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E-Commerce Websites: Non-Delivery Of Products

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The e-commerce sector is one of the fastest growing sectors of industries in India. A lot of companies in the sector were expected to exponentially grow (and they did grow). The trend of the Indian consumer market tells us how online buyers use e-commerce portals to avail several facilities, such as book services like traveling, software, books/ebooks, trade and commerce, etc. When goods and services are purchased and sold, the buyer/consumer is conferred with some rights and the seller/manufacturer undertakes certain liabilities.

The sale of goods in India is governed by the Sale of Goods Act, 1930. This states that a buyer should have ample time to view or check out a product before taking it for delivery. If the buyer has not had a chance to preview the goods, then the buyer has the right to reject those goods (if the buyer is unsatisfied with them).

Once a good or product is ordered, the buyer and seller enter into a contract. If any party defaults or does not keep their end of the contract, it will result in a ‘breach of contract’. Online portals exist as a platform/bridge between the buyers and sellers, much like a marketplace where buyers and sellers meet to exchange goods or services, except online. With respect to manufacturers, an e-commerce portal is a consumer that buys or employs from a vendor and re-sells to a customer.

If a consumer buys goods with intention of making a large scale profit or re-selling, then the consumer will be taxed and considered as a manufacturer. Any product liability can be borne by the product manufacturer or the retailer, though the burden of proof lies on the consumer.

How Can A Company Avoid Liability?

Terms of Delivery

The terms of delivery or delivery terms refer to a company’s shipping policy. A customer will be required to accept the delivery terms, which includes refund requests, shipping policy, discounts and promotions on delivery/shipping, etc. which enable a customer to know when they will receive their product, how the package will be delivered, the additional terms attached to shipping promotions, etc. Shipping information and the terms of delivery should be clearly mentioned in the company’s terms and conditions as well as the product page. In the event of any dispute, a customer would have read and agreed to the terms and conditions (including the shipping terms and conditions) and thus, the company can avoid liability within the security of the agreement.

Refund Policy

Canceled purchases must be refunded. If a customer orders a product and decides to cancel it, s(he) is entitled to receive a refund within a stipulated time-frame (usually 14 days). A refund policy must state the time period for the return of goods, time-period for refund, the party to bear the cost of return, the condition of returned goods, etc. A refund policy should be included in the terms and conditions of the e-commerce site as well as published prominently on the website. Once a customer reads and accepts the policy, they understand that the agreement goes beyond their statutory rights.

Limited Liability

Is a standard clause in most contracts so that any further liability that may arise (such as liability in case of non-delivery of products). This enables a company to keep its costs to a minimum, in the case of damage, non-delivery, etc.  


A disclaimer stating that the vendors on an ecommerce website will indemnify the buyer should be stated in an obvious manner on the website. A company or e-commerce website can transfer liability to the vendors or merchants selling on their website. In any event of non-delivery, the vendor will be held responsible for damages, refund, compensation, theft, etc.

Force Majeure

A company can avoid liability in case of unforeseeable circumstances (an act of God) that prevents the company from fulfilling a contract, such as package not received, out of delivery/service area, etc. It can also be included in the terms and conditions of the website. Most contracts include this clause as well.

What Can We Do?

As an e-commerce portal, several customers are bound to visit your website to surf or purchase something. The chances are that something may go wrong in the delivery process (such as delay in delivery, non-delivery of a good, delivery of a damaged good, the delivery boy stole the parcel, etc. A company should secure itself with the effective use of contracts (with vendors and partners/sellers) and company policies (that will be used on the company website for the customer to see). 

02 Feb, 17

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