E-commerce has opened an entirely near area of commercial litigation. While business owners should always ensure they comply with the law, they must be aware of specific issues related to e-commerce as they conduct business online. Our North Carolina business attorneys discuss five legal issues businesses need to know about e-commerce.
E-Commerce Contracts
Businesses that buy and sell goods and services via the Internet need to be aware of the contracts specific to e-commerce. An online business relies on contractual agreements with multiple parties, including software licenses, website hosting services, third-party vendors, payment platforms, independent contractors, and employees. These contracts can limit liability and protect businesses when disputes arise.
Examples of e-commerce contracts include:
- SEO services
- Web design and app development services
- Terms of service agreements
- Privacy policy
- User agreements
- Subscription agreement
- Return policy
- Vendor agreements
- Non-disclosure agreements
- Warranty
When drafting e-commerce contracts, jurisdiction for disputes is a key element to consider. Another critical element is whether to include causes requiring mandatory arbitration or mediation.
Product Liability
Selling products from third-party vendors could expose an online company to product liability for injuries and damages caused by defective products. Explaining a product’s warranties and who is accountable for defects and damages is crucial. Your terms of use should disclose that you sell products from third parties and how to cancel or return items purchased through your website.
Data and Privacy Protection
Conducting business through the Internet requires collecting and storing personal data from consumers. It is crucial to secure and protect data. An online company must ensure they comply with all state, national, and international privacy laws.
E-commerce businesses should prioritize data privacy by implementing strong measures to safeguard consumer information. A company should establish a privacy policy and ensure it is prominently displayed on its website. They should also obtain a user’s consent to collect and store information (i.e., consent to use “cookies”).
Intellectual Property
Intellectual property rights are a concern for all business owners. For e-commerce, there are two concerns.
First, you need to protect your intellectual property from infringement. Your branding, images, content, website, and app are crucial for success in a competitive market. Take proactive steps to protect these assets by registering trademarks, patents, and copyrights. State your ownership of intellectual property clearly on your website. Maintain the confidentiality of trade secrets by establishing strong confidentiality and non-disclosure agreements.
Second, establish policies to avoid infringing upon another company’s intellectual property rights. It is easy to accidentally infringe upon intellectual property rights online. Even if you cite the source of copyrighted material, it might not protect you from a claim.
Sales Tax
While your state might not collect sales tax, you may be subject to sales tax in other states. Each state has rules for collecting sales tax. If your company sells or ships goods or services to out-of-state consumers, you must understand state and local tax obligations for each jurisdiction. Special software can help navigate these complex tax obligations.
Contact Our North Carolina Business Attorneys for a Consultation
The regulations and laws governing e-commerce can be challenging to navigate. Call Patrick, Harper & Dixon, LLP to schedule a consultation with one of our North Carolina business attorneys. We will help you ensure you take the necessary steps to comply with all applicable laws.
