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  • Writer's pictureFroese Law

App Development & E-Commerce Business

Updated: Oct 4, 2023

The new norm has forced many businesses to dive into e-commerce platforms. Simply put, brands must incorporate e-commerce either as their primary retail platform or as a compliment to their brick and mortar retail presence. There is no doubt that e-commerce will continue to be an important retail platform, even after the global pandemic. How your business integrates e-commerce into its business plan can vary, from hosting your own e-commerce website, to using a 3rd party e-commerce platforms, or to developing a mobile app. The beauty of creating your own app is that you create and control your own marketplace, which can be highly lucrative, freeing and powerful. In this article, we focus on the legal issues involved with developing your own app. After all, in today's society, there really is an app for everything. In our socially distanced, online new norm, don’t you want to be a part of the app movement?

Legal Considerations to Address With Your Developer

1. Ownership

Hiring a developer is one of the first steps to consider when deciding to build an app for your business. The developer you hire will likely not be an employee, but rather a 3rd party independent contractor or software development company. This will impact ownership of the app itself. It is important to have your relationship with the developer documented in a written contract so that you can own your app. Generally, waiving moral rights is also a key consideration.

2. A Good Statement of Work

It is important to have a written statement of work that is attached to the contract with your developer. Essentially, this will be the one thing you will be able to point to later on if the app does not turn out the way you had hoped. It also serves to set expectations and to make sure you and your developer are on the same page. Key terms to cover in a statement of work are as follows:

  • Scope of the services and deliverables expected

  • Fees, which are often tied to milestones for the delivery of the deliverables

  • A period to test the deliverables and reject them if they do not meet the specifications or don’t work, with an ability for the developer to re-perform the services until the deliverables are accepted

3. Maintenance and Support

Once your mobile app has been developed, it is important to consider what will be needed in order to ensure maintenance of the app over time. For example, making sure the app continues to be compatible with Apple’s iOS or Google’s Android mobile operating systems, which can change frequently. The app will also need support which covers errors and bugs that are found after launch. Support often goes hand in hand with maintenance, but it needs to be separately contracted for by specifying how quickly the developer will respond to notifications of bugs or other problems with the app, and how quickly they will fix them.

Legal Items to Cover in Your User Facing Terms and Conditions

So now your app is developed and your e-commerce platform is booming. What's next? There are several aspects to consider that relate your dealings with users of the app, such as user's privacy rights along with protecting your own liability.

1. User Generated Content

If your app allows users to post content that 3rd parties (i.e. other app users) can see, or otherwise interact with 3rd parties, you will want your Terms to clearly specify what is not considered appropriate content.

2. Rights to Use User Data

Information that users provide to you using your app (i.e. email addresses, names, birth dates, etc.) will often be considered personal information. You will need to disclose to your users how you collect, store, use, disclose and transfer their personal information, which is typically done in a privacy policy.

3. Risk Allocation Terms

It is prudent to allocate risk between your business and users. If something goes wrong and your business app is involved (i.e. a data breach), the Terms can give you some protection by limiting your liability through contractual provisions. You may also want to recoup expenses for any claim that may be brought against you, for example, relating to content a user posted that may infringe copyrights. The best way to do this is to obtain an indemnity from your user for certain harms that you have little control over.

4. Protect your Brand

To protect your brand, you may want any disputes with users to be kept confidential. In order to do so, your terms must require the parties to resolve disputes not in court but instead, via mediation or arbitration.

Generally, individual users may have some protections under consumer protection laws that you can’t contract out of and courts will tend not to enforce Terms that are too one-sided. So your Terms need to be drafted carefully in a reasonable way, to maximize the benefits they can provide.

This is only a summary of some of the issues that should be addressed in your creation of the app. It takes a village to build an online presence and without a doubt legal issues will arise at every crossroads of that village.

Froese Law is your ally for success. If you have legal questions about how to launch your business online, contact us for a free consultation!

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