Introduction

Online businesses have the capacity to reach customers in distant locations, unlike traditional brick-and-mortar businesses. 

However, with physical businesses, it is easy for the business owner to build trust with their customers. By simply running down to the store, customers are able to tell when the business is open or closed, purchase whatever they want at will, and channel their complaints to the store management without stress.

All of this cannot happen with an online store because of the distance and because the business owners are not known to the customer, which could make it difficult for the customer to believe that the business will fulfill their part of the bargain by delivering products to the customer after a purchase.

Furthermore, shopping online puts Customers at risk of identity theft and fraud because they have to input sensitive personal, financial, or credit card information into the website to pay for purchases. It is only natural for a customer to be wary and reluctant to provide such details to an unknown person. 

You need to create certain legal or formal documents and place them in strategic locations throughout your online platform. These documents would serve to demonstrate your commitment to transparency and high standards in different areas of your business to help set customers’ minds at ease, giving your business room to thrive. Some of these documents are not compulsory but are required as a business best practice, but others are mandated by law, as we shall see shortly.

In this guide, we discuss; 

• Why legal documents are important for online businesses
• Some of the key legal documents such businesses might need
• Other details to help you create effective legal documents for your business.

Please keep reading to learn more.

Why Having Documents For Online Businesses Are Important

Up-to-date documentation, both legal and otherwise, is necessary for every online business for several reasons, including the following:

Legal Compliance

As a business owner, you may be obligated to create it execute certain legal documents by law depending on the nature of your business. Compliance in such cases is mandatory to ensure your business does not incur any legal liability.

Transparency

As an online business, you have to go the extra mile to make your customers trust in your brand and your ability to fulfill your business promises. By creating certain policy documents, as we will see below, you can demonstrate your business’s accountability and transparent business operations to your customers, all of which are essential for building trust and maintaining a positive brand image.

Risk Mitigation

As an online business, it is important that you do all you can to avoid legal issues with customers and regulatory authorities. Legal disputes cost time and money to resolve, and they are generally considered bad for business. Having the right documentation for your online business can protect you from future legal issues or at least minimise the risks.

Professionalism

Having well-structured documentation can help your business stand out in a competitive market. It creates a great first impression for first-time customers who visit your weBsite and signifies your commitment to maintaining high standards throughout your business operations. 

Key Legal Documents for Online Businesses

Privacy Policy

Online businesses typically collect customers’ personal information, such as 

• Email addresses
• Names
• Birthdays
• Credit card details.

A privacy policy is a legal document that explains how you intend to use these personal details collected in the process of running your business.

Also known as a privacy statement or notice, this document helps your customers understand the terms upon which their information is being collected, giving them a chance to continue or opt out of the transaction.

By the Australian  Privacy Act of 1988 a privacy policy is mandatory for Australian businesses that collect personal information by any means with an annual turnover of $3 million.

However, even if your turnover is lower than that, having a privacy policy is still important to build trust and transparency among your customer base.

Get a free Privacy Policy when you sign up to Lawpath today.

A Privacy Policy is required by law in certain circumstances. It outlines how your business will use, store and collect your customers information.

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Website Terms and Conditions of Use

Website terms and conditions of use cover the rules that customers are subject to when they browse or shop from your online store.

This document should contain details such as:

• Disclaimers
• The types of conduct that are permitted on your platform and the extent of the user’s license to use your website 
• Dispute resolution mechanisms
• Refunds and other consumer guarantees under Australian law.

This document is required by law, so compliance is mandatory for Australian online businesses. 

GDPR Privacy Policy

GDPR stands for General Data Protection Regulation. It is a European Union (EU) law that governs how private information and personal data are used by those who collect them.

If your online business serves customers in the EU or you have any sort of business presence there, you may need to create a GDPR privacy policy to ensure compliance with the regulatory standards.

A GDPR privacy policy is similar to the domestic privacy policy discussed above. However, GDPR policies must contain certain mandatory details, including the following;

• The identity/contact information for your business and  its Data Protection Officer
• Why you need to process an individual’s private data
• The details of any personal data transfer to a different country and the safeguards taken to protect such transfers
• The retention period that is how long you intend to store the information you collect and the criteria used to determine the retention period.
• Your customers’ data privacy rights
• The right to file a complaint with any supervisory authority if there’s a breach of those rights.

Your GDPR privacy policy must also be easily accessible through a link on every webpage. It must also be drafted in clear and unequivocal language to ensure it is easy to understand.

Compliance with the GDPR privacy policy regulations is essential; otherwise, you could face serious legal sanctions and be forced to pay hefty fines.

Shipping Policy

If your online business involves the delivery of goods to your customers, then you need to have a shipping policy.

Unlike the other documents described above, there is no legal requirement for you to have a shipping policy. However, it is important to have one as a standard practice.

A shipping policy details your business’ shipping procedure and specifies 

• Processing and delivery timelines
• Locations where you ship
• Any shipping restrictions
• What happens if goods are damaged or missing in transit
• Other details related to the delivery of your customers’ goods.

It is a proactive measure that helps to keep your customers informed beforehand so they do not need to seek out those details directly from you. The time you would have spent on shipping-related phone calls and emails can be directed toward other crucial activities.

Website Development Agreement

A website development agreement is a binding contract between a website developer and an individual or organisation that needs to build a website.

This agreement specifies the terms of the web development transaction before and after the website is completed and running.

Typically, website development agreements cover 

• The website specifications
• Costs and fees
• Timeline for completion
• Ownership of intellectual property
• Confidentiality
• Maintenance.

As an online business owner, this agreement helps to clarify the rights and obligations of all parties involved, which can help you prevent disputes with your web developer.

Legal issues with your developer could affect the operation of your website and your business by extension; hence, it is important to do all you can to avoid them, beginning with creating a detailed and clear website development agreement.

Security Policy (Cybersecurity)

Information on the internet is at risk of corruption or misuse by hackers and fraudulent entities. It is up to you, the business owner, to take active steps to ensure that your online business website is protected from external threats that could jeopardise the security of your website and its contents.

As such, you need a cyber security policy to identify possible threats to your website technology and clarify the protocols or steps to be taken to prevent those threats.

Your cyber security policy will also serve as a guide for your employees and anyone else who handles your website so they are all aware of their role in protecting your online infrastructure, thereby increasing the likelihood of compliance and minimising risks.

Conclusion

In the ever-changing e-commerce space,  well-crafted business documents are not just a legal necessity but a strategic key for sustainable business growth and the success of your venture. 

We’ve explained how legal documents are important for 

• Legal compliance
• Transparency
• Risk mitigation and 
• To demonstrate professionalism.

We also discussed some of the basic legal documents for Australian online businesses:

• Privacy policy
• Website terms and conditions of use
• GDPR privacy policy
• Shipping policy
• Website development agreement
• Cyber security policy.

However, at Lawpath, we understand that getting all these documents together from scratch can be difficult. We are committed to your cause, and that’s why we have created adaptable and expert vetted legal document templates to help you comply with legal requirements and best practices for your business.

Browse our collection of affordable document templates for online businesses as the first step toward up-to-date legal documentation and security for your business. We’ll be glad to support you and hold your hand through the creation process.

F.A.Q.s

Why Is it Important to Have Legal Documents for an Online Business?

It is important for an online business to have legal documents to reduce legal risks and ensure compliance with relevant laws and regulations, build trust, and clarify customers’ expectations. 

What Are Some Legal Documents That I Should Have to Run My Online Business? 

Some of the legal documents you need for your Australian online business include :

• A privacy policy
• A shipping policy
• Cyber security policy
• Website Terms and Conditions of Use
• Website Development Agreement
• GDPR privacy policy
• And any other document required by federal or local laws for your type of business.