Doing business online: What are the legal issues? – StartupSmart

Over the coming weeks, StartupSmart will be running a five-part series that covers the legal basics involved in starting a business.


The first instalment, by Lachlan McKnight, CEO of LegalVision, looked at legal structures. Today, McKnight focuses on the online sector.


If you’re running a start-up, big or small, the chances are you’re doing business online – you will be providing information, goods or services through your website.


A website is your portal to potential and actual customers, as well as other stakeholders. It’s therefore really important that you get the legal issues relating to your website spot on from the beginning.


First things first – your URL


Before getting started on your website design you obviously need to register the URL. This is easy enough, but a number of businesses make the mistake of forgetting to check:

  • if the name they intend to use is already being used by someone else;
  • if the name or logo that they intend to use (and later trademark) is already trademarked;
  • if the name or logo that they intend to use can be protected by trademark registration.

You don’t want to build a website and brand and then be forced to change your name and URL because someone else is using the name or you’re infringing their trademark. You definitely don’t want to discover that you can’t protect your name/brand with a trademark!


Before starting your business and choosing your name you should do two searches:

Make sure you own your website!


Before you start doing business online you will need to have your website designed and built (unless you’re doing this yourself). A web development contract governs the relationship between you, as client, and your developer.


It is vital that you read and understand this agreement; if possible you should be the one to provide it.


The most important clause relates to copyright. Some unscrupulous developers try and retain control of the website’s copyright after they’ve been paid in full, which is completely unacceptable.


If you are launching a start-up you need to retain the freedom and flexibility to run the business as you see fit.


Once the website has been built it should therefore be wholly and completely yours. Make sure your web development contract clearly states this!


You should also ensure that you get a warranty from the developer that their work product does not infringe anyone else’s copyright.


You don’t want to be on the hook if your developer turns out to have lifted the code from a third party.


Make sure your developer indemnifies you against any costs or liabilities resulting from any breach of this warranty.


Finally, be careful with placing any image, text or other media on your website. Make sure these either belong to you or you have a licence to use them.


Otherwise you will be in breach of copyright.


What documents do you need to provide?


It is important that you ensure your website prominently displays two legal documents visible to all visitors and preferably visible on every page; a set of website terms and conditions and a privacy policy.


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