Buying and selling online

The entrepreneurial lure of the ‘online business’ has seen a huge growth in the number of business emerging that have chosen to ditch the traditional shop-front presences and adopt a business model that focuses on selling their product/service online. Whilst there is great economic sense in this business mode it does not come without its risks which arise for both the consumer and business owner. In addition, the responsibilities of the tradition physical retailer of goods and services, online business have the additional legal responsibility for handling online payments, customer privacy and the impact of online reviews of their business.

Website terms and conditions (also known as Term of Use)

Websites terms and conditions (T&C’s) set out the terms on which the consumer is allowed to use the website and forms a binding contract between the website owner and the person using the site. For retailers who sell products online, the website T&C’s may also specify things including warranties for products, returns and refund policies and any other terms of purchase. It is therefore critical for an online retailer to have clear terms and conditions that it will be entitled to rely on in the event that a consumer attempts to dispute the terms on which it purchased the service.

Key clauses in T&C’s include

  • the use of the website terms and conditions. This clause will specify the conditions of access/entry to the website and what the parties are entitled to when using the website;
  • a clear definition of the product offered;
  • details of the website ownership. It is important to protect your intellectual property such as your trademarks. This clause should also include full details of the ownership and the operator of the website;
  • any guarantees, warranties and disclaimer of liability. It is important to clarify the guarantees regarding the website and its use in case of any damage.
  • the refund policy;
  • updates to and changes of terms and conditions. You may want to change the terms and conditions at any time and without notice and it is therefore important to highlight that in the agreement to avoid any surprises down the track;
  • privacy policy clause. Personal information obtained online is required to be protected, in compliance with the Australian privacy laws; and
  • transaction methods. You will have to accurately specify the online payment methods (i.e. credit card, PayPal, Paymate, etc.).

Providing a service or selling a product online

Online businesses must provide quality services to their customers and comply with the mandatory provisions of the Australian consumer law (ACL). All usual consumer rights apply when people shop with an Australian online business. This is why you have to ensure that:

  • your products and services correspond to the Australian safety regulations. You have to give clear product descriptions and instructions of use;
  • you have the right the sell the service or the product and upon sale, you are taken to have provided certain guarantees, which may result in having to provide a refund or other appropriate compensation; and
  • you compete fairly and disclose any important details regarding the products you are selling like special or additional costs.

Lesson learnt

Having effective website terms is only part of the equation as it is equally important that the consumers of online purchases understand the terms of purchases and confirm their agreement to those terms. The most common way of effectively engaging a customer to your terms and conditions is to include a pre-purchasing check-box confirming their agreement to the T&C’s. However, it is also a good idea to convey your key commercial features (i.e. price, refunds and returns in short form) in clear and obvious way (usually on your site), so that there can be no opportunity for a consumer to argue that they didn’t know or understand the terms of purchase.