Many businesses are adapting to an e-commerce business model to suit their customers and the changing market better. Hence, you may open a reverse auction website to connect buyers and sellers. However, you must consider some legal aspects before doing so. By ensuring your website is legally compliant, you avoid legal action, fines and reputational damage. This article will outline important legal documents you must draft for your reverse auction website.
What is a Reverse Auction Site?
A reverse auction website is where you connect buyers and sellers, effectively acting as the middleman. The buyer will post a particular task they require someone to do, and sellers who deliver services will bid and compete for the job. The reverse factors stem from the sellers trying to outbid one another to complete the job at the lowest cost.
Website Terms and Conditions
An essential legal document for a reverse auction website is your terms and conditions. Terms and conditions will govern the relationship between you, the buyers and the sellers, and helps to limit risks and liabilities. To ensure parties accept your terms, you can display the documents through a clickwrap agreement. Key terms include:
- limitation of liabilities;
- cancellation policies;
- pricing and payment;
- ownership of your intellectual property;
- acceptance of terms;
- warranties; and
- your ability to amend the terms.
You can also state that you are not a party to any transaction between the parties. Hence the buyer and seller must manage disputes by themselves.
Additionally, you should outline how parties will make payments. You can use the following:
- payment gateway;
- limited payment agent; or
- merchant of record.
Privacy Policy
When running a reverse auction website, you may collect personal information from customers and sellers. This may include names, emails and contact details. Under the Privacy Act 2020, you have the responsibilities to comply with the privacy principles. To communicate how you will comply with such obligations to customers and sellers, you can draft a privacy policy.
Your privacy policy can include the following:
- how you will secure data;
- data storage methods;
- why you are collecting personal information;
- whether people can opt out of giving their information;
- consequences for not providing information;
- how long you will retain data for;
- your process in case of a privacy data breach; and
- how people can contact you regarding their data.
Website Terms of Use
Your website’s terms of use will govern how buyers and sellers can use your website appropriately. Ultimately, it outlines accepted and prohibited behaviour. Further, it can outline:
- prohibition to use of the site for illegal activity;
- prohibition on defaming others;
- cookies;
- the requirement that information in user profiles must be accurate;
- acceptance of terms;
- disclaimers; and
- how you can modify the terms of use.
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Intellectual Property (IP) Records
You will likely have a registered IP for your website. This may be in the form of a trade mark, patent or design rights. Your IP may include the following:
- logos;
- website images; and
- brand/business name.
You can register your IP on IPONZ. Ideally, you should search the register first to ensure a similar or identical IP does not exist. This will prevent you from infringing on someone else’s IP rights. After that, you can apply to the IPONZ. You should start this process in advance, as it can take time for your application to be reviewed and accepted.
Key Takeaways
Managing a reverse auction website can be rewarding, although you must ensure your website holds the necessary legal documents. Firstly, you can begin by drafting terms and conditions to govern the relationship between you, the buyers and the sellers. Secondly, your privacy policy should outline how you will comply with your duties under the Privacy Act 2020. Thirdly, ensure you have a website’s terms of use to outline acceptable and prohibited behaviour on your website. Lastly, remember to keep accurate IP records.
If you need help drafting legal documents for your website, you can contact our experienced business lawyers to assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at 0800 005 570 or visit our membership page.
Frequently Asked Questions
Your terms of use must outline how buyers and sellers can appropriately use your website. For example, you can state that illegal activity, defamation and abusive behaviour are not allowed.
To adequately comply with your privacy obligations, it is vital to draft one. Further, your buyers and sellers can have more assurance that you will secure and manage their data well.
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