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Selling on an online marketplace can be a convenient avenue for your business. An online marketplace handles the technical aspects of setting up an online store, and you can access the already existing customer base that uses that marketplace. However, when you operate on someone else’s site, you enter into a contract with them and must abide by their rules, particularly as a vendor or seller. Some online marketplaces will set out these terms in a marketplace vendor agreement. This article will go through what a marketplace vendor agreement is and what terms it should include.

What Is a Marketplace Vendor Agreement?

When you sell on an online marketplace, this typically involves:

  • setting up a store page;
  • listing and advertising products for customers to buy; and
  • receiving customer payments online.

The online marketplace you choose to trade on may claim a commission of your success fees or charge an ongoing subscription for using their services. When you use their website to sell to your customers, you agree to the terms they set to use their digital address. This is similar to setting up a vendors stall at a physical market – they give you the location and customer access, and you pay their fees and abide by their rules.

Some marketplaces will set out the exact nature of this arrangement in a marketplace vendor agreement. They may include this agreement in their overall marketplace terms and conditions or as an addendum specifically for vendors on the website. You agree to this contract when you use the marketplace and sell your goods.

Contents of a Marketplace Vendor Agreement

The exact contents of a marketplace vendor agreement will vary depending on the marketplace itself. However, there are a few key issues that it will likely cover. Be sure to thoroughly read through any vendor agreement for an online marketplace you use, as well as their terms and conditions. Your marketplace vendor agreement (or its related terms and conditions) should include the following points.

Marketplace Function and Scope

Firstly, your agreement should define the exact nature of what you can use the online marketplace for. This will likely include details of what kinds of products you can list and the kind of business activities you can engage in on the site. This section should also detail the marketplace’s powers, such as banning or removing you from the site should you breach any of the agreement’s terms.

Parties to the Agreement

The marketplace vendors agreement should set out who each party to the agreement is and their responsibilities. If the marketplace is a company, then they should make a note of this status where relevant. 

Your marketplace vendor agreement will also point out any other policies/documents you agree to when using the site, such as their privacy policy or terms of service. It will also include details relating to the contract itself, such as:

  • any cancellation terms;
  • a dispute resolution process;
  • the effective date of the contract’s beginning and end; and
  • what happens if either party fails to meet their obligations.

Disclaimers and Liability

Most online marketplaces will not be a party to the transactions between you and your customers. They act only as the intermediary location where the transaction takes place. Therefore, they are not usually liable for any issues directly between you and your customers (although they may provide a dispute service where needed). 

Whatever liability an online marketplace takes on, they should outline this status on your marketplace vendor agreement. They will outline who bears the risk of loss in a transaction and what they are prepared to be responsible for.

Fees and Payment

When you use an online marketplace, they will charge you a fee to use their website and services. This can come in different forms, such as a fee for:

  • commission or sale success;
  • subscription; or
  • listing products.

Your marketplace vendor agreement should outline the exact nature of this fee and when they will charge you. It will likely also include details of how you process customer payment, particularly if they use online payment gateways.

Intellectual Property

Your business likely will have its own intellectual property, and you may have registered intellectual property rights, such as a trade mark or registered design. You may also have inherent copyright for any original creative works you sell.

When you operate on an online marketplace, your marketplace vendor agreement will likely contain a licence granting them the right to use your intellectual property. They will set out when they may do so, such as for advertising. 

Your Responsibilities

Your marketplace agreement will outline your exact responsibilities as a vendor and the rules you agree to abide by. This may be in the agreement itself or their terms and conditions. These responsibilities may include:

  • operating and selling legally;
  • not misleading or deceiving your customers;
  • abiding by a code of conduct;
  • not selling restricted or prohibited items;
  • abiding by any laws that apply, such as your consumer guarantees; and
  • delivering goods to your customers promptly and efficiently.

Key Takeaways

When you sell goods or services on an online marketplace, you agree to operate according to their rules in exchange for their services. The marketplace may outline this arrangement in a marketplace vendor agreement. If you would like more information or assistance with your marketplace vendor agreement, contact LegalVision’s eCommerce lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is an online marketplace?

An online marketplace is a website/platform where users can buy and sell products or services. Examples include Trade Me or Facebook Marketplace.

What is a vendor?

In this case, a vendor is a person or business that may sell on an online marketplace. They agree to the terms and conditions the marketplace sets.

What is a marketplace vendor agreement?

A marketplace vendor agreement will outline what services the online marketplace offers and what the vendor agrees to in exchange for those services. This can include fees/payment, liability disclaimers, and vendor responsibilities.

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