Learn from the mistakes of others

contracts, consumer protection, and clickwraps.

The purpose of any commercial enterprise is to maximise profit, which includes the need to minimise risks. Other than your accountant, your other crucial risk management advisor is a good lawyer. A few dollars spent on good legal advice before you embark on your wondrous journey could well save you millions should something go wrong. This is a brief tour of some of the main legal issues that should cross your mind when you plan your website and approach your lawyer. It is not legal advice.

Contracts

A contract is a legally enforceable agreement between two or more parties.

A contract requires someone to offer something of value to someone else, who   accepts the offer. There is no specific form or document required, although a written document provides good evidence of the terms of the agreement.

Until the person who accepts the offer has done something to their detriment, usually by giving some kind of consideration (money or similar), the contract may not be enforceable. Contract law is complex, and fraught with subtlety.

Although anyone can create a contract, even write one, it is something best done by a contract lawyer. They are well versed in the tedious and niggly art of getting things right and remembering the small things. Getting it right before you test it out on customers is always to be admired and applauded.

OzNetLaw, “Small/Medium Business: E-Commerce: Contract”, <http://www.oznetlaw.net/home.asp?action=results&ContentID=143>

consumer protection

Basic consumer rights protected by law in South Australia and elsewhere apply to online transactions the same way they apply to more traditional ones.

In South Australia, consumers have the following rights:

• "honest and accurate information to help you decide which goods or services to purchase”


• “a fair and reasonable contract when you purchase goods and services”


• “goods and services that are:


• of merchantable quality
• free from faults or defects
• fit for the purpose,


• and match the description or sample given.”


• “redress if you have a problem with something you have bought. Possible remedies include a refund, repair, replacement or resupply of services”


• “claim compensation where you suffer a loss caused by a product or service.”

Office of Consumer and Business Affairs, South Australia, “Consumer rights” <http://www.ocba.sa.gov.au/consumeradvice/protection/rights.html>

The Office of Consumer and Business Affairs (OCBA) <http://www.ocba.sa.gov.au/> can provide advice and training to assist you meet your legal obligations.

Some basic advice offered to consumers can be found in the Australian e-Commerce Safety Guide for 2005 <http://www.ocba.sa.gov.au/pdf/EcommGuide_2005.pdf>, provided free of charge for download by the OCBA. Advice to consumers can help you understand the issues you should be addressing to reassure your customers that you are trustworthy and know what you are doing. Keeping up with current advisories and security alerts should be considered good customer service and good legal risk management, as well as protection for your investment.

clickwraps

The online world is not so much different from the usual one that things that go on there haven’t already been tried out elsewhere. This includes the need to ensure the terms of ‘entry’ to your premises are clearly spelt out to the potential customer before they enter your property. The purpose of a so called ‘clickwrap’ or ‘browsewrap’ agreement is to provide a mechanism to ensure customers are made aware of the terms and conditions of entering your property – your website – and ideally preventing them from entering if they do not agree.

It is always better to prevent problems whenever you can. If potential users cannot enter your shopping system, or other potentially risky areas, without first at least nominally acceding to your terms and conditions of entry, you will be in a stronger position should anything go wrong.

The conditions should cover topics such as potential misconduct by the customer, limit liability should your system malfunction, address consumer and vendor legal rights, and specify acceptable use of your website. The clickwrap is usually intended to form the terms of the contract of sale that the user might complete with you when they hit “buy” after filling their “webcart”. Be clear about that. You can never be too clear.

It is also important for the clickwrap agreement to limit the possibility that you could be bound by any pre-existing offers by the customer. The Internet enables transactions to occur out of what would be considered normal time sequences outside of the online environment. Customers can take advantage of this by carefully timing when they hit “send”, or the vagaries of the technology may result in offers to buy a product or service may arrive out of sequence, and so on.

Getting the content and the mechanism for this right is just as important as having a well-structured website and good user interface. Your system needs to log the users positive consent to your agreement, whether they make a purchase or not. Documentation is the best evidence you will have, should anything untoward arise.

OzNetLaw, “Small/Medium Business: E-Commerce: Terms and conditions of website” <http://www.oznetlaw.net/home.asp?action=results&ContentID=141>

Richard G Kunkel JD, “Recent Developments in Shrinkwrap, Clickwrap and Browsewrap Licenses in the United States” (2002) Volume 9, Number 3 E LAW | Murdoch University Electronic Journal of Law <http://www.murdoch.edu.au/elaw/issues/v9n3/kunkel93_text.html>