The difference between marketplace terms and conditions and business terms and conditions depends on your relationship with the consumer. You may operate an online marketplace where you connect two or more parties. Alternatively, you may have complete control over the transaction and directly deliver products and services to your clients. Regardless of the type of business arrangement, it is a good idea to have terms and conditions in place to govern the relationship between parties and protect your interests. The terms and conditions for marketplaces are quite different from those of standard businesses. So, this article will explain whether your business should have marketplace terms and conditions or standard business terms and conditions.

What are Marketplace Terms and Conditions?

A marketplace is an online platform that connects vendors or providers with purchasers or users. Under this arrangement, the business providing the marketplace typically:

  • only performs the role of matching the two parties to exchange products or services, without being directly involved in the transaction;
  • charges both users and providers a fee to use the platform or for carrying out a successful exchange; and 
  • try to limit their legal responsibility for issues arising from the transaction by shifting accountability to the parties using the platform.

Additionally, marketplaces will often shift responsibility for the details of the transaction to the seller using their platform, including:

  • payment method;
  • delivery method; and
  • refund and exchange policies.

Your marketplace terms and conditions will outline the relationship between your platform, your users and your product or service providers, so that each party’s obligations are clearly understood.

Common Marketplace Examples 

Some of the most popular marketplaces today include Airbnb, UberEats and Gumtree. Other examples include platforms that connect people with:

  • local GPs within a certain radius of their home;
  • drivers who can help deliver large items;
  • tradespeople who can carry out specific tasks; and
  • babysitters who can look after their children,

These are likely to be marketplaces because you are providing a platform that connects two parties, yet you are not directly involved in the transaction. You are merely providing a platform where the customer can choose who to connect with. 

For example, your marketplace may connect patients with GPs. There could be a fee to search for GPs or make a listing as a GP on the platform. On the other hand, a fee might arise when a transaction takes place by booking an appointment with a GP.

Importantly, you want to make sure that the transaction is made through your platform so that you receive the fee for connecting two parties. 

For instance, Airbnb doesn’t want people contacting homeowners directly to book accommodation outside of the platform, as they would receive no benefit. 

You can draft your terms and conditions to set out a user’s and provider’s obligations so that you can prevent this from occurring.

What are Business Terms and Conditions?

Business terms and conditions govern the standard and conventional relationship between your business and your clients. These may include terms and conditions relating to:

  • sales if you operate an online store; 
  • services (commonly known as a client agreement) if your business provides services to customers; and
  • software-as-a-service (SaaS) providers.

These outline each party’s direct obligations and responsibilities to one another, including: 

  • payment terms; 
  • product or service delivery; 
  • defects and damage; 
  • refunds; and 
  • warranties. 

If you are providing a service or selling goods, then your business would ideally have business terms and conditions. 

Common Business Terms and Conditions Examples

You may establish business terms and conditions if you engage in practices such as:

  • selling clothes and accessories online;
  • providing coaching or consulting services; or
  • selling subscriptions to computer software. 

This can occasionally get confusing, so the critical point to consider is whether you have direct contact with the consumers.

For example, you may run a website where consumers buy t-shirts that you have advertised on behalf of another business. The customer pays you for the items, and then you organise for the t-shirt business to ship the order directly to the customer. The t-shirt business and customer never make direct contact and no money passes between them. Rather, you have made the transaction happen as a middle-man and take a commission in exchange. So you would require a standard set of business terms and conditions.

However, if you merely connected the t-shirt business and customer so that they could carry out an exchange independent of your involvement, then this would be a marketplace. 

Key Takeaways

You must have a robust set of terms and conditions to: 

  • protect your business; 
  • limit your legal responsibility; and 
  • ensure all parties understand their obligations. 

You should establish marketplace terms and conditions if your business is a platform that connects two parties to carry out a transaction. However, it would be more appropriate to have standard business terms and conditions if you provide goods or services directly to customers. If you are looking for advice regarding which agreement is most suitable for your business or would like assistance drafting your terms and conditions, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Rowan ONeill

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