If you’ve already launched your online business, the next step is to protect yourself and your business in terms of legal contracts.
Every business, online or brick and mortar, needs to have standard business documents to avoid potential legal problems and future conflicts. In extreme cases, having your employees or clients sign a legal agreement could prevent a lawsuit, which would save you time and money.
This guide will go over the contracts needed to start a business online and why you need them. We will also cover some common questions revolving around legal contracts.
Contracts Needed to Start an Online Business
The types of legal contracts you need depend on the type of online business you’re running. Factually speaking, any type of legal agreement is generally one that is signed between two parties. One of them is the business owner.
The second party can either be an employee, a client, or a person using your online business’s services. The contract sets out the specific details of your transaction to which both parties agree. For example, every time you create an online account on a website, you are asked to tick the “I’ve read the terms and conditions” box.
Furthermore, as an online business owner, the agreement you ask the second party to sign is an online contract. This is different from traditional paper contracts, which are signed physically.
Online contracts, also known as e-contracts, are composed and signed electronically. They can be signed using the “click to agree” method or with an electronic signature. Bear in mind that just because a business agreement is compiled and signed electronically, it’s no less valid than a traditional contract.
Here are some fundamental contracts needed to start an online business:
- Write it yourself
2. Terms and Conditions
Although not mandatory, this type of legal document should also be incorporated into your website. A “Terms and Conditions” agreement is also known as a “Terms of Service” agreement. It’s a contract between your business or website and the people who visit your business.
When someone views a particular website or makes an account, they usually need to tick the “I agree” box next to the “Terms and Conditions” link. Whether your website’s visitors have actually read the terms and conditions or not isn’t your concern. If they check the box, they generally can’t legally pursue you for anything stated in that legal document that they later claim not to be aware of.
Having a “Terms and Conditions” agreement on your website is particularly useful if you own an e-commerce business. Without it, you won’t be permitted to accept online payments.
3. Legal Disclaimers
Having a legal disclaimer on your website is another way of protecting your online business. If you give professional advice and your website doesn’t include any disclaimers, your viewers can take advantage of that. This means that you would be risking potential legal action against yourself.
Disclaimers can usually be found on almost every website, although you may not have noticed them before. They are typically separated from the rest of the content, and they can be displayed anywhere on a website.
Disclaimers can take the form of a hyperlink, a checkbox, a separate tab at the bottom of the page, or placed within the “Terms and Conditions” page.
4. Client Contract
If you want to start an online business that will involve cooperating with specific clients, you need a client contract. Not only does this legal agreement help protect your business, but it also lets your clients know what type of cooperation they should expect from you.
For example, a typical client contract contains information such as payment terms, deliverables, deadlines, project details, and other data. You should also decide what will happen if the client contract is terminated before the entire agreed-upon period is reached.
If you don’t know how to compose a client contract by yourself, you can employ a lawyer to write the agreement and finalize the details, or you can use online contract makers.
5. Employment & Contractor Agreement
Employment agreements are essential for online startups. Although employment contracts can take the form of written documents or oral arrangements, we highly recommend sticking to a written employment agreement to avoid legal issues in the future.
The expected duration of your employee’s service doesn’t matter – you should have all your employees sign the employment agreement, whether they are working full-time or not.
Employment agreements usually contain the following details: job responsibilities and expectations, working hours, salaries and remuneration packages, confidentiality, ownership of intellectual property, termination, notice periods, etc.
6. Non-Disclosure Agreement (NDA)
These types of legal contracts are designed to protect your online business’s non-public information. NDAs, also known as confidentiality agreements, indicate that the employer plans to share certain information with the employee but doesn’t want that information revealed to the public.
The type of information usually covered by an NDA is intellectual property, trade secrets, knowledge, even ideas. Some well-known examples of non-disclosure agreements are doctor-patient confidentiality, attorney-client privilege, priest-penitent privilege, and banker-client confidentiality.
You can have an attorney compose an NDA for your online business, or you can find an NDA template online from providers like Legal Templates.
Apart from these six essential contracts needed to start a business online, here are some legal documents you can also include: invention assignment agreement, service contract, stock purchase agreement, partnership agreement, LLC operating agreement, non-compete agreement, and affiliate agreement.
Are Online Contracts Legally Binding?
Due to their novelty, online contracts tend to be taken less seriously than traditional paper contracts. That’s because people assume that they aren’t legally responsible for something unless they physically sign their name on the document sheet.
However, it’s important to note that online contracts and electronic signatures are, in fact, legally binding. This implies that you should carefully read any type of agreement you sign online.
Signing an online contract comprises:
- Clicking on the “I agree” button
- Entering your name in the signature box
- Using a digital signature
Do I Need a New Contract if I Want to Change the Terms of the Agreement?
Changing the terms of a contract is only possible if both parties agree to the contract amendments. Furthermore, you don’t need to draw up a new contract to change the contract’s terms. Instead, an additional document, called an annex, can be drafted and added to the original contract.
Agreement terms that can be altered are:
- Working hours
- Duties and responsibilities
- Location of work
Why Do Online Businesses Need Contracts in Place?
No matter what type of online business you establish, you could end up with many problems without the necessary contracts. Here are several reasons why you should utilize business contracts.
- To protect you and your online business from legal issues and the possibility of litigation
- To provide your employees/clients/customers/visitors understanding of what it means to use your website in any way
- To make your responsibilities, requirements, and obligations valid and legally binding
- To minimize any sort of risk
- To protect your clients
Recommendations – Our Top Choices
Handling all these legal matters can be confusing, especially if you aren’t familiar with legal practices. But you don’t have to do it alone. You can hire a professional to give you legal advice, or you can use online contract makers.
Here are some of our top picks for legal aid companies.
LegalZoom is an online legal aid business with over four million customers. They offer legal guidance for business and personal operations, and some of their top services include helping you start a business, trademark registration, and writing annual reports.
For less than $40 a month, their experienced and first-rate attorneys will help you compose all your necessary business contracts for you to successfully launch your online business. Furthermore, this team can help you with your formation documents and all your permits and licenses.
RocketLawyer offers free legal advice and documents and affordable legal services provided by licensed attorneys. Some of the available services RocketLawyer has to offer are the option to make your online legal documents, start your own business, and digitally sign other business contracts. Furthermore, there are numerous templates available for different types of legal documents.
The first seven days of service are free, followed by a monthly fee of $39.99. RocketLawyer offers various packages for businesses, attorney services, legal documents, and personal matters.
Legal services that Legal Nature provide are for family and personal matters, real estate, and business. They also offer online document templates for different types of agreements, such as business plans, website privacy policies, online terms of service, employment contracts, and many other options.
With a monthly subscription of $39.95, you can make a version of any document and receive access to all categories.
Law Depot is one of the most successful legal document service businesses. Their customizable, legally binding forms, documents, and contracts have helped over 10 million businesses save an estimated 2 billion dollars in legal fees.
They provide over 150 legal forms that you can use in your online business such as partnership agreements, Non-Disclosure Agreement, Website Terms and Conditions, and many more.
Make Sure Your Online Business Is Protected
To protect yourself and your online business, you must take care of all the legal matters that come with being a business owner. This includes compiling and signing all the essential contracts needed to start an online business.
Have you ever used an online contract maker for your online business? Which one do you think is the best for legal documents? Let us know in the comments section below.