Concluding Contracts Online 2024 PDF

50 5. Concluding contracts online  Concluding contracts online 51 Having implemented all the general requirements for commercial websites, including data protection law, Selma and Sebastian are eager to set...

50 5. Concluding contracts online  Concluding contracts online 51 Having implemented all the general requirements for commercial websites, including data protection law, Selma and Sebastian are eager to set up what they consider to be the most important part of their online shop: the features that allow customers to conclude online contracts with them. After all the experience they have gained so far they suspect that a host of further intricate legal requirements is awaiting them, and they are, indeed, right... 5.1. Contract law 5.1.1. Formation of contracts A contract is made through the agreement between two (or more) parties who mutually declare that they will be bound by particular rules, e.g. by particular obligations owed to one another. The two declarations of will (Willenserklärungen) are called ‘offer’ (Angebot, Antrag) and ‘acceptance’ (Annahme). Contracts made between an online shop and its customers are mostly contracts for the sale of goods or for the provision of services. As a general rule, contracts do not have to be made in a particular form, but can be made orally, or even by You will study the origins of modern implied conduct, and only exceptionally does the law contract law in BA CM 4 (Roman require particular formalities (such as a deed made in Law and the Civilian Tradition). writing or even a notarial deed). Many declarations are nowadays made by electronic means and over the You will study contract law as it is Internet (e.g. by clicking on a button). in force today in BA CM 9 and CM 10 (Civil Law and Parties are normally more or less free, within the Private International Law). confines set by the law and public policy considerations, to decide on the content of contractual agreements. This is an important aspect of party autonomy (Privatautonomie). However, where one party (such as an online trader) imposes its general terms and conditions (GTC) (Allgemeine Geschäftsbedingungen, AGB) on the other party (such as a customer), these general terms and conditions are subject to additional unfairness control. This unfairness control is particularly strict in dealings with a consumer. Since unfairness control is very strict and there is very little leeway in dealings with consumers anyway, Selma and Sebastian decide not to use GTC for the time being and simply rely on the law. 5.1.2. Consumer, general, and commercial contracts Contract law rules are very different depending on whether the contract is one between two businesses (B2B), a business and a consumer (B2C), or two consumers (C2C). For the purpose of contract formation the main difference is between consumer contract law (B2C contracts) and general contract law. A ‘consumer contract’ that is subject to specific consumer protection rules is any transaction in which one party is acting as a business and the other as a consumer (B2C). There is a host of legal provisions on consumer contract law that apply exclusively to B2C transactions, a major part of which is based on EU Directives. More or less all consumer law is mandatory law in the sense that it cannot be derogated from by agreement to the detriment of the consumer. In European law, a ‘business’ means any natural or legal person that is acting for purposes relating to that person's trade, business, craft or profession. A ‘consumer’ means any natural person who, 52 Starting an E-Commerce Business in Austria conversely, is acting for purposes which are outside that person's trade, business, craft or profession. These definitions are relevant for the application of all directly applicable EU law (Regulations). In Austrian domestic law, notably § 1 of the Consumer Protection Law (Konsumentenschutzgesetz, KSchG), definitions are slightly different. A consumer is defined as any natural or legal person that is not acting as a business. Even legal entities (e.g. associations) may thus qualify as consumers provided they are not pursuing an economic activity. The KSchG further provides that whoever sets up a business for the first time is not considered to be acting as a business for any preparatory transactions entered into before the business starts its operations. As far as contract formation is not governed by specific provisions of consumer contract law the provisions of general contract law apply. The most important provisions are to be found in the Austrian General Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB). Every contract is, at least to some extent, governed by provisions of general contract law because consumer contract law never covers all the issues that might arise. While contracts between businesses are largely subject to the general provisions under the ABGB there are also some legal provisions that are explicitly restricted to dealings between businesses, i.e. to B2B transactions. Most of the latter can be found in the Austrian Commercial Code (Unternehmensgesetzbuch, UGB), notably in §§ 343 et seq. UGB. 5.1.3. Cross-border trading In cases with a foreign element, the applicable contract law does not have to be Austrian law, it may equally be foreign domestic law. As far as an issue is not governed by uniform law such as the CISG (on which see below p. 54), the applicable contract law is determined by the rules of private international law (conflict-of-laws). Every court seised with a matter applies the conflict rules of its own country (the so-called ‘forum’), which may be rules of domestic, EU or international law, in order to find out (a) whether the court has international jurisdiction, and, if that is answered in the affirmative, (b) the law of which state applies to the issue at hand. Naturally, if every court applies its own rules of jurisdiction and its own conflict rules, the results achieved may diverge. This is why there is an incentive for claimants to search for the most favourable forum, i.e. the forum that will apply the substantive rules most favourable to the claimant (‘forum shopping’), and also why there may be conflicting decisions. This is undesirable, and a reason for making efforts to harmonise jurisdiction and conflict rules at European or even at international level. Jurisdiction Selma and Sebastian are a bit concerned when they hear this. Does this mean that someone could sue them in a court abroad, maybe in a country whose language they do not speak, even though they have their business in Austria? Unfortunately yes, in particular when dealing with consumers. Where a court is seised with a matter arising from a contract a court within the EU has to base its own international jurisdiction You will study international on the Brussels I Regulation (but there are exceptions where jurisdiction the defendant is not domiciled in a Member State of the EU). in MA CM 4 (Law of Civil Special provisions on consumer contracts apply to some Procedure) contracts with a credit element and, more generally, to contracts made with a business that pursues commercial activities in the Member State of the consumer’s domicile or that, by any means, directs such activities (also) to that Member State, and the contract falls within the scope of such activities.  Concluding contracts online 53 Whether an online shop ‘directs’ its activities to the consumer’s country is to be determined by a variety of factors, such as any explicit statements made, delivery options, the language chosen for the website, domain names, or currencies. According to Article 18, the consumer may bring proceedings against the business either in the courts of the Member State in which the business is domiciled or in the courts of the place where the consumer is domiciled (the latter even where the business is domiciled outside the EU). The business may bring proceedings against a consumer only in the courts of the Member State in which the consumer is domiciled. So these rules of jurisdiction are extremely favourable to the consumer. In contracts other than such B2C contracts international jurisdiction for contractual claims follows from an agreement between the parties, or the claimant can sue before the courts of the defendant’s domicile or at the place where the contractual obligations were to be fulfilled. Applicable law Selma and Sebastian are now truly shocked. Is it even possible that they will have to comply with foreign contract law, just because they are marketing their stuff cross-border? Unfortunately (for them), the answer is again: yes. The law applicable to issues arising from a contract is determined, from the point of view of a court in the EU/EEA, by the Rome I Regulation. This holds true even You will study conflict of laws where elements of the situation are located outside the in BA CM 10 (Civil Law and Private EU/EEA, or when the law applicable to the contract is not International Law). that of a Member State (‘principle of universal application’). The most important principle underlying the Rome I Regulation is that of party autonomy, i.e. a contract is, in the first place, governed by the law chosen by the parties. The choice can be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. There are only very few limits to this general principle, e.g. the parties cannot escape the mandatory provisions of the law of a country where all other elements relevant to the situation at the time of the choice are located in that country, or mandatory provisions of EU law where all other elements are located in the EU. In the absence of choice by the parties, a contract for the sale of goods is normally governed by the law of the country where the seller has their habitual residence. For other than sales contracts, there are similar rules, referring normally to the law of the supplier. ‘Habitual residence’ of a company is the principal place of business or central administration. Where the contract is concluded or to be fulfilled by a branch, agency or any other establishment, the location of that branch etc. counts. Things are, however, different for B2C contracts where the business pursues their commercial activities in the country where the consumer has their habitual residence, or by any means, directs such activities (also) to that country, and the contract falls within the scope of such activities. In the absence of a choice by the parties, such a consumer contract is wholly governed by the law of the state of the consumer’s habitual residence. Even where the applicable law has been chosen (such as in standard terms provided by the business) choice by the parties may not deprive the consumer of the mandatory protection afforded by the law of that consumer’s habitual residence. 54 Starting an E-Commerce Business in Austria CISG A cross-border contract for the sale of goods between businesses may primarily be governed by the United You will study the CISG Nations Convention on Contracts for the International in BA CM 9 and CM 10 (Civil Law Sale of Goods (CISG). The CISG is international uniform and Private International Law). law, applicable in 94 countries worldwide. It applies to contracts for the sale of goods between parties whose places of business are in different States when these States are Contracting States; or when the rules of private international law lead to the application of the law of a Contracting State. The CISG is not really restricted to parties who are acting as businesses, but it does not apply to the sale of goods bought for personal, family or household use, which means it will ordinarily apply only to commercial sales contracts. However, the parties may opt out of the CISG (note that choice of ‘Austrian law’ as the law governing the contract does, as such, not suffice for opt out, as the CISG is part of Austrian law). Also, the CISG governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract, but not, e.g., the validity of the contract or liability of the seller for death or personal injury caused by the goods to any person. 5.2. Duties under e-commerce law Selma and Sebastian know from their own shopping experience that there is a number of duties for online retailers, including the duty to acknowledge very quickly receipt of an order. They are not sure, however, what the source of these duties is, and which kind of duties exist … Where an information society service consists in making contracts with others, or offering to do so (as is typically the case with an online shop), additional information and You will study e-commerce law related duties must be fulfilled on top of the ones already in BA CM 7 (Digital Law). discussed (see above p. 34). Their purpose is to make sure contract formation is fair for the customer. These duties apply irrespective of whether the contract is B2B or B2C, but where the customer is not a consumer the parties may derogate from the duties by way of mutual agreement (which hardly ever happens in practice). Without prejudice to more far-reaching information duties resulting from consumer contract law or other bodies of the law, at least the following information must be given by the online shop clearly, comprehensibly and unambiguously and prior to the order being placed by the customer: the different technical steps to follow to conclude the contract; whether or not the concluded contract will be filed and whether it will be accessible; the technical means for identifying and correcting input errors prior to placing of the order; the languages offered for the conclusion of the contract; and any relevant codes of conduct to which the business subscribes (such as trust labels) and information on how those codes can be consulted electronically. In addition, the business must make all contract terms and general conditions available in a way that allows the customer to store and reproduce them; acknowledge the receipt of the customer's order without undue delay; and  Concluding contracts online 55 make available to the customer appropriate, effective and accessible technical means allowing the customer to identify and correct input errors, prior to the placing of the order. 5.3. Duties under distance sales law (Fernabsatzrecht) Requirements under the ECG look pretty straightforward to Selma and Sebastian. However, when shopping online in the past, they were usually confronted with a lot more information, and with something called ‘right of withdrawal’. If this does not follow from the ECG, does it follow from another law? Or do online traders offer this voluntarily? While the duties under the ECG apply to all online shops irrespective of whether an online shop sells to other businesses or to consumers, there is a host of further You will study consumer contract law duties that apply specifically to B2C contracts. They in BA CM 9 and CM 10 (Civil Law and follow from the Distance and Off-Premises Contracts Private International Law). Act (Fern- und Auswärtsgeschäftegesetz, FAGG) and apply to consumer contracts that are concluded under an organised distance sales or service-provision scheme without the simultaneous physical presence of the parties, with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded (distance contracts). Contracts concluded in an online shop are typical distance contracts. 5.3.1. Steps towards online contract conclusion Step 1: Pre-contractual information duties Before the consumer is bound by a distance contract the business must provide the consumer with a very long list of items of information, as listed in § 4 FAGG, in a clear and comprehensible manner and in a way appropriate to the means of distance communication used. The information includes specific information, inter alia, about the business, the characteristics of the goods etc., the total price, delivery and any other costs, details about delivery and payment, details about the consumer’s right of withdrawal, and a reminder of the existence of warranty rights and, where applicable, of commercial guarantees and complaint mechanisms. As will be explained in more detail below (p. 57), the consumer may, within a period of 14 days, withdraw from the contract without having to give any reason. Among the long and detailed list of items, the information regarding the right of withdrawal is of particular importance because any – even very minor – mistake may lead to quite drastic consequences (on which further below p. 58). In the course of providing this information, the business also has to provide to the consumer a model withdrawal form set out in an Annex to the FAGG. Because it is so difficult and yet so crucial to get the information right, the legislator provides a set of model instructions on withdrawal in another Annex. The business is not strictly required, but well advised to use them. Step 2: Order process If a distance contract to be concluded by electronic means places the consumer under an obligation to pay, the business must make the consumer aware of particular key items of information, which are listed in § 8(1) FAGG, in a clear and prominent manner directly before the consumer places their order. This normally occurs in the electronic ‘shopping cart’. 56 Starting an E-Commerce Business in Austria Trading websites must indicate clearly and legibly, at the latest at the beginning of the ordering process, whether any delivery restrictions apply and which means of payment are accepted. Before the order is placed, the business must then comply with the additional duty under the ECG (see above p. 54) to make available to the customer appropriate, effective and accessible technical means allowing the customer to identify and correct input errors prior to the placing of the order. Normally this occurs by showing to the consumer, on one page, all the core information they have provided and asking the consumer to check and either correct or confirm. The business must then ensure that the consumer, when placing the order, explicitly acknowledges that the order implies an Order now with obligation to pay. If placing an order entails activating a button obligation to pay or a similar function, the button or similar function must be labelled in an easily legible manner only with the words ‘order with obligation to pay’ or a corresponding unambiguous formulation. Formulations such as ‘Buy now’ are generally assumed to comply with this requirement, but not formulations such as ‘Download’ or ‘Continue’. If the trader has not complied with these requirements, the consumer is not legally bound by the contract or order. Step 3: Requests to start performance before the lapse of withdrawal period As has been mentioned above, the right to withdraw from the contract without having to give any reason is a core consumer right. For many contracts, such as contracts for services, digital content or grid-based supply of water or electricity, it would be impossible to unwind the contract in kind if the consumer exercises their right of withdrawal after performance has started. In order to minimise complications caused by the reversal of such contracts, the FAGG provides for further safeguards. Where a consumer wants the performance to begin right away or otherwise already before the lapse of the 14-day period the business must require that the consumer ‘makes an express request’ or ‘gives consent’ and acknowledges that they will lose the right of withdrawal under certain circumstances. Details are very complex, including on who has to require or confirm what in which order. However, it is particularly important for businesses not to forget this step because forgetting can have drastic consequences (on which further below p. 58). Step 4: Confirmations In consumer contract law, the provision of information on a ‘durable medium’ plays an important role. A ‘durable medium’ means any instrument which enables the consumer to store information addressed personally to them in a way accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored. This includes paper, email or text message, but normally not the mere display on a website because a website can be changed by the business at any time. There may be exceptions for very sophisticated websites with a password-protected customer area which the business cannot just access to change the information therein stored. If the information has already been given to the consumer on a durable medium before the contract was concluded the business does not have to provide it again. Otherwise – e.g. if it was displayed only on the website – the business must provide the consumer with the confirmation of the whole contract and all the information on a durable medium within a reasonable time, and at the latest at the time of the delivery of the goods or before the performance of the service begins.  Concluding contracts online 57 5.3.2. Consumer’s right of withdrawal Selma and Sebastian are now particularly worried about this right of withdrawal, which seems to involve quite a lot of risks for businesses. They are keen to learn more… When marketing goods, services and digital products to consumers online, businesses must bear in mind that contracts are usually subject to the consumer’s right of withdrawal under distance sales law (see already above p. 55). Existence of a right of withdrawal As a general rule, consumers who buy online have the right to withdraw from the contract, without giving any reasons, within a withdrawal period of 14 days calculated from the day the goods were delivered or, for contracts other than for the sale of goods, when the contract was concluded. However, where the trader has not one hundred percent complied with all information duties concerning the right of withdrawal, the withdrawal period is extended by up to one year. This applies irrespective of whether the mistake was only minor (e.g. the model withdrawal form was missing, but the consumer would not have used that anyway, or there was just one little ambiguity in the formulation). Generally speaking, consumer protection regulation such as the FAGG is very formalistic and strict, i.e. there is hardly any room for argumentation whether something is equitable and just in the individual case. Even abusive behaviour by consumers is tolerated to a very large degree, as the idea is that traders who fail to comply with the requirements are not deserving protection. This applies irrespective of the size of the business. § 18 FAGG lists a limited number of contracts where no right of withdrawal exists. These contracts include, inter alia: the supply of goods made to the consumer’s specifications or clearly personalised; the supply of goods which are liable to deteriorate or expire rapidly; and the supply of sealed goods which are not suitable for return due to health protection or hygiene reasons and were unsealed after delivery. There is also a limited number of situations where a right of withdrawal initially exists but later expires for reasons other than lapse of the withdrawal period. The most important situations are: full performance of a service under a service contract, but only if the performance has begun with the consumer’s prior express consent, and with the acknowledgement that they will lose their right of withdrawal once the contract has been fully performed by the trader; and start of online supply of digital content or digital services, but only if the performance has begun with the consumer’s prior express consent and with the acknowledgment that they will lose the right of withdrawal with the beginning of performance. Conditions The consumer can exercise their right of withdrawal by way of informing the trader in any form, with or without using the model withdrawal form provided by the trader, and including by way of implied conduct such as by sending back the goods received. Exercise of the right of withdrawal immediately terminates all obligations to make performance under the contract, and insofar as performance has already been made, anything received under the contract needs to be returned. This means that the trader will reimburse all payments received from the consumer without undue delay and in any event within 14 days. The obligation to reimburse payments includes the costs of standard delivery (if paid by the consumer), but not any supplementary costs if the consumer has expressly opted for a type of delivery other than the least expensive type of standard delivery offered 58 Starting an E-Commerce Business in Austria by the trader. The trader may normally withhold the reimbursement of payments until the trader has received the goods back or the consumer has supplied evidence of having sent back the goods. The direct cost of returning the goods is normally borne by the consumer, but a trader may, of course, voluntarily agree to bear these costs (in order to encourage consumers to buy). When consumers exercise their right of withdrawal this may be burdensome for the trader who, in the case of sale of goods, receives the goods back and has to examine and re-package the goods, sometimes also to replace price-tags etc. The situation is worse where the consumer has used the goods so that they need cleaning and may only qualify for re-sale as second-hand goods, if at all. Under distance sales law, the consumer is liable for any diminished value of the goods resulting from the handling of the goods other than what is necessary to establish the nature, characteristics and functioning of the goods, such as where garments have already been worn and not just tried on. However, the burden of proof is on the seller, and the consumer is not liable for any diminished value of the goods where the trader has failed to provide notice of the right of withdrawal in accordance with all the requirements that the law sets out for this notice. As, in the latter case, the withdrawal period is extended by up to one year, this means in effect that the consumer can theoretically use the goods for one year, send back what is left of them, and claim back the full purchase price plus initial delivery costs. In the case of services or grid-bound supply of water, energy etc. the situation is even more difficult for the trader because the consumer does not have to pay anything for the service or supply received where the trader has made particular, albeit very small, mistakes. 5.4. Warranty law (Gewährleistungsrecht) Warranty law comes into play when performance made under a contract, e.g. goods delivered under a sales You will study the origins of contract, is not in conformity with the contract. The legal warranty law in BA CM 4 consequences differ, depending on whether the contract (Roman Law and the Civilian is a B2C, B2B or C2C contract and on the contract type. Tradition). Contract law, including 5.4.1. Consumer Warranty Act consumer contract law, will be For B2C contracts, a special Consumer Warranty Act taught in in BA CM 9 and CM 10 (Verbrauchergewährleistungsgesetz, VGG) has entered (Civil Law and Private into force in January 2022. The VGG relies on two EU International Law). Directives, one on the sale of goods and the other on the supply of digital content (such as apps) and digital services (such as social network services) to consumers. Lack of conformity with the contract As to the requirements that must be met for goods to be in conformity with the contract, a distinction is made between two types of requirements. The ‘subjective requirements’ are rather straightforward – the trader simply has to comply with everything they have promised under the contract, ranging from product features to software updates. The ‘objective requirements’ are generally implied by the law, but the parties may derogate from them by way of qualified agreement. For such derogation to be qualified the consumer must have been specifically informed that a particular characteristic of the goods deviated from the objective requirements for conformity when the sales contract was made, and must have expressly and separately accepted that deviation.  Concluding contracts online 59 ‘Objective requirements’ include, inter alia, that goods are fit for the purposes for which goods of the same type would normally be used; are delivered along with such accessories (e.g. packaging and instructions) and with updates (e.g. security updates) as the consumer may reasonably expect to receive; and possess the features normal for goods of the same type and which the consumer may reasonably expect given the nature of the goods and taking into account any public statement by persons in the supply chain, particularly in advertising or on labelling. The seller is liable for any lack of conformity that existed at the time of delivery, albeit possibly in ‘embryonic’ form, and that becomes apparent within the warranty period, which is at least two years from delivery. Where the lack of conformity becomes apparent within the presumption period, the burden of proof that the lack of conformity already existed at the time of delivery is on the seller. This presumption period is at least one year. Whether Austria will eventually provide for periods that are longer than the minimum periods is not yet clear. What is important to note is that the right to receive updates is not limited to the warranty period, but is for the period of time ‘that the consumer may reasonably expect’ or, in cases of continuous supply, for the duration of the contract. This means that, in particular for expensive and durable consumer goods, the seller may become liable for a lack of conformity that is due to absence of an update, or to a faulty update, even many years after delivery. Needless to say, this is not the case where it was the consumer who failed to install the update that was properly provided. Remedies for lack of conformity In the event of a lack of conformity, the consumer is, in the first place, entitled to have the goods, digital content or services brought into conformity. For goods, this means that the consumer may choose between the ‘primary remedies’ of repair or replacement. The consumer is not entitled to repair or replacement where the remedy chosen would be impossible or would impose costs on the seller that would be disproportionate. The consumer cannot freely choose to have the price reduced or claim their money back right away. Rather, these ‘secondary remedies’ are available only under particular circumstances. This is the case where the business has failed to comply with the primary remedies, or has refused to do so, or it is otherwise clear that the business will not comply within a reasonable time and without significant inconvenience for the consumer, or an attempt to comply with them has been unsuccessful, or the lack of conformity is of such a serious nature as to justify an immediate price reduction or termination because the consumer has lost trust in the business. The consumer may, under such circumstances, choose between proportionate price reduction and termination, but termination is not available as a remedy if the lack of conformity is only minor. In the event of termination, the contract needs reversing, i.e. the consumer must return goods to the seller, at the seller's expense, and the seller must reimburse the consumer for all sums paid under the contract. Mandatory nature and redress Traders cannot, in B2C transactions, escape the strict warranty rules – like more or less all consumer contract law, the rules are mandatory. Since the immediate sellers are usually not the parties who have caused the non-conformity it is important to make sure they can seek redress against previous links of the supply chain. Where the seller is liable to the consumer because of a lack of conformity resulting from an act or omission, including omitting to provide updates, by a person in previous links of the supply chain, the seller is entitled to pursue remedies against that person. 60 Starting an E-Commerce Business in Austria 5.4.2. General warranty regime All sales contracts that are not B2C contracts, and more or less all B2C or other contracts that are not contracts for the sale of goods or the supply of digital content or services, are subject to the general warranty regime under the ABGB. This general warranty regime is not too different from the VGG, as the types of remedies, and their hierarchy, are very similar. However, it is clearly less favourable for the buyer (e.g. the presumption period is shorter; remedies are less far-reaching where goods have been installed; there are no explicit rules for goods with digital elements). In particular, parties may freely derogate from warranty provisions under the general regime, but full waiver of all warranty rights by the buyer may be considered to be contrary to public policy in the case of a sale of newly manufactured goods. Even for B2C contracts that are normally covered by the VGG, some concurring remedies are to be found in the ABGB, including: damages in lieu of warranty (Schadenersatz statt Gewährleistung), which is similar to warranty rights, but requires fault, and is subject to a more favourable prescription regime; damages for consequential harm (Schadenersatz für Mangelfolgeschäden), which equally requires fault and may be afforded for instance where the buyer suffered personal injury or property damage; and avoidance of the sales contract for mistake (Irrtumsanfechtung). Note that, independently from any liability of the seller, the producer of defective products that have caused death, personal injury or property damage may be liable in tort or under the Product Liability Act (Produkthaftungsgesetz, PHG). This has nothing to do with warranty law. Warranty for goods or digital products that are not in conformity with a commercial sales contract is mostly governed by the ABGB, with some specific provisions in the UGB. Under §§ 377, 378 UGB, there is a requirement for commercial buyers to notify the seller within a reasonable period of defects in the goods which they have discovered or should have discovered by examination in the ordinary course of business after delivery. Normally, failure to do so means the buyer can no longer enforce any rights under warranty law, but there are some exceptions, e.g. where the seller acted intentionally or grossly negligent in causing or concealing the defect. 5.5. Trading via a platform Given how difficult it is to get everything right, Selma and Sebastian are beginning to wonder whether it is really a good idea to set up an entire webshop by themselves, or buy a ready-to-use webshop package, or whether they should maybe rather trade their stuff via one of the big trading platforms. Maybe these platform providers would assist them in setting up their business and take over much of the difficult tasks. Online intermediary platforms play an ever bigger role for e-commerce. There is a very broad range of different types of platforms, ranging from mere search engines (e.g. Google), to price comparison tools (e.g. Geizhals.at), to direct marketing tools (e.g. Facebook), to online marketplaces (e.g. Amazon) to full-service intermediary platforms that take over most of the steps required for negotiating, concluding and fulfilling a contract (e.g. Airbnb). Accordingly, the types of services provided to platform users (suppliers as well as their You will study platform regulation in customers) vary, as do the contractual arrangements. BA CM 7 (Digital Law). It is in particular in the case of full-service intermediary platforms that operators may even become the  Concluding contracts online 61 customer’s only contracting partner if the whole appearance of the arrangement was such as to make the customer believe they were contracting with the platform operator itself. 5.5.1. General duties of platform operators Platform operators are essential for a free and vibrant online society and economy. There is thus a general desire to shield them from overreaching duties and liability risks with regard to their users’ activities. On the other hand, there is often a mismatch between the actual power of platforms as well as the profits they make and the responsibilities they take. For instance, a platform engaging in the matchmaking between transport services providers and passengers might harvest a significant share of the profit derived from transport services without having to worry about specific requirements for transport as a regulated trade (see above p. 13), about wages and social security (see above p. 26), about taxes in the country where the service is provided (see above p. 22), or about many mandatory consumer rights. In addition, such a platform can collect and accumulate valuable data from all individual transactions, giving it unparalleled insights into the behaviour of market participants and enabling it to create additional value, ranging from the development of new ‘smart’ services to AI training. This is why there is a general trend to shift more legal duties and requirements to the platform providers themselves, e.g. by qualifying the operator of a platform such as ‘Uber’ directly as a provider of transport services, by involving online marketplaces in market surveillance measures, by making them liable for import VAT as ‘deemed suppliers’ (see above p. 25), and by further measures. Information duties for B2C contracts There has been a continued expansion of rules concerning the duties of platform operators. Online marketplaces facilitating B2C contracts must provide particular information to the consumer under the FAGG. This information includes the main parameters determining ranking of offers presented to the consumer as a result of a search query and the relative importance of those parameters as opposed to other parameters. It also includes the information whether the supplier offering the goods etc. is a trader or not (on the basis of the declaration of that supplier to the provider of the online marketplace) and, if not, a warning that mandatory consumer rights do not apply to the contract. The online marketplace must also disclose how the obligations related to the contract are shared between the supplier and the online marketplace. Notice-and-action principle for illegal content and activities One of the aspects Selma and Sebastian find worrying is that, on some of the platforms they are considering, there seem to be a lot of rather dodgy suppliers, in particular from outside the EU/EEA, overtly offering, for instance, counterfeit products or iPhones at the astonishing price of 5 euros. They are wondering how this can be possible. 62 Starting an E-Commerce Business in Austria One of the most controversial issues is the extent to which platform operators may be held liable for their users’ activities where these activities are ‘illegal’ in the broadest sense, ranging from hate speech to copyright infringement to fraud to the marketing of counterfeit or unsafe products. According to the Digital Services Act (DSA), platform operators that are mere host providers (as contrasted with content providers), i.e. that limit themselves to the storage of information provided by a supplier, are not liable for the information stored on condition that the provider (a) does not have actual knowledge of illegal content or activities and is not aware of facts or circumstances from which the illegality is apparent; and (b) upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the content (‘notice-and-action’ principle). There is, in particular, no general obligation to monitor content which they store, nor a general obligation to actively seek facts or circumstances indicating illegal activity. Only where illegal activities become known, the service provider may be required to terminate or prevent an infringement. It is only with regard to copyright infringements that the UrhG, as amended in 2021, makes an exception from the limitation of liability, i.e. ‘online content-sharing service providers’ may become liable where uploaded content infringes copyright unless they demonstrate that they have (a) made best efforts to obtain an authorization from the rightholders, and (b) made best efforts to ensure the unavailability of protected works where no authorization is provided, and in any event (c) acted expeditiously, upon receiving a sufficiently substantiated notice from the rightholders, to disable access to infringing works and prevent their future uploads. Points (b) and (c) have given rise to the interpretation that ‘upload filters’ need to be generally employed, which is a heavily contested point. In order to avoid over-blocking (i.e. the phenomenon that providers, for fear of liability, delete too much content) providers must offer an effective and expeditious complaint and redress mechanism for users. Online platforms that allow consumers to enter into distance contracts with traders have certain obligations under the DSA in relation to trader traceability, i.e. they must ensure that they have certain minimum information about traders. If they become aware of illegal products or services being traded on the platform, they must inform consumers of this, the identity of the trader and any means of redress. Further due diligence and design duties The DSA includes a broad range of duties and requirements, which also depend on the size of the online platform (i.e. the larger the platform, the more duties it has to comply with). For example, host providers must now set up notification and action mechanisms for their users. In addition, online platforms must introduce an internal complaint handling system, an out-of-court dispute resolution system and a so-called trusted flagger system, accompanied by extended transparency obligations, including in the context of advertising and recommender systems. For very large online platforms, the DSA requires risk mitigation measures and a mandatory crisis response mechanism as well as stricter supervision by the governing bodies. Additionally, providers of online platforms allowing consumers to conclude distance contracts must implement the principle of ‘compliance by design’ for their online interface so that traders can fulfil their information obligations. 5.5.2. P2B Regulation Selma and Sebastian are also worried at hearing about the experience of Xu’s parents, and of Matteo and John, all of whom have had difficult encounters with some big and powerful platform providers. For example, they suddenly found their offers removed from one day to the next (‘de-listing’), or ranked so far down that customers would never find them (‘dimming’). They are wondering whether there is any protection against such practices.  Concluding contracts online 63 The P2B Regulation lays down rules to ensure that business users of online intermediation services (platforms) as well as corporate website users in relation to online search engines are granted appropriate transparency, fairness and effective redress possibilities. In territorial terms it applies where the business users or corporate website users are established in the EU/EEA and offer goods or services to consumers located in the EU/EEA, irrespective of the place of establishment of the platform or search engine provider and of the law applicable to the platform contract. A focus of the P2B Regulation is the requirement of full transparency of all terms and conditions applied by a platform provider vis-à-vis business users. Proposed changes of terms and conditions must be communicated on a durable medium and must not be implemented before the expiry of a reasonable notice period of at least 15 days, allowing the business user to adapt to the new situation or to terminate the contract with the platform. Non-transparent terms and conditions, or changes of terms of conditions that do not meet the requirements, are null and void. Specific requirements apply where the platform provider decides to restrict or suspend the provision of its services to a given business user. Further provisions address the ranking of business users or of the goods and services they offer, or any differentiated treatment, or other relevant issues such as access to data. They concern mainly the transparency of parameters with the aim of enabling the users to obtain an adequate understanding of whether decisions take account of legitimate concerns. Last but not least, the P2B Regulation focusses on redress mechanisms, introducing mandatory internal complaint-handling system, mediation, and judicial proceedings by representative organisations or associations and by public bodies. 5.5.3. Competition law (Wettbewerbsrecht) When they hear this, Selma and Sebastian are not totally convinced. Transparency and procedural fairness requirements are nice, but what they would find essential is that these very powerful platforms simply refrain from unfair practices against much smaller businesses … Competition law, and more specifically a part of competition law that is often referred to as antitrust law or cartel law (Kartellrecht), serves to protect the market against restrictions of competition and the undue exercise of market power. It is partly derived directly from Articles 101, 102 TFEU, partly from EU secondary law, and partly from domestic law (e.g. Kartellgesetz 2005 KartG 2005, Wettbewerbsgesetz WettbG). Competition law comprises the prohibition of cartels (e.g. price cartels) and the prohibition of abuse of a dominant market position. Furthermore, it includes merger control and state aid law. Amongst other things, competition law prohibits abuse of a dominant market position (Missbrauch einer marktbeherrschenden Stellung). You will study What constitutes a dominant position depends on the relevant product competition law in and geographic market. In general, the lower the market share, the BA CM 11 more likely it is that special circumstances of the market structure or (Business Law). similar factors must be present in order to assume a dominant position. Abuse of a dominant position may, e.g., consist in charging unreasonably high prices, depriving smaller competitors of customers by selling at artificially low prices they can't compete with, obstructing competitors by forcing consumers to buy a product which is artificially related to a popular product, refusing to deal with certain customers or offering special discounts to customers who buy all or most of their supplies from the dominant company. However, traditional competition law enforcement inevitably intervenes after the restrictive or abusive conduct has occurred and involves investigative procedures that are difficult and take time. 64 Starting an E-Commerce Business in Austria A new piece of EU legislation, the Digital Markets Act, deals specifically with practices of so-called ‘gatekeepers’ among the platforms that limit contestability or are unfair. The regulation complements existing competition rules by minimising unfair practices already ex ante. For instance, a gatekeeper must allow businesses to offer the same products or services to end users through other platforms at prices or conditions that are different from those offered through the gatekeeper platform, and to conclude contracts with end users acquired via the gatekeeper platform regardless of whether for that purpose they use the core platform services of the gatekeeper or not.