Online marketplaces have become increasingly popular and more and more people look to virtual platforms to buy and sell anything from technology to food. According to the European Commission, around 7,000 online platforms and marketplaces are active in the EU.
If you’re thinking about setting up your own online marketplace, there are probably many questions you’re asking yourself in relation to your legal obligations. In this blog we’re looking into some of the obligations you may have to consider and the legal documents you may want to have before you open your online marketplace.
The different contractual relationships
You will need to consider:
- what your role is going to be
- how users are going to transact on your platform
- how you charge both sellers and buyers
Your role and responsibility will largely depend on your business model and the concept behind the marketplace itself. While most creators of online marketplaces provide no more than an introductory services to the parties interacting in the marketplace, whatever business model you choose, an online marketplace creates a range of different contractual relationships.
If you are an intermediary it will be important to state that you do not form a party to agreements that are entered into between sellers and buyers.
Once you’ve decided on your business model, you will need terms and conditions for the providers of the products or services. These should cover the fee you’re taking and the way they work with your marketplace. They may also be affected by the legal status of the goods or service provider – a business or an individual.
Secondly, you would need terms and conditions for the customers of the marketplace which should clearly address the payment you are processing and their rights.
To avoid negotiating contracts every time, you can have two standard sets of terms and conditions – one for customers and one for goods/service providers.
This is needed because consumers have far greater protections than businesses do, for example, with regards to cancellation rights and refund rights. You cannot contract out of these consumer rights and as such it is important you have the right terms and conditions in place.
However business to business (B2B) transactions are typically exempt from consumer rights legislation and therefore businesses are normally allowed to contract on whatever terms they want (ie you don’t normally need to give cancellation rights or refund rights for businesses).
Users of your marketplace will provide you with their personal data such as name, address, email address, phone number, and even debit/credit card details.
You will need to demonstrate your compliance with data protection regulations such as the GDPR and assure them that you will only use data for the purposes that they have provided them for.
Intellectual Property Protection
Considering how popular online marketplaces are becoming, you may want to protect your logo by registering a trade mark. Your website will be your most important asset, so registering your domain will be essential.
Every marketplace is unique and operates in a different way.