March for Independents: new online and EU labelling regulations for merchants

By Andrew Park

Published: 18 February, 2015

There is a whole raft of legislation that retailers need to be on top to make sure they are on top what are termed as "distance sales", wine lawyer Andrew Park advises.

So much of an independent wine merchant's business is now done online, by phone, fax or email, be it selling to consumers or buying in goods from suppliers. On the face of it that sounds straighforward enough, but, as Andrew Park, trade law specialist at App Wine Law explains, there is a whole raft of legislation that retailers need to be on top to make sure they are on top what are termed as "distance sales".

Here Park goes in to detail about how distance selling works and what steps independent wine merchants must take:

From June 13, 2014 the old regulations governing distance selling were replaced by a new set of regulations (The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013). The official BIS Guidance gives the impression that all this involved was a consolidation of pre-existing rules and requirements.

Not so - the 2013 Regulations place extensive and onerous obligations on all businesses selling goods online or by other distance methods.

Furthermore, from December 13, 2014, distance sellers of wine were burdened by additional requirements under the new EU Labelling Regulation[1].

Here wine trade law specialist Andrew Park of App Wine Law explains the implications for wine retailers.

What are "distance sales"?

Sales to consumers which are concluded online - or by phone, email, fax or mail order - where the seller and consumer are not physically together at the seller's business premises.

Who are "consumers"?

Under the 2013 Regulations, "consumer" means an individual acting for purposes which are wholly or mainly outside that individual's trade, business, craft or profession. Someone who buys fine wine for investment or speculative purposes, i.e. primarily intending to resell the wine at some point, rather than consume it, is a consumer within this definition, provided this is not his/her trade, business, etc.

KEY REQUIREMENTS UNDER THE 2013 REGULATIONS

Pre-contract

Before the consumer is bound by a distance contract, the seller must:

· provide details of delivery restrictions, delivery charges, and payment means accepted

· obtain the consumer's explicit acknowledgement that the order comes with an obligation to pay

· obtain the consumer's express prior consent to any additional payments - e.g. for private reserve storage

· provide information about the consumer's mandatory right to cancel - see below

· make the prescribed Model Cancellation Form available to the consumer.

Post-contract confirmation

The seller must give the consumer confirmation of the contract, and all the pre-contract information required to be supplied as above, in a durable medium.

Mandatory right to cancel

In all cases (except en primeur or deferred delivery sales) the consumer can cancel the contract within 14 days of receiving the goods. On returning the goods, he/she will be entitled to a full refund of the price and any standard delivery charges paid. The consumer will be liable for return delivery charges only if informed of this before purchase.

Delivery period

Unless agreed otherwise, any goods must be delivered within 30 calendar days.

Passing of risk

Risk in goods will not pass to the consumer until the goods come into the physical possession of the consumer, his nominee for receipt of the goods, or his nominated carrier.

Premium rate telephone lines

A seller must not make the consumer use a premium rate telephone line to make contact about an existing contract.

KEY REQUIREMENTS UNDER THE 2011 LABELLING REGULATION

Under the new regime, obligations are placed on the distance seller as well as the producer. The producer remains responsible for ensuring that the labelling of products meets the mandatory requirements. But now, every distance seller must also ensure that the mandatory information appears on the "material supporting the distance-selling" or "be provided by other appropriate means". This means on your website, catalogues, mailers, leaflets, product sheets, and so on.

In the case of most wine labels, the mandatory information will be as follows:

· name - (i.e. the wine's permitted legal name/category under other EU Wine Regs)

· net quantity (e.g. 75 cl)

· allergen information

· name or business name of the business operator responsible for the provision of mandatory information, being either:

o the operator under whose name/business name the wine is marketed, or

o if that operator is not established in the EU, the importer into the EU

· country of origin or place of provenance

· actual alcoholic strength by volume (% abv).

Pre-existing stock

These obligations apply to wine placed on the market or labelled after 12^th December 2014. For most, therefore, the obligation to comply with the above requirements is not an immediate problem. But it will become increasingly relevant over time.

PRACTICAL IMPLICATIONS

Website sales

If you are making online sales via a website, the online sales process must provide all the prescribed information and documentation (a) correctly, and (b) at the right points in time. For many online wine retailers this will mean making major changes to their website and systems.

Distance selling - by phone, email, fax or mail order

Systems and procedures for making sales by phone, email, fax or mail order must also build in the provision of the prescribed information and documentation correctly and at the right point in time.

WHAT ARE THE RISKS OF NON-COMPLIANCE?

Non-compliance with the 2013 Regulations involves contractual/commercial risks vis-à-vis your customers:

· the 14-day cancellation period would be extended for 12 months. During that time, the customer would be entitled to cancel without any reason or justification, and to receive a full refund on returning the goods

· the customer would not be liable for the cost of returning any goods delivered

· the customer would probably not be liable for any reserve storage charges

· in certain cases the customer will not be bound by the contract at all. That could extend his/her cancellation right - and opportunity to have wines stored in private reserve free of charge - indefinitely on a speculative basis, with a guaranteed right to a full refund if and when required.

Local Authorities can apply to court for orders requiring sellers to comply with the 2013 Regulations in the event of persistent and/or serious non-compliance.

Non-compliance with the Labelling Regulation could be a criminal offence. Non-compliant products would have to be withdrawn, and could be confiscated.

WHAT TO DO NEXT

To find out more, and establish whether you need to comply with some or all of the above requirements, visit the APP Wine Law website and download their Free Guide.

Andrew Park is a solicitor and director of APP Wine Law, a dedicated UK wine trade law firm specialising in UK/EU wine agency, distribution, brand development and joint venture work.