Fulfillment opens up considerable growth potential for online retailers and reduces costs – but it also entails risks. This is because the legal issues surrounding the topic are complex. To give you an overview of the legal pitfalls, lawyer and eCommerce expert Yvonne Bachmann from Händlerbund answers the most important questions about fulfillment in today’s article.
What should I pay particular attention to when concluding a fulfillment service contract?
During contract negotiations, the focus is clearly on the question: What do I want? The most important thing is then one thing above all: a detailed service specification that defines exactly what service is required and what additional services will cost. In addition, of course, there are the standard clauses on the fulfiller’s duty of care, the inspection obligations or complaint deadlines as well as everything to do with duration, remuneration, payment modalities or insurance issues. Last but not least, common sense must also be taken into account. There should be a relationship of trust between both parties, as the service provider is ultimately the retailer’s public image.
Who is liable for damage or accidents during transportation of the goods?
A distinction must be made here between two constellations: In relation to the consumer, it is always his contractual partner, i.e. usually the retailer, who is liable for damage, accidents or loss. In the internal relationship, liability must then be classified according to fault. Liability can therefore lie either with the fulfiller or, for example, with the transport company.
How is data protection implemented in fulfillment?
Sensitive data such as the customer’s name, address and ordered items are actually transferred to the fulfillment service provider. However, according to the current legal status, a data processing agreement is not necessary. The transfer of data is therefore possible without a special contract or even the customer’s consent and is justified as follows: The use of data by the fulfillment service provider is necessary for the fulfillment of the contract and may therefore take place without any further requirements.
Which laws and regulations should I be aware of when hiring a fulfillment service provider?
The list of laws in this area is almost endless. Of course, you have to start with the general consumer regulations that arise from contract design and liability issues. The fulfillment service provider must also ensure that the delivery ends up in the right hands. The key issue here is the protection of minors in the destination country (e.g. alcohol, tobacco and media). Another aspect is the tax component, where there were far-reaching changes in mid-2021 with the VAT reform. Finally, the EU Market Surveillance Regulation came into force on July 16, 2021, which imposes obligations on fulfillment service providers and, unlike previously, considers them to be economic operators themselves. Until now, fulfillers have been able to take advantage of these many grey areas.
Are there any tax law peculiarities in fulfillment or where is the turnover taxed?
Yes, there are definitely some special features. If retailers use structures such as fulfillment, more work has been required since summer 2021. In the case of a warehouse in another EU country, registration and reporting to the local tax office in the country of storage is still required – the OSS procedure does not apply. At the same time, cross-border deliveries must be reported via the OSS in the country of domicile.
What do I have to consider in my general terms and conditions or the purchase contract with my customer if I commission a fulfillment service provider?
In fact, nothing. There is no obligation to inform the buyer that orders will be partially or completely processed by a third party. Therefore, fulfillment does not need an extra clause in the general terms and conditions for the customer. There may only be special requirements for returns after a withdrawal if a return to the fulfillment service provider is desired instead of to the retailer.
Who has to license which packaging?
Anyone who places packaging subject to system participation (including filling material, labels, etc.) on the market must also pay for recycling. In practical terms, when working with a fulfillment service provider, it is therefore not the retailer who places the packaging on the market, but the fulfillment service provider. According to the wording of the law, the fulfillment service provider is then also obliged to register and participate in the system.
However, there is an exception to the rule here: if only the seller is recognizable on the outside of the shipping packaging, the seller itself is subject to registration and system participation. You can find more useful information on the registration and licensing of packaging in our blog post Checklist for a legally compliant start with your own online store.
Conclusion: Legal issues depend heavily on your expectations and circumstances
Overall, the legal framework for fulfillment depends heavily on what type of goods you offer and sell in which catchment area. It is in everyone’s own interest to obtain sufficient information. In terms of contract design, however, the legislator leaves quite a lot of room for maneuver. For this very reason, you should be very clear about what you expect from working with a fulfiller. If you also know about general topics, you have the ideal basis for getting started with fulfillment and fully exploiting your business potential.
You can also find a large number of certified fulfillment service providers in our JTL-Fulfillment Network. With the help of intelligent filters, you can find the right service provider with just a few clicks and start working together directly from our software. Good news: The platform is completely free of charge for you as a merchant!
About the author: Yvonne Bachmann has been working as a lawyer and editor for Händlerbund since 2013. She advises online retailers on legal issues and regularly reports on legal topics that affect the eCommerce industry on the OnlinehändlerNews information portal. She is also a sought-after speaker, interview partner and guest author throughout Germany.
