The Relationship Between a Digital Retailer and a Supplier: Focus on the Legal Position of the Digital Retailer and the Optimal Risk Allocation

Mathilde Mainz Elkjær & Mie Krogh Madsen

Student thesis: Master thesis

Abstract

According to Danish Civil Law, a supplier is responsible for the cost in case of a consumer's claim of defect. However, this legal position was challenged by Danish case law, where a retailer was sentenced responsible. The purpose of this project is to investigate under which circumstances a dealsite is responsible for the consumer's claim of defect and the appurtenant consequences of this responsibility. Furthermore, the optimal risk allocation will be analysed based on the business opportunities and challenges of a dealsite. The legal part of this project contains an assessment of when a retailer disclaimer is valid. According to Danish case law a valid retailer disclaimer has to be enacted in the terms and conditions of an agreement. It also has to be distinct, sufficiently clear and easy for the consumer to understand. Moreover, the dealsite must not act in a way that will lead the consumer into believing that the dealsite is its contracting partner. If a dealsite takes these conditions into consideration, it will not be responsible. In case of a dealsite being the responsible part, practical issues will arise in regards to a consumer's remedies for breach of contract, as the dealsite will only be able to perform financial compensation. A dealsite has two business models available depending on whether it takes the three conditions mentioned above into consideration or not. In the first business model, a dealsite is not responsible for the consumer's claim of defect, whereas it is responsible in the second. The second business model is concluded as the most profitable as it incentivizes opportunities from positive network externalities. However, both business models encourage strategic contracting, due to the accordance between the risk preferences and risk allocation of the parties involved. The challenges in both business models are concluded to be a conflict of interest and a risk of conventional contracting. The risk allocation in the second business model is considered to be optimal for a dealsite and a supplier, given the contract contains a dealsite's access to recourse combined with the supplier's submission of additional profit to the dealsite. However, this risk allocation is considered to be inappropriate for the consumer.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2018
Number of pages105
SupervisorsBent Petersen & Kim Østergaard