In last month’s issue we gave a brief overview related to a business website which could cause loss, liability and risk for a company and its managers or directors if not managed correctly. In continuation of this topic and in order to further identify corporate governance responsibilities in this issue we will focus more closely on the importance of having well evaluated, considered and drafted Terms and Conditions and disclaimers for your company’s website, to ensure the website functions correctly and as intended.
As was mentioned in last month’s issue there are many types of websites and internet based business worldwide. With the rate at which South African businesses are using the internet as a profitable commercial platform it is currently being compared with the growth rate in countries like the UK and USA. This rate of growth is directly proportional to the acceptance of the South African internet user and electronic consumer in local internet companies.
The fundamental principle of any successful internet based business is the careful consideration of the contracts and agreements (1) being concluded with potential clients and website users and (2) the obligations and possible liabilities resultant from such agreements. This is achieved by, amongst others, the posting of business and website specific Terms and Conditions. This will require that your legal department or your company’s legal representative will need to draft clear and coherent Terms and Conditions for your business website, in order to reduce the business risk of transacting over the internet.
It is disappointing to see how regularly South African internet businesses will post legal notices and legal content which was simply copied from another company or website, all having very real legal implications for the company and which itself is an infringement of the copyright vested in that website, and such internet businesses will use the copied content as their primary Terms and Conditions on the company website.
Such companies are failing to consider the serious legal implications such legal content may have on their business. Take for example that such copied content was originally drafted for the UK or USA e-commerce environment. South Africa has distinctly different legislative and developed requirements. Using such copied material can only have negative repercussions for your business and leaves your business unprotected.
It remains the responsibility of the managers and directors of a company to ensure that it does not conduct business in an unlawful or reckless manner. It could be said that manages and directors have a positive obligation to prevent any form of unlawful or reckless conduct by the company.
By allowing your company to infringe on another’s copyright and/or by posting Terms and Conditions which do not belong to the company and do not protect or adequately reduce the business risk of your company, you are allowing the business of the company to be carried on “in a reckless manner”. The Companies Act 61 of 1973 holds the director or manager who knowingly allows the company to conduct its business in such a “reckless” manner personally liable together with the company, for any liability resultant from such conduct and for any and all loss resultant from such conduct.
The same can be said about company disclaimers, from e-mail to limitation of liability for goods and services advertised on the company website the same care and thought needs to be given to the drafting of disclaimers, also to ensure that business risk is controlled. Employers need to be educated and inform their employees of the importance of company’s disclaimers and the need to use disclaimers on any outgoing electronic communications.
The above is a brief overview of some of the possible business risks associated with the operation and management of a company website and as such, no business decisions should be based upon the information supplied, without first consulting an appropriately specialised attorney in order to identify and evaluate your company’s specific needs and requirements. RMI4 Law members are able to contact the legal advice and assistance line on 0861 668 677 for further information related to this topic.
Contribution by: Wesley Watson LLB (UNISA) Barnard Incorporated Attorneys