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Contracts will underpin a lot of your business’ relationships, which is no different for online businesses. Handling contractual matters may look different online, but you still need to ensure that the contracts you draft are binding and fair. In particular, there are three key contracts you will need for your online business. These are your:

  • website terms of use;
  • terms and conditions; and
  • privacy policy.

You will also have essential legal contracts specific to the kind of business you run. This article will go through these contracts you need for your online business and discuss creating contracts in an online space.

Creating a Binding Contract Online

For a contract to be binding, there needs to be:

  • an offer;
  • acceptance;
  • consideration (exchange of value, like money);
  • certainty of terms; and
  • an intent to create a legal relationship. 

You may offer products on your online store, and customers accept that offer when they complete the transaction process. Additionally, they exchange money for your goods according to the certainty of terms laid out in your business terms and conditions. Likewise, there is an intention to create a binding relationship through their purchase. Note that if these terms are unfair, then your contract may be invalid.

Where appropriate, get online visitors and customers to actively agree to any contracts they enter into with click-wrap agreements. This means that a customer has actively checked a tick-box saying “I accept these terms and conditions” or similar. This makes it easier to establish acceptance later on if there are any issues.

Three Key Online Contracts

These are standard documents your online business needs, even if your main operations are offline. If you have a website for your business, then you should have these three contracts. Their contract forms may vary, whether they be separate or combined into a single document. Additionally, these contracts are general in nature and will apply to everyone who engages with your online business.

It is best to draft these contracts as simple and straightforward as possible and that customers can easily find them on your website.

Website Terms of Use

This is a document with terms that visitors usually agree to when they visit and use your website. What it covers will vary depending on the nature of your site, but you would outline what kind of things visitors can expect from your site and any legal disclaimers. Specific issues may include:

  • risk limitation;
  • liability disclaimers;
  • intellectual property rights; or
  • prohibited conduct.

For example, you may provide general advice on product usage or similar topics on your website. Your website terms of use would include a clause outlining that this advice is only general and limiting your liability if a customer relies on that advice.

You may include specific website policies in your website terms of use, such as a cookie policy or a comments policy.

Terms and Conditions

This contract covers the terms of any transaction that customers engage in on your website or with your eCommerce business. It is similar to your website’s terms of use, except it will contain clauses directly relating to online sales. This may include:

  • product descriptions;
  • payment details;
  • delivery responsibility; or
  • warranties.

Your business’ terms and conditions are a standard form contract, which means that customers have to accept those terms to proceed with a transaction. There is usually no room for negotiating terms beforehand. 

Privacy Policy

Your online business will likely deal with customers’ personal information, so you need a privacy policy outlining how you handle their personal data. You need to inform them about what data you collect and why, and how you gather that data.

For example, if you use cookies for web analytics, you would include this in a clause in your privacy policy detailing what personal information you collect.

Other Contracts

Depending on the nature of your online business, there will likely be other contracts you need to continue operations. If your business sources its products or materials from suppliers, then you will need a manufacturer’s agreement to regulate that contractual relationship. Additionally, if you have employees, then you will need employment contracts with the staff you employ. Depending on your business structure, you may also need a shareholder’s agreement or a partnership agreement as well.

Further, most contracts for your online business can now be signed and dealt with remotely, which can be convenient. However, this does not mean that you should cut corners in your due diligence. With any contract, make sure that its terms are fair and that you understand them. Read through it carefully, and seek legal advice if you are unsure about anything. 

Key Takeaways

Your online business should have three critical contracts with its visitors and customers. These are your:

  • website terms of use;
  • terms and conditions; and
  • privacy policy.

Where you can, have your customers actively accept these contracts to avoid issues if something goes wrong. You will likely also need other contracts depending on the nature of your business. If you would like more information or help with your online business’ contracts, contact LegalVision’s online business lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What are a website’s terms of use?

A website’s terms of use is a document that, in most cases, you implicitly agree to abide by when you visit and use the website. It will outline the website’s prohibited conduct and various legal disclaimers. 

Does my online business need terms and conditions?

Your online business needs a terms and conditions contract because it regulates the contractual relationship between you and your customers. It sets the conditions of the sale and what your expectations are.

What is a privacy policy?

A privacy policy outlines how your business collects, stores, and uses its customers’ personal information. It should be comprehensive and transparent.

What contracts do I need for my online business?

What specific contracts your online business needs will vary depending on the nature of your business. However, you should ensure that you have website terms of use, terms and conditions, and a privacy policy.

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