Vertex Law

Only fools rush in to web trading

by Irfan Baluch

A website might seem a quick and easy way to cut costs and kick-start trading, but ignore the legal complexities and you could find yourself paying a high price.

Before anyone rushes in to trading through an e-commerce website there are some key issues that should not be overlooked as there can be very serious consequences, both legal and commercial, if these issues are not dealt with properly during the initial planning stages.

If you are employing someone to build your site for you, be sure to have a Website Development Agreement in place that should cover the development timeline, functional specification and the content and structure of the site. Make sure that your intellectual property is protected.

Ensure you have a suitable maintenance agreement in place with the developer and that the site has been built to comply with Disability Discrimination legislation. Make sure that you understand the hosting arrangements for your site.

It is good practice for e-commerce sites to have effective security and encryption systems, plus you will need to draw up terms and conditions of use for visitors to the site and a privacy policy which sets out how you will handle any data collected from the site, as well as ensuring that you comply with the e-commerce and distance selling regulations.

When it comes to finance and administration matters, you need to consider whether you are operating within a sector where you need regulatory approval to trade and if you need to register for VAT and other tax. Investigate the best bank accounts for your business and take out all the relevant insurance policies.

Before you spend too much time and money on the site infrastructure, you need to consider how you are going to trade. Agreements should be negotiated and signed with suppliers so that you will have stock to sell before you invest too heavily in getting the site built.

Check the content of your site carefully to avoid infringing third party trademarks and be aware of the potential dangers of committing defamation or libel on your site.

Make sure your arrangements for processing payments are in place and work efficiently before you start trading.

Your delivery system needs to be clearly defined and priced and you should be clear how you will deal with customer complaints and service issues.

Setting up an on-line business needs to be treated as seriously as setting up any other venture – neglect the legal requirements at your peril. Make sure you consult a solicitor with expertise in e-commerce to help you avoid the pitfalls.

For further advice on setting up an e-commerce website, contact Irfan Baluch on 01732 224006 or email irfan.baluch@vertexlaw.co.uk.