Buying any type of business requires a sustained and substantial investment of time to locate a suitable target business. With a more traditional brick-and-mortar business, most of the initial due diligence can be done without too much up-front legal assistance. For example, the buyer can visit the store and assess — at some level — the condition of the physical location, the types and volume of customers, foot traffic, the “neighborhood” environment, etc. The buyer can also gain confidential access to financial and sales records, which will generally include information on volume, what products/services are being sold, pricing, and more. Likewise, it is possible to look at supplier and vendor contracts, leases, financing documents, and the like. From these and other efforts, a buyer can make a pretty good determination of whether the target is a good option. From there, attorneys get involved to prepare and review a letter of intent and/or a purchase agreement.
This is much less true for an e-commerce business. This is because, broadly speaking, the framework of an e-commerce business is a legal framework. Those without legal training and experience may not be able to fully evaluate the adequacy of the legal framework of the potential business. For example, most e-commerce businesses operate a website. A website is an e-commerce analog to the brick-and-mortar store for a traditional business. But is the foundation of the website legally sound? Buyers can, of course, evaluate such data as website analytics, consumer/user reviews and comments, and similar data. However, legal help is needed in evaluating some aspects of a website.
One of the more important foundational issues is the Terms & Conditions (“TAC”) posted on the website. A buyer can certainly read the TAC, but retaining an e-commerce business purchase attorney is crucial to evaluating the quality of the TAC. Here are just a few examples of what a quality TAC should do:
- Explain how to use the site for purchases, including information on prices, changing prices, product information, promotions, canceling orders, returns, and more
- Explain intellectual property rights, declaiming any intent to infringe, obtaining the user’s implicit agreement to not infringe through improper uploading or comments, and more
- State and define limitations of liability and waivers of warranty
- Provide privacy notifications and instructions consistent with U.S. and international consumer data privacy laws
- State the terms, conditions, and limitations for user-provided content (if allowed), including the website owner’s right to use such content, terminate user accounts for violations of the TAC, remove offending content, and more
- Set out dispute resolution provisions, venue, choice of laws, and similar
Of course, legal assistance can help evaluate the sufficiency of other aspects of a website, such as its copyright footer, web accessibility for the disabled, and whether privacy notices are “conspicuous”
Early legal assistance can also be helpful in evaluating whether an ecommerce business is in compliance with the TAC of a major online selling platform like Amazon.
Contact the E-Commerce Business Attorneys at Revision Legal For more information, contact the experienced Ecommerce Business Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.
