Let’s start with – what is a reverse marketplace?

A reverse marketplace is one where instead of sellers posting products they want to sell and sourcing buyers, the buyers place ads for products they wish to buy, and sellers then make offers to sell.

When setting up a reverse marketplace, there are several key considerations. These are set out below.

What are the relationships?

There are 3 relationships in a marketplace: the relationship between you and your buyers, the relationship between you and your sellers, and the relationship between your buyers and sellers.

It is important that each relationship is clearly set out to prevent a party from being involved in a dispute which may have nothing, or very little, to do with that party.

What is the money flow?

Generally, the less involved you are with the monetary transactions, the better. You can, if you wish, take fees from the buyers and sellers from using your reverse marketplace, but we recommend that any money transactions from the buyer to seller be made independent of the marketplace. If you become involved in the transactions between the buyer and seller, for example, by holding onto payment by the buyer, and releasing this to the seller only when delivery of products is confirmed, there are an additional number of trust accounting issues which need to be considered.

Who is responsible for delivery?

As with the money flow, the less involvement you have in the transaction between the buyer and seller, the better. Many marketplaces provide a platform only, where buyers can source sellers, and vice versa, and do not become involved in the delivery of products. Often, sellers are required to arrange delivery directly to the buyer. This means that in the event of any disputes, subject to your responsibilities as a service provider under the Australian Consumer Law, the dispute is generally between the buyer and seller, and there is no need for you to be involved.

How can I protect my intellectual property?

All your logos, branding, and slogans on the reverse marketplace (subject to other intellectual property agreements you may have entered into with other parties) should belong to you. Intellectual property that is available on a website is generally covered in a well-drafted set of Website Terms of Use, which will inform each user that, between you and the user, you own all the intellectual property that is on the reverse marketplace. Your terms and conditions can add greater protection by stating that registration for an account, or use of the services provided by the marketplace, do not constitute a transfer of any intellectual property ownership.

Can I monitor the actions of the users?

100%. You are well within your rights to do so. As the operator of the marketplace, you are required to monitor the marketplace to ensure that it operates efficiently, which includes activities, chats and/or postings of your users. In your terms and conditions you should clearly state that each user’s use of the marketplace will be monitored, and if a user engages in any illegal activity or activity which may bring the Website into disrepute, you have the right to suspend or terminate the account immediately.

Conclusion

If you are setting up a reverse marketplace, or any online marketplace, we recommend that you have a professionally drafted set of Marketplace Terms and Conditions, Privacy Policy and Website Terms of Use. If you would like any assistance with all or any of these documents, contact a Contract Lawyer at LegalVision today. We can provide you with first drafts of your legal documents within days of receiving your full instructions.

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