Online marketplaces are a great way to set up a virtual platform, through which people can buy and sell information, products and services. Online marketplaces are becoming increasingly popular today due to their creative interfaces that allow individuals to interact with each other in a variety of meaningful ways. There are many legal considerations that need to be taken into account when setting one up.
In setting up an online marketplace, LegalVision’s online solicitors are able to draft Marketplace Terms and Conditions that will effectively outline the legal rights and obligations of both sides of the marketplace.
So, if you’re thinking about setting up an online marketplace, you have come to the right place – LegalVision’s online solicitors have put together our top five legal considerations for establishing your online marketplace.
(a) Your role in the marketplace
The role you play in your online marketplace will largely depend on your business model and the concept behind the marketplace itself. However, most creators of online marketplaces provide no more than introductory services to the parties interacting on the marketplace. For example, Lisa is setting up an online marketplace where people can buy and sell clothing. She allows users to create profiles on her website, which allows users to interact with each other using these profiles to buy/sell the clothing. However, when a purchaser proceeds to buy a piece of clothing from a seller, Lisa will not be involved in the agreement they enter into for this purchase. The purchaser and the seller will be required to enter into a separate agreement with its own specific terms and conditions.
This is an important point to consider as, if Lisa does not specifically indicate that she is only providing introductory services to the parties interacting on her marketplace, the scope of acts or omissions that she may be liable for will become very broad.
(b) How the services are sold
In following point (a), it is important to remember that when creating an online marketplace, you are simply providing an introductory service to the parties. You will not be involved in the purchase/sale of the goods and services in the marketplace.
For this reason, you should provide a detailed description of how you provide this introductory service. Some important questions you might want to ask:
- Will people need to create profiles to interact on the website?
- If so, will you charge people to create these profiles?
- Will you need specific information to allow people to interact on the website?
(c) Permitted and prohibited conduct
Since people will be interacting on your online marketplace to buy/sell products and services, it could be a good idea to set out the types of conduct that you allow on the marketplace, and the kind of conduct that is prohibited.
For example, providing purchasers with the ability to comment and give reviews on products or services being sold can be a great way to build up the reputation of sellers on your marketplace. However, you may need to provide guidelines on the types of reviews that can be made. A good starting point is to state that any defamatory, misleading or false information cannot be posted on the marketplace.
Here are some further questions to consider:
- If sellers are encouraged to post photos of products and services, what kind of photos can they post?
- Will you approve of ratings or reviews before all users of the website can see them?
- If you want to prevent users from writing comments on the marketplace, would you like them to provide a rating out of 5 (for example)?
(d) Limitation of liability and disclaimers
According to our online solicitors, limiting your liability and providing disclaimers is crucial due to the interaction of a wide variety of people buying and selling a range of products or services on your marketplace.
When considering your responsibilities, you should be aware of the legal requirements for providing services in Australia. For example, while you may state that you are not responsible for the products or services sold on the website (since you are only providing an introductory service), under the Australian Consumer Law you are still required to make certain guarantees about the introductory service that you provide. It is a good idea to know your responsibilities as a service provider under the Australian Consumer Law. For more information please visit the Australian Competition and Consumer Commission website or have a read of our article “What Guarantees Apply to the Sale of Services”.
(e) Protection of intellectual property
A point that is often not considered in depth is that relating to your intellectual property on the online marketplace. Your business name, logos and other trademarks and intellectual property will most likely appear throughout your website. When users access your website and take screenshots of the products to show their friends, or share information regarding your marketplace through online social media, your intellectual property rights could be at risk.
For this reason, we recommend speaking with an online solicitor who can help you assess your intellectual property rights and how you can best protect them while building your brand image on the online marketplace.
Setting up an online marketplace can be a great idea for your business. Once you have considered the legalities involved in this process, we recommend that you speak with an online solicitor to discuss setting up your online marketplace.