When is the contract concluded in the online store or with SaaS services

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Conclusion of contract through offer and acceptance

In principle, a contract is concluded by two concurring declarations of intent – offer and acceptance. In online trading and SaaS services, however, the legal classification is not always clear.

The product presentation in the web store or the description of the SaaS service generally constitutes an “invitatio ad offerendum”, i.e. an invitation to submit an offer. The customer then submits the binding offer with his order or registration. However, from the customer’s point of view, the expectation may now have formed that the conclusion of the contract only depends on their own actions as soon as they have moved the purchase item to the digital shopping cart. From the perspective of the objective recipient horizon, this would be tantamount to an unconditional commitment on the part of the seller at the moment of releasing an item for the shopping cart.

The release of the order button by the seller could also be understood as a binding offer. From the customer’s perspective, the result may be the image of a seller who has little interest worthy of protection in delaying his commitment beyond the ordering situation. The customer can therefore be expected to commit to a contract as soon as the item is released for the shopping cart or, at the latest, when the order button is released.

This understanding is often reinforced by the labeling of the order button in accordance with Section 312j (3) BGB. Although the European legislator actually wants to leave the time of contract conclusion to the member states, the labeling of the button with “order with obligation to pay” or similar allows the conclusion that the seller wants to bind himself at this moment. In the past, case law has deemed labels such as “Send order”, “Register now” or “Binding registration (travel contract subject to payment)” to be insufficient. The order button must be clearly and legibly labeled with the words “order with obligation to pay” or a corresponding clear formulation. Additional symbols or graphics are permitted as long as the prescribed text is not changed. The button must also be visually highlighted.

However, these strict requirements only apply to consumers. In B2B business, online retailers are freer in the design of the ordering process. Less clear formulations such as “buy” or “order” are also sufficient here. However, for the sake of clarity, it is also advisable here to indicate that a fee is payable. The exact legal classification therefore depends on the specific design of the ordering process and the customer’s expectations in each individual case. Store operators should take this into account when designing their online store and ensure clarity in the key areas. The labeling of the order button in particular requires special care. Errors in this area can result in the contract not being concluded effectively. If in doubt, store operators should seek legal advice in order to avoid liability risks.

Acceptance by the provider

The provider can then accept this offer, e.g. by an express declaration of acceptance, by activating the account or by sending the goods. Here it is important to choose the right wording in the general terms and conditions and confirmations. An immediate confirmation of receipt of the order or registration should not yet be formulated as acceptance. Instead, it is advisable to state that the contract only comes into effect with a separate order confirmation, activation of the account or shipping confirmation.

The acceptance must be declared to the customer in order to be effective. The same principles apply to the receipt of the declaration of acceptance as to the receipt of the offer. The customer must have the opportunity to take note of the acceptance. In the case of an automated ordering process, acceptance can also be implied by dispatching the goods. The contract is then concluded when the goods are handed over to the shipping company. However, it is also advisable here to inform the customer in advance by e-mail about the conclusion of the contract.

If the provider does not respond to an offer made by the customer, this shall not be deemed acceptance in case of doubt. However, something else may arise from the circumstances or a prior agreement. If the provider does not respond to an order at all, the customer can cancel the order as long as the contract has not yet been concluded.

If the order confirmation differs from the order, e.g. with regard to price or delivery date, this constitutes a new offer which the customer must first accept. If the customer does not respond to such a deviating order confirmation, this shall not constitute acceptance. The contract is then not concluded. To avoid confusion, providers should design the ordering process in such a way that the time of contract conclusion is clearly recognizable for the customer. A clearly formulated contract conclusion clause in the GTC and unambiguous confirmations by e-mail are particularly suitable for this purpose. The labeling of the order button also plays an important role.

Special care should be taken when paying in advance in online stores. As I already wrote here, the GTC clause according to which the acceptance of the customer’s contract offer takes place “at the time the customer pays in advance” is anti-competitive. The conclusion of the contract may not be made dependent on receipt of payment. Instead, it should be made clear in the GTC that the contract is concluded regardless of payment and that advance payment is merely a payment method.

Special features of the order button labeling

In order to prevent internet providers from concealing the fact that their offers are subject to a charge, the law requires the order button to be clearly labeled. If the order is sent by clicking on a button, this button must be clearly labeled with nothing other than the words “order with obligation to pay” or a correspondingly clear formulation. If this requirement is violated, the contract is not concluded. The customer is then also not obliged to pay. However, formulations in another language that also clearly indicate the obligation to pay, such as “order with obligation to pay” or “acheter avec obligation de paiement”, are permissible.

Additional symbols or graphics are permitted as long as the prescribed text is not changed. The button must also be visually highlighted, for example with a high-contrast color. Simply underlining or bolding the text is not sufficient.

However, these strict requirements only apply to consumers. In B2B business, online retailers are freer in the design of the ordering process. Less clear formulations such as “buy” or “order” are also sufficient here. However, for the sake of clarity, it is also advisable here to indicate that a fee is payable. In the past, case law has deemed labels such as “Send order”, “Register now” or “Binding registration (travel contract subject to payment)” to be insufficient. The order button must be clearly and legibly labeled with the words “order with obligation to pay” or a corresponding clear formulation.

The European Court of Justice (ECJ) ruled in Case C-249/21, Fuhrmann-2-GmbH, that only the wording on an order button is decisive for the question of whether the labeling on the button meets the requirements. The wider context of the website is irrelevant. The decisive factor is whether the wording is “necessarily and systematically associated with the justification of a payment obligation, both in everyday language and from the perspective of the average consumer who is reasonably well informed and reasonably observant and circumspect”. In its updated guidelines on the Consumer Rights Directive, the EU Commission has cited phrases such as “buy now”, “pay now” or “confirm purchase” as examples that convey the required message. On the other hand, terms such as “register”, “confirm” or “order now” as well as unnecessarily long formulations that can obscure the message about the payment obligation are unlikely to meet the requirements.

Special features of SaaS contracts

In the case of SaaS contracts, there are a few special features to consider in addition to the conclusion of the contract. This includes, in particular, regulations on the availability of the service as part of a service level agreement (SLA) as well as data protection aspects. Since SaaS services regularly process the customer’s personal data, the conclusion of a data processing agreement (DPA) in accordance with Art. 28 GDPR is required. The DPA regulates how the provider, as the processor, may process the data on behalf of the customer as the controller. It defines the obligations of the provider, in particular with regard to technical and organizational measures for data protection and support for the customer in safeguarding the rights of data subjects.

The transfer of data to third countries outside the EEA may also play a role and may need to be secured by additional guarantees. Since the ECJ’s Schrems II ruling, the EU Commission’s standard contractual clauses alone are no longer sufficient to legitimize data transfers to the USA and many other third countries. Rather, the provider must take additional measures to ensure an appropriate level of protection. This includes, in particular, a careful examination of the legal situation and practice in the third country as part of a “transfer impact assessment”. Only if the provider can prove that the transmitted data is adequately protected against access by the authorities may it carry out the transmission on the basis of the standard contractual clauses. Otherwise, he must take additional technical, contractual or organizational protective measures.

The DPA should therefore contain precise information on whether and, if so, to which third countries data is transferred and on what legal basis this takes place. The additional protective measures taken should also be described. Only in this way can the customer, as the responsible party, fulfill its accountability obligations. Finally, the DPA should also contain provisions in the event that the provider wishes to use sub-processors, for example for partial services such as hosting or support. The customer must agree to the deployment and the provider must conclude DPAs with the subcontractors that contain at least the same obligations as the DPA between the provider and the customer.

Conclusion

Providers of online stores and SaaS services should check exactly when the contract is concluded in their order or registration process. This is the only way to ensure that general terms and conditions and withdrawal instructions are included in a legally compliant manner. Unclear wording in confirmations must be avoided at all costs. The labeling of the order button in particular requires special care. Errors in this area can result in the contract not being concluded effectively. If in doubt, store operators should seek legal advice in order to avoid liability risks.

The right of withdrawal also deserves special attention. The revocation instruction must be issued in text form at the latest when the contract is concluded. It must be formulated clearly and comprehensibly and contain all legally required information. Errors or omissions may mean that the withdrawal period does not begin to run and the customer can still withdraw from the contract years later.

In the case of SaaS contracts, the special requirements for the service description in the SLA and for data protection must also be observed. The DPA must clearly regulate which data is processed where and how. The rights and obligations of both parties, for example with regard to instructions, controls and support, must also be defined in detail. With careful contract design, providers can set the course for a successful customer relationship.

Despite all the care taken in legal research, some questions regarding the conclusion of contracts in e-commerce remain unanswered. For example, it is disputed whether the release of an item for the shopping cart or the release of the order button is already to be regarded as a binding offer by the seller. The exact time of receipt of electronic declarations of intent is also the subject of controversial debate, but many of these uncertainties can be avoided by a clear and unambiguous design of the general terms and conditions and the ordering process. By clearly stating when and how the contract is concluded, the provider creates clarity for itself and its customers. Such a transparent and legally compliant design is ultimately the best basis for long-term satisfied customers and successful business relationships in e-commerce.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.