Plan Ahead! Considerations for Doing Business On-Line

You may just have set up your business' website, or maybe you are considering transacting business with a company with an on-line presence. In either case, you should perform an objective risk management analysis to determine your potential liabilities and conversely what your potential avenues of remedy might be if a dispute arises. A couple of questions that you want to ask include:

Is There A Terms & Conditions Or Disclaimer Provision On The Website?
Most small businesses look to the internet to help generate business. However, without adequate control your marketing plan or potential client intake procedures could create unforeseen liability.

For example, a small local San Marcos, California business’ website is viewable anywhere. Without a Disclaimer or Terms & Conditions provision, that small business owner might be opening him or herself to be sued by someone in New York or other place the person never thought he or she would ever do business. If a small business decides to use a website, it should take care and perform a risk management assessment on itself. A website that clearly delineates its target audience, and if appropriate explains that nothing in it is to be taken as a guarantee (unless you actually intend to make a guarantee) can help avoid confusion and unjustified reliance in the future.

Businesses want to establish a connection with their potential client by inviting an on-line inquiry/application. Businesses should take care to analyze the potential risks in doing so, by asking questions like:
- Is your invitation for an application intended to create a formal contractual relationship?
- Are you guaranteeing that services will be provided?

A properly worded Terms & Conditions or Disclaimer can help you control your risk in the future.

From the consumer's standpoint, reviewing a company's Terms & Conditions or Disclaimer can help give you a sense of how the company treats disputes with its customers.

Is There a Forum Selection Clause in the Contract/Website?
Probably included in the Terms & Conditions or Disclaimer is a Forum or Venue Selection Clause.

A contract that specifies what law is to be applied and what jurisdiction any future potential legal dispute should be litigated or arbitrated in can predetermine whether an action even gets filed. A forum selection clause will specify that any legal action has to be filed in a particular jurisdiction. Frequently, the state law to be applied will be the same state where jurisdiction is agreed to by the parties. However, it is possible to specify a particular jurisdiction as the venue but also another state’s laws will be applied. This type of clause will not stop someone from filing a lawsuit in contravention of the contract (in another state for example). However, it will help control how and where a matter is determined.

Other important considerations should be considered that might affect what law and jurisdiction applies: did you actively solicit or do business in another state, does your business implicate federal statutes, etc. While a forum/venue selection clause could help you mitigate your risk, you should consult with an attorney for more specific direction or advice concerning your business dealings.

Again, from a consumer's standpoint a forum or venue selection clause should be analyzed from a risk management prospective. For instance, if you foresee the possibility of a dispute arising between you and the business, transacting with that potential out-of-state business may not be advisable.

Business and contract attorney Darwin Bustarde can help you analyze your contracts and websites from a legal/risk management perspective. As a solo-practitioner and small business owner himself, he knows first hand the important considerations in marketing and conducting business on-line. Contact him for reasonable hourly rate, flat-fee, or maximum fee legal services to help you control your costs in order to make your business more efficient from a business and legal standpoint.