Legal documents you need when selling a product online

Legal documents you need when selling a product online

Author
5 min read
Deal with Software or Data

You have designed an amazing website and you are ready to start selling your products. Have you considered the legal documents that you need to put in place?

Example business

This business is owned by Sophia, a fashion designer who imports the latest fashion from overseas. She lists the items on her website for a fixed price. To order an item you need to create a user account and select the item and proceed to checkout. The payment process is facilitated by a third-party payment processor.

First things first - In South Africa, there is legislation that places various obligations on Sophia when selling products online. Below we consider the legislation that plays a role when selling products online.

The Electronic Communications and Transactions Act (ECTA) requirements

Because Sophia will be selling products online, she will need to comply with the requirements under ECTA. For example, a person selling products online must provide certain information to customers that purchases products through the website.

The information that must be provided to the customers includes certain particulars of the business, return, exchange and refund policy, dispute resolution procedure, certain aspects surrounding privacy and payments etc.

Another important aspect contained in ECTA, is the customer’s right to cancel without reason and without penalty any transaction within 7 days after the date of the receipt of the product. The only charge that will be levied on the customer is the direct cost of returning the product.

If payment for the product is made before the right to cancel is exercised, the customer will be entitled to a full refund of such payment, which refund must be made within 30 days of the date of cancellation.

Protection of Personal Information Act (POPIA) requirements

A question that we often get from business owners selling products online is why do they need to comply with POPIA? They are not selling or making available any personal information to anyone else.

Let’s break it down. Under POPIA there are certain obligations placed on a business when dealing with personal information. Processing of personal information is broadly defined in POPIA and includes collecting, storing or transmitting personal information.

Examples of personal information commonly collected on websites include email addresses, physical addresses, telephone numbers and financial information when processing payments and the name of the person that appears with the aforementioned information.

Even if your website requires a user to enter their email address to subscribe to your monthly newsletter, you will be processing personal information and you will require a privacy policy.

To comply with the above legal requirements, a privacy policy is required and must be easily accessible on your website.

The Consumer Protection Act (CPA) requirements

The CPA also plays a role when selling a product online.

Under the CPA, certain terms are regarded as unfair, unreasonable or unjust and certain terms must be highlighted and sufficiently explained to a consumer. If you want to read more about the impact that the CPA on contracting, have a look at this - Starting an online business has never been easier. But do you have all your legal ducks in a row?

The documents that you need to put in place

Website terms of use

The website terms of use must contain information about:

  • The particulars of the business that must be disclosed to the consumer under ECTA (for example, name, registration number and address for the service of legal documents);
  • What the user can and cannot do on the website;
  • Any other information that governs what a user can and cannot do on the website.

For example, as part of Sophia’s marketing strategy, she decided to use content marketing and regularly makes blog posts on her website where users can engage and provide feedback on the items that she is considering importing.

Having well-drafted website terms of use will provide that a user will violate the terms if a user posts any content to the blog that is for example discriminatory or violates another person’s intellectual property.

Standard terms of sale

These terms are usually agreed to in the form of a “click-wrap”. You know those “I agree to the terms and conditions” tick boxes you have to click before proceeding with the transaction.

The standard terms of sale contain information about:

  • Provisions relating to ownership and risk;
  • How returns, refunds and exchanges will work;
  • Limitation of liability;
  • Dispute resolution; and
  • The consumer’s cooling-off right and how the cooling-off right will work.

Website privacy policy

Condition 3 of POPIA provides that personal information must be collected for a specific, explicitly defined and lawful purpose related to a function or activity of the responsible party and steps must be taken to ensure that the data subject is aware of the purpose of the collection of the information.

Condition 6 of POPIA provides that various steps must be taken by the responsible party (the business) to ensure that a data subject (the customer) is made aware of personal information that is being collected, details of the responsible party, purpose of collecting and various other details relating to the collection of the personal information.

Consequence if you do not comply with your obligations

Generally, if you do not comply with your obligations imposed by the relevant legislation the transaction will be void.

For example, If you do not comply with the ECTA information disclosure obligations, the customer will have the right to cancel any transaction concluded within 14 days of receiving the product.

How to ensure that you cover your legal obligations when selling a product online

As a start, we suggest that you get the above documents on your site as soon as possible. These documents can be embedded on different pages on your website. It is important that these documents are easily accessible and that users are made aware of these documents during the ordering process.

You can generate these documents with the use of the docninja.io contract generator:

If you get stuck during the process, be sure to reach out to one of the docninja.io contract and commercial law specialists by signing up for one of the packages.

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