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Operating an Online Marketplace – Key Legal Terms to Protect Yourself and Your Users

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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.

Terms of Use

The purchase of goods or services from an online marketplace creates a contract between the buyer and the seller.

However, the operator of the site will ideally wish to avoid becoming a party to that contract. This is usually achieved by ensuring careful legal wording is included in the terms of use of the website. These terms of use will need to make it very clear that, as the operator of the site, you are only facilitating the contract and are not a party to it and that the terms of sale of the goods and services are between the buyer and the seller.

In addition to drafting careful legal wording for the website terms of use, it is fundamental to ensure that those terms are accepted by the customers using the site. This can be done in a number of ways but site operators will need to sure that they can clearly demonstrate that customers have been made aware of the terms and also accepted them. A common method to do this is to require users of the site to read the terms and then check a box to confirm that they have read, understand and accept the terms.

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.

Bespoke Terms

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.

Depending on how many sellers will be operating from the site, this could be achieved by way of a bespoke contract or terms of use on the site, which the sellers will have to adhere to.

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.

Whether you are an online marketplace operator or an ecommerce or business owner looking to strengthen your online legal protection, get in touch with the Corporate & Commercial team at Darwin Gray.