Legal Basics for Startups 100% Better Using These Strategies
Do I need legal advice for my business?
Legal advice is an important first step along the path of forming a startup. It can help validate your business model and ensure that your business is compliant with applicable regulations.
This article is a guide, however, the best way to make your business legally compliant for your business model is to consult with a legal professional.
Startups essentials will include management of employee relationships with employment agreements. You should consider what legal documents your business may require and what steps you can take to protect your intellectual property and business assets.
- business structure
- contracts (employee, contractor, supply, confidentiality)
- intellectual property (trade mark, patent, designs, copyright, trade secrets)
- website or app terms and conditions
Australian Consumer Law
The Australian Consumer Law (ACL) is set out in Schedule 2 of the Competition and Consumer Act 2010 (previously known as the Trade Practices Act 1974 (TPA))
- trade practices
- unfair contract terms
- unfair practices and unfair trading
- consumer guarantees
- direct marketing
- lay-by agreements
- product safety
- information standards that apply to goods and services
- refunds and exchanges
Your contracts must be clear and fair to ensure a balance between you and the consumer.
On 2 November 2016, a new law, Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 (Cth) came into effect. The new law aims to protect small businesses from unfair terms in business-to-business contracts.
Unfair contract terms can apply to almost all contracts, with some exceptions including most insurance contracts and contracts for the shipping of goods.
A business may have recourse under the law where a contract:
- would cause a significant imbalance in the parties’ rights and obligations arising under the contract
- contains terms that are not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the terms
- would cause detriment (financial or non-financial) if it was to be applied or relied on.
Bait Advertising and Special Offers
Most people want low prices, so offering items for sale at cheaper prices to attract consumers is known as bait advertising. If a business wishes to practice this type of advertisement, they must ensure they remain compliant with the Australia Consumer Law (section 35) by ensuring there is reasonable quantity for a reasonable period of time. If the goods or services are in short supply, or only available for a limited period of time, the business must clearly state this.
Offering rebates, gifts or redemptions
Often, businesses will offer the chance to win free goods or services. However, offering these gifts without the intention to provide as promised is illegal. The rebates must be supplied in the specified or reasonable time and the business must ensure that consumers are not misled.
Advertising through search engines and other online ads
There are many advertising platforms online that businesses can use to advertise, such as Google Ads and pop-up ads. Despite online advertising services being a modern way to reach new audiences, businesses still need to ensure they are compliant with Australia’s consumers laws by not tricking or misleading consumers.
Reviews and testimonials
Many consumers will look to reviews and testimonials from others for potential businesses before deciding where they wish to go, which is why good reviews are imperative.
Refund and Exchange Policy
Your refund and exchange policy should be clear and comply with the Australian Consumer Law where you must provide a refund or exchange if the goods:
- are faulty
- don’t match the product description
- are unfit for their unintended purpose
- Trademark application to own your brand name and logo
- Patent application to protect your inventions
- Design application to protect your designs
- Non-disclosure Agreement to keep your proprietary information confidential when discussing your business with third parties
- IP Assignment agreement to ensure you obtain a transfer of the intellectual property if you contract with a third party to develop your IP
Legal-proofing your Website or App
Most successful businesses have a website or app.
You need to comply with the “legals” for your website. You should consider which legal documents your website needs. Websites may include pages for terms and conditions of use, privacy policies, terms and conditions of use, disclaimers and corporate policies.
- whether you collect personal information
- the types of personal information you collect
- how you collect the personal information
- how you use that personal information
- if and how you disclose personal information to third parties
- how you store and secure personal information
- how your customers can access their personal information
- how you will correct inaccurate or incomplete information you hold about a customer
- how you customers can contact you regarding the information you hold about them
If you sell goods or services on your website, you must have a terms and conditions that outlines how your company complies with Australian Consumer Law as well as how you provide refunds and warranties for your goods and services. Some important clauses to include in your T&C’s are an indemnity clause, as this is the contractual transfer of risk between you and your consumers to prevent loss, or compensate for a loss, which may occur. You will also need to include liability and warranty clauses.
Take away points
- Seek legal advice on the best type of business entity for your business
- Work out which contracts you need when dealing with employees, contractors and suppliers
- Know how to comply with the Australian Consumer Law
- Meet your privacy obligations
- Protect your valuable intellectual property
- Website legal for terms and conditions, privacy policies, and disclaimers
- Practice advertising, selling and promotional techniques that comply with the law
Lara Alexandra, Legal Assistant and Trade Mark Administrator
We are a team of trade mark attorney and IP specialists based on Gold Coast and Sydney. If you need any assistance with your startup, please contact us on 1300 77 66 14.
Disclaimer. The material in this post represents general information only and should not be taken to be legal advice.