Legal considerations (to minimize liabilities) for online businesses
General terms and conditions
Why general terms and conditions? When running a business, whether online or not, you want to consider having general terms and conditions in place. With your own terms and conditions you can determine in advance which terms and conditions will apply if a conflict arises between your company and a client.
Specific matters you could address in your general terms and conditions
• To minimize liabilities: include an exemption clause (in Dutch: exoneratiebeding), by means of which certain liabilities may be limited or completely excluded. This is possible within the limits of the law.
• To minimize nonpayment: include a payment policy (for example the terms of payments) and specific penalties upon nonpayment. Other measures to minimize the chances of nonpayment could also be included, for example a provision determining that the goods are delivered under retention of ownership (in Dutch: eigendomsvoorbehoud) until full payment is received.
• Other: you could include for example a return policy and personal data collection policy.
Do not forget!
Note that having general terms and conditions in place does not automatically mean that these are applicable to the agreement between you and your client. Always make sure to:
1 Refer to the general terms and conditions in the agreement (or offer, receipt etc.) and declare it applicable to the (possible) agreement between parties.
2 Provide the client with your general terms and conditions before finalizing the engagement (and to document this for future reference).
3 Provide your client with your general terms and conditions before he provides you with his. Doing so, you make sure that your general terms and conditions apply to the contract.
4 (optional) Register the general terms and conditions with the Chamber of Commerce or the Court of First Instance. Doing so, you will avoid future discussions about the specific content of the document.
When marketing a product or a service, make sure you have the right or authorization to use a trademark or other intellectual property rights. The rightful owner of an intellectual property right can oppose the infringement of its rights based on his exclusive right. He may even request the Court of First Instance for the infringer to be ordered to, for example, pay any earned profits and/or damages or to provide information on suppliers and customers.
When marketing a product or a service, make sure that the advertisement is not misleading. According to local law it is prohibited to provide information of the product or service that is misleading in respect of for example:
– its nature, composition, quantity, quality or possibilities for use;
– its origin or its manner and time of manufacture;
– its price;
– declarations given by third persons or the scientific or professional terms used; and
– the extent, content or duration of the warranty.
Privacy and cookies policy
When running a business, you want to consider taking a business liability insurance (in Dutch: bedrijfsaansprakelijkheidsverzekering). Such insurance (can) cover claims that are not excluded by an exemption clause of the general terms and conditions, for example claims arising from damages caused by an employee during the course of his job. Note that depending on your specific business, taking other insurances might be advisable.
Final advice – choosing a business structure
Maybe the most important advice if you are starting a business, is to draw up a business plan and subsequently choose the business structure that best fits the priorities and budget of your business. Many people choose for the sole proprietorship (in Dutch: eenmanszaak), which is a business run by one individual. This is the simplest and most cost-efficient way to start a business, but this is not necessarily the most preferable business structure.
The owner of a sole proprietorship company is personally liable for all debts, losses and liabilities of the business. This is even more important in the current risky business environment due to the uncontrollability of the effects of the COVID-19 pandemic. Finalizing, from a legal perspective, while marketing is important, always try to minimize your liabilities!