Last updated: 14 April 2021
More and more online businesses are marketing to overseas customers. With an online business you have access to a larger potential customer base – it’s an easy and low cost way to sell more goods and services.
So what do businesses do about Terms and Conditions (“T&Cs”) for their customers in other countries? Can they still be sued if things go wrong? And what can you do to protect yourself when selling your products and services overseas?
It is difficult to provide an all encompassing answer to the question or even one that business owners want to hear. But here goes.
E-commerce is governed by local laws
There are no comprehensive, general worldwide set of Terms and Conditions that exist for international electronic commerce, online businesses or global transactions.
Generally, if you sell to customers located in another state or country, your e-commerce business is subject to the laws and regulations of those other jurisdictions. Your customers may be able to sue your business in their local court or even close your business down if your business is declared to breach or not comply with their local laws.
The best protection for your business would be to consult lawyers in each country where you are selling your goods and services. Then have them draft your Terms to comply with their local requirements on consumer law, payments, taxes and other regulations.
Then on your website have a ‘country selection’ drop-down menu or visible flag showing which version of your website is being used. The Terms and Conditions would then match the applicable laws of that jurisdiction.
However, this can end up being extremely expensive and more so with each of the US States having their own individual State laws.
Include a Governing Law clause in your T&Cs
Alternatively, strong Terms and Conditions written by Australian lawyers that clearly outline your Terms such as refunds, guarantees, delivery and other information for doing business go a long way to protect business owners. They can help avoid confusion when purchasing and potential disputes with customers. However, they are not a guarantee against claims from customers, even in Australia.
Many website T&Cs contain a Governing Law clause which indicates where the business is located and the law under which the Terms of business are governed. In your Governing Law clause you nominate the State where your business is registered. It does not mean you can only conduct business in that State. But it does mean that your business and Terms are governed by the legislation in the State you nominated.
So when customers agree to purchase your goods and services, they agree to your Terms with your Governing Law clause. This means that any dispute or claim they have with your goods or services, is to be made in your nominated State.
It also means that the Terms of your agreement with the customer are governed by the laws of that State. This can save you the time and money of having to travel to defend a claim from a customer in another jurisdiction.
And get “active” agreement
Governing Law clauses are being upheld by many countries and in many Internet cases. But to get extra protection, have your customers “actively” agree to your Terms. You can do this by getting them to tick a box or otherwise indicating positive consent.
This is more readily enforceable and provides more protection than T&Cs that are simply posted on the website for a customer to read at any time.
But be aware: while a Governing Law clause may be accepted in many countries, there are instances where some countries may argue the clauses are void on the grounds of public policy or not in the best interests of their local consumers. Generally, this has been largely dependent on the case, the gravity of the issue, the goods and services being sold and the country regulations themselves.
Remember, before selling products and services in any country, you should always familiarize yourself with local consumer laws relating to your business. You don’t want to trigger certification or licensing requirements. And if in doubt, check with other business owners or local regulators – they often are happy to discuss!