A guide to Non-Fungible Tokens (NFTs), 2023 - Flipbook - Page 30
Impiled terms
A consumer contract for sale of an NFT is likely to have some terms
implied, such as the product or NFT being of satisfactory quality, free
from defects and fit for purpose.
To the extent that the NFT is linked to a tangible asset (a good) then terms as to
title and quiet possession may also be implied and if the NFT is purely a digital
asset there will be an implied term that the trader has a right to supply it. For
information on the terms implied into contracts for digital content and goods.
Right to cancel
Typically, consumer contracts carry a right to cancel, known as a
“cooling off period”, during which the consumer is entitled to a full
refund.
A consumer will only lose their cancellation right in respect of digital content
if they request its immediate supply and acknowledge that their cancellation
rights will be lost as a result, and a trader can build this into its sales process.
Cancellation rights in respect of goods run for 14 days after their delivery (longer
if the consumer is not informed of them) and cannot be waived. To the extent
that the sale of an NFT involves the supply of a mix of digital content and goods
(or services), cancellation rights are likely be determined by assessing the “real
main purpose” of the contract; if the real main purpose is the supply of goods,
the goods cancellation rules will apply.
Given the immutable nature of blockchain transactions, it is evident that the
technology may encounter challenges with implementing this consumer right.
A potential workaround might involve the smart contract providing for a re-sale
back to the trader in the event of their exercise of this right. However, this would
require serious forethought and technical application on the part of the trader
to provide an effective mechanism that would be fair and acceptable to both
parties.
