Kay Lam-Beattie was a godsend who appeared when I was looking to consult with a Lawyer about the legal requirements for my first online business – womeninbusiness.com.au

I wanted to talk to someone who would understand what I needed and advise me about what was required legally, while talking my language when it came to technology and doing business online.

Kay’s business website Idealaw outlined her credentials (Law & IT qualified) and convinced me this was the woman I needed to talk to.

Kay works with a variety of online businesses and here she shares with us some seasoned advice when it comes to your business online and legal requirements.

Q) What are the most common legal mistakes new website owners make?

A) People building a new website or online business are usually excited, and they have a vision that they want to create.  But they tend to gloss over boring details like having clear agreements in place with their web designers, image providers, graphic artists, copywriters and service providers etc

The agreements  should deal with intellectual property ownership/licensing.For example, a few weeks ago a couple came to me with a letter of demand from a stock images company.  Their web designer had ‘borrowed’ a few images from a stock photo site, believing that it okay because it was ‘royalty-free’. The stock images company tracked them down and were demanding thousands.

These agreements should also set out the scope of the work, the costs, timeframes and technical specifications etc of the website.

I’ve seen websites fail before they even go live because the business owner has an informal agreement with the web designer, then they have a falling out,  leaving nothing but disputes, bills, and useless half finished code.  And of course, no one really knows who actually owns the code either.

Q) What advice would you give for new online business owners regarding getting their legals in order? What will they need? When should they seek advice?

A) Every startup has a long shopping list of things to do, and usually a tiny tiny budget to do it all with!  So it is a matter of prioritising.

Some businesses are simply higher risk than others – if your proposed website has gambling, has stock tips, financial advice or P2P file sharing – then you are in an extremely high risk category and good, robust legal advice is a must, and if you can’t afford it, you can’t afford to be in that business.

But even for small and less risky start ups, it’s a good idea to find a lawyer who can work with you (and your budget) before you sink substantial funds into the business, or sign any major agreements.

You certainly don’t have to do it all at once, but most start-ups should be looking at:

• basic structuring to minimise risk, minimise tax, and give asset protection, allows you to build more later
• intellectual property advice – identifying, owning and licensing – so you don’t accidentally give away or compromise your IP
• agreements between owners of the business
• other internal agreements such as employment agreements
• external agreements with contractors, clients and suppliers etc – including website legals
• financing – loans, venture capital etc

Remember that while it’s tempting to just ‘make do’ and delay setting things up properly,  the longer you leave it, the harder and more expensive it’ll be to change over to a new model or structure later.

Q) Is it important for businesses to consult with a lawyer who specialising in online requirements? Why?

Any good general commercial lawyer will be able to help set up a business with some basic tools.  But it’s important to find someone who understands your website and the technology behind it.  Someone that you feel comfortable communicating with.

Don’t be nervous about asking your lawyer what kind of experience they’ve had  with online businesses like yours.  Especially if this is your first online business, having a lawyer who has ‘seen it all before’ means that they can also help you with parts of your business model you might be struggling with.

For example, I was recently asked to write the website legals for a business that sold ornaments online.

Customers ordered and paid  through the website, and an independent supplier shipped the goods directly to the customer.

I was able to help her refine her business model, identify risk areas, protect her payments, and  liaise with her web-designer to check where and how the terms appeared on the site.  And talk her out of offering a 30 day no questions asked returns policy – because her suppliers would reject returns unless goods were actually faulty, and then she’d have to pay the supplier’s bill, the courier’s bill AND refund the customer.

Q) Are there common legal requirements that every website should meet? Do they differ depending on what you’re offering?

An online business is first and foremost a business – just interacting with customers online rather than through a physical shopfront.  So the website needs to comply with the same local laws and industry specific regulations as physical businesses – and maybe the local laws where the customers are, too.

Websites should try to comply with best practices – being quite clear about who they are, supplying an ABN, plus issues like privacy, payments, refunds and so on.

Many online payment facilities now require you to have certain website legals in place before you can process payments through their systems.

Q) Say I’m a physical business and I want to set up a website to sell my products, what legalities do I need to consider?

The basic transaction is the same (customer gives you money, you give the customer the product).

But think about the extra steps and issues when selling online:

• Local laws that might apply to your customers
• Export laws for overseas customers
• Technical errors – eg wrong descriptions or prices on the site
• Payments, rejected payments, exchange rates
• Cancellations or changes to orders
• Delivery, delayed delivery, damage or loss in transit, wrong address supplied
• Returns policy – change of mind, goods that are defective, inferior, mistaken, wrong quantity etc
• Privacy policy – what you can use the customer’s information for
• How you’re going to communicate or interact with the customer
• Limitation of liability
• Website usage rules – eg whether customers can post comments or reviews or ratings on the site, and whether you can edit them

Not all of these issues will apply to every physical business setting up an online presence of course.  It will depend on the nature of the business.

Visit Idealaw to learn more about Kay Lam-Beattie and online business legal requirements.

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Filed under: Do good business online, Interviews