Legal Documentation required for E-Commerce Start-up

As a result of the “Digital India” initiative and digitization of our country, e-commerce businesses have been flourished in our country in the past few years. People nowadays are using these online markets to buy almost everything they want. From groceries to mobile phones and insurances to loans, people are buying these products and services online. Thus, this makes a huge market place for businesses and services and it is the most crucial reason the traditional businesses are coming on online platforms. If you are planning to do so, then let’s start with the basics of it. In this article, we are going to see the documents which are necessary for starting an e-commerce business.

Legally Required Documents:

The following legal documents are required for establishing an e-commerce start-up. These documents play a vital role in deciding the success of your venture and it’s legal protection.

Founders Agreement: The roles and responsibilities of the founding members of a company, the equity vested in them, the ownership of intellectual property, etc. are outlined in the Founders Agreement. This agreement is done by the founding members of the business. This agreement is compiled with the various aspects of the business. Most importantly it should state the consequences of departure or death of the founders along with the division of the profits.

Vendors/Sellers Agreement: The stipulation of the conditions under which the work is to be performed by the vendor is stated in the Vendors/Sellers Agreement. The various aspects of the business such as the quality of goods supplied or service provided, duration of the contract, terms, and mode of payment are mentioned comprehensively in this agreement. This agreement proves to be beneficial while hosting a large event (a trade exhibition, for example) where several vendors will be selling their wares or products. Also, it is useful for payment settlement issues between the sellers and Vendors.

Non-Disclosure Agreement: A legal contract which states that certain information is confidential, and the extent to which its disclosure is restricted to third parties is known as the Non-Disclosure Agreement. This agreement can be entered into with an organization or a person. The confidential information in this agreement includes trade secrets, business plans, business methods and strategies, drawings, charts, and other such data. Software programs and codes involved or used in your business are also considered as confidential information.

Website’s Terms & Conditions:  The terms of service agreements and privacy policies of all online businesses are required to be prominently displayed on their website. All entrepreneurs know the importance of the terms and policies but most of the users never read them and sometimes users wonder why they are even used for. The conditions on which service is being delivered is explained in the terms of the service agreement. These terms and policies could be seen on the website as to policies or disclaimers. Let’s see its difference –

  1. Privacy Policy: It is a legal document that mentions that any data which is being cumulated by any website will not be shown to the third party without any permission or legal action is known as Website Privacy Policy. In India there is a corporate body to provide a privacy policy for handling of or dealing in personal information, it is as per Information Technology Rule,2011. This makes the privacy policy a must-have for websites. 
  2. Disclaimer: A statement/notice informing the user of any product or service of the possible consequences of the same Is called a Disclaimer. As per our law, it is mandatory to display the disclaimer in certain cases which are quite sensitive, such as where there is a hazard or an inherent risk of harm to one’s health (the warnings displayed on tobacco products are a good example), but most generally used in all product and services. A disclaimer is helpful in clearly establishing or limiting one’s rights and liabilities with respect to the user of any particular product or service. If there is any uncertainty or risk then the disclaimer is used.

Non-Compete Agreement: A contract between two parties, where one party agrees not to compete with the other for a period of time is known as the Non-compete Agreement. It lowers the possibility that knowledge gained by an employee or business partner will be used to compete against them in the future. The party is paid a fee in return for not competing. In many cases, the Non-Compete Agreement is utilized to prevent someone who signed it from competing directly, or from working for a competitor. The duration of the agreement, any geographical limitations, and what subjects or markets it covers is outlined in this agreement.

Franchise Agreement: A legal contract between a franchiser and a franchisee is nothing but a Franchise Agreement. The agreement’s content can differ depending upon the franchise’s system, the state jurisdiction of the franchiser, the franchisee, and the arbitrator. The investor is provided with a product, a branded name and recognition, and a support system through this agreement.

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Memorandum of Understanding (MOU): A declaration document in which two or more parties agree on a common course of action or business is known as the Memorandum of Understanding (MoU). It could also be known as the first stage of the making of a contract. Even though it creates no rights and obligations in itself, the MoU is recognized as a binding between two or more parties. An MoU must identify the contracting parties, declare or display the subject matter of the agreement and its objectives, summarize the necessary terms and should be signed by the contracting parties only.

Joint Venture Agreement: A group of persons or companies to do business together or to collaborate on a particular project without losing their individual legal identities enters into an agreement known as Joint Venture Agreement (JV). This agreement is legal joining between the parties and clearly outlines or states the areas of cooperation and divergence, and also makes the arrangements for profit-sharing and operations. Usually, the parties sign a Memorandum of Understanding (MoU), before entering into such a formal agreement. 

Non-Solicitation Agreement: A Non-Solicitation Agreement is referred to a contract where an employee agrees after leaving the company will not solicit a company’s clients or customers for his or her own benefit or the benefit of another competitor. In this agreement, it is also stated that an employee should not solicit the other employees after leaving the company which could be done for his/her own benefit or the competitor’s benefits as well.

So, as you have read the article, you now know the important legal documents which are necessary for starting an e-commerce start-up. If you still have any queries or doubts and if you require any help regarding this documentation and the processing then feel free to contact us. 

Thanks for visiting us and let’s hope you start your business as soon as possible. 

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