trade mark. So, you don’t need to manufacture to be a manufacturer.
Manufacturers must not place toys on the market unless they comply with the essential safety requirements during their foreseeable and normal period of use.
But manufacturers obligations don’t stop there. They must also undertake a range of actions and follow a selection of procedures to comply with the TSRs. These include (but are not limited to):
- ensuring that toys are designed and manufactured to comply with the essential safety requirements;
- carrying out a safety analysis of the toy;
- following applicable conformity assessment procedures (internal or in some cases external);
- drawing up a declaration of conformity and affixing a CE mark to the toy;
- drawing up technical documentation containing all relevant information about how the manufacturer ensured conformity;
- marking toys with specified information (identifying number, manufacturer’s name or trade mark, and address); and
- supplying instructions with the toy as appropriate.
TSRs: importer obligations
Under the TSRs, “importer” means any person who is established in the EU and places a toy from a third country on the EU market.
Importers are subject to the general obligation not to place a toy on the market unless it complies with the essential safety requirements during the toy’s foreseeable and normal period of use.
In addition, they must (amongst other things):
- ensure that the manufacturer of the toy has complied with the various requirements summarised (incompletely) above;
- include their own identifying information on the toy;
- ensure that the manner of storage and transport of the toy does not jeopardise compliance;
- take appropriate measures to check and monitor toy safety;
- notify the enforcement authorities and manufacturer of unsafe toys; and
- retain appropriate records (including a declaration of conformity) for 10 years.
Where an importer modifies a toy, they may be directly subject to the manufacturer’s obligations (see above).
TSRs: distributor obligations
Most smaller online sellers – ToyZio included – will be distributors rather than manufacturers or importers. The obligations placed on distributors by the TSRs are not nearly so onerous as those placed on manufacturers and importers.
Distributors must act “with due care” in relation to the compliance with the TSRs’ requirements, and must not make a toy available if they have reason to believe that the toy will not comply with the essential safety requirements during its normal and foreseeable period of use.
In addition, distributors must examine toys to ensure that the various labelling and marking requirements have been met.
Distributors must, like importers, ensure that their storage and transportation of toys does not negatively affect the toy’s compliance with the TSRs requirements.
Non-compliant toys and toys presenting a risk that the distributor was intending to market must be notified to the importer/manufacturer and the appropriate enforcement authority, and must in relevant circumstances take corrective measures in relation to such toys (e.g. withdrawal or recall).
There are also various obligations to provide information to and cooperate with enforcement authorities.
In applying these criteria to the ToyZio business, we concluded that proper storage of the products in addition to the actions listed above in relation to the GPSRs should be sufficient to comply with the TSRs.
Illegal products
Finally, I should mention those products that you cannot sell, whatever the circumstances.
The sale – or even just possession – of some products is a criminal offence. Illegal products include some drugs, some pornography, and some firearms and other weapons.
In many cases, the illegality of a product will be obvious.
Just like a lot of products, this article comes with a warning: there are lots of rules and exceptions I haven’t mentioned here. The legal rules have been summarised, sometimes crudely, for readability. Don’t treat anything herein as advice. If you are selling online, this article is a good place to start your research, but it is only a starting point. If you require legal advice, please get in touch.
The next article in this series looks at the legal aspects of product descriptions and product photos.
Hi
can I ask you if I get a toy from a supplier and selling it online how can I assure it’s not a copy of any other popular brand. For eg: hulk is a marvel’s company toy but if I am not aware of the same and get hulk and sell the company will sue me how do I make sure anything that I am getting is not a copy because I may be getting toys from china and selling it in UK.
Hi!
If you sell a toy online and make it available globally, do you need to comply with all the rules for all countries you make it available? or does that count as the customer importing it and they take on those obligations? and related, is it up to them to pay any possible import charges? thanks
In principle, particularly if you are selling B2C, you may be obligated under the law of each country into which you sell to comply with its laws. You can’t usually just pass the burden of compliance on to a B2C customer, although there may be particular obligations that can be passed on to the customer. You should take proper advice on the specific question of handling import charges.
In practice, many businesses will weigh the costs of compliance against the real risks of potential non-compliance, and in some cases find that the former outweigh the latter.
Is my contract with the marketplace or the seller? I have been offered delivery before Christmas by the market place as advertised on their site, but the seller has sent me a delivery date of 9th of January.
Typically, when you purchase something through an online marketplace, the contract of sale is with the particular marketplace seller and not the marketplace operator. However, there may also be an ancillary contract with the operator. You need to look closely at the legal T&Cs for the marketplace (placed in the context of applicable law) to establish each party’s rights and obligations.
Good Morning! Am I right in believing that if you own something and have paid for it you have the right to sell it on a third party site such as Amazon or Ebay even though the original supplier states that you are prohibited to do this.