3 Must-have legal documents for your online business

By On Your Terms co-founder Claire Bodle
Oct 2023

Running an online retail business comes with a unique set of challenges. In this blog, we discuss the three essential legal documents that help provide crucial legal compliance and protection for your new or established business.

1. Product Terms of Sale

Product Terms of Sale are fundamental for any online retailer. These terms benefit both you and your customers and give you confidence to focus on your business.

Product terms contain the things customers agree to when they buy products from you, such as expected delivery timeframes and the specifics of your returns and exchanges policy. Clearly setting these matters out gives customers assurance in how your business will handle problems should they arise, encouraging them to press go on a purchase.

They also serve as your legal shield. By outlining your responsibilities and limitations in clear, concise language, product terms help protect you from misunderstandings and disputes, ensuring both parties are on the same page from the moment a purchase is made. For example, if you have clear terms about payment timing, and there’s a dispute with a late paying customer, you are much more likely to succeed.

See our blog 'When do I need to provide a return or exchange?' (coming soon) for more information on your responsibilities to customers as a retailer. 

Your website should require customers to accept your Product Terms of Sale (in a click box) before making a purchase. For your terms to apply, it needs to be clear the customer has accepted them.

2. Website Terms of Use

Website Terms of Use act as the digital rulebook stating how visitors can use your website. They also provide clear guidelines to users on what they can’t do while interacting with your site, such as copy or misuse your website’s content. Additionally, Website Terms of Use offer you the flexibility to manage and modify your website as necessary, by giving you the right to make changes without prior consent.

Website Terms of Use are essential where your platform allows visitors to post content (including product reviews). Additionally, if your online business sells products that are age restricted, you must tell visitors about these restrictions.

These terms also establish the boundaries of your liability, making it clear what you are not responsible for (including any user-generated content), and if you are responsible, the maximum amount you would have to pay for a user’s loss. They also provide protection for your intellectual property by clearly stating you own the rights to all content on your website, and the only rights users have to your IP is to view or use the website. This means, if someone was to copy your original content, you would have a legal basis to claim breach of IP.  

Your Website Terms of Use need to be clearly displayed on your site.  

3. Privacy Policy

Online businesses collect personal information, such as email addresses, physical addresses and financial details. A privacy policy serves multiple crucial functions for your online business.

Importantly, it enables you to comply with the Privacy Act 2020. By clearly informing customers how their personal information is collected, used and protected, a privacy policy shows transparency and demonstrates your commitment to data security, accountability, and customer rights.

If anyone believes you are not complying with the privacy principles under the Privacy Act, and this has caused them loss, they can make a complaint to the Privacy Commissioner. The Privacy Commissioner will look at whether you are adequately protecting personal information and providing the required information to your customers about this protection. The Commissioner can also refer a complaint to the Human Rights Tribunal who can issue fines.

By having a clear and visible privacy policy, your business is actively considering its privacy obligations, putting processes in place to address them, and providing the required information to its customers.

Your privacy policy should include:

• what information is collected;
• how the information is collected (including through cookies);
• the purpose of collecting the information;
• how the information is stored and protected;
• who (if anyone) the information is shared with;
• your customer’s right to correct their information;
• how you will notify policy updates;
• contact details for privacy inquires; and
• opt out options for data collection or use where appropriate (including marketing emails).

It's important to draft your privacy policy clearly, concisely, and in language that is easily understandable by your customers. You should also regularly review and update your policy to reflect any changes in your data practices or legal requirements.

Key points

By having Product Terms of Sale, Website Terms of Use and a Privacy Policy, your business will comply with New Zealand law, build customer trust and be more protected if any disputes arise with customers.

On Your Terms’ Online Sales Essentials Bundle contains these three key documents for you to customise for your business, using our easy chatbot technology. The bundle also includes lots of helpful legal information – a start-up checklist for online businesses, a Guide to Consumer Law in New Zealand and a checklist for negotiating better terms with suppliers. If you sell your products online and through a ‘bricks and mortar’ store, check out our Retail Sales Essentials bundle instead.

On Your Terms makes it faster, simpler and more affordable for New Zealand starts ups and small businesses to access top-quality legal solutions and connect with legal experts. We’re on a mission to make legal information accessible and understandable.