Tag: Contract lawyer

June 9, 2014   Posted by: Margarita Smirnova

BUSINESSES DEALING WITH ON LINE DEAL SITES!

At one point, sooner or later, you, as a business owner or business principal will consider offering your services on a Groupon like or an on line deal sites to promote your business and show potential customers your service.   Forbes’ article Are Daily Deal Sites Like Groupon Still Worth It? points out the wariness of the consumer.  In the article, a writer didn’t use her coupon.  She stated that customers became disillusioned by the deals and burnt from experiences.  She ended her article with a list of great advice for the buyers.  The list is great to connect with customers and figure how to make your business last.  The list below will take it a little further and list issues that businesses may deal with when working with companies that providing on line deals.  Keep in mind that the list is not exhaustive and not all companies are the same.

1.     Deals are contractual agreements.  When dealing with a corporation that offers an on line deal you will be provided with an already prepared contractual agreement that contains multiple clauses.  One of the most commonly used clauses is expiration date.  Each contract varies.  In 2012, Groupon, Inc. paid $ 8.5 million and settled a class-action lawsuit, which alleged illegal expiration dates when customers didn’t use their vouchers.  See, In re Groupon Inc. Marketing and Sales Practices Litigation, 11-MD-2238, U.S. District Court, Southern District of California. The result affected businesses that now must accept monies customers paid even after the deal, sans the discount.

When facing with on line deal like contract, this is the time to review every clause very carefully.  It is important to understand the company’s motive, which is to sell.  This means what is said is not always what is in writing.  One Boston magazine offered an on line deal to a business where the salesperson verbally offered a deal-type scenario that consisted the company would provide the deal on their website and keep 100% of proceeds from the deal while the business would provide a service to the customers who would buy the deal in exchange for the publication.  When they sent the contract to the business, it was shocking to see that no deal-type scenario was included anywhere in the contract.  In fact, the business would be solely responsible for the publication.

2.     Cancel the contract clause.  Deal-type companies retain the right to cancel the contract with the business at any time without warning or explanation.  That means whatever efforts you made to prepare your business to deal will go to waste.  They also can change a day and a time of the without being liable to you.  The contract can limit the business’s right to cancel which renders the clause illegal when one sided.

3.     Another big one is condition of approval clause.  If the business isn’t careful and signs this clause, the company can get the right to strip you of your right to condition for approval, which I think, is atrocious.  You want to see your final version of advertisement before it goes out in print or on line.

4.     Watch out for your own property rights.  One company wanted to retain rights to own and sell to third parties of businesses’ pictures or images and trademark perpetually.  This means that not only they can use your images that you’ve spent time, money and energy to obtain and belong to you, but also to sell them to whoever they please forever.

5.     Customer dissatisfaction.  All on line deal like companies contain limitation clauses in their contracts.   They also will make sure to be indemnified from further liability and the responsibility will fall almost entirely on the business.  It is important to be aware what type of liability the business will absorb.

Groupon like companies retained attorneys to draft contracts for them.  There is nothing wrong if you get help from one.

Written by Margarita Smirnova, Esq.

If you have a specific question relating to your business or any other legal questions, please contact Margarita

Call: (617)398-7482
E-mail: margarita.smirnova@gmail.com
This post is for informational and educational use only and does not create attorney-client relationship.
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