Recently, several clients who sold counterfeit goods on a UK e-commerce platform have approached us after their payments were frozen indefinitely. The platform has withheld these funds pending proof from the merchants that the goods are authentic.
But why is this, and what can sellers do to remedy the situation? Find out here.
According to the Seller Terms, the platform has the right to withhold payments if it reasonably suspects a breach of the terms. However, the clause doesn’t specify how long the platform can withhold these funds, resulting in situations where sellers can’t prove authenticity, and the platform refuses to release the payments.
At first glance, this clause appears to give the platform broad authority to withhold payments in the event of any breach of the agreement. The issue is the broadness of the clause; read literally, it could allow the platform to withhold payments even for minor breaches. As the contract was made under the platform’s standard terms, the clause is subject to the “reasonableness” requirement under the Unfair Contract Terms Act 1977.
This means that if the platform relies on this clause to alter its contractual obligations substantially, it must be fair and reasonable to do so. Therefore, there are valid grounds to argue that this clause could be unenforceable.
However, under English law, courts will not permit a claim if it would result in the claimant benefiting from illegal activity. If the court determines that the goods in question are counterfeit, it would not order the platform to refund the seller, as this would conflict with the principle that one cannot profit from unlawful conduct.
Our advice
Given the UK’s strict laws against selling counterfeit goods, we advise our clients to verify the authenticity of products and their supply chain when selling in the UK to avoid future disputes.
Have questions? Get in touch today!
Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.
Email us on info@lisaslaw.co.uk.
Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/
For more updates, follow us on our social media platforms! You can find them all on our Linktree right here.