Written by Fatin Ismail
The convenience of online shopping often overshadows the legal realities behind each transaction. Every online purchase, no matter how big or small, constitutes a legally binding agreement between buyer and seller. When a consumer clicks “Add to Cart” or “I Agree,” a digital contract is formed, establishing enforceable rights and obligations on both sides.
The Formation of Digital Contracts
E-commerce transactions may occur in virtual spaces, but the legal principles that govern them remain firmly rooted in contract law. The legal elements for constituting a contract which include offer, acceptance, consideration, and intention to create legal relations still apply.
When a seller lists a product on a platform, that listing can be construed as an offer. The buyer, clicking “Checkout” or “I Agree” can be construed as acceptance, creating a valid and binding digital contract. Though the form of consent has evolved, the legal effect remains the same as a physical signature on paper.
We previously discussed on the formation of digital contracts here.
Unfair Contract Terms in the Digital Marketplace
Despite this clarity in theory, many online transactions still suffer from unfair or unclear contractual terms that tilt the balance against consumers. Common examples include:
- Refunds offered only in the form of vouchers instead of cash;
- Automatic renewals of subscriptions without clear disclosure or consent;
- Requirements that place unfair responsibility on consumers to bear return shipping costs, even where the seller is at fault; and
- Ambiguous terms regarding cooling-off periods, return conditions, or treatment of perishable goods.
These practices can undermine the fairness and transparency expected in consumer contracts. When consumers enter into such agreements without full understanding of their rights, the digital marketplace risks eroding trust.
Transparency and the Duty of Disclosure
A major contributor to consumer dissatisfaction and dispute escalation is the lack of clarity and accessibility in contractual terms.
Terms are often embedded in lengthy, complex documents that discourage review, or are presented in ways that obscure essential rights, such as the cooling-off period, cost of returns, or conditions for refunds.
Businesses should adhere to the minimum standards of cooling-off periods established by competent authorities. Where no such standards exist, intermediaries and e-retailers should establish fair and reasonable cooling-off provisions aligned with good commercial practice. This ensures that consumers have sufficient time to reconsider purchases, especially in cases involving misleading advertising or post-purchase regret.
Legal Standards and Regulatory Compliance
E-commerce operators, intermediaries, and sellers are expected to align consumer protection laws in Malaysia particularly in relation to:
Adherence to Unfair Contract Provisions
Intermediaries must ensure compliance with the provisions relating to unfair contract terms under the CPA, avoiding clauses that create significant imbalance or restrict consumer rights.
Refund Obligations
Consumers should have the right to cash refunds where the cause of dispute or contract termination does not originate from them. Refunds in the form of store credit or vouchers should only be permitted when the consumer voluntarily agrees to such arrangement.
Fair Allocation of Costs and Responsibilities
In the event of disputes, returns, or non-conforming goods, the principle of “cost borne by the party at fault” should apply. Responsibility for compensation and shipping costs should be shared equitably among the consumer, seller, intermediary, and logistics provider, depending on who contributed to the fault or breach.
These principles promote accountability and reduce the burden often placed disproportionately on consumers, particularly in cross-border or platform-mediated transactions.
Building Trust Through Clarity and Fairness
E-commerce thrives on efficiency, but its sustainability depends on trust. That trust is nurtured when businesses commit to fairness, transparency, and compliance.
Clear online contracts do more than satisfy legal requirements; they enhance credibility, reduce disputes, and foster long-term consumer loyalty. By ensuring that digital contracts are fairly drafted, easily accessible, and legally compliant, online businesses strengthen not only their commercial reputation but also the integrity of the digital marketplace as a whole.
In an era where offer or acceptance occur at the click of a button, clarity remains the cornerstone of consumer protection. Upholding transparency and fairness in digital contracting is a shared responsibility among all participants in the e-commerce ecosystem.
Published on 22 October 2025