Ecommerce Legal Guide: Australia

 
DISCLAIMER: These guides are for informational purposes only, and do not constitute professional legal advice. Please consult independent legal advice for information specific to your country and circumstances. Shopify is not liable to you in any way for your use or reliance on these guides.

Whether you’re starting a brand new business or you’re an established retailer, taking your business online is a fantastic and exciting growth opportunity. In fact, there has never been a better time to start an ecommerce business. The internet has connected the world and tools like Shopify now make it possible for anyone to get started, regardless of technical skill.

However, with all of these advantages come some complex legal issues. Different countries have different laws and knowing which ones apply to you is critical. In addition to the large variety of laws to take into account, you must remember that the law is fluid and subject to change. In order to reap the rewards that a successful online store can bring, you must stay informed and protect yourself and your business.

And that’s exactly why we created this guide.

We want to make you aware of all the important implications that come with conducting business online so you can prepare yourself and carry out all the necessary steps to ensure everything you’re doing meets the legal requirements for an online business operating in Australia.

Having said that, this guide is not meant to be taken as official legal advice. Rather, it’s simply meant to point you in the right direction and it’s always best to seek professional legal counsel if you have questions about your specific situation.

Let’s dive in.

 

Trade–mark

Definition
A sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.

—S. 17 Trade–marks Act

It differentiates your business and the quality of your products from those of your competitors. Your trademark carries your reputation with it, and reinforces long-term relationships with your buyers.

It’s important to be aware of trademarks not only to protect your rights, but also to ensure that you’re not infringing on the rights of others when creating one.

IP Australia (IPA) is the agency responsible for registering and enforcing your rights as a mark holder. They’re a resource you can access to gather information, ask questions, check the registry of current marks and begin the registration process.

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Sign

Definition
Includes any combination of the following: any letter, word, name, signature, numeral, device, brand, heading, label, ticket, packaging, shape, colour, sound or scent.

—S. 6 Trade–marks Act

The Trade Marks Act is the federal legislation that broadly defines which marks can be protected by law, as well as outlining your rights as a trademark holder and how to enforce them.

Before registering your mark formally with the IPA, there are some factors to consider. First, check the IPA registry to make sure your mark is unique. This increases your chances of being approved.

There’s no legal requirement for you to register your trademark, but there are benefits for your brand if you do. Registering your mark gives you the exclusive right to use it in Australia. In the event that someone does use your mark, it’s easier for you to take legal action because the registration is enough proof that you own the mark.

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You Can Register
(i) A mark that is distinctive for the goods or services you provide.

(ii) Words, graphics or
a combination of both.

(iii) Deters others from using it.

(iv) Proof of ownership.
You Cannot Register
(i) A mark that is similar or deceptively similar to any previously filed trademark application or registration.

(ii) A mark using a word that other traders might need to use in their normal course of business.

An unregistered mark holder can only enforce their rights on the basis of “passing off,” which is difficult and expensive to prove. A trademark is an asset to your business that is worth protecting, and registering your mark is the best way to do that.

Always remember that the law is fluid and subject to change. Although trademarks are an established area of the law, be sure to stay informed about the changes relevant to you and your business. The IPA is a good resource for keeping up to date and ensuring that your rights are maintained.

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Registered
(i) Becomes property that can be sold or licensed.

(ii) Gives the holder exclusive rights.

(iii) Deters others from using it.
Unregistered
(i) Using your mark for extended time can provide rights.

(ii) More difficult and expensive to bring legal action.

 

Spam

Defined
Unsolicited commercial electronic messaging. Electronic messagingincludes emails, instant messaging and SMS but does not cover normal voice-to-voice communication over the telephone.

As a shop owner, you often have the opportunity to collect and use your customers’ e-mail addresses. This can be a valuable resource to increase sales, but be sure to exercise caution when using this information. The Australian government has addressed privacy issues associated with this by implementing the Spam Act in 2003. The act preserves the value of commercial messaging while minimizing the costs and inconveniences of spam. Compliance with this legislation is enforced by the Australian Communication and Media Authority, and failure to comply can result in significant penalties.

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Avoid Spamming

Three key steps
(i) Consent — You must have express or inferred consent from the receiver.
(ii) Identity — Messages must contain clear and accurate information about you or your business and how you can be contacted.
(iii) Unsubscribe — Messages must contain an unsubscribe button. Requests should be responded to promptly. The act says consent is officially withdrawn within 5 days.

Sending e-mails to customers is a great way to keep them informed about your products and offers. These sorts of communications are defined as “commercial electronic messages,” or CEMs for short.

Potentially problematic messages range from emails telling customers about a new sale to offering unsolicited business opportunities.

The law in Australia doesn’t ban these messages, but it does require that you (the sender) provide certain features and information in the messages you send.

These ensure that the recipient knows exactly who you are and that they can stop the messages from coming if they’re no longer interested.

Getting consent is a great way to make sure your marketing materials are well received and effective.

Express Consent:
A direct indication that it’s acceptable to receive messages from a business

In order to give express consent, the receiver can subscribe to your messages by intentionally checking a box on your site, or by providing an email address for the purpose of getting information about your store. Consent can also be acquired if the receiver requested information over the phone.

Inferred Consent:
When the relationship between you and the recipient means it could be reasonably expected that such messages would be sent.

There are situations in which you can send marketing messages without the express consent mentioned above. This form of implied consent is dependent on a pre-existing relationship with the recipient, as well as their conduct.

If the product or service you’re selling on your online store is one where it can be reasonably expected that continued contact is necessary, you have inferred consent.

Consent is not inferred, and this relationship does not exist, when an individual provides their email address when purchasing a regular product or service online. Inferred consent is more difficult to establish and prove. The best course of action is to find a way to have the customer expressly consent to get future offers and deals from your online store.

Complying with this law will allow you to maximize your contact list as a means of marketing, while ensuring that your communications are legal.

 

Privacy — Data Protection

DISCLAIMER: These guides are for informational purposes only, and do not constitute professional legal advice. Please consult independent legal advice for information specific to your country and circumstances. Shopify is not liable to you in any way for your use or reliance on these guides.

Personal Info

Defined
Information or an opinion that identifies an individual or allows their identity to be readily worked out from the information. It includes such things as a person’s name, address, financial information, marital status or billing details.

—Office of the Australian Information Commissioner

Whether you conduct business online or offline, you have access to personal information about your customers. Privacy is important to them, and it is becoming harder for them to protect in an increasingly digital marketplace.

Data protection laws in Australia do not directly apply to all types of businesses. You’re only subject to the Privacy Act if you have an annual turnover of more than $3 million.

Small business owners may, however, opt in to the privacy standards to show the public that their customers’ privacy is important to them. Although the laws may not be mandatory for you, it’s still wise to understand the rules. Being a company that respects privacy is viewed favorably by the public.

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OAIC

Provided Tools
(i) Explanations of privacy laws.
(ii) Checklists to understand what applies to you.
(iii) How complaints are handled.
(iv) Privacy fact sheets.

The best way to protect yourself, gain consent and inform your clients is to implement a well-designed privacy policy. The link to this document should be visible and accessible on your online store.

Any promises you make in this policy create a contract to which both you and your customer are bound. You need to be conscious of your privacy policy to make sure you comply with the promises you make. Some of the information that needs to be provided is actually controlled by the e-commerce platform you choose (such as storage or security). When deciding on a platform, pay attention to how they integrate their privacy policy, and see what sort of guidance they provide for preparing the clauses for your own policy.

The Office of the Australian Information Commissioner is an excellent and interactive resource for informing yourself about privacy legislation in your country. In addition to clearly labeled information, there are checklists that will lead you in the right direction.

Respecting your consumers’ personal information can help build a strong and competitive foundation to your customer relations.

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Privacy Policy Generator

Coming up with your first privacy policy can be challenging so we’ve created a handy tool that generates your own, custom privacy policy with the click of a button.

 

Business Structures

DISCLAIMER: These guides are for informational purposes only, and do not constitute professional legal advice. Please consult independent legal advice for information specific to your country and circumstances. Shopify is not liable to you in any way for your use or reliance on these guides.

Structures

Your Options
(i) Sole Trader
(ii) Partnership
(iii) Corporation

Whether you’re just starting out or deciding on the right structure for your existing company, understanding the law around business organization is important. You’ll have to assess the nature of your business to figure out which option will afford you the most benefits.

Sole Trader

This is the most common structure for online store owners, and also the easiest to run and set up. The federal, state and local governments are each responsible for registering different types of businesses. You can check the Australian Business License and Information Service to see which apply to you.

As a Sole trader, you’ll also have to register your company’s name with the Australian Securities and Investment Commission (ASIC). This process is simple, fast and can be completed online. Since no separate entity is created for the business, the taxes associated with your company are filed on your personal tax return.

Although it’s simple to open and run, being a sole proprietor does have disadvantages. Your business is not a separate entity from you and although you receive all profits, you are personally liable for all debts or legal action taken against the business. This common and simple structure is ideal for a shop with little risk of liability.

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Pros
(i) Easy to set up and run.

(ii) Control of all business decisions and profits.
Cons
(i) Not a separate business entity.

(ii) You are responsible for all debts or actions against the company.

Partnership

A partnership is another common structure for small businesses. These are formed when two or more individuals are co-owners of a business venture. This structure allows individuals to pool their assets and skills to increase their chances of success.

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Agreements

Considerations
A well-drafted and balanced agreement should include:

(i) Names of partners and how new partners can be added
(ii) Outline of the business
(iii) Investment, liability and profit share of each partners
(iv) What if partnership is dissolved

Like a sole trader, a partnership is not a separate legal entity from its owners. This means the partners are personally liable for all debts and obligations of the business. An additional consideration is that all partners are liable for the actions of the others in relation to the business. One partner may be responsible for the debt of another if their assets are insufficient to cover an obligation..

With this form of organization, remember to focus on the human element. There’s always a chance that a friendly partnership can change in the future. For this reason, make sure to have a lawyer assist you when drawing up a partnership agreement. Selecting the right partner is important because you’re liable for the debts and actions that they incur on behalf of the business.

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Pros
(i) Allows for a division of labor.

(ii) Partner brings more
capital investment.
Cons
(i) Not a separate entity.

(ii) Jointly liable.

(iii) Business relationship can sour.

Company

Running a company has many benefits and increases the credibility of your business. The process is more complicated but does have many potential benefits for your online shop.

The business cannot be called a company until it’s been registered with ASIC. A registered company can conduct business throughout the country, without needing to register in individual states.

One of the most notable differences about this business structure is that the corporation becomes a separate entity from you as the owner. You’re not personally financially liable for what happens to the corporation. This is a good business structure if your company is growing and there is a greater potential for liabilities.

Although this provides a lot of personal protection for you as a shop owner, it’s not the right choice for every business. The costs associated with setting up and running a corporation are higher, and a company requires extensive record keeping.

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Pros
(i) Separate entity.

(ii) Limits your financial liability.

(iii) The corporation survives the death of shareholders or sale.

(iv) Tax advantages.

(v) Improves your credibility.
Cons
(i) Heavily regulated. This means that there are many requirements for running a corporation.

(ii) Extensive record company.

(iii) More expensive then the others to form (fees associated with incorporation).

Choosing a business structure

It is really important that you consider the particularities of your business when deciding on the structure that is right for you. Although some options have benefits on paper, they may not be a worthwhile choice for your business. There are detailed and helpful resources made available to you by ASIC. Before you finalize your decision or begin the process it is highly advisable to consult a lawyer to insure that you have made a sound choice, and that the process is completed properly.

4 Steps to Registering

(i) Reserve your company name — The name of your company must not already be registered with another company or business.
— Before deciding on a name, check its availability.
— Your company name must identify its status as a company (see this chart to find which abbreviation applies to you).

(ii) Plan how your company will be internally governed — Be sure to seek legal advice for this step.
— You must decide how your company will be run.
— You can either use the Replaceable Rules found in the Corporations, write your own constitution, or use a combination of both.
— Replaceable Rules cannot be used if you are a sole director or shareholder of your company.

(iii) Get the Required Consent — Before registering, you need written consent from those who will be the director, secretary and member of the company.
— These people must be 18 years or older.

(iv) Register your company — There are two ways to register your company: Through a service provider using software connecting directly to ASIC or by completing the application manually and mailing it to ASIC.

Choosing a Business Structure

It’s important to consider the unique aspects of your business when deciding which organizational structure to choose. Although some options have benefits on paper, they may not be a worthwhile choice for you. There are detailed and helpful resources available from the Government of Canada (Canada Business Network). The checklists, information and planning strategies can help you make the best choice for your business. Before finalizing your decision, consult a lawyer to make sure you’ve made a sound choice and that the process is completed properly.

Conclusion

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Share the Legal Guide if you think that it may be helpful information for your friends and followers.
Being aware of and obeying the rules that apply to you as an online business owner is an important aspect of running your shop.

Protecting your brand, your assets, and maintaining a positive customer relations are all affected by your ability to understand and obey the law.

The law is fluid and can always change! The resources provided to you in this book will allow you to stay up to date and make sure you are aware of requirements placed on you.

Ready to start your online business?

 

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