The legal advice that ecommerce, sharing economy, and VR startups need

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This article is part of Tech in Asia’s partnership with Asia Law Network where we publish articles written by lawyers on their advice for startup founders. For more articles in this series, go here.

In this article, we asked some professionals for legal advice on starting a business in ecommerce, sharing economy, and virtual reality. Find out the common problems entrepreneurs face in these industries and how to avoid them.

Ecommerce

By Samuel Yuen (managing director at Yuen Law LLC) and Su Myat Htun (associate at Yuen Law LLC)

The essential issues with running online platforms are the allocation of risk and protection of rights.

Here are some questions you should ask yourself:

1. What contracts do I need?
2. How do I protect my money?
3. How are people allowed to use my platform?

Some basic contracts that are typically required to run e-market platforms include:

• Merchant contracts with vendors: This should set out the vendor’s stocking and delivery obligations, maintenance of an online account and associated membership fees, warranty period and exchange of defective goods, and restrictions against pricing disparities across multiple platforms (if permitted).
• Terms of use for consumers: This includes privacy and acceptable use policies and will typically grant consumers a non-transferrable, revocable license to use your platform. This serves to obtain consent for the collection, use, and disclosure of personal data submitted on the consumer’s online account.
• Service contracts with other collaboration partners: These include the engagement of companies that provide back-end services to your platform such as payment gateways, software developers, business analytics, logistics services, or even data intermediaries. Ensure that these contracts comply with your standard operating procedures (e.g. securitization of data, delivery policies, etc.).

One of the primary goals of these contracts should be to protect your money flow. This means creating clear terms on who should pay what and when (e.g. you may deduct a commission when processing online payments from consumers to vendors), what your business is and is not liable for, and limiting the business’ total liability to a reasonable sum.

You also need to protect the unauthorized, unlawful, or simply undesirable use of your platform. For example, merchant contracts should regulate the type of goods that vendors can offer through your platform, stipulate photography guidelines, and grant you the final say on the descriptions of goods. The acceptable use policy should regulate content submitted by consumers to your platform (e.g. false or malicious reviews for goods). Also consider intellectual property rights, data breaches, and malicious content.

Sharing economy

By Steven Liew (co-founder at Cosmic Cafe)

Virtual reality/augmented reality