Category Archives:Internet legal advice

Online defamation

The issue of online naming and shaming of people and businesses is rife and although venting rage and disappointment online can provide some emotional release and a warning to others, the risks are immense.

If you (or your business) are named online, whether in a blog, on a social media platform or on a website, and the things being said about you are misleading, damaging to your reputation, blatantly false or simply malicious, you may have legal rights against the person who posted the statements online. Don’t be fooled into thinking that this is an easy road to travel though, as the tests to prove and the defences against legal actions in this area of law are challenging to overcome for plaintiffs and defendants alike. In fact as an eminent Supreme Court justice said to the writer in court recently, “defamation proceedings are a fools game”. Having said that, there are obviously situations where a person well and truly deserves justice and these are the matters the court will take seriously.

As is the case in many areas of law, resolutions to matters broadly referred to as “defamation matters” are often resolved by mediation or by consent on the doorsteps of the court because of the alarmingly high costs involved in pursuing matters that are often very difficult to prove. Issues such as finding real identities based on the IP addresses of the publishers of damaging content, the number of people who have viewed defamatory material and a raft of other matters such as damage suffered can be hotly contested over many months or years and once legal proceedings are instituted it is seldom as easy as “just giving up” – plaintiffs who wish to call an end to the fight may then be faced with an order to pay their opponent’s costs.

In many circumstances, the best solution to being victim to perceived defamation is spending a small proportion of what you would have spent on legal fees to engage an expert in SEM & SEO to spread the truth of the situation far and wide. You may find that this approach will send what was a second or third result on Google to the third or fourth page and statistically very few people even click that far – this may be a much more practically (and financially) achievable result than seeking the assistance of the higher courts in your state or territory.

For more see: Ben Hall on The Project

How to structure your online business

It is important to remember that an online business is still a business and the fact that it’s ‘online’ doesn’t ordinarily affect legal dilemmas such as the owners being personally sued for a business debt. Simple misunderstandings to do with business structuring can have catastrophic results for hard-working online business people such as you.

Have you considered who the owner of your online business actually is? Have a think about the following key questions which may either set off some alarm bells for you or help you sleep better at night:

Online Business Bank Account

If your online store takes payment to a bank account held in your personal name, whether connected through PayPal or not, chances are your online business is actually you, an individual, with a trading name. In business structuring lingo, this set-up would be referred to as a ‘sole proprietorship’, and in most situations this is the worst possible way to protect your assets from the dangers associated with litigation.

Registration of Domains

Another question to ask yourself is to whom are your domain names registered? Locating the registrant of a domain name is a straight forward process and if the registrant is you personally this may give rise to any legal action being launched against you, even if a company or another legal entity is the owner of the business. For this reason it is important to make sure your domains are registered to the correct entity – usually the owner of the business itself (e.g. a company or a trustee on behalf of a trust).

Business Names

If your online business operates in Australia you are required to register a business name with the Australian Securities & Investments Commission (ASIC) and by and large online business owners understand this and play by the rules. The issue arises, however, when the actual legal owner of the business is not registered correctly behind the business name.

For example, if your online business is trading with the business name “Online Legal Advice” and it is owned by “Online Legal Advisers Pty Ltd”, it is important that this is registered with ASIC correctly. In far too many situations the owner of the business name is identified as the individual (a director of the company) rather than the intended company, eg “Ben Hall” being registered as the owner rather than “Online Legal Advisers Pty Ltd”.

If a creditor is keen on recovering some money from the business and does a search through ASIC to identify the owner of the business name, they will see an individual rather than the company and the painful reality of legal proceedings will ensue for that individual person when it should have been against a company, which is a separate legal entity to the person.

Accountants -v- Lawyers

Lawyers cannot and do not give financial or accounting advice, but we do advise on legal risk including formulating a business structure to protect your assets. Unfortunately many business owners allow their accountant to structure their business, which is great for tax purposes but terrible for legal risk mitigation. Accountants are barred from providing legal advice, but in many situations they do (either intentionally or accidentally, but with the best of intentions for their clients).

Given that accountants are not legally permitted, nor qualified to turn their minds to legal risk for your online business, ensure that when you are setting up your online store you seek the advice of a solicitor as well as an accountant.

If you would like more detailed advice about your own online business, contact us to find out more.

Online Business Terms and Conditions

Website user agreements / terms & conditions (or Ts & Cs for short) are a critical yet often ignored part of the online legal landscape. Hopefully you will never have to argue with your customers, let alone engage in a protracted dispute but if you find yourself going down this path and you do not have tight terms & conditions to rely on to prosecute your argument, you will wish you did. Legislation will step in to protect you in some cases but in the vast majority of online transactions your only friend is contract law and if you haven’t crossed your Ts and curled your Cs, you may be out of pocket or otherwise in trouble.

Record your Agreement

A key consideration for your online user agreement or terms and conditions is to make sure you have a record of the agreement being clicked or otherwise agreed to. If you cannot prove that the agreement was actually executed electronically by the user or customer, it will be your word against somebody else’s and since it will be your responsibility to prove your allegations to a court, you will have to be a pretty convincing witness to show the agreement without a shred of evidence. For this reason, consider saving a time and date stamped copy of your electronically agreed to contracts for later use as evidence and ideally to prevent having to go to court.

Assess Key Risks

Another consideration for drafting t’s & c’s for your website is making sure they cover all the risks you need to cover. A good way to make sure your terms are up to scratch is of course hiring a lawyer to advise you on the matter however if you want to do this yourself, make sure you draft a comprehensive list of problems and worst case scenarios so that you can address these by way of including a term or condition to counteract the risk. For example if you think a risk is that the customer won’t pay you on time, make sure you have strict payment conditions regarding time in the agreement.

Utility of Agreement

Do you even need terms and conditions or a user agreement on your website? Many people simply copy and paste somebody else’s agreement assuming that they need an agreement simply because everybody else has one. Whilst it is often true that you should protect your legal interests by having an agreement on your website, it is also true that you don’t need to have a novel-length contract if you aren’t even selling anything online. As a rule, if you are selling things online you do need a user agreement but if you aren’t, think carefully about what type of agreement you need and you will often find that something simple will suffice.

Other questions to ask yourself with respect to online terms and conditions include:

  • What is my business’ policy regarding refunds?
  • If my customer doesn’t pay me, what effect will this have on their user account permissions?
  • The laws of which jurisdiction will govern the relationship between users and my business?
  • What behaviour from the user would constitute grounds for barring them from my service?
Copyright and Intellectual Property

Finally, remember that you can’t simply copy and paste an agreement you find on someone else’s website without infringing the owner of the original agreement’s intellectual property rights – specifically copyright law. Obviously this is an ironic situation, given that your goal was to comply with law and protect your legal affairs. Draft an original agreement or purchase a template for which the owner grants you the right to copy and amend as required and then you can rest easy, as long as you are completely sure that the agreement protects against all the risks you have identified.