E-Commerce Businesses: Online legal documents implementation
1 June 2022 | Minutes to read: 4

E-Commerce Businesses: Online legal documents implementation

By Renae Barrett

Crisis breeds innovation, and the Covid-19 pandemic is no exception. Despite numerous lockdowns, COVID-19 has led a lot of existing businesses to shift to e-commerce for survival and has also prompted a surge in e-commerce startups.

Selling online is a great way to engage a wide customer base while keeping costs to a minimum. However, like any business, e-commerce businesses have legal responsibilities. All online businesses that operate through a website require several key legal documents, such as a Privacy Policy, Terms of Use, and Terms and Conditions. By ensuring that your online business is legally protected from the beginning, you can avoid expensive and time-consuming legal issues from arising later.

This article outlines the three key legal documents you must have in place before you go live with your website.

Privacy Policy

A common question we get asked from business owners is whether they need a Privacy Policy for their website.

The simple answer is usually yes – if your website gathers any sort of personal data (such as via a ‘contact’ page requesting email addresses) then a Privacy Policy is required under the Privacy Act 1988 (Cth).

A Privacy Policy deals with how personal information is collected, what it is used for, and how it is stored and managed.

If you use Google Analytics, your Privacy Policy must disclose this along with how Google Analytics collects data about your website traffic. In fact, Google explicitly states in its Terms of Use that if you’ve enabled any Google Analytics display features, then you must notify your visitors of this in your Privacy Policy.

Likewise, you must notify users of your website if you store any personal data overseas.

The Privacy Policy must be displayed within the basic navigation of every website page. Its inclusion on your website is a necessary safeguard to a potential breach of the Privacy Act 1988 (Cth).

Terms of Use

Terms of Use are legal terms that govern the use of the website by a website user. These terms will often appear as a link at the bottom of each website page.

A website’s Terms of Use will generally cover things such as, prohibiting users from posting certain material on the site, using robots or scrapping devices to copy content, using the website in an unlawful or illegal manner, or simply using the website in a manner that breaches your written terms and conditions.

In addition to registering your trademark, your terms and conditions can also protect your website’s intellectual property from unauthorised use. A copyright and trademark clause informs your users that you are the owner of all content contained on your website.

Terms of Sale

If you sell goods or services via your website, then you are required under Australian Consumer law to have Terms of Sale on your website. These are different than the more generic Terms of Use and will generally deal with issues such as payments, returns and refunds, consumer guarantees, deliveries, disclaimers, and competitors.

Online agreements allow businesses to transact with customers without having to negotiate or interact with each user individually. It is therefore important that your Terms of Sale are tailored specifically to your business. We often find that many businesses have copied or based their Terms of Sale off another website. Not only is this a breach of copyright, but it often leaves a business exposed as the copied Terms of Sale may not be consistent with Australian law or consistent with a business’ own policies and procedures.

It is critical that your Terms of Sale creates a legally binding contract between you and your customers.  Simply stating this in the Terms of Sale and having those Terms on your website will not be enough. Australian courts will only recognise agreements that have been created online if the basic elements of a contract can be established. Generally, this includes acceptance of contractual terms by both parties, a meeting of the minds, and an intention to create legal relations.

This is best achieved by including your Terms of Sale as a ‘clickthrough agreement’. A clickthrough agreement is created when a user ‘clicks’ or ‘checks‘ a box (or simply takes a positive step) to indicate acceptance of the terms and conditions displayed online. The positive step substitutes a real signature. After the user has given their consent, they can continue to place their order. If the user rejects, or chooses not to agree to the terms, the online agreement and their interaction terminates.

Australian courts are more likely to recognise a clickthrough agreement as legally binding if the following conditions are satisfied:

  1. Reasonable Notice: The user must have enough notice and opportunity to read the terms of the agreement before accepting the terms. Ideally, users will be required to read the terms by scrolling through the text before proceeding.
  2. Positive Step: The user must take a positive step (such as clicking ‘agree’ or ‘accept’) to confirm that they have read and consent to the terms of the agreement. The box should not be pre-ticked.
  3. Unusual Terms: Any unusual or onerous terms should be displayed in bold or highlighted in some manner to draw the user’s attention to the terms. This point is particularly important when the user is a consumer or small business, as they have the benefit of consumer protections contained in the Australian Consumer Law (ACL) which prohibit ‘unfair’ terms in consumer contracts.

The above is general information only and should not be taken as legal advice.

If you want more information on this topic or you’re planning to start an online business, get in contact with your commercial lawyer.


E-Commerce Businesses: Online legal documents implementation

Renae Barrett

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