Online marketplaces, where buyers connect with sellers, are becoming an increasingly popular business model for budding online entrepreneurs.
One of the key legal challenges for the operator of these sites is to construct the legal relationship between itself, the buyer and the seller in such a way so as to avoid becoming liable to the customers of the sellers in respect of the goods and services sold on the sites.
The purchase of goods or services from an online marketplace creates a contract between the buyer and the seller.
Terms of Contract
As the operator of the site, you will also need to consider how the terms of contract will be formed between the buyers and the sellers using the site. It may be that sellers will have their own terms which can be incorporated into the contract during the buying process, conducted via the website. Alternatively, you may wish to impose standard terms of sale between buyers and sellers. However, in order to do this, you will need to obtain the sellers’ agreement.
Whether or not sellers wish to sell on the basis of their own terms, it’s not unusual for the site operator to put a contract in place between it and the sellers to, for example, ensure that specific minimum performance standards are adhered to. This will be important in developing the website brand and credibility.
Additional Key Website Terms
Terms between sellers and you as the site operator will need to deal with a number of other issues including the use of the sellers’ intellectual property, for example in marketing the sellers’ goods and services on the site.
In addition to contract terms, you will also need to ensure that the site has appropriate policies to deal with privacy and also cookies. Also, if buyers and sellers are going to be posting content, it may be preferable to have an acceptable use policy to regulate such activity.
As a site operator, it is crucial to consider implementing the above contract terms in order to avoid liability for the buying and selling activity being conducted on your site. It is advisable to seek professional legal advice to make sure that the terms you have in place protect you as much as possible.