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Some Legal Aspects of E-Commerce

You work hard to market an innovative product or service so that it will catch on like wildfire. You've developed an exceptional transactional website and hired marketing consultants to boost your sales. But have you thought of everything?If your server is located in Canada or if you sell goods and services in Canada, your company is subject to various laws which may entail obligations or trade restrictions. 

1/ Your website's design

The structure of your site: If your company sells products to consumers, it is important that you ensure that the structure of your website adheres to the requirements of the Consumer Protection Act. According to this law, online sales are treated as "distance contracts." As such, your website must include some crucial information, regardless of your industry. This step is easy for any business to overlook. The Consumer Protection Bureau's website offers information about this topic. Vendors must provide the same information for online clothing sales as for many other consumer goods.

The language(s) on your website: Even if your clientele is primarily Anglophone or located outside of Quebec, it is imperative that you have a French version of your website. If this is not the case, you may receive a notice from the Office québécois de la langue française (OQLF). In some cases, you may be required to pay penalties. Resources such as the OQLF can help you with the translation process.

The copyrights applicable to your website and its content: The popular belief is that once we have paid for something, it belongs to us automatically. However, this is not always the case. It is highly probable that the people who designed your logo and your website, your content writers, and other parties you've contracted, have retained the copyrights over their work as per the Copyright Act. This can be a roadblock if you want to make changes to these elements in the future. In order to avoid this type of situation, it is important that anyone who has contributed to your website's development signs an assignment of copyright ownership as well as a waiver of his/her moral rights. 

2/ The logistics of national and international sales

Launching a website must be part of a company's overall strategy. E-commerce most commonly encounters the following pitfalls:

  • planning of sales logistics (e.g.: customs charges, lead time, variable delivery costs)
  • aligning conditions of sale with the logistical aspects of the business
  • lack of knowledge regarding the taxes that apply in the buyer's location
  • the return policy
  • not registering a business outside of Quebec when large sales are made abroad.

Here are a few good practises to follow:

  1. Make sure that your suppliers respect the delivery deadlines and that they provide a guarantee policy for defective products, ideally covering the costs of returning the damaged merchandise to the supplier.
  2. Make sure not to offer, in your own terms and conditions of sale, guarantees on your product that exceed those offered by your supplier.
  3. In the case of sales abroad, check if taxes must be charged in the buyer's location. Application programming interfaces ("APIs"), which you can integrate into your website, can calculate these taxes for you. And do not assume that if Amazon doesn't charge taxes, you can do the same. The result may come as an unpleasant surprise, especially given the penalties imposed.
  4. If a significant percentage of your revenue comes from outside of Quebec, whether this means from Alberta or elsewhere in the world, you may need to register your company, or be subject to penalties imposed by this province, state, or country. A lawyer should be consulted regarding this matter.
  5. Indicate in the conditions of sale that the company may refuse to sell products. This is an essential precaution when a customer is located in a region where the delivery costs are too high and you offer this service free of charge; if your customer lives in a country that imposes restrictions on imports (e.g., food or cosmetic products) or worse, if your biggest competitor unexpectedly tries to order 1,500 units of your star product at sale price! 
  6. You must make sure to always indicate in the conditions that in the event of a disagreement, all disputes must be submitted to the courts in your judicial district in the province of Quebec and that Quebec's laws apply to the purchase. In doing so, you will avoid a great deal of hassle abroad, with some exceptions.

3/ The anti-spam law: not to be overlooked in your marketing strategy 

Failing to revise your strategy for promotion and after-sale marketing could prove extremely costly for your business and even for you, personally, as the administrator of your company. The Canadian anti-spam law applies to any electronic message sent from a computer located in Canada and to any message received in Canada. It should also be noted that anti-spam laws have been adopted in many countries around the world. You must therefore make sure that you scrupulously respect these laws' provisions before sending a message to a potential or former client, otherwise you may be charged costly penalties. Your strategy for advertising on social media must also be in line with the law. Consult the government website to learn more.

In short: launching a transactional website may seem simple enough, but it is important to carefully plan what happens once the sale has been made in order to avoid legal and tax issues. To your success!

 

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