Electronic commerce is becoming popular all around the world, and new opportunities are emerging for Bangladeshi businessmen/entrepreneurs to market their products or services in global markets. Yet with opportunity comes complexity, especially in legal agreements. Cross-border e-commerce means trading products across borders between businesses and consumers in different countries, which in turn entails manoeuvring between multiple legal frameworks.
To help facilitate seamless and legal transactions, Bangladeshi entrepreneurs should be aware of important aspects of cross-border e-commerce contracts.
Understanding Cross-Border E-Commerce Agreements
A cross-border e-commerce agreement is a contract between two parties residing in different countries that agree to conduct transactions online. Such contracts govern the rights and responsibilities of each party, including terms of payment, delivery, dispute resolution, and liability.
It will always involve two jurisdictions, so agreements need to be written with both countries’ laws in mind. Not taking these steps could put your business in a position of legal conflict, financial loss or sanctions
1. Choose the Governing Law Carefully
If deciding on a law for cross-border e-commerce agreement, there will be some points to consider. This provision states whose laws and courts will be used if there is a dispute.
Why It Matters:
- Legal systems differ from country to country. What is all right in Bangladesh may not necessarily be OK in Europe, the USA or other places.
- By ensuring you have a clear governing law, you can minimise uncertainty and facilitate a faster dispute resolution process.
2. Include a Clear Dispute Resolution Clause
Disputes are a part of doing business, particularly with overseas customers. You should always use a dispute resolution provision to minimise the risks in the contract.
Options for Dispute Resolution:
- Arbitration: A neutral third party resolves disputes. Swifter and more private than court action.
- Mediation: A process of negotiation with the help of a third party called a mediator.
- Litigation: Suing, which can be more costly and time-consuming.
3. Address Intellectual Property Rights (IPR)
When it comes to cross-border e-commerce, guarding your brand, products, and content from unauthorised use is extremely important. Your contract needs to specify who owns what in terms of IP as well as how any IP that you create will be utilized.
What to Include:
- Copyrights: Who has the rights to the content or product design?
- Trademarks: Protecting your brand in other markets.
- Licensing Terms: What you’ll allow the other party to do with your IP.
- Non-Disclosure Agreements (NDAs): To maintain confidentiality.
4. Clearly Define Payment Terms
Monetary disputes tend to come up when there are unclear, or unpaid, payment agreements. Cross-border transactions can have complex payment methods and c urrencies, so we need to be in the clear.
Points to Cover:
- Currency of Payment: State the specific currency (e.g., USD, BDT).
- Payment Methods: Bank transfers, online payments, or digital wallets.
- Transaction Fees: Who bears the conversion or bank charges?
- Late Payment Penalties: Outline fines for delayed payments.
5. Address Taxation and Customs Duties
The complexity of tax regimes is a common feature of cross-border trade. Your contract should specify who pays the tax, customs duty and similar charges.
Tax Considerations:
- VAT and GST: Specify if the price includes or excludes these taxes.
- Customs Duties: Indicate directly who will pay the import/export duties.
- Tax Compliance: Add a provision for the parties to adhere to local tax requirements.
6. Data Protection and Privacy Compliance
When interacting with global consumers, data protection regulations such as the General Data Protection Regulation (GDPR) in Europe become important. Your agreement should explain how personal information is gathered, kept, and used.
Important Inclusions:
- Data Usage: Describe how customer data will be used.
- Data Security: Comply with international data protection standards.
- Customer Consent: Explicit consent to data collection should be obtained.
- Breach Notifications: Outline the steps to take in case of a data breach.
7. Shipping and Delivery Terms
Cross-border e-commerce logistics is a bottleneck problem. Lost deliveries or damaged products can ruin your reputation. Have explicit shipping and delivery terms to protect your position.
Essential Clauses:
- Delivery Timelines: Specify expected delivery dates and methods.
- Risk Transfer: Clarify when the risk shifts from the seller to the buyer.
- Insurance Coverage: Who covers the loss or damage during transit?
- Returns and Refunds: Set clear terms for returns, including conditions and timelines.
8. Address Force Majeure Events
A Force Majeure clause protects your business from liabilities in case something beyond your control rocks your world (i.e., natural disasters, political turmoil, or pandemics).
Why It Matters:
If you cannot fulfil your contractual obligations due to such events, the Force Majeure clause temporarily exempts you from liability.
Include:
- Specific events covered (e.g., earthquakes, government actions).
- Notification requirements if an event occurs.
- Timeframes for resolving the issue.
9. Be Clear About Liability and Indemnity
To provide your business with some safeguards against liabilities that seem to exceed the value of a contract, you will want to set limits of liability and certain indemnity clauses.
Points to Include:
- Limitation of Liability: Cap the damages that the other party can claim.
- Indemnity Clause: Specify that the buyer will cover any legal costs if they misuse the product or violate laws.
- Exclusions: List circumstances under which you are not liable.
Why Choose Legal Advice BD
At Legal Advice BD, we appreciate the complexities of dealing with cross-border e-commerce agreements. Our professional Legal team is well-versed in preparing and reviewing contractual documents which adhere to the local and international laws.
- Personalised Advice: Custom recommendations as per your business model.
- Expert Drafting: Reduce legal exposure with carefully worded agreements.
- Ongoing Support: Being there for you during your cross-border business adventure.
Conclusion: Secure Your Cross-Border Success
Cross-border e-commerce presents vast opportunities for Bangladeshi entrepreneurs, but it also comes with legal complexities. To do that without tripping over tricky issues, make sure your agreements are also strong in terms of governing laws, payment structures, IP rights and dispute resolution.
Taking steps to batter down in these areas will protect you and enable seamless flow of transactions with global counterparts. At Legal Advice BD, we believe in making cross-border trade easy, so that’s what we do.
Take your company to the next global level – contact our attorneys now!