Your online business sells to overseas customers as well as Australian customers. Do you need worldwide terms and conditions – and is there such a thing? A good question we get asked regularly at Legal123.com.au.
More and more online businesses are marketing to overseas customers. Why not: you have a larger potential customer base, it’s easy to do with the internet, and it’s low cost.
So what do they do about terms and conditions (‘T&Cs) for their business?
E-commerce is governed by local laws
You may have noticed some websites ask you to either put in your postcode or to change the flag in the upper right hand corner (country selection) – these normally have terms and conditions to match the applicable laws of that jurisdiction.
It is difficult to provide a ‘safe’ response to the business owner’s question of whether one set of terms and conditions can cover their business worldwide. Or a response that business owners want to hear.
The general response is: If you sell to customers located in another state or another country, your e-commerce business will be subject to the laws and regulations of those other jurisdictions. Your customers may be able to sue your business in their local court in that country or even shut your business down in that country if your business is deemed to breach local laws or is non-compliant.
Basically, there is no comprehensive general set of laws or regulations that exist for international electronic commerce for online businesses to cover transactions worldwide.
Ideally have T&Cs for each country you do business in
The best protection is to consult lawyers in each country and have them draft your terms to comply with their local requirements on consumer law, payments, taxes, and other regulatory requirements. This can end up being extremely expensive and more so with each of the US states having their own individual state laws.
Many online businesses and startups cannot afford to have local lawyers draft their terms in every country they want to offer their goods or services. So the next question is whether and how far their Australian T&Cs protect them for overseas claims.
The answer: Having strong terms and conditions written by Australian lawyers that clearly outline your terms such as refunds, guarantees, delivery and other information for doing business go a long way to avoiding confusion and potential disputes with customers.
Otherwise include a Governing Law clause
Many website T&Cs contain a Governing Law clause. This is where you nominate the state your registered business is located. It does not mean you can only conduct business in that state. It does mean that your business and terms are governed by the legislation in the state you nominated.
When customers agree to purchase, they agree to your Governing Law clause which stipulates that any dispute or claim they have with your goods or services, must be made in the nominated state.
It also means that the terms of your agreement with the customer are governed by the laws of that state. This can save you a lot of time and money of having to travel if a there is a customer claim in another jurisdiction.
Generally, it seems Governing Law clauses are and continue to be upheld by many countries in many internet cases. If you have your customers actively agree (by ticking a box or otherwise indicating positive consent), this is more readily enforceable and provides more protection than T&Cs that are simply posted on the website for a customer to read at any time.
But be aware: while a Governing Law clause may be accepted in many countries as valid and enforceable, there are some clauses that some countries may argue are void on the grounds of public policy and not in the best interests of their local consumers. In the recent past, this has been largely dependent on the case, the gravity of the issue, the goods and services being sold and the country policies themselves.
It is always a good idea to familiarise yourself with local consumer laws relating to your goods or services being offered. Ensure you do not trigger certification or licensing requirements and, if in doubt, check with a local!
Image credit: NASA/NOAA/GSFC/Suomi NPP/VIIRS/Norman Kuring