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8 Key Terms in Marketplace Terms and Conditions

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marketplace is an online website where the owner hosts a platform that allows others to connect to each other. Some examples of marketplaces include eBay, Etsy, Airbnb and Gumtree. They may not always involve e-commerce. The focus is on the interactions between the users, not with the actual host of the marketplace.

If you are in business and you are setting up a marketplace, it is essential to have marketplace terms and conditions in place. They protect you as the host and limit your liability with what happens between the users of your platform. This article explores some of the key terms you need to have in your marketplace terms and conditions, including:

  1. A provision regarding your role in the interactions between your users;
  2. Account registration;
  3. Payment;
  4. Dispute resolution;
  5. Intellectual property;
  6. Disclaimers;
  7. Limitation of liability; and
  8. Indemnity.

1. Your Role on the Platform

As the marketplace is a way for your users to interact with each other, and not with you directly, it is important to set out how the platform works and your role in its operation.

Having a clause that sets out the purpose of the marketplace (e.g. as a social media platform, e-commerce site, dating platform, etc.) and how the users can connect with each other will make this relationship clear. For example, if your marketplace is an e-commerce site, it may be that buyers and sellers have different use of the platform and particular ways that they can interact with each other. You should include details on how they can advertise their products or services, how the buyer can connect with the seller, and how the buyer will need to make payment to the seller.

It is then important to set out that in your role as a facilitator of the platform, you are not a party to any agreement your users have with each other. Your only responsibility extends to facilitating the availability of the marketplace. As you do not have any control over the actions of your users, any agreement they have with each other does not form a part of any agreement they have with you.

2. Account Registration

Depending on the type of marketplace you wish to operate, you may allow for your users to create accounts. If users who create an account can access the marketplace in a different way to users who cannot create an account, this will need to be clearly set out. You should include details on:

  • The differences between levels of access;
  • What information the marketplace will require when creating an account (e.g. name, email address, password, etc.); and
  • The restrictions on the use of this information.

To protect yourself in your collection and use of user information, you should also set out:

  • The security measures that are in place;
  • The applicable privacy policy in place; and
  • The requirements for users to be responsible for their account and report any unauthorised access or suspicious behaviour on their account.
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3. Payment

Payment requirements differ between marketplaces. You may wish for your users to pay a subscription each month to have an account and interact with other users. You may allow users to use your site for free with payment options for access to extra services. In other situations, the payments may also be between the users, such as where one is buying a product from another.

You should be clear about how and when the users will pay. If you are taking a subscription payment from a user each month, you may require the user to pay by direct debit. Otherwise, you may allow payment by PayPal or credit card and charge once for the fee to register, with different ongoing fees for access to aspects of the platform.

Payment methods are bespoke to each type of business, and as such, you will need to determine the best method that is suitable for you. Regardless of what kind of method and frequency you choose, you need to make it clear in your marketplace terms and conditions that you have the right to recover any unpaid fees. You should also clarify that all information the user provides to you is genuine and that they are authorised to make such payments.

4. Dispute Resolution

As users to interact with each other, it should be clear in your marketplace terms and conditions that they will need to resolve any disputes between each other. You are not responsible for playing advocate to any dispute between users.

Your only responsibility should be between you and the user concerning the marketplace. Having a clear dispute resolution procedure in place will help to clarify how you respond to complaints and what kind of process you will follow (e.g. a meeting, mediation, etc.) to resolve the dispute.

5. Intellectual Property

Your marketplace will no doubt contain intellectual property that is owned by your business. It is essential to include intellectual property protections in your marketplace terms and conditions to prevent any users from copying, imitating or using it without your permission. It needs to be clear that their use of your marketplace does not grant them a licence or interest to any of your intellectual property.

Depending on how your marketplace works, you may give the user a limited licence to use your marketplace for their personal use. This type of agreement should state that they have no rights to use the marketplace unless expressly set out in the terms and conditions.

6. Disclaimers

It is important to have disclaimers in your marketplace terms and conditions in certain situations. One instance is if your marketplace facilitates the interaction between users whereby one is providing products or services and the other is purchasing those products or services. These disclaimers should limit your responsibility for the quality or suitability of any products or services advertised by your users.

Your disclaimers should make clear that:

  • You do not control the content, condition, legality or suitability of any products or services advertised by users;
  • You do not perform background checks or endorse any users;
  • Users are responsible for providing accurate information, and you do not confirm the accuracy of any information provided; and
  • You do not accept any responsibility as to the reliability, accuracy completeness of any information provided by users.

7. Limitation of Liability

In addition to setting out specific disclaimers, it is also important to limit your liability as much as possible. You should limit your liability to the total amount a user has paid to you for the use of the marketplace for a specified period (e.g. 12 months), or a nominal fee (e.g. $100) if they have not made any such payments.

It should also state that this limitation applies to any claim the user may have against you, including under contract, tort, negligence, equity or statute. This limitation will help to protect you from liability under different kinds of legal avenues the user could use in making a claim against you.

8. Indemnity

An indemnity will require the user to indemnify (compensate for loss and secure against responsibility) you from any claims arising out of their use of the marketplace. It is effectively a way for the user to be responsible for any loss you may suffer as a result of their use of the platform, if they breach the terms and conditions, or violate any laws regarding any rights of third parties.

The indemnity clause should also allow you to form your defence to any claims that third parties may bring against you, whereby it is the conduct of the user which has caused the action. The extent of the indemnity clause required will depend on the type of marketplace you operate, but at least a basic indemnity clause is essential to include in your marketplace terms and conditions.

Key Takeaways

Setting up a marketplace is an exciting venture. Before doing so, it is important to take the time to have your marketplace terms and conditions drafted by an online lawyer to protect you once your website is up and running. This article has discussed the importance of having eight key terms in your marketplace terms and conditions but this is by no means an exhaustive list. As every marketplace is different, so too are their terms and conditions. If you have any questions, you can speak to LegalVision’s online lawyers today by calling us on 1300 544 755 or filling out the form on this page.

Bianca Reynolds

Bianca Reynolds

Practice Leader

Bianca is a Practice Leader at LegalVision with expertise in private M&A and Corporate law. She has assisted clients in a large number of business sale and share sale transactions and assists clients with their general corporate needs, such as shareholders agreements, share buy-backs and employee share option plans.

Qualifications: Bachelor of Laws (Hons), Graduate Diploma of Legal Practice, Bachelor of Arts, University of Adelaide.

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About LegalVision

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