When launching and running an online marketplace, you have to coordinate a lot of moving parts. This can range from finding merchants to deciding payment options. However, a critical task is drafting your website’s legal documents. This is an integral part of running a marketplace because it protects your liability as a platform and defines how users interact with your website and each other. If your online marketplace has well-drafted and comprehensive legal documents as part of your website set up, then you can avoid potential legal issues in the future. Three key documents you need are:

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

This article explains what each of these legal documents is and why your online marketplace needs them.

1. Marketplace Terms and Conditions

Much like an online business will have terms and conditions to outline how its sales work, you will need a set of marketplace terms and conditions dictating how your site functions. This document will outline the legal relationships at play between you and the site’s users, as well as between users themselves. 

The contents of this document will depend on what kind of online marketplace you run. If your online marketplace is just a platform for people to find customers, then say so. But if you play a more active part in the transaction, you should outline this process.

For example, say you run an online marketplace that provides a platform for people to buy and sell clothes. In your marketplace terms and conditions, you would outline that you are not a party to the contract between buyer and seller, merely the platform that allows them to meet.

Clearly outlining your role on the website helps you to define your legal responsibility if something goes wrong between the buyer and seller. If you do not do this, you could be liable if something was damaged or a service was not fulfilled.

Some key terms that you would put in your marketplace terms and conditions include:

  • your complaints and disputes policy;
  • account registration;
  • how buyers should interact with sellers;
  • your returns and cancellations policies;
  • liability disclaimers;
  • consumer law obligations; and
  • fees you charge.

2. Website Terms of Use

While your marketplace terms and conditions outline how buyers and sellers will interact on your site, a website terms of use covers everyone who visits your site. Not every person will register an account on your marketplace or engage in the goods and services it provides. However, you still need to outline how they can interact with it. This offers greater protection for your business so that you are not liable for what users do on your website.

For example, you may allow comments on listings on your online marketplace. In your website terms of use, you would dictate what kinds of comments are prohibited, such as harassing or abusive comments. 

If someone breaches this policy, then you can take action against them, such as banning the user from continuing to use your site. This means that you have acted appropriately as an online platform if someone tries to take legal action in the form of a harassment or defamation claim.

Some key terms to include in your website terms of use would be:

  • how people can use your website;
  • limitation of liability;
  • disclaimers;
  • your intellectual property rights; and
  • permitted and prohibited conduct.

3. Privacy Policy

When users sign up to use your online platform, they will likely provide their personal information to do so, such as their:

  • email addresses;
  • financial information;
  • full names; or
  • a profile photo.

Every business that deals with peoples’ personal information will have obligations under NZ privacy law. If you run an online marketplace, you will have these obligations as well. 

You must let your users know how you collect, store and use their personal information. This information should be contained in your privacy policy. When you collect data for your online marketplace, you can only collect what you need for the service to function. 

For example, you would only collect information about a user’s physical location for delivery purposes.

When storing users’ personal information, you have to make sure it is appropriately protected through encryption and proper cybersecurity measures. You generally cannot share users’ personal data with third parties, unless: 

  • that was the purpose you collected the information for; or 
  • you have their consent. 

For example, the merchant would need the buyer’s location to deliver the product.

Some key terms in your privacy policy would include:

  • details of what kind of information you collect, and why;
  • how you are storing and protecting user information; and
  • who you are sharing that information with.

Key Takeaways

There is a lot you have to keep track of when you launch and run an online marketplace. You can save yourself future hassle if you cover your legal obligations by drafting a:

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

If you would like help drafting these legal documents for your online marketplace, contact LegalVision’s New Zealand ecommerce and online business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

What are marketplace terms and conditions?

Your online marketplace’s terms and conditions are a document that outlines how the marketplace works. This means how buyers and sellers facilitate transactions and your business’ role in the process.

What is a privacy policy?

A privacy policy outlines how you collect, store and use your users’ personal information. You need to be transparent about why and what personal data you collect. You should also make sure users have the option to look at and change their information.

What are a website’s terms of use?

A website’s terms of use is a document that dictates how visitors should use your website. This can include terms protecting your intellectual property rights or policies outlining prohibited conduct on the website.

Why do I need legal documents when setting up an online marketplace?

Having comprehensive legal documents can make sure that your business is protected against future legal ramifications. They can limit your liability, and show that you are complying with your legal obligations.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited legal consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer