Online fashion industry

Online Fashion Industry

The online fashion industry is an area of specialisation at our firm and the purpose of this article is to provide a few relevant contractual starting points for fashion entrepreneurs, that they might chose to get further advice on, to set them apart from the rest.

When setting up a business in the fashion industry, there are a variety of legal challenges many businesses could inevitably face. As the fashion industry covers a broad spectrum of organisations, from online retailers to modelling agencies and everything in-between, the issues that may arise will vary depending on the type of establishment. We have come across all of these issues first hand, and we will cover some of the most common in this brief guide.

Product returns

As an online fashion retailer, your obligations regarding the returning of products will depend on whether you have a returns policy in place. If you do not, you are under no legal obligation to accept returned goods unless the product is faulty, unfit for its intended purpose, or not as per the item’s description. However, if you do, you are required to honour that arrangement.

Due to the Consumer Contracts Regulations implemented by the Consumer Rights Directive, customers also have a right to cancel an order up to 14 days after receipt of the goods. They are therefore entitled to return goods purchased online provided notification of cancellation is given in this 14-day period, and the goods are returned within another 14 days from cancellation.

Modelling contracts and jurisdiction

If a contractual dispute arises between an agency and a principal in another country, the law applied will depend on if there is a clause in the contract that specifies which country has jurisdiction.

With some exceptions such as the jurisdiction of Brazil, where a specific clause has been included in the contract, the law of the country named in that clause is applied exclusively. However, if the principal concerned issues proceedings in their own country first, any subsequent proceedings issued in the country with jurisdiction must be stayed until the courts of the principal’s country rules that they do have jurisdiction based on what has been included in the contract. As this delay can be costly, it is imperative to act quickly.

Where no clause has been included the courts will decide the jurisdiction. We can help you to clarify where you stand legally if you have not included a jurisdiction clause in your contract.

Agent Commission

Modelling agencies are no longer permitted to charge fees up front to a principal, so all earnings can be via commission. However, with that in mind, the commission arrangement must be agreed between the parties involved before any work is undertaken and clearly laid out in the contract. If these arrangements have not been written into the contractual agreement, the Commercial Agents (Council Directive) Regulations specify that the amount payable to the agent should be equal to that paid to agents offering the same service within the area. Where there is no comparable agent, the Commercial Agents (Council Directive) Regulations take in to account three factors when calculating a reasonable commission due.

These three factors are:

1. The work acquired from the third party for the principal must be a direct result of the actions of the agent.

2. The third party has previously undertaken similar transactions with the agent.

3. The third party belongs to an area or party over which the agency has exclusive rights as outlined in the contractual agreement.

Ownership of Photography

The ownership of photography is a commonly misunderstood area in this industry, particularly if a freelancer takes the photographs.
Despite paying a fee to hire a photographer, the photographs themselves remain their property, which means they have control over how the images are used.
The hiring fee often covers use of a select number of prints. However, any unauthorised copies produced are an infringement of copyright law.
With this being said, there are two circumstances in which copyright of the images is not exclusive to the person taking the photographs, they are:

1. If the photographer is an employee of your company, and has taken the photographs under your instruction.

2. The copyright of an image is not automatically assigned to the photographer if there is a specific agreement in place that legally passes ownership of the images to another party.

Summary

Above we have explored just a few of the issues that are faced by those working in the online fashion industry every single day. As you can see from all the above points, contractual clauses play an important part in settling any disputes that may arise for any company.

If you like this article then you might like our articles on:
 

Luxury fashion e-commerce

 
To book a face to face consultation for commercial legal advice you should contact a specialist online retail industry lawyer (charge rates may apply and may vary).


You can get free advice from the Citizens Advice Bureau who offer a free service for consumers, or The British Library where there is an Intellectual Property department on the second floor which is free to use. You will however have to pay for any research carried out by library staff.