Advising on legal issues & supplying contract documentation specific to trading online:

  • Website design and development agreements
  • Terms of website usage
  • Website hosting agreements
  • Website linking permission
  • Domain name services
  • Data protection compliance and privacy policies
  • User consent agreements regarding solicited and unsolicited direct marketing
  • Terms and conditions of supply
  • Business acquisitions and disposals
  • Joint ventures and partnerships
  • Branding
  • Trade Marks
  • Copyright

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Contracts

Unless you have the necessary expertise in-house, you will need to find someone to:

  • Design and develop the site. A website development agreement with the designer will best be entered into.
  • Host the site. This will be done by an internet service provider (ISP). An ISP agreement may be needed.
  • Develop an associated mobile app, if you decide you require one, and contract with the developer under an app development agreement.

The business may also want to engage a “search engine visibility” agency to ensure that the site appears near the top of search engine result lists, in which case an SEO agreement with the agency will be needed.

Domain name

You will need an internet domain name (or perhaps several) that will direct users to the site. A new domain could be registered for the purpose, or a domain name bought that has been already registered (and perhaps used) by someone else.

Clearance checks before using a domain name for business purposes are particularly important because this use can constitute passing off or registered trade mark infringement.

Metatags

The designer of the site is likely to want to embed metatags into the site’s HTML code. These are phrases and descriptions, or single words, that help search engines to find the site, but are not visible on the site itself.

Using competitors’ product names as metatags to attract users who are searching for those products can, in some circumstances, constitute registered trade mark infringement.

Terms and policies

Every website should prominently display links to the following documents (ideally on the home page):

  • Terms of use containing provisions for access to, and use of, the website. The website owner may rely on these terms to prevent unauthorised access to the website, disclosure by users to third parties of access security information, unauthorised reproduction of material contained on the website and unacceptable user behaviour, such as hacking, introducing viruses and uploading illegal or defamatory content.
  • A policy that sets out rules and standards with which visitors of a website must comply when they are using its features. The website owner may rely on these rules in preventing both the unauthorised reproduction of material contained on the website, and undesirable user behaviour, such as hacking, introducing viruses and uploading illegal or defamatory content. The terms allow the website owner to remove the offending material and to suspend, or permanently disable, a user’s right to access the site. It also creates certain contractual remedies for breach by the user of any of the standards imposed by it.
  • A privacy policy.

We are online text with green light. Concept of online support

Data protection

From a statutory viewpoint, “personal data” includes, broadly speaking, all information about identifiable individuals. Any website operator who collects personal data will be classified under the Data Protection Act as a data controller. All data controllers must provide data subjects (internet users) with fair processing information. This is information about the type of data they collect, and the way in which, and the purpose for which, they process that data.

If the site is going to be collecting any personal data from users, it will need to comply with data protection rules, as follows:

  • If it is collecting non-sensitive personal data such as name, contact and credit card details, or information about users’ online behaviour, such as IP addresses and web log data, it should publish a privacy policy that informs site users of how it may collect, store and use that data. The privacy policy not only provides a convenient way of giving users the fair processing information, but can also allow the controller to obtain the data subject’s (implied) consent to its processing activities.
  • Many sites now use cookies to enhance users’ experience. It is best practice to obtain users’ explicit consent for this (and this is mandatory if the cookies are storing sensitive personal information). The site should include a short-form notice, either in a prominent place on the site (such as in the header), or by way of a mouse-over highlight that links to a more detailed cookie policy.

The same principles apply to mobile apps.

It is important to put in place robust security procedures if the business intends to collect personal data.

Protection of intellectual property

There will be intellectual property rights in the content displayed on the site, most likely copyright, trade marks and possibly database right. To put users on notice that these rights are exclusive to the person who owns them (whether this is the business or third parties), the website owner should place a notice on each page stating that they are proprietary. This is often placed in a footer.

If the site is going to carry user-generated content, the terms of use need to deal with ownership of copyright in that content. For example, some social media sites (such as Facebook) require from their users a licence of all intellectual property rights in content that is being carried on the site.

Links from other sites

Other websites might want to link to the site. This might not be of great concern to the business, in which case it can publish a one-size-fits-all set of terms on the site, which give it the right, for example, to remove links to inappropriate or undesirable material. If the business wants to monitor links more closely than this (perhaps because a pristine reputation is one of the central assets), it may prefer to issue a contract for each permitted link.

Content produced by employees of the business

Most intellectual property rights created during the course of employment belong statutorily to the employer, and most employment contracts confirm this in writing. However, there may be uncertainty over ownership if an employee produces content when this is not within their job description.

Commissioning content

You may commission content such as graphic designs or written copy. Remember that, unless there is an agreement to the contrary, copyright will belong to the designer or writer, rather than to the business. You should therefore always commission content under a written contract that assigns copyright to it, especially if it wants exclusivity over the content.

There may also be uncertainty over ownership if an employee produces content when this is not within their job description.

Taking a licence of content

Another way for V to acquire rights in content is to enter into a licence. If you want to license in content to be displayed on the site, you will need to enter into a licence with the content owner.

Website production process, business concept on blackboard

Contracting online

If your site sells goods or services, the business is likely to be transacting electronically, rather than by paper means.

Terms of sale

If the site retails to the public, you will need to comply with the rules on cancellation, return of goods and information to be provided to consumers at the point of sale.

Distance selling

On 13 June 2014, the Consumer Contracts Regulations 2013 came into force. These apply to all contracts which are:

  • Distance contracts.
  • Off-premises contracts.
  • On-premises contracts.

Obligations to consumers

  • All consumer contracts:
    • Traders must seek the consumer’s express prior consent before taking any additional payments (for example, pre-ticked boxes are not permitted).
    • Traders must, unless the consumer agrees otherwise, deliver any goods purchased within 30 calendar days.
    • Traders must not make the consumer use a premium rate telephone line to contact the trader about an existing contract.
    • Traders must not impose excessive payment surcharges when consumers pay by certain means, such as credit or debit cards.
  • On-premises contracts: The rules introduce a new list of pre-contract information that a trader must give or make available to a consumer under an on-premises contract. (The information is not required in respect of day-to-day transactions which are performed immediately, and there is no requirement to provide it where it is already apparent from the context.)

Distance and off-premises contracts:

The 2013 rules:

  • Extend the list of pre-contract information that a trader must give to a consumer (there are some differences between distance and off-premises contracts).
  • Introduce new rules on the cancellation of contracts for the supply of digital content not on a tangible medium.
  • Extend the statutory cancellation period (sometimes known as the cooling-off period) to 14 calendar days.
  • Where a consumer has a right to cancel a contract, require the trader to provide the consumer with a model cancellation form.
  • Extend the cancellation period to, broadly, one year if the trader fails to provide certain pre-contract information.
  • Require online traders to make it clear (for example by labelling the payment button with “Order with obligation to pay”), where proceeding with the transaction will trigger a payment.
  • Require a consumer to return goods within 14 calendar days of cancelling the contract.
  • Allow the trader to withhold a refund until the goods are returned (or evidence of their return is provided).
  • Allow the trader to deduct an amount for the diminished value of the goods when refunding payments.
  • Extend the list of ancillary contracts which will be automatically terminated on termination of a distance or off-premises contract.

Intellectual property infringement: jurisdiction

Sometimes, a business can find itself unwittingly selling counterfeit goods, or offering goods or services that infringe trade marks or copyright. Within the UK, the general rule is that these claims will only be made out in relation to UK copyright and trade marks if the site is targeted at UK users or customers.

Tax

If you plan to sell outside the UK, the cross border transactions requirements as to VAT will need to be complied with.

If the website will be used to sell the goods or services of more than one group company, you will need to consider the basis on which costs are allocated between them or commission charged.

If you intend to supply goods from non-UK sources, it will need to assess whether its arrangements for doing so create a permanent establishment and therefore give rise to a tax liability in the country from which the supplies are made.

Competition law

As part of setting up a website offering of goods or services, you may make agreements with entities at a different level of the supply chain such as manufacturers. EU competition law (primarily Article 101(1) of the Treaty on the Functioning of the European Union) prohibits the inclusion in these so-called “vertical agreements” of any arrangements that prevent, distort or restrict competition in the EU.

Internet selling is generally regarded as a passive form of selling which should not be subject to restrictions, so vertical agreements such as exclusive distribution agreements between manufacturers and suppliers cannot normally restrict sales via websites. They can, however, prohibit active promotion into other distributors’ exclusive territories or customer groups.

Transfer and storage of data

If the site collects personal data from users, you will need to consider how (and where) it should be stored to comply with data protection law. Whatever method is chosen must be set out in the site’s privacy policy.

You may choose to store data in the cloud.

Advertising and marketing

Many websites use the data collected from users to send them marketing emails. Forms of consent to this marketing may be needed.

You may wish to operate an affiliate network of websites that will refer users to the site, an agreement for which should be put in place.

Illustration depicting a screenshot of a search bar containing the word e-business.

Advertising keywords

Advertising keywords are terms purchased specifically to be referenced by search engines. The most well-known example is Google Adwords, which involve the display of a list of sponsored advertising links in a particular part of the Google search results page.

Many online advertising campaigns involve buying keywords so that the advertiser’s product comes up as a sponsored link when a user searches for a competitor’s product. However, care should be taken, as this can make the advertiser liable for trade mark infringement in some circumstances.

Sites aimed at children

If the online business involves interacting with children, there are likely to be issues specific to the protection of children that the business will need to consider. For example, the business should comply with the Information Commissioner’s guidance on data protection issues, such as getting parental consent, and with regulations and codes that control advertising targeted at children.

User-generated content

If the site has an element of social media, there will be issues around data protection. Equally, any site that permits users to post comments, product reviews or other content will need to consider what liability might arise from this.

Streaming of content

If the business intends to stream live content on the site, this will infringe the copyright in that content, unless the business has a licence to do so.

In relation to the playing or offering of music on the site, a licence can be obtained from the relevant collecting societies, PRS for Music (in relation to the underlying musical work) and PPL (in relation to the sound recording itself).

Licensing of digital content

If the site will be licensing the use of digital content (such as software or journals) on an on-demand basis, it will need to use a click-wrap licence that sets out the terms on which users are allowed access to the content. The site user then agrees to the terms of the licence by clicking on an icon or link.

Comparison sites

If the site is a comparison site that uses spiders, bots or crawlers to seek out and collect information from other websites, there may be legal risks associated with copyright, database right and other intellectual property rights.

Auctions

If you plan to run an auction site, it needs to be aware that you may have joint or secondary liability if the site carries goods that infringe intellectual property rights or are counterfeit.

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