Counsel & Conversation | S2 E2 | Legal Essentials for a New Business Website | Swinburne Maddison

Caroline Smith 0:06
Welcome to Swinburne Maddison’s Counsel & Conversation, where our experts talk about everyday legal scenarios. Today, I’m pleased to welcome Jenny Wade, who is a Partner here at Swinburne Maddison and heads up our Commercial department. So, welcome Jenny. Thank you for giving up the time today. So as you know from the format already, I’m going to read a scenario to you, and then I’m really keen for you to talk through how that scenario might be handled. So, here goes. An owner of an established business which has gone through a strong period of growth in the past three years, want to commission the build of a new website. What are the legal steps they need to consider?

Jenny Wade 0:49
Ok, so I’m assuming here is an existing business that’s been trading for some time. They are getting a new website to replace an existing website. I would say the first thing to do is just to do a quick check to make sure that the business does own the domain name is registered as the owner of of that domain name. We do see examples where when a business has originally registered a domain name, they’ve used a third-party to do that, perhaps the first software developer and the domain name might have been registered in the name of that software developer, rather than the business itself, and this would be a good time to try and remedy that if you’re not registered as the owner in the first instance. Again, assuming that there is an existing website and the business owner is just looking to sort of develop that website and replace what’s existing. If you have a good relationship with your original software developer, you might just want to engage with them again for the new build. But if you want to look at other options in the marketplace, it would be worth doing some due diligence before deciding who you’re going to use. It’s really important, as any business owner will know and be aware that they use suppliers that they’re they’re happy to work with and can have a good relationship with, and that whatever you’re spending money on is going to get you where you want to be. So spending a bit of time doing some research about options out there, looking at client testimonials, examples of a software developer’s work will be really important to make sure that you’re engaging with somebody who is going to give you what you want at the end of the day. And then once you’re out there, speaking to software developers, you might want to speak to a few initially to try and get some quotes. Now, the business owner will need to share some information with those software developers about their business and what their intentions are, what their specification would be for the website so they can get those quotes. Now, at that point, there is no contract between the business owner and the software developer, but because the business owner will be sharing information about their business, it would be important to think about putting a confidentiality agreement, otherwise known as a non disclosure agreement, in place, so that means that any information the business owner is sharing about their business with potential software developers will be protected, not giving that software developer the ability to use your ideas themselves or to give them away to somebody else. That’s really critical.

Caroline Smith 3:34
That makes complete sense and and so really, what, what you’re saying is there’s some things that the business owner would do from the outset themselves. But actually it’s sounding like pretty quickly you would need advice in order to have an NDA drawn up. Is that the case?

Jenny Wade 3:51
Yeah, I think that’s important. Now some businesses will have a house NDA or confidentiality agreement themselves, maybe that they’ve used previously non-disclosure agreements or confidentiality agreements are on pretty standard terms. So it might be that they already have something that they can use at that stage, but it’s always worth getting some legal advice just to make sure that it is fit for purpose in respect to this particular project that you’re undertaking. And then, even if you do have a house confidentiality agreement that you can use for those initial discussions, as soon as you’re looking to actually engage the software developer that you want to work with, I would recommend getting some legal advice, and that’s because it’s going to be really important to make sure there is a really good contract in place between the business and the software developer that will explain the basis on which the software developer is going to develop the website. Now it might be that the software developer has their own terms and conditions which they would want to apply to the arrangement, in which case you’d be looking for a review of those to make sure that they cover all of the things that you would expect. And if the software. Where a developer doesn’t have their own terms and conditions, which happens more often than you would think, then it will be a case of developing something bespoke that will apply to that arrangement.

Caroline Smith 5:10
Great. I mean, really pragmatic advice. So in terms of that contract that you mentioned with the supplier, Jenny, what sort of things would be covered in that to protect the business?

Jenny Wade 5:20
There are some things which you’d be looking for in any type of contract, and then some which are particular to a software development contract. So in terms of standard types of provisions that you’d be looking to ensure a covered price, you know what? What is the price that you’re paying? How is it calculated? Is it just a one off price. Do you know from the outset what that’s going to be, or is it dependent on things that happen along the way, If changes need to be made? Are there things that you don’t know yet and that might change the price of what you’re going to need to pay for the website? Payment is that payment up front? Is there a deposit and the rest payable later? Do you pay all at the end? Are there milestones along the way? They’re all things to think about at the start, so that everybody’s on the same page about how that’s going to work. And it’s price and payment that often cause problems during the development of a website. Then in terms of other provisions, standard provisions, you’d be looking at things like liability if something goes wrong, who is responsible, and up to what sort of threshold is there a cap? Are there any indemnities that you’d want from the software developer if things go wrong, to protect the business owner? And then, in terms of specifics for a software development contract. Testing is really, really key. Now the business owner is going to want to make sure that what they get at the end of the day is what they thought they were going to get. So having a specification and then testing against that specification is really, really important. And it might be that that testing takes place all just at the end, once the website is being developed, and the business owner will have a look at what’s being developed and check whether they’re happy with it and it accords with the specification. Or it might be that there are steps along the way, different parts of the website that can be tested to make sure that everything’s on track. And then really, really important point in any sort of software development contract is about intellectual property rights. Now, the business owner is really going to want to ensure that the website is going to be theirs and that all copyright that is in the website vests automatically in the business owner on creation. Now that’s not always the case, and I’ve seen lots of examples of contracts which are on software developers terms and conditions which say that intellectual property rights in the output so the website, in this case, vest in the software developer. And that’s no good for the business owner. And so that’s something you’re going to really want to check if you’re contracting on the software developers terms and conditions, and make sure that is amended before you sign anything.

Caroline Smith 8:04
So really specifying all the details, leaving no grey areas, and it’s just really clear. It’s just going back to something that you said about the sort of protection for the business around the website. So for instance, I was thinking if that was somebody who traded through their website, to say, an E commerce site. Would there be something built into the contract to suggest that if, for some reason, it wasn’t ready and the business wasn’t able to trade, that they are protected?

Jenny Wade 8:31
You can absolutely capture that sort of thing in a contract. It might be that there are milestones, for example, that’s probably the way that you would deal with that, that there would be some timescales and milestones in your contract, and if those milestones weren’t achieved, there would be some remedies for that, but these things really need to be thought through at the outset, and it’s difficult. I appreciate that when you’re wanting to work with somebody and everyone’s very excited to get going, you don’t want to stop and think about what could go wrong, but it’s much better to try and think those things through when you are all still happy and wanting to work together, because you can have those slightly difficult conversations where you say, you know, I need this to be done by a certain date. Is there a risk that might not happen? If it doesn’t happen? How are we going to deal with that? What are the implications to us? What can you do to try and fix that? It’s much easier to have that conversation at the start and work that all through. If you don’t address that in your terms and conditions and wait and that situation arises, then you know you haven’t left yourself in the best position, because nobody really knows how to try and address that.

Caroline Smith 9:43
In terms of the the advice, then really, at that point you’re suggesting think about that in advance?

Jenny Wade 9:51
Yes, absolutely, it’s so much better if everyone can stop and and think at the beginning about all of the things that need to be done as part of the engagement, and then what might go wrong along the way. And if those things do go wrong, how might you deal with it? So if, for example, there is a deadline and the website needs to be completely ready by a particular date for reasons that are important to the business owner, that deadline really needs to be specified in the contract with some provisions which deal with how that’s going to be dealt with if that deadline is missed. So is it that the business owner gets the money back, for example, or is the business owner going to start to incur some losses and needs to be able to recover those from the software developer? And it’s much easier to think about those things at the outset when you’re wanting to work together than it is to try and address them once everything has gone wrong. So even though everyone’s really keen to get going at the outset, it is important to just stop and think through what the important points of the contract are, what it is that you’re wanting to get by when and for what price you know, sort of the essential points to think about and make sure you’ve taught those through and documented those and thought through what might happen. How could something go wrong? How would you address it if it does go wrong? And know that once you get started, you’ve thought of all those things and kind of worked out a plan of action, rather than potentially getting to the point of something going wrong not having thought about it, tensions run high, and a dispute ends us, which means ultimately, you don’t get your website when you want it, and just causes more of an administrative burden.

Caroline Smith 11:43
Yes, and so effectively you’re protecting yourself. I would imagine, because of your experience and working with so many different businesses, Jenny, that you probably have experience of those pitfalls. So somebody might think about their scenario with their business, but then they could come and talk to you about some of the other considerations that they might want to apply in the contract?

Jenny Wade 12:04
Yeah, absolutely. I can think of a number of examples, and it’s particularly in relation to ownership of the website, where I’ve been approached by clients who it’s usually when they come to sell their business or to seek investment in their business, and as part of the due diligence, the buyer or investor will be looking at all elements of that business, and in amongst that due diligence, it is discovered that the website is actually owned by a third party, and then the buyer or investor doesn’t want to proceed until that situation is remedied, because they want to ensure that they will own the website, and you then need to try and remedy the situation after the event. And it’s not completely irretrievable. There are ways to deal with that. You can put in place something known as a confirmatory assignment under which the website will be assigned from the software developer to the business owner, and then can be sold to the buyer or the investor, but that is reliant on the software developer playing ball, and they will not have much incentive to do so if they’ve developed the website. It might be some years ago that they developed the website. They’ve been paid. They’ve completely forgotten about the whole thing, and there’s nothing to incentivise them to do anything.

Caroline Smith 13:22
Your corporate colleagues have said to me before time kills deals. So if in that scenario, to find that out, could really derail that whole purchase of the business. So Jenny, just in terms of the legal scenario and the fact that this website’s been built, what are the legal considerations would there be? So there is various information that the business owner will need to ensure is placed on its website. So it will need to discuss that with the software developer. So I’m thinking things like their privacy policy, their cookies policy, their terms and conditions under which they provide their goods and services to their customer base, and there is also certain information which is required at law to be placed on a website of a business. So just to run through each of those things, privacy policies. Now, any business should have a privacy policy which is also known as a privacy notice, and that is where they set out how they deal with customer personal data. Now, if the business has been trading for some number of years, it’s probably a good opportunity to do a refresh on the privacy policy to make sure that it’s up to date. As the business grows, it might start to deal with more personal data than it did at the outset, different categories of personal data. Its customer base might have expanded. It might be working with more third parties to whom it would need to provide the personal data to provide the service, for example, a payment provider. So it’s a good opportunity to do that refresh on a privacy policy. See similarly, the cookies policy will need to be updated if the website is being renewed, because there will be new cookies which will apply for the use of the new website. So the cookies policy will need a refresh. And then any business which is providing goods or services to a customer will have its own terms and conditions under which it does so, and those terms and conditions should really be on the website. And again, as a business has grown, it might be that those terms and conditions need a refresh, because the goods or services that you’re offering have changed. The way in which you provide them has changed, possibly just because of the growth of the business, you need to be taking a slightly different commercial position in your terms and conditions to that which you did earlier in your trading journey. So again, it’s a good opportunity to just check whether they need to be updated before they’re put on the new website. And then there is some information which is prescribed at law that needs to be on a business’s website. It’s quite straightforward. It’s just the business’s name, it’s registered office, it’s registered number, and that it’s registered in, let’s say, England, for these purposes. And that information all needs to be on the website, and the software developer will need to be made aware of that information so it can make sure that you are compliant with those regulatory requirements.

Caroline Smith 16:20
So actually, in this scenario, it does sound like the business has an opportunity just to look at everything at that point of building a contract?

Jenny Wade 16:27
it’s a good opportunity to do so yes, because everything is going to appear on the new website, and you want to make sure that when the new website is launched, it is all ready to go, and there’s nothing that you have to go back and revisit, ideally. So yes, it’s part of that process.

Caroline Smith 16:45
You’ve talked about a number of considerations for the business content that needs to go on the website. What about just things like the business name, the brand logo?

Jenny Wade 16:55
Yes, they will absolutely appear on the website. They’re really important. That’s the business’s brand in its name and its logo, it’s probably a good opportunity to stop and check that any protections you have in place in respect of those are still valid. So a business’s name and its logo can be protected by a registered trademark. Now there are also unregistered trademarks, but I would always encourage our business clients to consider applying for registration of their trademarks, because it’s much easier to protect your brand by way of a registered trademark. If you find out that somebody else is using a similar name or logo, you just have much better rights when your trademarks are registered. So as you are putting your name and your logo on the website, it’s a good opportunity just to check whether you have registrations for those and if not, to apply for registration, which is pretty easy to do. It’s all managed in the UK through the Intellectual Property Office, and there are checks you can do to make sure that your brand name and logo are available, not being used by somebody else, which you can carry out yourself, or you can ask a trademark attorney or a solicitor to carry out for you. And it’s also important to make sure that your trademarks, if registered, stay live. Now, once you register a trademark, it is valid for 10 years, but you do have to renew your trademark at the end of that period, and if you don’t do so, then you are granted a small amount of time after the trademark ceases to exist to renew your trademark, but if you don’t do so within that period, you have no rights over anybody else to apply for the continued existence of that trademark, so somebody else could come and effectively steal your brand. So I would really encourage any business owner to take that opportunity as well to just check trademarks make sure you have a log of when you need to go through that renewal process. Now, if you’re registered as the trademark owner with the Intellectual Property Office, the Intellectual Property Office will get in touch with you in the run up to the expiry of your trademark to let you know that you need to go through the renewal process. But they can only do that if they have your current contact details on file, so they’ll have a name address and an email address. But if any of that has changed, you would need to update the Intellectual Property Office. So that’s just also something I would recommend that business owners are live to at all times.

Caroline Smith 19:35
That’s really fascinating, Jenny and a little bit scary actually. Have you ever known of situations where somebody hasn’t registered their trademark from the outset or allowed it to expire? And what might happen? Can they be contacted by another business that does own the trademark?

Jenny Wade 19:52
Yes, that absolutely happens, and it happens all the time. I can think of examples where a business has been trading for some time using a name that they have chosen, probably without doing quite as much due diligence as they ought to have done, but have built up a following and are doing quite well, and then they receive a legal letter saying that they are infringing somebody else’s trademark by using a name which is the same as or very similar to somebody else’s. And in those circumstances, it can end up being the case that that business has to change its name, and that can be very, very damaging for a business, because it will have built a following, built up a reputation, and it has to almost start from scratch, really, by completely rebranding. So you can lose business as a consequence of that, and there are lots of costs involved in having to go through a rebranding exercise and then having to deal with that sort of legal fallout with the other business, which has contacted you via legal letter. There are things that you can do. Sometimes it’s possible to enter into something called a coexistence agreement, where two businesses agree, via contract that they can continue to operate by a name that is the same as or similar to another business’s name and brand, but possibly with some commercial implications. So it might be that the registered trademark owner requires the unregistered trademark owner to only operate within a certain geographical area or in respect of a certain market, or potentially to even have to pay some portion of its revenues to the owner of the registered trademark and none of that is where a business owner wants to find themselves, and it can really easily be avoided just by carrying out some really quite simple Google searches, for example, at the outset, or searches on the Intellectual Property Office itself.

Caroline Smith 21:52
What would happen? So you’re talking about different classes Jenny, so if, for instance, you were making a particular product, footwear, and it’s registered in a class for that. Does that mean that you couldn’t naturally just extend that brand into a different product group without registering it?

Jenny Wade 22:07
It’s really interesting question. So yes, businesses, when they start up, will often, particularly when their business is the production of goods manufacture, they’ll be producing one product, and then the range expands as they grow. And it might be that if you have brand protection for your original product, that doesn’t necessarily extend to your expanded range of products. So for example, beer, there are lots of small breweries out there, and beer is one category, one class of trademark. And so you might apply for your for protection of your name, your logo against that class of beer is covered by but if you then start brewing spirits as well, they’re covered by a completely different trademark category. So you actually wouldn’t have brand protection in respect of those products. So it, as always, it’s a matter of keeping things under review, and as your business develops, changes, grows, really thinking through all of the different implications there might be. But particularly in respect to trademarks, it is important to make sure that if you grow in that way, you have a look at the trademark classes. Get some advice if you need it, and look to expand the sort of registration of your brand trademarks to cover those new classes in which you’re producing goods.

Caroline Smith 23:30
So a lot to think about, particularly if you’re selling products to the general public. Are there any other considerations that you might have if you’re if you’re selling products online?

Jenny Wade 23:42
if a business is selling directly to the general public, then yes, there are some additional considerations over and above, if you are selling your goods and services to businesses, and that’s because, at law, consumers have additional protections. So when we are buying as individuals, that is the case. So under consumer law, there’s some information which needs to be given before the individual enters into a contract. So it’s things like, what is the price? Real clarity on how much you’re going to pay for the goods or services that you’re buying. When do you have to pay that amount? What your cancellation rights? Is there any guarantee and that information needs to be provided in a really clear format before the consumer makes the decision to buy through the website. So there would need to be some consideration by the business owner as to how that information can be presented in a really clear fashion on the website, so as not to fall foul of consumer legislation.

Caroline Smith 24:43
And in terms of the areas they need to consider, that’s the sort of advice that you could give to them then?

Jenny Wade 24:49
Yes, absolutely, Consumer Law is ever changing, and that’s because the Internet changes all the time, and the ways of buying and selling goods and so. Services change almost from day to day. So consumer legislation changes all of the time. We’ve recently had some new legislation, which is taking effect in relation to subscriptions. And lots of us buy things on a subscription basis. And there has been lots of case law developed about people who have been paying for some subscriptions that they didn’t realise they had, or where the terms and conditions are really unclear, and people are tied up in subscriptions that they don’t want to be in anymore. And that’s just one example of consumer law changing all of the time. So if you are a business selling to consumers it is worth just from time to time, checking whether there have been any any changes that you would need to take into consideration when you are buying and when you are providing your goods and services.

Caroline Smith 25:48
So, Jenny, just in terms of the scenario of the this business, we know that it’s grown very quickly over the past three years. What if that growth has come about because they’ve acquired another business?

Jenny Wade 26:00
That’s an interesting question. Now, if the business now operates via a variety of different companies, it will be key to consider whether the website is going to cover all of the different activities of those companies and how that information would be presented. The software developer will need some clear instructions on that from the business owner. And the business owner will need to ensure that all of the different companies within the group structure are happy with how that information is going to be presented. And I’m also conscious that the different businesses within that group might have different privacy policies or different terms and conditions, and it will be very important to ensure, from a design perspective, that the website clearly sets out which apply to different users of the website.

Caroline Smith 26:53
Finally, Jenny, just to summarise what we’ve talked about today, I mean, what would the implications be to a business that didn’t have any contracts?

Jenny Wade 27:02
I would never recommend to a business to operate without having contracts in place and formal written contracts at that. And that’s because if you don’t have a written contract, what is the contract then? And what happens when something doesn’t quite go according to your expectation,? That might not be the other person’s expectation, and before you know it, you find yourself falling out and potentially in a legal dispute, and it’s very difficult then to try to remedy that situation, because nobody really knew what the agreement was at the outset. So I’d always recommend that you have a formal contract in place, and that will protect you for whatever the subject matter is. So it will protect your confidentiality or protect your brand. It will protect the spending money on something in this in this scenario, you’re buying a website you want to make sure that you get what you pay for, and the only way that you can do that, really is to be very clear about what your expectations are, what you’re paying for when you’re going to get it. And it’s to everybody’s benefit to do that, because then everyone is working together in accordance with clear expectations, and they know what they need to do and when, and that’s the real key to successful business relationships.

Caroline Smith 28:25
Yeah, absolutely. And it sounds like you know, as a business starting up, you really would be sensible to seek advice from the outset, to know that you covered from the beginning with all those legal implications. We’ve talked about a business that’s established today, and it’s interesting to see that even an established business might not have just dotted all the I’s and crossed the T’s. We could keep chatting. Jenny, it’s been so interesting to talk to you today. Thank you for giving up your time.