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##### *Whether you are looking to purchase or sell shares in a private company, you will need to go down the administrative road of conducting a sale of shares. Read more about how you can successfully conduct a sale of shares without a lawyer.*

![](/images/saleofshares.webp)

Ordinarily, conducting a sale of shares would entail having to go to a firm of attorneys who would need to prepare and draft the necessary documents and contracts in order to properly and effectively transfer the shares.

Unfortunately, the cost of lawyers can be prohibitively expensive, but ordinary business owners are left with no choice because they do not know how to go about properly and effectively attending to a sale of shares.

This article aims to educate you as much as possible, without going into too much legalese, of how to conduct and go about a sale of shares transaction without the help of lawyers.

### Get going now, and create the documents you'll need to do your sale of shares

1.  [Sale of Shares Agreement](https://shop.hellocontract.co.za/permalink/5fd1db42-2ad3-4625-9b93-6d0aa0945772);

2.  [Share Transfer Form](https://shop.hellocontract.co.za/permalink/d8ffdd48-e2c4-42f3-9aeb-1c3e97afe255); and

3.  Authorising resolutions of both the [shareholders](https://shop.hellocontract.co.za/permalink/4fcb8b64-c620-40f7-af2a-9492fd18d15e) and [directors](https://shop.hellocontract.co.za/permalink/9e85667e-ed2f-4b15-95b7-88a5c424b956).

#### **Sale of Shares Agreement:**

> A Sale of Shares Agreement is the main governing document that serves to set out the details of the transaction, the obligations of each party, the purchase price to be paid, as well as the relevant time frames for the sale.

#### **A Sale of Shares Contract should, at the very least, have terms which pertain to the following:**

##### **Purchase Price:**

It is important that, in order for the purchaser and the seller to clearly understand the expectations as to how much the shares will be sold for and the terms surrounding how the payment is to be made, the purchase price be recorded with sufficient detail in the Sale of Shares Agreement.

For example, the purchase price might be paid in one lump sum of R50 000.00 on X date, or it might be paid in instalments of R10 000.00 over 5 months, or there could be some other custom payment timeline. Whichever it is, this should be recorded.

One of the reasons that the above is so important is that in the event that payment is not made on time, there should be the ability for the seller to place the sale on hold and not permit the sale of shares to go through, and also allow for the seller to place the purchaser in breach and potentially force the purchaser to make payment of the purchase price.

##### **Transfer Date:**

It is very important to record what the actual date of the transfer will be as this date will be recorded in the requisite share register, share certificates and the like, and is a clear line in the sand to determine when the purchaser’s obligations to the company begin and the seller’s obligations in respect of the company cease.

##### **Number and class of shares:**

To ensure certainty, it is essential to record the number of shares that are being sold coupled with the class of those shares.

A lot of people when completing template Sale of Shares Agreements tend to fill in the percentage of what the sale will comprise. However, and depending on the time frame of the sale, and what other share sale transactions might be going on at the same time, the number of shares comprising the percentage might change, and as such, it is very important to record the number of shares rather than the percentage which is to be sold.

Additionally, as the company may comprise more than one class of shares, it is important to specify what class is the subject of the share sale.

Should this terminology be completely foreign to you, you most likely only have one class of shares in your company, and as such, the class of shares that will be transferred will be ordinary shares.

##### **Warranties:**

This might be bordering on a bit of legalese, but it is very important to understand. You do want to ensure, among others, that the seller is in fact selling shares which he in fact owns.

As such, it is important to have a clause which speaks to the warranties given by the seller that they are the sole owner of the shares, that they are not the subject of a pledge or some other form of security and that they can freely and effectively transfer the shares to the purchaser.

##### **Confidentiality:**

Ordinarily, and although this is not an obligation on the part of the parties, a confidentiality clause is ideal in that you do not want the seller or the purchaser to wilfully advertise and speak to others about the terms of the sale and what might internally be considered a sensitive and confidential matter.

##### **Accession to the provisions of the Shareholders Agreement:**

Should there be multiple shareholders of the company, and should there exist a Shareholders Agreement which was signed by the shareholders of the company, a clause which requires the purchaser to automatically agree to (accede) the terms of the Shareholders Agreement is necessary, so that the purchaser will, as from the date of the sale of shares, be bound to the terms of the same Shareholders Agreement.

##### **Breach Provisions:**

Clear terms, setting out the procedure should either the purchaser or the seller not adhere to their obligations in terms of the Sale of Shares Agreement, should be included. These are what are known as breach provisions.

Normally, a breach provision will provide that should a party, such as the purchaser, not pay the purchase price on time, the seller will be entitled to place the purchaser in breach, and require that the purchaser rectify that breach by making payment of the purchase price within a specified time period, failing which the seller will be entitled to cancel the agreement and/or claim damages through a court of law.

##### **Dispute Resolution:**

Somewhat related to the above, in the event that there is a dispute between the parties, a procedure to resolve any disputes should be set out.

Normally, the dispute procedure will involve the parties having to try attempt to resolve the dispute for a certain period of time informally between themselves, and if this fails we would suggest attempting mediation with a qualified mediator for a further period of time, and thereafter, should that fail, either looking at permitting the parties to take it to court or otherwise arbitration.

##### **Share Transfer Form:**

Although the Companies Act is not entirely clear on the exact nature of what and how shares are transferred, it only records that share transfers, such as a sale, should be “evidenced by a proper instrument of transfer”.

As such, along with a Sale of Shares Agreement we would advise a simple 1 pager instrument of transfer (share transfer form) which records who the purchaser is, who the seller is, the number of shares being transferred, the class of shares being transferred, the purchase price and the transfer date.

##### **Which law is applicable to your site:**

There is a possibility that your users might be accessing your site from all over the world, but you might be headquartered in a single country only. It is often cheaper to record that the law applicable to your website is the one in which you are situated, which will inevitably save you costs should you ever go to litigation. This is on account of the fact that if the litigation is to be held in a foreign country, you would have to appoint foreign lawyers, and potentially incur travel expenses and accommodation.

##### **Authorising Resolutions:**

Along with the aforegoing, there might well be certain authorising resolutions of the company which are needed.

For example, should a Shareholders Agreement exist, it will most likely have pre-emptive rights in that agreement, meaning that if a shareholder wants to sell any of their shares, they will first need to offer those shares for sale to the other shareholders before offering them to an outsider. If the sale of shares is in fact to an outside party, a Shareholders Special Resolution will need to be entered into where the shareholders waive those rights of pre-emption to permit the sale to go ahead.

Furthermore, the company will most likely need to cancel existing share certificates and issue a new share certificate to the purchaser which would require that a Directors Resolution be passed to permit this.

##### **All the documents you need on our website:**

At Hello Contract, we have all of the above documents available on our website so that you can conduct your sale of shares transaction entirely on a self-service basis without getting lawyers involved. 

All that you need to do is select the appropriate document that you would like to generate, answer a few questions, and our document generation software will automatically compile the Sale of Shares Agreement, the Transfer Forms and Authorising Resolutions necessary for you to conduct your sale of shares transaction.


Sales of Shares - Do it properly without a lawyer

#### When dealing with contracts, it's likely that you either have or will come across contract drafters referring to the term, "boilerplate clauses". Boilerplate clauses play an important role in contracts which is why it is crucial that you understand what they are.

> Boilerplate clauses are typically the clauses that most people skip reading, that's why we are addressing them here. They are there for a reason and you need to know about them.

Understanding the different clauses included in your contracts and why they are necessary is imperative when drawing up contracts. In every contract, there are clauses that are called boilerplate clauses. Boilerplate clauses are also called standard or general clauses. These clauses are usually at the end of each contract. They provide instructions on how to act in a variety of situations and clarify the relationship between the parties. In order to understand contracts it is important to understand the meaning and importance of these boilerplate clauses.   This blog aims to educate you as much as possible on the Boilerplate clauses that you should look out for in your contracts and why these are important.

####

#### Contents of this Blog

1.  Variation

2.  Severability

3.  Whole Agreement

4.  Indulgences

5.  Assignment

6.  Non-Disparagement

7.  Return of Information 

8.  Restraint of Trade

#### **Variation**

Before you sign a contract, it is important that you know how that contract may be amended or changed and a Variation clause tells you if the terms of a contract can be changed and if yes, how. This clause is important for clarity and it ensures that the terms of the contract are not varied accidentally or informally, and to stop any one of the parties from falsely claiming that a contract has been varied when it has not . In 1964, the Supreme Court of Appeal, in [Graanmaatskappy Bpk v Shifren](http://www.saflii.org/za/cases/ZASCA/2018/28.pdf) , held that contracting parties could protect their interests by limiting their future contractual freedom by including a Variation clause into their contracts. This clause often provides that variation is only valid if done in the form prescribed in the relevant contract (typically in writing). This clause ensures certainty and formality and the inclusion of such clauses into contracts has since coined the term, ‘The Shifren Principle’.

#### **Severability**

It is possible that a part of any contract may be declared invalid or illegal and naturally, the rest of the contract will be deemed as illegal or invalid as well. The Severability clause provides for such instances, where parts of the contract are no longer enforceable. This clause states that in such a case, the rest of the contract will still be valid and enforceable and only the part that has been rendered invalid and illegal will be unenforceable. This clause is of extreme importance because without it, the whole agreement will not be enforceable and deemed invalid, if a part of it is rendered  invalid or illegal. The declaration of a clause within a contract being invalid or illegal poses a question of what happens to the rest of the agreement? In accordance with the prudence principle, contracts now include severability clauses to provide for such cases. The Severability clause provides that should a part of the contract be deemed invalid or illegal the rest of the agreement will still be valid and enforceable. However, the presence of such a clause within a contract is only prima facie evidence that the clauses will be severable and a court will need to sever the parts of the contract. In[ Malesela Taihan Electric Cable (Pty) Ltd vs Fidelity Security Services (Pty) Ltd](http://www.saflii.org/za/cases/ZAGPJHC/2017/341.html), the court discussed the factors that would be taken into consideration when deciding whether parts of a contract will be severable and these include but are not limited to; whether it was the parties intention to sever the clauses which can be evidenced by a Severability clause, whether the illegal/invalid part of the contract is distinct from the rest of the contract and whether that part is not a subsidiary of a  main part of the contract. When the Severability test discussed above is passed, a court will render only the invalid or illegal part of the contract unenforceable, and the rest of the contract will remain valid and enforceable.

#### \*\*Whole Agreement \*\*

It is normal that there may be smaller agreements, or side discussions which parties make before agreeing to the final terms of the actual contract, and there may even be other agreements that parties make after signing a contract. The Whole Agreement clause stipulates that everything comprising the parties agreement has been reduced to writing within that contract and that there are no other terms or undertakings that will be enforceable if they do not fall within the contract. It is important to ensure that any previous agreements and undertakings are included within the contract or they will not be enforceable because of the Whole Agreement clause. This clause provides contractual certainty and prevents parties from relying on any other agreements or conversations other than those in the contract.  In [AXA Sun Life Services Plc v Campbell Martin Ltd and Others](https://www.rkllp.com/2011/07/06/commerical-law-update-july-2011/), a foreign case, the court agreed that if parties want to effectively exclude liability for some representation, a clear statement to that effect will be required and that statement is usually the Whole Agreement clause.  The utterance in a Whole Agreement clause usually includes a declaration that the document in which it appears, and any documents referred to, contain the totality of the parties’ agreement. The clause is usually also drafted to include a statement of non-reliance and an express exclusion of liability.

#### **Indulgences**

Indulgences are ‘favours’ or ‘relaxations’ granted by one party to another. For example, a company  may give an individual an extension on the due date of a payment. The party that grants the favour is considered the grantor, while the other party is considered the grantee. The Indulgence clause provides that the relaxation does not constitute a waiver of the grantor’s rights. This means that, for example, a company still has their right to claim payment from the individual in terms of an agreement even if it did not act and try to claim the outstanding payment previously. The court in [Triodos v Dobbs](https://www.casemine.com/judgement/uk/5a8ff71860d03e7f57ea769d) confirmed this position and agreed that “the resulting obligations did not replace the original obligations” because of the Indulgence clause. A clear understanding of this clause is important to ensure clarity and avoid the unnecessary losses that may occur based on a possible assumption, on the part of the grantee, that the indulgence constitutes a waiver of the grantos rights. 

#### \*\*Assignment  \*\*

An assignment clause is a clause included in contracts that allows or disallows  a person or a business the opportunity to assign or completely transfer their contractual obligations, rights, and benefits to a separate entity. For example, the Assignment clause may not allow an accounting clerk to give somebody else to their same job.  This clause is important to provide certainty on whether the rights and duties may be transferred to any other person or entity. This clause is important because it protects parties from uncontrolled transfer of contractual rights and obligations. The Assignment clause may also include exceptions and the instances where the contractual rights and obligations of parties may be transferred.  The basic law is that A cannot transfer rights or obligations to B that are under an agreement with B, without B’s consent. In contracts where an Assignment clause provides that rights and obligations may not be transferred, any subsequent transfer of rights thereof will be considered void ab intio based on the nemo plus iuris rule which states that one may not transfer more rights than those which one possesses. 

#### **Non-Disparagement**

The Non Disparagement clause which is also known as the Protection of Reputation clause restricts a party to a contract from taking any action that may negatively impact the other party, its reputation, products, services, management or employees. Most of these clauses usually include a description of the prescribed action or examples of prohibited actions. For example, a Non-Disparagement clause may prohibit an employee from speaking ill of their employer.  While non-disparagement clauses are not discussed often, it is of paramount importance that you know the actions that you may or may not take and protects the reputation of the parties. You naturally would not want to be a part of an agreement that does not ensure the protection of your reputation and so it is important to ensure that your contracts include a Non-Disparagement clause.  Non-Disparagement clauses have become increasingly popular in contracts with the increase in awareness of individuals rights to freedom of expression. The [National Media v Bogoshi](http://www.saflii.org/za/cases/ZASCA/1998/94.html) case discusses the right to reputation and freedom of expression. It is important to note that the right to reputation which is protected in the Non-Disparagement clause does not take away from the right of freedom of expression and the persons maintain their right to express themselves notwithstanding the presence of a Non-Disparagement clause in a contract, for as long as their expressions consist of the truth. 

#### \*\*Return of Information \*\*

A Return of Information clause provides for instances that involve the sharing of proprietary information such as trade secrets, confidential information etc. This clause typically contains requirements to either return or destroy such information. Most business contracts will include a Return of Information clause as it ensures that parties will keep and protect their proprietary information. Such a clause may also provide for instances in which information is not returned or destroyed and what you can do in such a case.  The exchange of proprietary information is common and almost unavoidable when parties enter into a contract. After the conclusion of a contract, it is important that the information is returned or destroyed. However, it is common that parties do not return or destroy information received during the course of an agreement and this practice has resulted in the increasing popularity of a Return of Information Clause. With the presence of a Return of Information clause in a contract, retaining such information after the conclusion of a contract will be considered breach of contract and may be considered theft and that may constitute grounds and good reason for immediate legal action against the non-complying party.

#### Restraint of Trade

A restraint of trade clause limits the ability of an employee to accept future employment which could be to the detriment of their current employer. A Restraint of Trade clause has a similar effect as that of a Non-Solicitation clause. The Restraint of Trade clause is normally included in an agreement between two parties that work closely together, and neither party wants to allow the other party the opportunity to steal their respective staff members or share any confidential information with any other party. This clause has become increasingly popular with the rise of cases where individuals approach the clients or employees of their former employer on behalf of their new employee or their own business. This clause is very important to both the employer and employees. On the one hand, it protects the employer from the potential loss of clients/employees, and on the other hand, it provides clarity to the employees that they may not solicit the employers clients or employees, else the employee will be found to be in breach of this contract.  There is often a misconception that a Restraint of Trade clause provides that an employee cannot seek any employment after their employment with their current employer comes to an end. The court in [Reddy v Siemens](http://www.saflii.org/za/cases/ZASCA/2006/135.html) \[2006] SCA 164 stated that a Restraint of Trade clause only prevented the employee from taking up employment with the competitor of the former employer. It does not prevent the employee from being employed, it merely limits the specific employer. Accordingly the restraint of trade agreement was found to be valid and enforceable.


Boilerplate Clauses – What Are They and Why Are They Important?

##### Sharing profits or revenue between business partners is a key element of a successful business. A Profit or Revenue Sharing Agreement outlines how to share profits or revenue between business partners and in some cases, how to divide any losses.​

If you already know what you’re looking for, an automated [Profit Share Agreement](https://shop.hellocontract.co.za/permalink/7e07a82d-de78-4cde-b059-28bccf536b5b) or [Revenue Share Agreement](https://shop.hellocontract.co.za/permalink/109f40a1-5e3c-494a-a8bf-b71141904908) is available on our shop page. Otherwise, enjoy our blog!

#### **Profit or Revenue Sharing**

Sharing profits or revenue between business partners is a key element of a successful business. A Profit or Revenue Sharing Agreement outlines how to share profits or revenue between business partners and in some cases, how you will divide any losses. Although neither of these agreements are legal requirements, they are an incredibly useful tool for your business and can be used from start to finish.

#### So firstly, what exactly is a Profit Share Agreement?

A Profit Share Agreement is a legal document or contract which allows for profits between business partners, along with the potential losses, to be shared between themselves.

#### **Here is an example:**

Assume you and your business partners plan to purchase an item for R50 and sell it for R100. In this scenario, R100 is the revenue and the profit would be sale price – cost price (R100 – R50), which would total R50.

If you have three partners along with you, you can’t each receive 100% of the profits. Split evenly, each business partner would receive 25% of the R50 profit. However, it is not always as simple as this. 

Perhaps you created the company or invested significantly, and may now want to split profits so that you receive 50% (R25) and your other partners receive the remaining share (R8.33 each). This type of agreement is achieved using a profit share agreement. 

#### What then, is a **Revenue Share Agreement?**

Similarly, a Revenue Share Agreement is a legal document or contract which allows for revenue between business partners to be shared between themselves, along with potential losses.

The main difference between a Profit Share Agreement and a Revenue Share Agreement is that a Profit Share Agreement allows for your business expenses to be deducted from revenue prior to the profit being split between business partners. 

A Revenue Share Agreement, on the other hand, does not allow for this deduction.

#### Here is an **example of a Revenue Share Agreement** in practice:

Again, you and your business partners plan to purchase an item for R50 and sell it for R100. In this scenario, R100 is the revenue.

If you and your three partners agree to an equal share of the revenue, then you will all receive 25% (R25). Similar to the Profit Share Agreement, the total revenue may be shared unequally as agreed upon by all business partners.

Understandably, you may not be aware of all the differences between a Profit Share Agreement and a Revenue Share Agreement. To better explain the key differences and similarities between the two agreements, have a look at the figure below:

#### **The Main Benefits of Profit and Revenue Share Agreements**

*   Provides financial security for both parties. By legally agreeing to Profit or Revenue sharing terms and conditions, you may all proceed with your business venture with peace of mind



*   Prevents future misunderstandings and disputes. By making sure all partners are on the same page and understand their respective responsibilities, you negate future disputes or potential conflicts



*   Specifies how partners may or terminate the agreement, and what constitutes a breach. Should issues arise, both parties will have a copy of the contract to refer to and be aware of the grounds on which the agreement can be ceased



*   Establishing a Time Frame. The point at which partners begin sharing Profits or Revenue can disproportionately and significantly affect specific partners or parties. Negotiating a fair commencement date is key, as is the duration of the agreement. Specifying the full timeline, in detail, benefits all partners.

Quite simply, if you are entering into a business agreement, you are most likely going to have to negotiate how you and your partners split your business’ earnings. If this is the case, either a Profit or Revenue Share Agreement is indispensable.



#### The 50-50 partnership or 50-50 profit share Agreement

Typically most joint ventures will start with a 50-50 partnership. This is a type of business partnership where each partner holds an equal share of the partnership's assets, liabilities, and profits. This means that both partners have equal decision-making power, equal access to the partnership's resources, and are equally responsible for the partnership's debts and obligations. This type of partnership is often used when starting a new business or when two existing businesses decide to merge. A 50-50 partnership can provide a balance of power, as well as a sense of shared ownership and responsibility. However, it is important to have a clear partnership agreement in place to define the terms and conditions of the partnership, including decision-making processes, dispute resolution procedures, and financial and management responsibilities. This will help to ensure that the partnership runs smoothly and that both partners are on the same page.



##### Key advantages of a 50-50 partnership


A 50-50 partnership can provide a number of advantages, including:


1.  Shared ownership and responsibility: Both partners have an equal stake in the business, which can foster a sense of shared ownership and responsibility. This can lead to a more committed partnership and greater investment in the success of the business.

2.  Balance of power: With both partners having equal decision-making power, there is a balance of power that can prevent one partner from having too much control over the business.

3.  Shared expertise and experience: With both partners bringing their own skills and experiences to the table, the partnership can benefit from a broader range of expertise and experience.

4.  Shared financial risk: With both partners sharing the financial risks of the business, the burden of financial loss is spread out, reducing the risk for any one partner.

5.  Increased capital: A 50-50 partnership can bring together two sets of assets, which can increase the capital available to the business.

6.  Better decision-making: Two heads are often better than one and having two partners with different perspectives can lead to better decision-making and problem-solving.

7.  Increased accountability: With both partners having an equal share of the business, they are both accountable for its success, which can lead to increased productivity and a stronger sense of commitment.

8.  Better Business Continuity: When both partners are present, the business can continue to operate in case one partner is unavailable, this can be important for long-term sustainability of the business.

It's important to note that a 50-50 partnership is not the best fit for all businesses or all partners, it's crucial to have a clear partnership agreement in place and evaluate if it will work for the specific business and partners



##### Disadvantages to a 50-50 partnership

There are several risks associated with a 50-50 partnership that should be considered before entering into such an arrangement. Some of these include:

1.  Decision-making paralysis: With both partners having equal decision-making power, it can be difficult to reach agreements on important matters. This can lead to delays in making decisions, which can negatively impact the business.

2.  Deadlock: If both partners are unable to reach an agreement, the partnership may become deadlocked, which can result in the inability to make important business decisions.

3.  Equal liability: Both partners are equally liable for the partnership's debts and obligations, which can be a significant risk if the business is not successful.

4.  Lack of incentives: With both partners having equal ownership, there may be a lack of incentive for one partner to work harder or take on more risk than the other.

5.  Personal conflicts: A 50-50 partnership can be affected by personal conflicts between partners, which can be difficult to resolve and can negatively impact the business.

6.  Conflicting visions: Partners may have different visions for the business, which can lead to disagreements and tension, which can be detrimental to the partnership.

7.  Legal disputes: Without a clear partnership agreement, legal disputes can arise, which can be time-consuming and costly to resolve.

It's important to be aware of these risks before entering into a 50-50 partnership and to have a clear partnership agreement in place that addresses these issues and defines the terms and conditions of the partnership. Additionally, choosing the right partner with complementary skills and values can reduce some of the risks and make the partnership more successful.


It is of utmost imporant to discuss these advantages and disadvantages with both principal shareholders before comiting to a joint venture agreement. Everyone needs to understand what they are in for, to avoid costly legal actions when things go wrong. 
The purpose of this agreement is to detail what happens when things go wrong, keep that in mind.

#### &#xA;&#xA;**Key Elements You Need to Understand about Profit and Revenue Share Agreements**

Understanding contracts is an undeniably daunting task, so we’ve explained a few terms to help you simplify the process.

#### \*\*#1: Commencement \*\*

There are a number of important dates in a contract – one of them being the Commencement date or clause. This date specifies when the contract will begin or commence and may also be initiated by a defined event. It is important that all partners are aware of and agree upon this date. 

**Example:**

Partner A is selling hats and Partner B is developing an online webstore. The partner who is selling hats has developed the product, invested in building a brand and has covered all the costs thus far. Partner A (the hat seller) wants to negotiate a greater share of the profit or revenue and only wants to begin the sharing process once he/she is certain that the webstore and business endeavour will be rewarding. 

In this scenario:

*   The Profit or Revenue Share Agreement will commence on a date agreed upon by both partners, or 

*   The commencement date may be negotiated to begin only when the webstore is determined to be fully operational.

Failure to include a defined commencement date may result in your business losing out on profits or worse, also enduring unwarranted losses. 

#### **#2: Duration & Termination**

Duration outlines the term of a contract and therefore, how long a contract is valid – in this case, the Profit or Revenue Share Agreement. Simply put, it is the amount of time that the agreement will remain in effect or continue to apply. Once again, this may be a predefined length of time or underpinned by a defined event. 

Termination of an agreement or contract refers to the legal process of ending contractual duties before they have been fulfilled or once they have been fulfilled. There are numerous reasons for why partners may choose to terminate or end an agreement. 

However, not all terminations of agreements may be mutual so it is important to note that partners intending to terminate may not be able to escape liability or continuing to have to part with profits or revenue. 

\*\*Example: \*\*

Partner A intends to advertise their products on a popular billboard and has entered into a partnership with Partner B, who owns a billboard advertising company. The Profit or Revenue Share Agreement is due to commence from the date agreed upon by both parties and will be valid for the duration that the product is advertised on the billboard which is, in this case, an agreed upon period of two years.   

In this scenario:

*   The Profit or Revenue Share Agreement will be valid for two years, or 



*   The Profit or Revenue Share Agreement will only be valid whilst the billboard exists, or



*   Both partners can agree to terminate the agreement

It is very important that all partners agree upon and are aware of the duration of the agreement. Failure to include clear terms, may result in the agreement being valid indefinitely, terminated prematurely or may lead to potential misunderstandings. 

#### **#3: Profit Share and Deductions**

“Profit Share” clauses in a Profit or Revenue Share Agreement form the meat of such an agreement. It is probably the first clause that you, a business partner entering into an agreement, would want to read. It details how the profits will ultimately be divided between partners or parties.

This clause provides clarity on how exactly partners will divide the profit.

The Profit Share will also detail the expenses that will be deducted from revenue to arrive at the profit, which will then be split between the partners. This was illustrated in detail in [Example 1](https://hellocontract.co.za/profit-share-and-revenue-share/#Example1)

This clause records all expenses and deductions which need to be deducted from the revenue to arrive at the profit to be split. This is an important detail, as you do not want to have ambiguous recordings of expenses which might cause a dispute at a later stage.  

#### **#4: Breach**

In the unfortunate case that a partner or party is found to be in breach of an agreement, it is important that you have taken the necessary measures to prepare beforehand.

This includes all partners drawing up and agreeing upon potential remedies that should be made available to those who were not in the wrong. 

This clause will usually provide that a partner or party has a right to claim specific performance or even cancel the agreement in some instances where another partner is found to be in breach. 

**Example:**

In the case of the person selling the hats partnering with the owner of the webstore in the previous example. If the web store owner refuses to sell the hats or fails to declare correct profits/revenue as initially agreed upon in the contract, he/she will be in breach of the contract.

#### **#5: Force Majeure Event**

This is somewhat of a technical legal term. 

It simply means an incident or event beyond the reasonable control of all partners or parties which has a significant impact on the ability of one or both of the parties to be able to perform in terms of the agreement.

The force majeure clause will normally state that the interrupted party may be relieved of their duties and obligations for the duration of the force majeure event and its consequences, provided that the interrupted party notifies the other of the event.

In the event that a force majeure event continues for a prolonged period of time, this clause would normally specify how long the force majeure event may continue for before the parties would be permitted to either negotiate a reconstruction or terminate the agreement.  

**Example:**

An example of a force majeure event may be a pandemic such as COVID-19 which may make it impossible for you to meet the commitments of the agreement you previously negotiated with your partners. 

#### **#6: Boilerplate clauses**

Apart from the above, all Profit and Revenue Share Agreements should contain standard boilerplate clauses (also commonly referred to as standard or general clauses). These clauses are included in the agreement to ensure certainty and prevent ambiguity. 

These clauses would include, for example:

1.  Domicilium and Notices 

2.  Governing Law and Jurisdiction 

3.  Dispute Resolution Procedures

4.  Non-Variation of Agreement Provisions

5.  Severability Provisions

6.  Whole Agreement Provisions

7.  Non-Waiver

8.  Assignment

Boilerplate clauses, although commonly included at the end of agreements, are just as essential as the other clauses. They are often varied and may be confusing which is why we have written another full blog dedicated to explaining just these, [here](https://hellocontract.co.za/boilerplate-clauses-what-are-they-and-why-are-they-important/). 

#### **Over to You**

We know that drawing up any legal contract or entering into a business agreement is daunting. What we also know is that proper contracts are the essential building blocks of your business. 

But, the task of producing a Profit or Revenue Agreement (or any business contract for that matter) should not deter you from taking the necessary steps in your business’ journey.

In the past, you had two options. The first included exorbitant legal fees and the second involved you drawing up your own agreements (and possibly excluding key clauses). 

Hello Contract is changing all of that for the ordinary South African business.

At Hello Contract we believe in an entrepreneurial future. By generating professionally automated and affordable contracts, we strive to provide people with the tools necessary to build their company, and take control in building their own future.

Shop Now, for an automated [**Profit Share Agreement**](https://shop.hellocontract.co.za/permalink/7e07a82d-de78-4cde-b059-28bccf536b5b) or [**Revenue Share Agreement**](https://shop.hellocontract.co.za/permalink/109f40a1-5e3c-494a-a8bf-b71141904908).

Everything you need to know about Profit and Revenue Share Agreements in South Africa

Our Best posts

## Whether you are a start-up or have been in the business game for years, the right business contracts are vital and can, quite frankly, make or break your business.

> Contracts are there to protect your interests, although some may dispute the need for them, thread carefully and get things in writing.

![Placeholder Image](https://assets.stackbit.com/components/images/default/post-4.jpeg)

When it comes to contracts, it’s safe to say most entrepreneurs would far prefer spending their time doing something different. 

Contracts always seem to get in the way of getting on with daily business. It is, however, incredibly vital that one dedicates enough time to preparing their contracts. By making the necessary preparations in advance, you will be able to determine the rules of your engagement and ensure that these rules fall in your favour. Additionally, you can avoid ambiguity and prevent future fall outs as all parties entering into the agreement will have a clear idea of what is required of them.

At [Hello Contract,](https://www.hellocontract.co.za/) we deliver high-quality contracts through our automated document platform at highly reduced costs when compared with traditional law firms. As contracts are at the core of our business, we want our customers to fully understand the risks and obligations arising from them.

Below, you will find the 6 most essential contracts that all businesses should have in place from the very beginning. 

#### **Table of Contents:**

1.  Terms and Conditions

2.  Non Disclosure Agreement (NDA)

3.  Website Privacy Policy

4.  Employment Agreements

5.  Copyright Assignments

6.  Independent Contractor Agreement

#### **1.  Terms and Conditions**

Regardless of the kind of business you run, every entrepreneur will need to pull together a set of Terms and Conditions.

The stipulated terms and conditions are essentially your *rules* – your way of doing business. From quotation to termination, you determine how you provide your products and/or services whilst being strict but fair. By laying down the terms and conditions, you make it clear to your customers how you conduct business and specify the details regarding what you charge, price increases, delivery times, limitations of liability and the like.

A comprehensive, well-written Terms and Conditions provides clarity between you and your potential clients while also preventing disputes. In the event that a dispute does arise concerning a subject which is clearly outlined in your Terms and Conditions, the dispute can be settled immediately as the subject and its contents have been recorded and agreed to in black and white.

You can view our Website Terms of Service [here](https://shop.hellocontract.co.za/permalink/b8ba15c6-73fd-4295-b25f-9c73b257af5d).

#### **2. Non Disclosure Agreement (NDA)**

Before setting out with your epic world-changing product or service, you will naturally want to be able to talk to your customers, partners or suppliers in confidence – without fear of your confidential information being used by them and especially, without gaining your permission first.

The legal instrument used to help enforce and protect this is known as a Non-Disclosure Agreement or an NDA for short. An NDA prevents confidential details of your conversation being used or leaked. This includes preventing parties from sharing confidential information with other persons who they have been introduced to in confidence during the business endeavour.

 You can view our Mutual NDA [here](https://shop.hellocontract.co.za/permalink/4101e7cc-7044-479a-8457-3abbb76ad616)

#### **3. Website Privacy Policy**

We know – a Website Privacy Policy isn’t exactly a contract, but it is a requirement by law. If you own a website – regardless of whether you’re selling products or services from it or not – chances are, you need a Website Privacy Policy. A Privacy Policy records, among other things, exactly what personal information you collect from users, who you share that personal information with, and what you use it for.

A Privacy Policy need not be signed to be agreed to, but a user needs to have the opportunity to view it, should they wish, and is required to consent to it before you can process their personal information.

Take a look at ours [here](https://shop.hellocontract.co.za/permalink/ba81b288-0e26-45da-91c1-0233b63e424b).

#### **4.   Employment Agreements**

Congratulations, you have employed staff! You trust them completely, and can only hold thumbs that it won’t come back to bite.

Often, this is the thought process that one goes through when hiring someone, however, setting clear expectations of salary, leave, duties, notice periods and the like is absolutely vital and should not be overlooked.

Below are a few employment agreements to help you get started:

*   [Casual Employment Agreement](https://shop.hellocontract.co.za/permalink/24e44a17-edcd-4c4e-825d-1d677321992d)

*   [Fixed Term Employment Agreement](https://shop.hellocontract.co.za/permalink/c278f21b-7cd6-4421-90ab-ced0634a4aef)

*   [Indefinite/Permanent Employment Agreement](https://shop.hellocontract.co.za/permalink/7966044c-0d04-4ee9-8f6c-22f90dddb974)

#### **5.  Copyright Assignments**

Over the lifespan of your business, you will most likely outsource hundreds of tasks to independent parties and freelancers. These tasks could include anything from software development and blog content to logo creations.

Outsourcing tasks of your business to external individuals who are not employed by you has one main unintended consequence – Despite paying the outside party for the work done, you do not own the work that they create. This is because the works created are all owned by the person who authored them and thus, the external party.

A Copyright Assignment Agreement is a legal document which is required to transfer the above ownership to you. For an assignment of copyright to be valid, it must be in writing and signed by, or on behalf of, the external party.

Feel free to purchase one [here](https://shop.hellocontract.co.za/permalink/6650d424-5ac9-4c0c-a50f-4f7d3c848b12).

#### **6. Independent Contractor Agreement**

In today’s interconnected world, where freelancers are available from all corners of the globe, bringing together expertise on a vast array of topics has never been easier. In this regard, you will – throughout the duration of your company – engage with external service providers that you do not employ. These relationships are typically regulated by an Independent Contractor Agreement.

An independent contractor differs from an employee in that when you employ an employee, you have control over their day-to-day services. However, if and when an independent contractor is required, you generally do not have much control over their day-to-day service renderings.

It is important to regulate the relationship between you and your independent contractor by recording obligations, expectations, time for delivery, payment guidelines, intellectual property ownership and the like.

You can purchase our fully automated Independent Contractor Agreement [here](https://shop.hellocontract.co.za/permalink/03574d1f-b195-4091-a59e-b4aa84139b32).


Contracts needed to start your business

Freelancer Agreements in South Africa

##### In South Africa, a shareholders agreement is an agreement entered into by the shareholders of a private or public company.;Even without a shareholders’ agreement in place, shareholders of a company are bound by the provisions of the Companies Act, no. 71 of 2008 (also known as the “**New Companies Act**”). In addition to being bound by the conditions of the Companies Act, shareholders must comply with their obligations under the Memorandum of Incorporation (MOI). Although the Companies Act is unique to South Africa, most of the mechanisms discussed here are of global nature.

> Shareholders agreements can become quite complex, the ideal SHA is both easy to execute and covers interest of all parties.

![Placeholder Image](https://assets.stackbit.com/components/images/default/post-4.jpeg)

What you can find in this blog:

*   6 Reasons to have a Shareholders Agreement
*   Shareholders Agreement or Memorandum of Incorporation?
*   Written shareholders Agreement v Verbal Agreement or Handshake Agreement
*   Minority shareholder protections –
*   Appointment of Directors
*   Dividend Policy
*   Conflict Resolution
*   Valuation Methodology
*   Financing the Company
*   Tag Along
*   Come along / Drag Along

#### The Memorandum of Incorporation of a company prevails over the shareholders agreement.

In terms of the Companies Act, the MOI is a company’s most important founding document.The Companies Act states that any shareholders agreement must be in line with the company’s MOI and the Companies Act.

Although having a shareholder agreement is not mandatory, having a well-prepared agreement provides shareholders with a host of benefits. A well drafted shareholders agreement provides shareholders with guidance when it comes to voting, buying and selling additional shares, valuing the company, resolving disputes between the shareholders and much more. 

In this blog we discuss both the reasons to have a shareholders agreement in the first place, and we explain the basic elements of a well written shareholders agreement.

### 6 Reasons to have a shareholders agreement

Before we explain the legalities of the SHA, we’d to address the 6 reasons that could make the difference in your situation 

#### **Control over valuing the shares.**

The Shareholders Agreement contains provisions for how the shareholders are to  value or price the shares in the Company. The Shareholders Agreement can stipulate that the shareholders must either reach agreement as to the value of their shares or use a predetermined formula. Furthermore, the Shareholders Agreement can require the use of an independent expert if the Shareholders cannot reach agreement.

#### **Regulate management of the Company**

The Shareholders Agreement should contain provisions dictating how the Company should be operated which should include detail as to the Shareholders’ rights and obligations. It is also important to contain provisions in the Shareholders Agreement that regulate how the Company Shareholders are to appoint directors of the company.

#### **Control the transfer of shares**

Your Shareholders Agreement should contain mechanisms to prevent a Shareholder from selling shares in the Company without the consent of the remaining Shareholders. Therefore, such mechanisms ensure that both minority and majority shareholders are protected. These mechanisms are often described as come-along and tag-along clauses and are described in greater detail in this article.

#### **Resolution of disputes**

Your Shareholders Agreement must contain provisions as to how the shareholders are to resolve disputes that may arise between them as to the management of the Company. 

#### **Can be used to secure funding and offer investors insight into your business**

If you are looking to raise capital in order to start your business or you are looking to bring on investors or friends, a well drafted Shareholders Agreement can often seal the deal. Investors will often require a written Shareholders Agreement to ensure that their investment is secured and to ensure that there are certain protection mechanisms in place. With a well drafted Shareholders Agreement in place,

#### **Can regulate a varied dividend policy**

Your Shareholders Agreement must contain provisions which direct when and how dividend is paid out to the shareholders. Such a provision can include directions for the time and circumstances which need to be met before a dividend is paid out.

#### **Breaking down the Shareholders Agreement more**

##### **Shareholders Agreement vs Memorandum of Incorporation**

Every company requires a Memorandum of Incorporation (MOI). The MOI contains the rights, duties and responsibilities of shareholders, directors and others within a company. It is a public document and is submitted to the Companies and Intellectual Property Commission (CIPC). 

When deciding if you need a shareholders agreement, we suggest you ask yourself the following questions: 

Q – \*Are there certain issues which we (as shareholders) would like to regulate privately? \*

If you answered **yes** to the above, then you require a shareholders’ agreement. 

Q –  *As a shareholder, do you want to prevent your fellow shareholders from selling their shares to third parties without your knowledge or consent?*

If you answered **yes** to the above question, then you require a shareholders’ agreement.

Having a right to purchase your fellow shareholders’ shares, when they are looking to sell, is known as a pre-emptive right. Therefore, in order to ensure that you are first in line when your fellow shareholders are looking to sell their shares,  you need a “pre-emptive right” to make an offer on said shares, before any third party is able to purchase such shares. When you have a “pre-emptive right”, if your fellow shareholder wants to sell shares, such shares must be offered to the other shareholders in the company first (i.e. yourself).

Therefore, ensuring that you have a pre-emptive right in respect of your fellow shareholders’ shares, ensures that you retain a certain level of control over who could potentially purchase shares in your company.

In terms of the Companies Act, pre-emption rights only apply to a fresh issue of shares and not to the transfer of existing issued shares. Therefore, the default position is that you as a shareholder are not automatically, by virtue of your shareholding, entitled to a pre-emptive right to your fellow shareholders’ shares.

In order to ensure that you have the above-mentioned pre-emptive right you need to include provisions in your shareholders’ agreement which deal with such pre-emptive rights. This provides existing shareholders with greater certainty and protection. 

> If there are any differences between the MOI (Memorandum of Incorporation – the statutory document which per the Companies Act “sets out the rights, duties and responsibilities of shareholders, directors and others within and in relation to a company”) and the shareholders' agreement, the MOI will prevail.

#### **Written shareholders Agreement vs Verbal Agreement or shareholders agreement versus Handshake Agreement**

Before exploring the benefits of a shareholders agreement, it is important to understand the benefits of having a written agreement in place (as opposed to a handshake or verbal agreement). Here are the three main benefits of having a written shareholders agreement:

1.      **there is a single source of truth, one document which all the parties can turn to when a dispute or confusion arises;**

2.      **having a single source of truth provides clarity in instances of disputes; and**

3.      **the written agreement can be shown to third parties, such as investors when attempting to raise capital for your business.**

#### Minority shareholder protections

Where a company has minority shareholders, their rights can be protected through a variety of mechanisms in the shareholders agreement to prevent abuse and oppression from a majority shareholder.

If you are looking to get into business as a minority shareholder we suggest that you insist on entering into a written shareholders agreement, which contains provisions that protect your interests as a minority shareholder.

#### Appointment of directors

A shareholders agreement can be used to regulate the appointment of directors by the shareholders. This allows you as a shareholder to have even greater control over the business and who makes decisions in the business.

Remember, as a shareholder, you aren’t responsible for the day to day running of the business. Therefore, this gives you the opportunity to have your say in the business.

#### **Dividends policy**

As a shareholder it is important to remember that dividends are not guaranteed. When starting out with your business it is often important to ensure that early dividends are used to reinvest in the business. Deciding when and how dividends are paid out is often a point of contention between shareholders.

The shareholders agreement provides shareholders with an opportunity to decide when and how dividends are to be paid out to shareholders.

One’s shareholders agreement is the perfect place to determine when you and your fellow shareholders are to receive dividends. For example, you can stipulate that ordinary dividends will be paid 100 days after the financial year end of the Company. 

#### **Conflict resolution and a reduction in conflict** 

A well drafted agreement has the ability to reduce the amount of potential conflict between shareholders. This is important because disputes are hugely distracting, and ultimately can affect the company and its viability. Clear mechanisms should be included in your shareholders agreement for the swift resolution of the disputes between the shareholders. 

#### **Valuation methodology**

When looking to sell your business or entice investors to invest in your business it is important to ensure that you know how to value your business. Valuation of a business is often determined by the industry you are in or the type of business you run. However, it is  important to agree on a valuation methodology with your fellow shareholders, to avoid unnecessary disputes and to avoid your fellow shareholders attempting to sell their shares for below market value.

The shareholders agreement will include a valuation methodology in order to regulate how the shares are to be valued in the event of a sale of any shares for whatsoever reason. 

#### **Financing the Company**

Your shareholders agreement can also contain provisions dealing with when and how the business is to be financed. You can stipulate the requirements for financing by shareholders and financing by third parties, banks etc. 

It is important to agree with your fellow shareholders as to when shareholders will be expected to loan money to the business.

#### **Tag Along**

A **tag along** provision is a clause in your shareholders agreement that provides for minority shareholders to ‘**tag along**‘ with a larger shareholder if they find a buyer for their shares. The **tag along** provision provides minority shareholders with some security in that they are afforded an opportunity to not be left behind should a major shareholder decide to exit the business.

#### **Come Along, or Drag Along**

A **come**–**along clause** allows a select number of  shareholders, usually majority shareholders, the right to force other shareholders to sell their shares when those certain shareholders decide to sell theirs.

#### **Insurance, Tax and Licences**

The shareholders agreement should also contain provisions dealing with insurance for the company, tax obligations of the company and any licences which the company will need to maintain and update. 

**Over to you**

A Shareholders agreement is an absolute necessity in many situations. At Hello Contract we aim to provide you with the tools to take control of your contracts. 
You can find our fully customisable Shareholders Agreement for South African law here


Benefits of a Shareholders Agreement in 2022, or why you should have a SHA for your business.

Step-by-step we take you through a contract

Contracts

##### **WORKPLACE POLICIES** 

The Team at Hello Contract aim to ensure that each workplace is as safe as possible. This article was written for the benefit of both employers and employees. It is critical that the following workplace policies are in place in any South African work environment.  

Our workplace policies and procedures are set out in a template from for easy use. Simply answer a few questions and receive your very own customised workplace polices. A set of policies is a guiding principle used to provide guidance for your organization or company. The workplace policies are  usually published in a booklet or online and are widely accessible to all within the company.  

> Workplace policies are the most underestimated documents we see when practicing employment law. It is very easy to take control as an employer, but a significant number of employers do not have workplace policies in place.

##### **Anti-Fraud and Corruption Policy**;

An Anti-Fraud and Corruption Policy aims to ensure that all employees are made aware of the exact actions that constitute fraud and corruption in a particular workplace and generally. 

An Anti-Fraud and Corruption Policy further seeks to explain the exact steps that will be taken in instances of suspected fraud or corruption in a workplace.  

The Anti-Fraud and Corruption Policy also provides a mechanism for employees to follow when they suspect that there may be fraud or corruption in the workplace.  

The Anti-Fraud and Corruption Policy further provides protection for “whistle blowers” i.e. those who seek to report fraud and corruption in the workplace.  

This is an essential workplace policy for all private companies in South Africa.  

Get your Anti-Fraud and Corruption Policy here: [Anti Corruption and Fraud Policy](https://shop.hellocontract.co.za/employmentandlabourlaw/hr-policies/anti-corruption-and-fraud-policy)

##### **Employment Policy - Conflict of Interests Policy** 

A conflict of interest occurs when an employee or its employer are compromised as a result of a clash between their personal (or self-serving) interests and their professional duties or responsibilities to act in the best interests of another (e.g. their employer or company).  

Problems arise when an employee or employer chooses personal gain over their duties to conduct themselves in the best interests of the company. When such a situation arises, the employee or employer is usually asked to remove themselves, and it is often legally required of them.   

A Conflict of Interest Policy applies to the following persons: 

1.  all Company employees (fixed term and permanent); 



1.  supervisors and management; 



1.  directors, public officers; and 



1.  consultants/contractors contracted by the Company. 

A Conflict of Interest Policy is informed by the South African Companies Act 71 of 2008 (Director’s fiduciary duties)  

By way of example a conflict of interest may arise when an employee, has a family member which he suggests should be used as a supplier by his or her new employer. This conflict of interest has arises as the employer is now unsure if the employee’s conduct, judgment and/or decision-making is unbiased. 

However, if an employee suggests a new supplier, which happens to be his or her family member, it does not necessarily imply wrongdoing on anyone’s part. 

However, the Conflict of Interest Policy is there to ensure that when a conflict of interest arises, it must be recognized, disclosed, managed, reduced and/or eliminated.  

Without a Conflict of Interest Policy in place, a company cannot manage conflicts of interest that may arise and therefore cannot determine which Conflicts are serious enough to warrant a dismissal or which Conflicts are to be simply disclosed and filed in the employees HR file. 

The Hello Contract Conflict of Interest Policy  is ready to be tailored to your company’s needs and should be considered a starting point for setting up your employment policies.  

Get your Conflict of Interest Policy here:  https://shop.hellocontract.co.za/employmentandlabourlaw/hr-policies/conflict-of-interests-policy

##### **Employment Policy - Human Immune Deficiency (HIV) & Acquired Immune Deficiency Syndrome (AIDS)** 

An HIV Policy is drafted to ensure that employees who have been medically diagnosed with or who are suspected of having the HIV virus and the AIDS virus are respected and measures are put in place to prevent the spread of the HIV virus and the AIDS virus.  

HIV and AIDS are serious public health problems in South Africa that have socio economic, employment and human rights implications.  The HIV and AIDS epidemic will affect every workplace, with prolonged staff illness and absenteeism and will impact on productivity, employee benefits, occupational health and safety, production costs and workplace morale.  

HIV and AIDS are still a disease surrounded by ignorance, prejudice, discrimination and stigma.  

One of the most effective ways of reducing and managing the impact of HIV and AIDS in the workplace is through the implementation of a HIV/Aids policy and programme. In the light of this, this policy has been developed as a guide to the Company’s management and employees. 

The purpose of this HIV Policy is to reassure employees that AIDS is not spread through casual contact during normal work practices and to reduce unrealistic fears about contracting an AIDS virus-related condition.  

In addition, the HIV Policy is there to protect the legal right to work of employees who are diagnosed with an AIDS virus-related condition and provides guidelines for situations where infection with the AIDS virus is suspected as to ensure individuals with HIV infection are not unfairly discriminated against in the workplace. 

##### Employment Policy - IT Policy 

The use of technology in the workplace is an integral part of modern working live as it provides employees the opportunity to perform their daily tasks more efficiently and effectively, whether out in the field or in the office. 

This IT Policy draws on the relevant legislation in South Africa, in particular the Regulation of Interception of Communications and Provision of Communication Act (“RICA”), the Protection of Personal Information Act (“POPIA”) and the Electronic Communications and Transmissions Act (“ECTA”).  

The IT Policy will apply to all company personnel, employees, contractors etc. who make use of the company’s IT equipment as well as external third parties who may from time to time make use of the company’s IT equipment.  

The IT Policy will further go on to explain what exactly constitutes the company’s IT. For example, it will differentiate between hardware, software and telecommunications related tools etc.  

An IT policy is essential as it ensures that all employees, even when working from home, have guidelines to follow when using the company’s IT.  

##### Q & A ON WORKPLACE POLICIES 

Q: Why does a company need workplace policies?  

A: Workplace policies are essential to ensure a safe work environment for all. Workplace policies provide guidelines for the relationship between the employee and the employer and ensure that both an employer and employee are made fully aware of their duties and obligations.

Workplace Policies you need for your business

Vaccination policies in South Africa remain controversial however they are not illegal if the policy is implemented in a manner which conformed with the laws in South Africa. 

Many companies followed the Department of Employment and Labour *Amended Consolidated Direction on Health and Safety *which provided the circumstances under which an employee may implement a mandatory vaccination COVID 19 policy in their workplaces. 

However, now that South Africa is no longer in a National State of Disaster, is your vaccination policy still legal? We seek to provide you with the answer in this article and to assist you in drafting a legally enforceable vaccination policy.  

> To be clear, the law in South Africa still allows for vaccination requirements / policies in the workplace even outside of the National State if Disaster.   
>
> ** **
>
>  

**What does the law say? ** 

Even before COVID, the Occupational Health and Safety Act, 1993 (**OHSA**), provided for guidelines on vaccination policies in South Africa.  

Under OHSA, an employer in a company has a legal duty to ensure a working environment that is safe and without risk to the health of its employees.  

Under OHSA various regulations are published which help employers understand and practically implement the provisions of OHSA.   

For example, the Hazardous Biological Agents Regulations (**Hazardous Regulations**) were recently amended to state that the SARS-CoV-2 virus is classified as a Group 3 hazardous biological agent. The Hazardous Regulations further confirm that a registered vaccine for the SARS-CoV-2 virus (COVID) is available in South Africa. 

The law in South Africa states that employers are to conduct a risk assessment to determine if any employee could be exposed to a hazardous biological agent. If after conducting the risk assessment it is found that employees may be exposed to COVID or another hazardous biological agent at the workplace the employer must take steps to control such exposure in the workplace. 

The Hazardous Regulations go on to provide that, such control measures must include **making available effective vaccines** for employees who are not immune to the hazardous biological agent in question. 

How does an employer being to implement such control measures? 

**The Code of Practice** 

The Code of Practice: Managing Exposure to SARS-CoV-2 in the Workplace” (**Code**) is now in force. The Code states that every employer must undertake a risk assessment and based on the risk assessment must develop a plan to include** steps to be taken relating to the vaccination of its employees**.  

A vaccination policy is only necessary and therefore legally enforceable as a “reasonably practicable control measure” which the employer will determine based on its risk assessment. 

 

**What is a Risk Assessment?** 

What is a risk assessment and how do you go about doing one?  

Before developing a policy on vaccination, an employer needs to conduct a risk assessment. You can find our suggested risk assessment document here \[=].  

Legally an employer must inform all employees of the results of the risk assessment, and the employees must be given an opportunity to comment.  

If there is an employees’ union representing the majority of employees the employer must also consult with the union regarding the outcome of the risk assessment. To the extent that there is a health and safety representative/committee, the employer must also consult with the committee.   

**What does a Vaccination Policy look like? ** 

Once the risk assessment has been completed and the employer has determined that there is a need for a policy to ensure a safe working environment, the employer must draft a policy describing the steps to be implemented for vaccinations in the workplace.  

But what does this policy look like? You can find our suggested vaccination policy document here \[=]. 

The Code states that an employer must provide employees with information about:   

*   the nature of vaccines used in the country; 

*    the benefits of the COVID-19 vaccines;  

*   the nature and risk of any serious side effects; 

we would suggest providing employees with the following fact sheet – \[=].  

**Objections to vaccination: ** 

Employers are advised to note that an employee can object to a vaccination on medical and constitutional grounds.  

The Vaccination Policy must make provision for an objections process. Our Vaccination Policy sets out clear guidelines to be followed when an employee refuses a vaccination.  

 


Vaccination Policy South Africa

## Disciplinary hearings in the Workplace

If an employee has allegedly breached their employment contract or a work place policy, the employer
must hold a disciplinary hearing to address the employee and make a final decision as to the alleged wrongful conduct.

A disciplinary hearing is a formal meeting where the employer can properly investigate the merits of
the charges against the employee being accused. This process is prescribed by
Schedule 8 of the Labour Relations Act 66 of 1995.

A disciplinary hearing is a meeting between an employer and an employee where the employer will
discuss an allegation of misconduct with an employee.

## What should be included in the notice to attend a disciplinary hearing?

If an employee wants to hold a disciplinary hearing, they need to inform the employee
in writing about the hearings and the reasons for the hearing. The employer
must prepare a formal notice. In such a notice, the following information
should be provided by the employer to ensure procedural fairness:

1.  Date, time and place of the hearing;

2.  The charges laid against the employee;

3.  Notification to the employee of the option to be represented;

4.  Notification to the employee of the right to an interpreter; and

5.  Notification to the employee of the right to call witnesses to prove its case and innocence
    in the case levelled against him/her.

## How should the “charge” be formulated?

The charge should be formulated in precise and simple language
that the employee can understand. It is unfair for an employer to charge an
employee with two or more separate forms of misconduct in circumstances where
the conduct only constitutes one offense.

## How does a disciplinary hearing work?

Employees are often stressed and overwhelmed when they are asked to attend a disciplinary hearing. A
disciplinary hearing by nature is stressful and taxing for an employee. However,
employees must always remember that a disciplinary hearing is their opportunity
to be heard and to give their version of events.

Ultimately, the purpose of a disciplinary hearing is to provide the accused employees with
an opportunity to lead evidence and plead their innocence before a final decision
is made.

From an employer’s point of view, the disciplinary hearing is essential as it ensures that before
a decision is made the employer can ensure that there are in fact substantive
reason to dismiss the employee.

Employers are responsible for ensuring that their employees are treated fairly both
procedurally and substantively. In any disciplinary proceeding, the proper
protocol must be followed, and employees must be aware of their rights and
entitlements.

## What is the difference between procedural and substantive fairness?

Dismissals must be both procedurally and substantively fair.

Procedural fairness refers to the process which the employer follows when dismissing an employee. If
a dismissal is procedurally fair it means that the employer has followed a fair
and proper procedure before dismissing the employee. For example, in order for
a dismissal to be procedurally fair, the employee must hold a disciplinary
hearing.

Substantive fairness refers to the nature of the charge against the employee. Substantive fairness
relates to the existence of a fair reason for the employer to dismiss an
employee.

## What are the requirements for a fair disciplinary hearing?

It is recommended that a disciplinary hearing is conducted by an independent and impartial chairperson.

The chairperson should be objective and fair. The chairperson is responsible for outlining the
violation or misconduct and explaining the hearing process to the parties.

The disciplinary hearing must start with the employer stating the alleged breach or charge and
providing their evidence to support the allegation. Once the employer has
stated the case against the employee, the employee is then allowed to present
their version of events. Remember that both parties may call witnesses and the
Chairperson may question these witnesses for clarity if necessary.

## What is the Chairperson’s role?

The Chairperson is responsible for outlining the violation or misconduct and explaining the
hearing process to the parties.

The Chairperson must ensure that both sides are given a fair chance to prepare their case and lead evidence.
The Chairperson must ensure that the witnesses are not led by the employee or
employer.

The Chairperson will decide on the employee's guilt or innocence after hearing from both the
employer and the employee, as well as evidence and witnesses. If the employee
is found guilty, this decision will be made on the basis of a balance of
probabilities, and it will contain an appropriate consequence or conclusion.

In terms of Schedule 8 of the Labour Relations Act (66 of 1995)

*   An employer must investigation and prepare evidence to prove the transgression or
    misconduct that the employee has allegedly committed. This does not, however,
    have to be a formal inquiry;

*   Next,the employer must issue the employee with a Notice to attend the hearing in a
    language that the employee can reasonably understand.Each party must have a reasonable time to prepare a response to the allegation, or where necessary, get the help of a trade representative. This is usually a minimum of 48 (forty-eight) hours.

*   The disciplinary hearing must then be held on the proposed date and time, at which point,
    the employer and employee will each have a chance to state their case and respond
    to the allegations.

*   After the hearing, the employer should communicate the findings of the hearing and
    decision ultimately taken to the employee.

(Though not always a formal requirement, the employer should provide the employee with
written notification of the outcome of the hearing and whether it is punitive
or dismissive in nature.


Disciplinary Hearings

###### An internship agreement is essential for regulating the relationship between an intern and a principle. It is, therefore, vital to understand the contents of an Internship Agreement and the clauses therein.

###### Below we discuss a fixed term internship agreement, which is not an independent contractor agreement. If you want to learn more about an independent contractor agreement, [click here](https://www.hellocontract.co.za/blog/freelanceragreements/)

An Internship relates to the education which an intern shall receive while rendering services for the employer, together with insight and experience into the business of the employer.

In this blog, we evaluate some of the key concepts and clauses that should be included in all Internship Agreements and provide some background on why these are important.

If you would like to go directly to our shop and purchase our automated Internship Agreement, click here: [Internship Agreement ](https://shop.hellocontract.co.za/permalink/1d411283-b1fe-4e95-b9f9-a1bf6409f7ad)

#### Contents of this Blog

1.  Nature of Appointment 

2.  Commencement and Duration

3.  Premature termination

4.  Services

5.  Transport

6.  Remuneration

7.  Sick Leave 

8.  Family Responsibility Leave 

9.  Maternity Leave 

10. Supervision

11. Working Days and Hours 

12. Confidentiality

13. Intellectual Property 

14.  Domicillium

15. Liability and Indemnity 

16. Breach

17. Dispute Resolution 

18. Boilerplate clauses 

#### [**Nature of Appointment**](https://hellocontract.co.za/blog/internship-agreements/#NatureOfAppointment)

The Nature of Appointment clause is very important because it describes the type of relationship between an intern and their principle. The legal relationship between the two is important because it then provides for the legal protection that will be available to both the intern and the principle. Generally, interns enjoy different legal protection from employees and the Nature of Appointment clause will in most cases state that the intern will be seen as an independent contractor. 

The nature of the relationship being that of a principle and contractor has an effect on the interns benefits. For example, an intern is not protected against dismissal nor entitled to minimum wage. It is important that the principle makes it clear that the intern will not be entitled to the benefits that are afforded  to employees such as fringe benefits and employment security. 

The clause also states whether the relationship between the intern and the principle will be continuous or result in formal employment. 

In the case of *Smit v Workmen’s Compensation Commissioner*, the court summarised a list of factors that outline the difference between an employee and an independent contractor. 

An intern meets the requirements of an independent contractor and Section 1 of the Basic Conditions of Employment Act  also excludes independent contractors from the definition of an employee meaning that independent contractors are not privileged to the same benefits as an employee. The effect of this includes but is not limited to the following:

*   The principle will not be bound to make payments to the Intern in instances where the Intern goes on sick/annual leave; 

*   The principle does not need to observe the employment laws when terminating the agreement with the Intern;

*   Tax responsibilities of the Intern’s income rest with the Intern. 

It is usually to the advantage of the principle that the Intern is defined as an independent contractor rather than an employee because it lessens the principle’s obligations towards the Intern. 

#### **Commencement and Duration**

The duration and time of engagement must be agreed upon by both the intern and the principle. The dates in which the Intern will start rendering their services, the term/duration period for which the Internship will last and the date in which the agreement will be terminated should be included within the agreement . 

Notice periods in respect to early termination should also be provided. The Internship Agreement will also state that termination of the agreement prematurely, will not constitute a dismissal.   

It is possible that a contract may be terminated in a number of ways which do not constitute a dismissal as defined in s 186(1) of the Labour Relations Act. In the instance of fixed –term employment contracts such as Internship Agreements entered into for a specific period or  expire upon the happening of an event, the termination of such a contract would ordinarily not be considered a dismissal. 

It has been the position in common law that the expiry of the fixed term- contract of employment such as an Internship Agreement does not constitute termination of the contract by any of the parties. It is rather seen as an automatic termination *ex lege* (by operation of law) rather than a dismissal. The practical effect of this is that the intern does not have the right to institute a claim of unfair dismissal should the principle terminate the agreement for unfair or unjustified reasons. 

#### **Premature Termination** 

In the event that there is a disagreement between the intern and the principle whereby the principle wishes to prematurely terminate the agreement, it is important that a Premature Termination clause provides for such instances within the contract. 

The intern will often not be entitled to receive any termination payment (compensation in lieu of notice) because the nature of the relationship between the intern and principle is that of two independent contractors and allows the principle to terminate the agreement freely for any reason which the principle deems reasonable or in some instances no reason at all. 

#### Services 

It is important that the services that the intern will be rendering are clearly defined within the Agreement to avoid uncertainty and ambiguity.  It is common that interns work remotely for the principle and the Services clause will often include a statement stating whether the intern will be rendering their services remotely or through office attendance. 

#### **Remuneration** 

Interns may or may not receive compensation for the work they do. If the agreement between principle and the intern provides that the intern be paid, the payment amount, date of payment and method of payment  must be clearly stated within the agreement. Any deductions that will be made to the interns compensation must be clearly stated.   

Interns are liable to pay tax as they are considered to be earning an income. However, this only applies if they earn a monthly salary/ stipend of R6 500 and above and so if the Intern is earning below the South African Revenue Services threshold at that time, they will not be liable to pay tax. 

The intern will not be liable to pay to the Unemployment Insurance Fund. The Unemployment Insurance Act and Unemployment Insurance Contributions Act apply to all employers and workers, but not to –

*   workers working less than 24 hours a month for an employer;

*   learners;

*   public servants;

*   foreigners working on contract;

*   employees in receipt of an old age pension are, since 07/2/2007, no longer excluded from contributing towards UIF; or

*   workers who only earn commission.

An intern is considered to be a learner and accordingly will not be liable to pay towards the Unemployment Insurance Fund. It is uncommon for there to be other deductions such as medical aid to the remuneration of an Intern. 

#### Sick Leave

Sick leave is the leave that is granted when an individual is ill and cannot work. Legislation such as the Basic Conditions of Employment Act provides for the number of sick leave days that an employee is afforded. Such legislation does not apply to independent contractors such as interns, however the sick leave concept is often incorporated into an Internship Agreement. It is important that the number of sick leave days that will be afforded to the intern are agreed upon and stated within the agreement. 

In an Internship Agreement, the intern is often entitled to a pro rata amount of sick leave. The agreement will also state what procedures should be followed when the intern has taken sick leave, for example the requirement of a doctor’s note alluding to the intern’s illness which resulted in them being absent from work. 

#### Family Responsibility Leave

Family responsibility leave is the leave granted to someone to allow them to attend to family responsibilities like the sickness of a child or the death of a parent. Although a principle is not obligated to grant family responsibility leave, it is a concept that is often included within an Internship Agreement. It is important that the number of days of family responsibility leave be clear in the agreement. The instances in which such leave can be taken should also be stated within the agreement. 

#### Minimum Stipend for Interns

According to [Indeed](https://za.indeed.com/career/intern/salaries): the average salary for a intern is R 4 588 per month in South Africa. 185 salaries reported, updated at 25 January 2023, which is close-to but slightly higher than the minimum wage, which comes in at R3 500 per month.

#### Maternity Leave

Legislation provides that female employees are entitled to 4 months unpaid maternity leave when they are pregnant. While such legislation does not apply to independent interns, the maternity leave concept is often included within agreements with independent contractors such as the Internship Agreement. 

A principle may decide that the female worker be compensated even while on maternity leave. The Internship Agreement should clearly state whether or not the intern’s maternity leave will be paid or unpaid. Some Internship Agreements may also provide that the Internship Agreement will not be extended should the intern become pregnant.

#### Supervision

An Internship Agreement involves educating and training the intern. Naturally this would mean that the intern will be under the supervision of the principle or any person designated by the principle. It is important for the intern to be aware of who will be supervising them during the course of their engagement with the principle and the reporting structures therein. 

#### Working Days and Hours 

The working days and weeks for the intern need to be agreed and stated within the agreement. For example, the intern may only work 3 days and week for 7 hours on each day. 

#### Confidentiality

The intern will obtain knowledge of the principle’s trade secrets or private and confidential information about the principle and the principle will usually prefer that the information remains private. It is important that proprietary and confidential information is protected and the agreement states that the Intern may not share the principle’s private and confidential information to any third parties and doing so will be considered breach of contract.

An employer will generally include a confidentiality clause in a contract, especially if the intern will be working with proprietary information and or top executives. In most cases, confidentiality clauses are signed when an individual is first hired and are valid through the termination of their Internship or, in some cases, a period of time after Internship  ends. On termination of engagement, a formal release document may also include an undertaking whereby the Intern is to refrain from disclosing certain confidential information.

#### Intellectual Property

Intellectual property is any product of the human intellect that the law protects from unauthorized use by others. An Internship Agreement should provide for the ownership of  intellectual property rights. The agreement should state who the intellectual property rights belong to. As with most employment agreements, an Internship Agreement will often state that intern will cede all the intellectual property rights obtained during the duration of the engagement to the principle. The agreement may also include that, although goodwill may be accrued, there will be no  payment to the intern for goodwill. 

Unless there is a statement to the contrary, a work created by an employee under a contract of service such as an Internship Agreement, in the course and scope of their agreement will be automatically assigned to the employer. This was confirmed in the judgment of \*King v South African Weather Service \*2009 (3) SA 13 (SCA); \[2009] All SA 31 (SCA).

It is still important to include this clause in the intern’s agreement as this will mitigate against a possible issue arising at a later stage as to the ownership of the particular intellectual property. The Internship Agreement may then also be relied on as being a written assignment in the event of the former Intern being recalcitrant. 

#### Domicilium

The addresses that the parties have chosen to be their designated addresses in respect to communication and notices is referred to as  *domicillium. The domicillium* must be included within the contract for clarity and to ensure that notices are sent to the correct address. 

Procedures that should be followed should one of the parties change their addresses should also be included, to ensure that the parties can communicate effectively and to avoid communication being missed. For example, the agreement may include that a notice of change of address must be sent in writing within 10 days of the change of address. 

#### **Liability and Indemnity**

It is of importance that both parties are aware of who assumes the risks that may be involved when entering into an agreement. Often in an Internship Agreement, the intern agrees to take on all risks associated with entering into an Internship Agreement with the principle. The intern usually agrees to indemnify and holds the principle harmless for any injuries suffered or losses incurred during the engagement between the parties.

Due to the high cost of risk, the principle in an Internship Agreement usually wants to assume minimal risk and so naturally the principle will ensure that the contract states that the intern will be liable for all risks involved with entering the agreement. To avoid problems that may arise at a later stage, where the intern institutes a claim against the principle for any injuries or losses suffered, it is important that the agreement clearly states who will bear the risk and be liable for losses or injuries. 

#### Breach 

It is important that a contract provides for instances when either the principle or the intern are found to be in breach of contract and the procedures that should be followed thereafter, including clearly stated notice periods. The remedies that are available when one is in breach should be clearly stated, as well as a clear indication of who will bear the costs incurred when seeking remedial action or costs incurred as a result of the breach. 

It is common that a party may be found in breach of contract and the Breach clause provides for such instances in detail. It is important to know when one can institute legal action against another party for breach of contract as well as the remedies that are available to an aggrieved party. 

Should the case of breach of contract reach the courts, the courts will consider whether the provisions within the agreement were complied with and take into consideration which remedies the parties agreed to rely on in the event that a party is found in breach. This clause makes it easier for a court to rule on a matter of breach of contract because the parties would have already agreed to what action should be taken, should a party be found in breach. 

#### Dispute Resolution

In the event that a dispute arises between the parties, it is important the agreement states which dispute resolution methods are preferred  and the procedures that should be followed. The agreement should also clearly state which court will have jurisdiction over any dispute that may arise from the agreement. 

It is important that parties agree to which procedure they will follow should a dispute arise before a dispute arises. The South African Law Commission Issue Paper 8  Project 94 Alternative Dispute Resolution highlights the alternative dispute resolutions that are favourable in employment agreements such an Internship Agreement which include mediation and arbitration. Disputes arising from an employment contract may also be resolved under the conditions and pursuant to the procedure provided for in Individual Labour Disputes Resolution Act.

#### Boilerplate clauses

Apart from the above, all Internship Agreements should contain standard boilerplate clauses (or general clauses) which are included to ensure certainty and prevent ambiguity. 

These clauses would include, for example:

1.  Severability

2.  Variation

3.  Indulgences

4.  Assignment

5.  Whole Agreement 

To understand boilerplate clauses more, please read [**here**](https://hellocontract.co.za/boilerplate-clauses/)**.**

#### **About Hello Contract**

At Hello Contract, we have taken into account all of the above considerations so that you can create a version of an Internship Agreement that is perfectly suited to your needs. All that you need to do is select the appropriate document that you would like to generate, answer a few questions, and our document generation software will automatically compile the Internship Agreement [here](https://shop.hellocontract.co.za/permalink/1d411283-b1fe-4e95-b9f9-a1bf6409f7ad).


Internships Agreements in South Africa

Find solutions or learn about the challenges

Employment Law

**Service Level Agreements (SLA’s) – Here’s what you need to know about them.**

A Service Level Agreement (SLA) is a contract that sets out the services that one party has agreed to render to another. The parties to a Service Level Agreement are often referred to as service provider and client. The service provider being the party that renders the services and the client being the party who receives the services rendered or  receives the goods produced as a result of those services.

An SLA usually exists between a business and its customers/clients. Regardless of what type of SLA exists between parties there are common building blocks that should be included in each SLA.

In this blog we evaluate some of the key concepts and clauses that should be included in all Service Level Agreements, and provide some background on why these are important!

**If you would like to go directly to our shop and purchase our automated Service Level Agreement, click > **[**Service**](https://shop.hellocontract.co.za/businessandcommerciallaw/service-level-agreements/service-level-agreement)** Level Agreement **

Contents of this blog;

1.  [Commencement, Duration and Termination](https://hellocontract.co.za/?p=2207#Duration)

2.  [Services](https://hellocontract.co.za/?p=2207#Services)

3.  [Service Variation](https://hellocontract.co.za/?p=2207#ServiceVariation)

4.  [Fees](https://hellocontract.co.za/?p=2207#Fees)

5.  [Force Majeure Event](https://hellocontract.co.za/?p=2207#InterruptionEvent) 

6.  [Intellectual Property](https://hellocontract.co.za/?p=2207#IP)

7.  [Boilerplate Clauses](https://hellocontract.co.za/?p=2207#Boilerplate)

**Commencement, Duration and Termination**

It is of importance that the parties to the agreement agree on when the agreement will come into effect and for how long the agreement will be in existence for. The agreement should provide clarity on how the agreement will be terminated and which of the parties will be allowed to terminate the agreement and if they will be allowed to end the agreement without reason and the notice period in such a case.

**Services**

This clause is one of the most important clauses in the entire agreement. Here you will find the details of the services that the service provider has agreed to render to the other party. A brief summary of the services, to whom and how the services will be delivered are details that you would also want to include in this clause.

**Service Level **

An SLA should provide clarity on how the success of the services rendered by the service provider is to be measured or approved. Parties should agree on what measurement will be used to measure the success of the services and how and when the success should be measured, within the agreement. 

**Service Variation**

Service Variation means a material change in the services that is made at the reasonable discretion of the Service Provider or at the request of the client. It is important that the process to be followed if the service provider needs to make an adjustment to services be clearly stated within the agreement.

In the Service Variation clause, it would be advisable to include how the service provider should go about obtaining the consent of the client to vary the services. In the instance of service variation, the fees in respect to services rendered may also need to be adjusted. It is then important that this clause clarifies the procedures to be followed for the service provider to obtain consent from the client to effect a fee adjustment.

**Fees**

As with any agreement that involves compensation, there should be clarity on the fees that will be charged for services rendered. The fees should be agreed upon and the details of when, how often and how payment will be made should be clarified in the agreement. The agreement should state whether the service provider will require a deposit before starting to render services, and if so, how much that deposit will be, when and how it will be paid. Parties may also agree on the penalties that may be imposed should one of the parties make a late payment. 

**Intellectual Property**

While rendering services to the client, intellectual property, including inventions, product designs, creative works etc, may be created. For the avoidance of any doubt, it is thus very important to ensure that the parties agree on which party will retain ownership of any and all intellectual property that is created by the service provider while rendering services to the client.

**Boilerplate Clauses **

Apart from the above, all  Service Level Agreements should contain standard boiler plate clauses (or standard clauses) which are included to ensure certainty and prevent ambiguity. 

These clauses would include, for example:

1.  Domicilium and Notices 

2.  Non- Waiver

3.  Assignment

4.  Governing Law and Jurisdiction 

5.  Force Majeure Event 

6.  Dispute Resolution Procedures

7.  Non-Variation of Agreement Provisions

8.  Severability Provisions

9.  Whole Agreement provisions

To understand more about boilerplate clauses, please read [here](https://hellocontract.co.za/boilerplate-clauses-what-are-they-and-why-are-they-important/). 

At Hello Contract, we have taken into account all of the above considerations so that you can create a version of a Service Level Agreement that is perfectly suited to your needs, and which is available [here](https://shop.hellocontract.co.za/businessandcommerciallaw/service-level-agreements/service-level-agreement).









Service Level Agreements at Hello Contract

Get on your feet quickly with our guidance

Freelancers

Technology and access to information has made our lives so much easier. Our digital scrapbooking skills through Social Media platforms such as Facebook, Instagram and Twitter pave the way for a new kind of ‘access to information’. It is the access into our lives. It is a mirror on all activities, trips, highlights and events that you wish to share with the entire world.  

And why not? That beach-body pose on the blue shores of Maldives can send followers and likes directly your way and is completely harmless in the meta-verse…right?  

That answer all depends on your company’s Social Media Policy.  

> “To Post or Not to Post” 
> \-That is the question that all employees should ask. 

### Why have a Social Media Policy?  

The sole purpose of such a policy is for the protection of a company’s brand image and to encourage all employees to use their social media accounts responsibly. So that post of Friday night drinks at the office may send, along with the followers and likes, lawsuits coming your way. Such a policy is a stonewall defence against such suits.   

### Do we even need a social media policy nowadays? 

Yes, an up-to-date and active social media policy is essential in current corporates as employees are now more active on social media platforms than ever before. Businesses are solely responsible for the safe-guarding and maintenance of their good business name. Any deviance from that, such as an employee’s post, which may not reflect the the true values or vision of a company and the spreading of fake news could result in huge legal suits and financial losses for the company.   

### Who regulates social media in South Africa? 

Lawyers have come to the conclusion that the POPIA (Protection of Personal Information Act) does not apply to pictures taken or shared. It is the company’s Human Resources, Public Relations and Marketing departments that are at the forefront of the company’s good business image and hence in charge of reporting and educating employees on the do’s and don’ts of social media.  

**What should be added in a social media policy?** 

The following are a few elements that are included in a social media policy:   

1.  Employee access: this is an outline on what sites employees are allowed to access at work.  

2.  Conduct, oversight and enforcement: acceptable use and code of conduct of social media accounts.  

3.  Prohibited behaviour: this includes inappropriate jokes; offensive remarks; content that employees do not have the right to and plagiarised content to name a few.  

In conclusion, a social media policy is essential in the current corporate South Africa and illuminates the correct and appropriate use of all social media accounts. In as much as some departments are in charge of the management and maintenance of a good business image, it is the responsibility of all employees to be part and parcel of the face of their company. This policy is the mirror in which the face of the company reflects whenever employees are on the internet.  

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 


A guide to social media policy in south africa

A Guide to a Social Media Policy

##### What is a eCommerce Privacy Policy? An eCommerce Privacy Policy is a legal document required by law in terms of the Protection of Personal Information Act (“POPI”) and in some instances the European GDPR, and acts as a form of legal consent from the users who make use of your eCommerce website with regard to what personal information you gather from your users, how you use this information, who you share it with, and how you keep it safe. In this blog, we will give you the full rundown of what it takes to draft prepare an eCommerce website Privacy Policy.

> POPI has set very specific guidelines on the requirements for your privacy policy's. We take all of these into account when creating documentation in our store.

![Placeholder Image](https://assets.stackbit.com/components/images/default/post-4.jpeg)

Many eCommerce shop owners don’t regard themselves as needing a Privacy Policy. This is based on a number of reasons, but some include that they believe their shops are too small to warrant a Privacy Policy, as Privacy Policies are for big businesses only. No matter the size of your business, as long as you collect and process personal data from entities, you will need a Privacy Policy. It is required by law. 

### **When do you need a Privacy Policy?**

You need a privacy policy for as long as your website collects personal information of users. 

Personal information comprises any information which allows for you to identify a user, such as e-mail addresses, physical addresses, names and the like.

In order to run an eCommerce store, you will always be required by law to have a Privacy Policy. 

### **What should be included in a Privacy Policy?**

#### **What Personal information you collect**

You are required to disclose the various types of personal information that you collect from users, and where such personal information is collected. For example, if you collect customers names, email addresses and credit card details when they buy something from your website, you must record this in the Privacy Policy.





The [Budweiser](https://www.budweiser.com/en/privacy-policy.html) Privacy Policy above clearly outlines which personal information the company collects and where they collect the information. 

#### **Why you need to collect Personal Information **

Privacy laws require you to collect only the personal data that you need, and to explain why you need it. As such, your Privacy Policy must clearly record this.

This is probably one of the most important clauses in your Privacy Policy. As such, it should be clear, simple to understand and accurate in order to ensure compliance with the law and that customers are comfortable that their Personal Information will only be used for the purposes stated in the Privacy Policy.

A great example of this is [Nestle](https://www.nestle.com/aboutus/businessprinciples/privacy/privacy-notice#Q2) (below):





Nestle provides a step by step account of why they need the Personal Information they collect.

[Airbnb](https://www.airbnb.co.za/help/article/2855/privacy-policy?locale=en&\_set_bev_on_new_domain=1615439616\_YTZiZjZlZTkwZGRk) is another great example of a webshop that clearly defines what reasons the collection of Personal Information is needed for.






#### **Who such Personal Information is shared with**

Most websites use one or more third party tools to enhance site performance and user experience. Examples might include Google Analytics to understand your website visitors, or AdSense for personalized advertising.

Further, in order to fulfil the delivery of items ordered from your online store, you might have to appoint external couriers. In doing so, you will have to share at least the physical address of the user with the courier.

The categories of all third parties to which personal data is shared with must be recorded in your Privacy Policy.

Here’s how [Instagram](https://help.instagram.com/519522125107875) does this:





#### **How to Opt Out of Data Collection**

Your users are allowed to request a change, correction or deletion of their Personal Information. Your Privacy Policy should include guidelines for the opting out of ongoing data collection, correcting or deleting Personal Information, as well as for obtaining a copy of any personal data already collected. 

[Nike ](https://agreementservice.svs.nike.com/rest/agreement?agreementType=privacyPolicy\&uxId=com.nike.unite\&country=US\&language=en\&requestType=redirect#Protection)clearly provides this information in its Privacy Policy:





#### **Cookies **

Although not a requirement in terms of South African law, the European GDPR requires that a Privacy Policy (of a separate cookie policy) state whether or not cookies will be used and require users to consent to such use prior to any cookie processing. 

In this disclosure, you must identify the cookies or data trackers, explain their purposes and detail the type of data retrieved from the cookies or data trackers. 

You should also list all sites, companies and organizations that will collect or receive data retrieved from cookies or data trackers.

#### **Security**

Your Privacy Policy should address data-security concerns of shop users. The policy should include language that expresses your stores’ commitment to safeguarding personal data and explain the steps used to ensure that it is safeguarded at all times.

#### **Orders from outside South Africa**

What happens if your eCommerce website takes international orders with you having to collect Personal Information from customers outside South Africa? You could be required to ensure that you draft a Privacy Policy that complies with the privacy regulations in the countries in which your customers reside. 

For example, if your shop collects any Personal Information from any European Union (EU) resident, your Privacy Policy needs to comply with the General Data Protection Regulation (GDPR). The General Data Protection Regulation is a regulation in terms EU law pertaining to data protection and privacy. 

#### **Non- compliance **

Ensuring that your business protects the personal information entrusted to it is very important and there are severe consequences put in place to ensure that businesses comply with POPI.  Non-compliance with the requirements of the POPI Act may lead to the imposition of an administrative fine or even imprisonment. It is therefore essential that you ensure that your Privacy Policy is POPI compliant.

### **How can you ensure that your Privacy Policy is GDPR compliant?**

#### **What’s Your Legal Basis for Processing Data**

The GDPR requires you to give at least one legal basis for processing personal data of customers. There are 6 legal bases, which are as follows:

*   The data subject has given consent to the processing

*   Processing is necessary for performance of a contract between the two parties

*   Processing is necessary for compliance with a legal obligation

*   Processing is necessary to protect the data subject’s vital interests

*   Processing is necessary in order to protect a public interest or exercise official authority

*   Processing is necessary for the purpose of legitimate interests, so long as fundamental rights and freedoms aren’t infringed

#### **How long you’re going to store the data**

The GDPR obliges you to inform your customers about “the period for which the personal data will be stored, or if that is not possible, the criteria used to determine that period”.

#### **Who Your Data Controller is and Contact Information**

If you control the personal information of your customers or you process it for some other company, inform your customers about it. Tell them who you are and what your role is when it comes to their data. If it is not you who processes the data, your policy should clearly state the name and details of the company that will be controlling and processing the personal data. 

#### **Whether You Use Data to Make Automated Decisions**

If you use automated decision making (for example for credit scoring or for profiling users) to provide services/products to your users, disclose this.

#### **Inform Users of the 8 Rights They Have Under the GDPR**

The GDPR requires you to tell your users about their 8 rights under the GDPR, which are:

*   The right to be informed

*   The right of access

*   The right to rectification

*   The right to erasure

*   The right to restrict processing

*   The right to data portability

*   The right to object

*   Rights related to automated decision making and profiling

*   You can comply with this requirement by merely stating the rights of your customers as above or you can provide details about the rights afforded to them. 

#### **Whether You Transfer Data Internationally**

If you transfer personal data internationally, you will have to mention it in your Privacy Policy. It is important to state why and to whom the data will be transferred to. Your policy should also mention how you will secure the information of the customers. 


Privacy policy for Ecommerce website

#### An eCommerce Website Terms and Conditions (also known as a Website Terms of Service) acts as a legal contract between you (the company) and the users who make use of your eCommerce website. Think of it as a document which sets out the basic ground rules- protecting your rights against users who may abuse your website and, ensuring that your customers grasp an understanding of your provided service or products. In this blog, we will give you the full rundown of what it takes to draft a Website Terms and Conditions and highlight a few of the most important clauses.

> Although there is no legal requirement to have a T's and C's on your website, it is highly *highly *recommended

![Placeholder Image](https://assets.stackbit.com/components/images/default/post-4.jpeg)

### **What is an eCommerce website?**

By definition, an eCommerce website is an online trading post that allows you to buy and sell products or services online. Once viewed by many as a subsidiary service offered by physical stores, e-commerce websites have rapidly evolved into leading companies and have quickly become a vital extension to even the most simple modern-day businesses. 

From fruit vendors to clothing startups, the internet is now a thriving, demand-driven marketplace for all businesses- no matter their size or products sold. The cyberspace market is not, however, a virtual Wild West and just as quickly as e-commerce sites have evolved, so have our laws and the demands of cautious consumers. 

As an online business owner, you need to be aware of both South Africa’s data privacy laws (which have recently become significantly more stringent) as well as a customer’s perception of your company. Having clear, understandable and legally-sound documentation on your website not only lowers your legal risk but it also increases the customers’ confidence in your business and determines your perceived business values.

There are now countless articles and studies supporting the belief that eCommerce is the future for many industries and without it, your business might easily be left behind. A common mistake we often see, however, and one that should be avoided, is frantically rushing into it. When setting up an eCommerce shop there are three important policies or legal steps that you need and should have displayed on your website.

Namely: A Website Terms and Conditions, a Returns Policy and a Privacy Policy.

### Table of contents:

1.  What is a Terms and Conditions Policy?

2.  Why do you need a Terms and Conditions Policy?

3.  Basic contents of Terms and Conditions

4.  Over to you

### **What is a Website Terms and Conditions Policy?**

A Terms and Conditions Policy is a document that details, amongst other things, how consumers may use the shop, your rights and responsibilities, that of the seller and the customers, what you are (and are not) liable for, and who customers can turn to if there’s an issue with a sale. It’s basically a set of rules that helps define a relationship between you and your customers. 

As a starting point, the fundamental basis of a set of Terms and Conditions is always the following:

*   What customers can expect of you: Which sets out how you provide your products and/or services;

*   What you expect of your clients: Which establishes certain rules for using your services and products;

*   Your website content: Which sets out the intellectual property rights to the content clients find on your website, and at its very simplest, records whether that is yours or owned by others; and

*   Conflict handling: How you address a problem or dispute with your consumers.

While it is not required by law that your eCommerce store has a set of Terms and Conditions, it is highly recommended that you do so. Typically we use Terms and Conditions, Terms of Service, Terms of Use, Website Disclaimer and T\&C’s interchangeable.

### **Why do you need a Terms and Conditions Policy?**

There are a number of reasons why you need a Terms and Conditions Policy. Here are some of the most important ones. 

As Website T\&C’s function as a basic playbook for the relationship between you and your visitors, it is an easy way to objectively set your standards and manage expectations for all parties. Furthermore, a T\&C’s establishes a form of legal protection for you, it sets rules to prevent site abuse, limit your liabilities and protect your intellectual property.

Here’s a great example of the importance of website T\&C’s taken from our local clothing store, Mr Price. Within their Introduction Clause, they clearly highlight the importance of their T\&C’s for potential customers regarding their stated provisions.

Not that you will want to, but you can read the full set of T\&C’s [here](https://www.mrp.com/en_za/customer-service/ecommerce-terms-and-conditions/). It is a  comprehensive, somewhat lengthy document but its overall purpose is succinctly outlined in a few short bullet points. Their Terms and Conditions outline everyone’s rights and the rules to be followed. A few more in-detail reasons are as follows:

#### **1. Legal Protection**

Terms and Conditions are legally enforceable rules, they allow you to set standards for how users interact with your site. While they protect consumers, they also protect you, the eCommerce store owner. The Terms and Conditions set out what you cannot be held responsible for, and what actions you’re entitled to take.

Terms and Conditions also set out the dispute resolution process if any legal issues do arise. Legal disputes cost a lot of time and money, and for the most part, can be easily avoided if you put in some pre-emptive groundwork. With a good Terms and Conditions Policy, you can save a lot in the long run by avoiding costly litigious processes. 

#### **2.  Prevent Site Abuse**

When the guidelines for your website are set out clearly in a policy, customers know what is acceptable and unacceptable when using your site and the consequences of non-compliance. Having a Terms and Conditions Policy allows you to take action against site abusers in the manners set out in the T\&C’s.

#### **3. Limit Liabilities**

Your Terms and Conditions Policy can also assist in limiting your liability in many ways, including but not limited to, personal injury, loss of profits, computer malfunction, product misrepresentations and warranty issues. 

#### **4.  Protect Your Property**

Your website is filled with brand-related materials that are owned by your business, such as its logo, designs and the like. A Terms and Conditions Policy can be used to inform users that you are the owner of the intellectual property on your website and prohibit users from taking or using your branding.

#### **5. Establish Trust**

Terms and Conditions help your eCommerce business establish trust and transparency with customers by clearly outlining the rules of using your website. When you explain the legal basis on which your business runs, customers are less likely to have misunderstandings or mismatched expectations about your online store and are more likely to trust you. 

### **Basic contents of Terms and Conditions**

Typically the contents are structured to include 15 important clauses as follows:

1.  The Introduction and Application Clause;
2.  Services Clause;
3.  Prohibited Uses and Actions;
4.  Information accuracy;
5.  Account Termination and Suspension;
6.  Third-Party Links;
7.  Shipping & Delivery;
8.  Intellectual Property;
9.  Payments;
10. Limitation of Liabilities;
11. Refunds and Returns;
12. Amendments to the Policy;
13. Jurisdiction & Dispute Resolution;
14. Your Contact Information; and
15. Active Consent to a Terms and Conditions.

#### **The Introduction and Application Clause**

An Introductory and Application Clause is normally contained in the first paragraph of your Terms and Conditions. 

From the first instance of your users reading the policy, they should know what the policy is about. A short introductory clause that states what the policy is, who the policy applies to and when it is triggered is important.

Both Takealot’s and Mr Price’s Terms and Conditions are a good example. There is a clear outline of what the policy is about and who it applies to.

This first section is not complex, but it’s contents are necessary.

#### Services Clause

The Services clause is one of the most important clauses in your T\&C’s, and sets out what your service offering is, and potentially how your charge for those services.

Put simply, with an eCommerce store that sells camping equipment you would, for example, a record that you are an eCommerce website which specialises in the sale of camping equipment throughout South Africa.

In this clause, it is not necessary to go into granular detail of your services, but rather provide a general overview of your services provided.

#### **Prohibited Uses and Actions**

Forbidding or preventing unlawful behaviour on your eCommerce website is essential and made possible by recording this in the Prohibited Uses and Actions Clause of your Terms and Conditions.

As an eCommerce shop, there is behaviour that is bound to be deemed unacceptable and it is important that you clarify what falls into the ambit of prohibited actions. It is up to you to decide what you will allow customers to do and not to do on your website, as this may have a direct effect on your reputation and the success of your webshop. 

There are, however, some standard behaviours that you should prohibit.

Prohibited actions usually involve violence, copying, circumventing the platform, crawling the platform, discriminatory or threatening actions. An example of this is included in Mr Price’s Clause 4.5 of their T’s & C’s. This clause should also detail the consequences of a user using the shop in a prohibited manner. 

Although this may seem like common knowledge or basic etiquette, it should be reiterated in writing along with your rights as the business owner to remove any content that you deem to be foul of these terms.

#### **Information accuracy**

Ensuring that the information displayed on your website is correct and without any mistake is what is known as Information accuracy. Information accuracy is important because your customers’ perception of your website or understanding of your products or services is based solely on the text or images you display, and as such this information must be accurate.

Mistakes do, however, happen and if you are selling many products on an eCommerce webshop, it is possible that sometimes your products and even your pricing can change before you update the information on the shop. It is very important that you stipulate that information can sometimes be inaccurate and change without notice.

This section should mention that despite your best efforts, on-site information might not be up-to-date and that certain information (e.g. prices, product descriptions, stock quantities) may change without notice.

Below is an extract from the Terms and Conditions of clothing retailer H\&M and Takealot on information accuracy:

H\&M clearly states that information on its site is not always up to date, and that information (including pricing) can change at any time. Similarly, Takealot makes it clear that they are not liable for any transactions made in error or incorrectly displayed prices. 

This is important, considering that 54% of consumers have returned items bought online due to complaints about colour.

#### **Account Termination and Suspension**

It is important to outline when, how and why a user can terminate their account or have it suspended or terminated by you, the shop owner. This clause should be kept as broad as possible to make provision for a wide range of situations that may give rise to termination or suspension. 

A good example is the Takealot Policy, wherein Takealot are typically entitled to close your account due to any behaviour that they do not want, including, *preventing* suspected fraud, abuse, multiple user profiles, taking advantage of coupons/promotions and the like. 

#### **Third-Party Links**

The third-party links clause explains the purpose of external links on your site, and that you’re not responsible for the content of sites to which you link. This is important as it limits your liability should any claim arise from a matter resulting from the use of an external link.  

The Takealot links clause records that any links pointing outside of its website are provided for the user’s convenience and that Takealot isn’t responsible for the quality, nature, and reliability of third-party content. The terms go on to state that the inclusion of third-party links does not imply endorsement by Takealot.

#### **Shipping & Delivery**

This clause is also known as the ‘Shipping Policy’ or “Shipping & Delivery Clause”. As the name suggests, this clause deals with the basic shipping and delivery terms of your online store. 

This is probably one of the most important clauses in the policy. Everyone wants to know when they can expect their goods. It is essential to outline your shipping and delivery terms, in which you record the time frames to fulfil orders, how costs are calculated, whether extra fees are applicable, and what your level of responsibility includes when third parties couriers, for example, are used. 

A shipping and delivery clause (such as Takealot’s below) should be as clear as possible, clearly stating how and when shipping and delivery is expected. It is also important in the case where goods may be damaged, delayed or do not arrive at all, that your policy stipulates what happens in these situations.

Often, you want to limit your liability by stating in this clause that once you have handed over the goods to the courier company if you are using one, that you no longer assume the risk of delivery.

Note that when doing business overseas, rules for returns or deliveries may be different from that of South Africa. Parts of the EU have legislation in place where the original sender is still considered the owner of the goods (and therefore liable for the risk of delivery) until it is delivered to the end-client.

#### **Intellectual Property**

Intellectual Property (IP), which generally includes copyrights, patents, trademarks and the like are the terms which best describe works of the mind to develop something original and new.

On any given website there are countless examples of IP creations, such as brand names, slogans, logos, patented products and the like. In today’s online world, your IP is an incredibly important asset that should be strategically managed.

It is important that you properly record what is your IP, and that of others, and further what can and cannot be done with your IP. A good example is that of Mr Price’s Intellectual Property clause. 

The laying down of IP ground rules will be extremely helpful if you ever find yourself in a situation where someone has used your site’s intellectual property, with your wishing to prohibit its use elsewhere.

#### **Payments**

In this clause you normally outline how payments are made when a customer purchases a product or service from your store.

Most importantly, however, one sets out the payment methods accepted by your webshop, such as debit card, credit card, EFT, eBucks and their vouchers.

The Takealot Terms and Conditions “Payment” clause below clearly defines what payment methods are accepted. 

This clause does not include actual pricing amounts, however. We would suggest that your pricing be recorded separately on your website, as this will allow for you to change your pricing as and when required without having to amend the Terms & Conditions.

#### **Limitation of Liabilities**

Mistakes and errors are bound to happen. Whether it’s a incorrectly described item or a system error, you want to make sure you state to what extent the business will be liable for any errors and mistakes. 

When it comes to purchases, you can’t always guarantee that every item you sell (or facilitate the sale of) will be flawless. If you sell items from third parties, this is especially important. For this reason, and among others, it is  important to indemnify your business and limit your liability. 

Takealot and Mr Price’s limitation of liability clauses are both great examples:

What is included and important in their clauses are that they are not liable for direct/indirect, incidental, special or consequential loss or damages when using their website, save for, in certain circumstances, where you might have been grossly negligent or exhibited willful misconduct.

#### **Refunds and Returns**

A Refunds and Returns Clause is typically a clause or set of clauses which sets out how and when your store will permit returns or refunds. 

It is advisable, however, like Takealot, to have a separate policy dealing with refunds and returns. 

#### **Amendments to the Policy**

Amending your policy means making minor changes or additions to improve your text or change specific clauses and, with any growing business, is absolutely necessary. 

Your Terms and Conditions Policy should be updated regularly, but it is important that your users are aware of how often you will change the terms, what the process is to amending your terms, and how, such as with Mr Price, a user may discontinue the services if they are not happy with your updated policy.

#### **Jurisdiction & Dispute Resolution**

Your store’s Terms and Conditions are a proactive step to avoid legal disputes with your customers. However, in the event that a legal dispute does occur, it’s important to have a clear Dispute Resolution Clause, so any conflict can be resolved quickly and most importantly, professionally.

A Dispute Resolution Clause typically sets out the process through which disputes between you and your customers are resolved. Typically this might start with informal negotiations, and if that fails, mediation, and if that fails, through our courts,

Takealot provides a great example of this:

#### **Your Contact Information**

Let your users know how to contact you with any questions or concerns they may have. 

Here’s an example from Mr Price and Takealot. You’ll notice that both companies list as much contact information as possible: 

#### **Active Consent to a Terms and Conditions**

We strongly recommend that in order to ensure compliance with local laws, you obtain express consent to your Terms and Conditions from your users, as in the case of Mr Price’s signup process, by use of a physical “click” or action.

Express or active consent requires a user to complete some positive step, such as clicking a button or checking a box in order to agree to the Terms and Conditions, with the opportunity to read such Terms and Conditions. This is as opposed to deeming their acceptance of the Terms and Conditions simply by using the website, which is referred to as passive consent.

Many courts have, however, found that T’s & C’s presented in a passive consent manner do not create an enforceable agreement. 

**Over to you.**

These guidelines and examples should be taken into account when creating any eCommerce Terms of Service- whether you are selling products and/or providing your customers with a service. 

If you are, however, not absolutely comfortable with writing your own Terms and Conditions, we do not recommend that you go it alone. 

At Hello Contract we’ve created a simple way to create an automated customised eCommerce Terms and Conditions. We provide you with a step by step questionnaire to answer, and once you’ve entered your information, we take care of the legal stuff automatically in seconds. It’s simple. 

Check out our eCommerce Terms of Service, [here](https://shop.hellocontract.co.za/permalink/65f57b59-b4a5-42ae-bc96-ae7648c39833)


Understanding eCommerce terms and conditions

An eCommerce Returns Policy acts as a legal contract between you (the eCommerce store owner) and the users who make use of your eCommerce website. Think of it as a document which sets out the basic ground rules around how, when and in what circumstances you permit returns and refunds of products or services sold on your eCommerce website.

> Vestibulum ullamcorper risus auctor eleifend consequat.

![Placeholder Image](https://assets.stackbit.com/components/images/default/post-4.jpeg)

### \*\*eCommerce Returns Policy \*\*

There are four key policy documents required to better legally manage your eCommerce store. A website Terms and Conditions, a Privacy Policy, a Delivery Policy and lastly, a Returns policy. This blog will walk you through why you need a Returns Policy in South Africa and most importantly, how to draft a Returns Policy.

If you’re still in the process of drafting your Terms and Conditions or Privacy Policy, we have dedicated guides for each of these documents in our blog library, [here](https://hellocontract.co.za/blog/). 

When operating any shop, whether a physical store or an eCommerce webshop, it is expected that customers may, in some instances, want to return or exchange goods bought from your business. 

There are a number of reasons why you, as a business owner, should draft a Returns Policy for your store, but the primary reason is for retailers to offer a policy to help mitigate the business owner’s risk by only permitting returns when returns should be permitted. 

After purchasing a product from your store, if your customer is not happy with your product, if it is defective or it is damaged, then it should be returned to you under certain circumstances. 

Most business owners try to strike a balance between offering a lenient Returns Policy and protecting their own business interests.

In a recently published study in the Journal of Retailing, the authors identified five common aspects which are in Return Policies to make them more or less lenient. 

They are:

1.  Monetary Leniency: How much of the price of your product is refunded;

2.  Time Leniency: The duration within which returns are accepted by your business;

3.  Effort Leniency: How difficult it is for your customers to return their products;

4.  Exchange Leniency: Whether refunds for products are in the form of store credit or cash;

5.  And, Scope Leniency: The type or categories of products which can be returned — for instance, whether perishable goods (such as milk) are accepted or not

These terms are important to keep in mind when planning your Returns Policy.

You can read the full article [here,](https://www.sciencedirect.com/science/article/abs/pii/S0022435915000822) but to skip ahead, the study found that drafting a more lenient Returns Policy can actually increase the number of products purchased on your store more than it increases the number of products returned by customers. 

The authors go on to say that this is policy or product dependent and not a sure bet but, they offer insight into what may help to incentivise product purchases.  

To reduce the number of returns, they highlight the importance of increasing the time leniency of your Returns Policy and reducing your scope leniency. For example, not rushing your customers’ decision to return a product may allow them the time to enjoy it and therefore not return it. Further, limiting your acceptance of returned goods to non-discounted products will also limit returns. 

As such, drafting your own Returns Policy is a balancing act. You need to carefully increase the demand for your products whilst simultaneously limiting the eventual returns.

Here are 6 tips provided by the authors to help you with your Returns Policy drafting:

1.  Be selectively lenient based on the cause of the return; 

2.  Be selectively lenient based on time;

3.  Be selectively lenient for cheaper products that need a quality prop up. For example, offering “more than your money back” can increase the perceived quality of your product;

4.  Be selectively lenient for your more important customers;

5.  Have the Returns Policy apply for a longer period after purchase so that the “[endowment effect](https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/endowment-effect/)” kicks in. This basically means that customers may feel a better sense of ownership after a period of time so, offering a longer return window may reduce the likelihood of the product being returned;

6.  And lastly, limit the return of any gifted or discounted items. For example, only offer store credit if the product is returned by the person that purchased the gift. 

Although it is not required by law that you have a Returns Policy, the document’s potential effect on your business may be significant, so it is advisable to have one in place to better control your store’s returns and refunds.  

So with this knowledge in mind, there are three key questions which need answering before you go ahead and draft your Returns Policy:

1.  **What is a Return Policy?**

2.  **Why have a Return Policy?**

3.  **What should be included in your Return Policy?**

4.  **Your Return Policy**

### **What is a Return Policy?**

A Returns Policy, as mentioned above, is a document that contains a set of rules that an eCommerce shop owner sets out to manage how customers return and/or exchange unwanted, damaged, defective or incorrect merchandise that they have purchased. 

A Returns Policy also sets out to customers what items can be returned or rejected and for what reasons, and the timeframe over which returns are accepted.

Every business should tailor their Returns Policy to fit their logistics capabilities, customer expectations, and product offering. For example, a Returns Policy for handmade, customised artwork will be completely different from one for a mass-market apparel company.

### **Why have a Return Policy?**

Apart from what has been set out above, a concise and clear Return Policy provides consumers with some security that what they are buying is what was represented to them. Without this consumers might become suspicious and avoid buying the product.

The nature of eCommerce is that it doesn’t allow customers to see and feel products before buying them. Naturally, customers want to be sure that if they don’t like what they bought or if it does not match their expectations, they can return the product. 

Almost half of all eCommerce shoppers check Return Policies before purchasing online and so we believe it is essential to have one. 

### **What should be included in your Returns Policy?**

#### **Timeframe for returns**

To ensure that Customers don’t abuse the returns process and that there is a clear line in the sand, the time period in which product returns are to be effected needs to be recorded. 

The time frame might differ dramatically from one website to another. For example, a fresh produce website will differ markedly from an electronics company.

Either way, it is up to you, but we suggest that due to Consumer Protection Act requirements this should not be less than 10 business days.

#### **Returning of unwanted goods**

A clause should then speak to the return, if applicable, of unwanted goods or products. These are items bought by your customers but returned not because they are faulty or incorrect but simply, because the custom does not want the item any longer. 

Depending on the condition and type of item or the time it has taken to be returned, you may want to be selectively lenient when drafting this clause. 

Setting clear terms will help you limit the return of any items which may result in a loss of profit for your business. For example:

*   Items can be returned if undamaged and unused, with the original labels and stickers still attached; 

*   Items can be returned if they are in the original packaging, which must be undamaged and in its original condition with all seals still intact (if applicable);

*   Items can be returned if they are in perfect working order and not missing any accessories or parts;

*   Items can be returned if they are not in the clause outlining products that are not eligible for return; and 

*   Certain items or categories of products can be returned if within a specified time frame.

Because these items often need to be returned in undamaged and unused condition, we suggest that it is very important to include a clause that permits you to inspect the product which is being returned prior to you validating a refund or exchange.

#### **Damaged goods**

Delivery is the backbone of many eCommerce stores, and sometimes products may leave your business in working condition but are damaged in transit or when they are collected. These are referred to as “damaged goods”.

If goods are delivered to your customer in a damaged state, the South African [Consumer Protection Act](https://www.gov.za/documents/consumer-protection-act) places a responsibility on the retailer to remedy the situation. 

As physical damage to goods is often fairly obvious, many businesses offer a full refund/repair and free collection of the damaged item if\*\* \*\*it is returned within a relatively short time frame and passes an inspection.

#### **Defective goods**

Defective goods are normally items which fail to conform with or operate according to applicable specifications. 

If items are defective, generally, the retailer is expected to refund the customer and permit a return of the item.

There is sometimes a fine line between products which are defective and damage which is caused to products for some other reason.

As such, we would suggest terms such as the below to mitigate your need to effect a refund unless necessary:

*   Items will not be refunded if faults resulted from normal wear and tear;

*   Items will not be refunded if damage arose from negligence, user abuse or incorrect usage of the product;

*   Items will not be refunded if damage arose from electrical surges or sea air corrosion;

*   Items will not be refunded if damage arose from a failure to adequately care for the product; and

*   Items will not be refunded if damage arising from unauthorised alterations to the product.

Again, it should also be recorded that you have a right to inspection of the items prior to effecting a  repair, refund or exchange.

#### **Non-returnable goods**

Non-returnable goods are those products that your business does \*\*not \*\*refund- regardless of the condition of the product or timeframe in which they were purchased. 

The return of these products may be a contentious subject with your customers, so you need to be especially transparent and understandable when you draft this clause, if it is applicable.

Reasons to justify not returning products include:

1.  Public and food safety regulations;

2.  Hygiene reasons; 

3.  Applicable legislation; and

4.  Reasons of cost efficiency.

Here are a few examples of products which are accepted as non-returnable for the above reasons:

*   Products purchased by way of special arrangement or which comprise a custom order;

*   Perishable products and/or food items; and

*   In certain circumstances, swimwear, underwear, shavers, toothbrushes and other health, beauty and personal care items.

#### **Refund methods**

In a standard eCommerce Returns Policy, the methods that your permit to effect a refund or return should be recorded. 

For example, whether you permit refunds, or prefer to replace items, or alternatively prefer to issue store credits, it is up to you.

In this regard, however, whatever methods you permit needs to be recorded in the Refunds Policy.

#### **Methods of return**

eCommerce website owners all need to determine how products are returned. For example, is a customer required to repack the product and send it back to you at their cost or do you perhaps collect the product from the customer.

There is no right or wrong answer, but whichever method you decide upon, this should be recorded in the Returns Policy.

### \*\*Your Returns Policy \*\*

There are two key parts to drafting this document yourself. The first is that you need to thoroughly understand your own eCommerce website, the products/services you market and the outcome you want to achieve from your Returns Policy. Do you have complete trust in your product and want to offer an incredibly lenient policy? Or do you need to limit your returns? 

Secondly, you need a basic understanding of South Africa’s consumer legislation, such as the Consumer Protection Act. If you are not absolutely comfortable with legally drafting your own Returns Policy, we do not recommend that you go it alone. 

At Hello Contract we’ve created a simple way to skip traditional legal fees and create an automated customisable eCommerce Returns Policy. 

We provide you with a step by step questionnaire to answer, and once you’ve entered your information, we take care of the legal stuff automatically and, in seconds, we provide you with a comprehensive Returns Policy. 

It’s simple.  

Check out our Returns Policy, [here](https://shop.hellocontract.co.za/permalink/4af54f52-67a8-4e9d-8571-0b212b8d82d0)


ECommerce return policy

##### Whilst most start-ups try to take a shortcut in compiling their Website Terms of Service by simply copying and pasting some industry leader's terms and conditions which is comparable to their own and placing it on the website, this is fraught with dangers and not advisable.

> Terms and Conditions are not required by law, but we highly recommend these having in place to prevent abuse of your site

![Placeholder Image](https://assets.stackbit.com/components/images/default/post-4.jpeg)

For example, one may consider their peer-to-peer lending or renting platform of movable equipment as comparable to Airbnb and therefore, simply copy Airbnb’s terms of service. Apart from the fact that this is copyright infringement, there will be aspects within Airbnb’s terms and conditions which are worlds apart from how you intend your business to function, but are now legally binding.

For example, a cover of up to $100 000 in respect of the breakage or theft of any movables on a property. 

This would have nothing to do with your own business, but could be problematic as a disgruntled consumer could try and justify some arbitrary claim of theirs.



>
>
> Terms of service (also known as terms of use and terms and conditions, commonly abbreviated as T\&C) are the legal agreements between a service provider and a person who wants to use that service. The person must agree to abide by the terms of service in order to use the offered service.
>
>



#### **As such, we list below the 5 most important aspects to consider in a Website Terms and Conditions.**

#### **The type of website:**

It is important to distinguish between whether the site will, for example, simply be for providing information to users, or rather allow users to submit information, content and the like on the website.

Examples of information websites might simply be a website about your company and what it does, whilst sites which allow for users to upload content might be a social media site, directory or the like.

If your website is simply to provide information, you will not be concerned about your terms and conditions recording the kind of content which might be uploaded, the fact that users which upload content need to ensure that they are permitted to upload such content and the like. Social media websites, and other websites which require content which needs to be uploaded require one to consider and record in the terms and conditions what kind of information might be uploaded, any rules pertaining to how users may engage with your site and potentially a community on your site.

#### **Whether you receive payments:**

If you receive payments through your website, you should record what payment methods will be acceptable, whether or not you store the card details, and if you do not store the card details, who will be storing the card details on your behalf.

Additionally, by accepting payments, you should then go on to record in what circumstances, if any, refunds shall be given, as well as any discount coupon policies.

#### **Which law is applicable to your site:**

There is a possibility that your users might be accessing your site from all over the world, but you might be headquartered in a single country only. It is often cheaper to record that the law applicable to your website is the one in which you are situated, which will inevitably save you costs should you ever go to litigation. This is on account of the fact that if the litigation is to be held in a foreign country, you would have to appoint foreign lawyers, and potentially incur travel expenses and accommodation.

#### **Dispute resolution mechanisms:**

It is important to consider that if the users ever have a dispute, what will be the process to resolve that dispute. We highly recommend that you simply don’t nominate a dispute to go to a court or arbitration as the first step, but rather record a process in which the parties will attempt to resolve the dispute informally between themselves. 

If that dispute is not resolved within a certain period of time the matter is then referred to potential mediation where a mediator will try and find a resolution between the two parties and only thereafter if the dispute is still not resolved one should then go to arbitration or through court proceedings. 

#### **Shipping:**

To the extent that your company ships goods physically, it is very important to manage expectations in the Website Terms and Conditions and set out the time frame in which goods are to be delivered and in which they might be returned, as well as what consequences would exist should the goods be delivered late, or in a defective state.

We hope that the above will equip you with the knowledge required to successfully set up your Website Terms and Conditions.


Website Terms and Conditions

##### Before starting an e-commerce website, there are a few vital aspects you need to understand in order to successfully (and legally) sell any products and/or services online. Let us walk you through the legal document necessities required for your e-commerce website

![Placeholder Image](https://assets.stackbit.com/components/images/default/post-4.jpeg)

An e-Commerce business predominantly involves the use of a website on which products and/or services are sold. These products might be physical products delivered through couriers or might be digital products delivered by means of email or a downloadable link (such as Hello Contract).

In setting up and running an e-Commerce website, you, as the website owner, need to set expectations and binding rules between yourself and your customers. These rules are predominantly set up in three separate legal documents which should be viewable on your e-Commerce website and to which each customer needs to agree.

This article will aim to educate you on the function of each document, as well as the important decisions that you need to make, which pertain to your e-Commerce website, in order to correctly compile these documents without the help of lawyers.

**Head directly to our shop for the three documents you need:**

1.  [e-Commerce website terms of service;](https://shop.hellocontract.co.za/permalink/65f57b59-b4a5-42ae-bc96-ae7648c39833)

2.  [e-Commerce website returns policy](https://shop.hellocontract.co.za/permalink/4af54f52-67a8-4e9d-8571-0b212b8d82d0); and

3.  [Website privacy policy.](https://shop.hellocontract.co.za/permalink/ba81b288-0e26-45da-91c1-0233b63e424b)

#### **Contents of this blog**

##### e-Commerce Website Terms of Service:

*   Delivery of goods and their time frame

*   Payment methods

*   Warranties by a customer

*   Unauthorized use of the e-Commerce website

*   Limitation of liability

*   Copyright

*   Prohibition on reverse engineering of website

*   Breach provisions

*   Dispute resolution

##### e-Commerce Website Returns Policy:

*   Circumstances in which returns are allowed

*   Timeframe in which returns are permitted

*   Choices upon return

*   How returns are initiated

*   Condition of the product returned

*   Manner of return

*   Product inspection

#### Website Privacy Policy:

*   What personal information is collected

*   The reason for collecting personal information

*   Sharing of personal information

### All the documents you need on our [website](https://shop.hellocontract.co.za/packages/hello-contract-package-deals/webshop-starter-package)

**e-Commerce Website Terms of Service:**

An e-Commerce Website Terms of Service is the main governing document of your website, and sets out the overarching and binding obligations as between the e-Commerce website owner and its customers.

An e-Commerce website terms of service should at the very least have clauses in it which pertain to the following:

#### **Delivery of goods and their timeframe**

One of the most essential aspects of an e-Commerce Website Terms of Service is specifying the manner of how goods are delivered to a customer and the timeframe in which you intend to deliver those goods. For example, should you specify that a delivery might take up to 14 working days, and the customer begins to complain that they have not received the goods after day 5, you may refer them to your e-Commerce Website Terms of Service in order to show that you are only obliged and will have the goods delivered within 14 calendar days of the goods being ordered.

This clause is also important in instances when you use external couriers, so that you are able to indemnify yourself against late delivery by an external courier, as you do not have control over the exact date and time frame in which they might deliver.

Additionally, this clause is necessary from the perspective of determining when risk associated with the goods transfers from you to the customer. It is ideal to record that upon delivery to the customer, whether the customer is at the premises for delivery or not, the risk associated with the goods and their being stolen or damaged, for example, transfers immediately on delivery to the customer.

#### **Payment methods:**

It is important to record exactly what payment methods you allow on your e-Commerce website in order to ensure that customers do not try to negotiate alternative payment methods which might be risky or simply not accepted by you. Furthermore, if you accept payment by credit card and the name of the payment processor is mentioned, it should be recorded that the customer acknowledges that it is subject to the terms and conditions of the payment processor rather than just being subject to your own terms and conditions.

#### **Warranties by a customer:**

The customer needs to warrant that any information that they provide to you is accurate and true, that they are not impersonating any other person, not violating any laws in making the purchase, such as a person being over the age of 18 should you operate an e-Commerce website which deals in liquor deliveries, for example.

#### **Unauthorised use of the e-Commerce website:**

Users should undertake that they will not post anything to your website which is objectionable or is unlawful, spam the website, make use of unsolicited mass emailing techniques, introduce a virus, worm, Trojan horse or malicious code, redistribute or use your information for commercial purposes and the like.

#### **Limitation of liability:**

It is very important that you record that a customer is required to use your e-Commerce website at their own risk. Further, that you will not be liable for any use or conduct in the connection with their use of the website at all.

#### **Copyright:**

It should be recorded that the contents of the website are the subject of your copyright. A copyright is essentially a protection that is afforded to a piece of creative work. This might include pictures, logos, the general look and feel of the website, audio files and the like. Generally, copyrights do not need to be registered and are created automatically.

As such, the images on your website, unless they are from third party manufacturers and suppliers are the subject of copyright protection, and should be recorded as such.

#### **Prohibition on reverse engineering of the website:**

One should also record a general prohibition that users cannot take your website and simply reverse engineer it for their own purposes in an attempt to copy your website based on the source code thereof, which comprises your intellectual property.

#### **Breach provisions:**

Clear terms, setting out what the procedure should the customer or yourselves not adhere to their respective obligations in terms of the e-Commerce Website Terms of Service should be recorded. These are what are known as breach provisions.

Normally, a breach provision will provide that should either party commit a breach of the agreement, such as the customer not making payment of the goods despite having ordered them, or your failing to deliver the product to the customer, the innocent party will be entitled to place the other party in breach, and require that the other party rectify the breach by either making payment of the goods (in the case of the customer breaching) or delivering the goods (in the case of you failing to deliver the product). Thereafter, and should the breach continue, the innocent party will either be entitled to cancel the transaction and/or claim damages through a court of law.

#### **Dispute resolution:**

Related to the above, in the event that there is a dispute between yourself and your customer, a procedure to resolve any dispute should be set out.

Normally, this dispute resolution procedure will involve the parties having to try and attempt to settle the dispute for a certain period of time informally between themselves, and if this fails we would suggest attempting mediation with a qualified mediator for a further period of time, and thereafter, should that fail, either looking at permitting the parties to take it to court, or otherwise, arbitration.

### **e-Commerce Website Returns Policy**

Any e-Commerce Website Returns Policy sets out the circumstances in which goods which are purchased from your e-commerce website may be returned by the customer who purchased them.

An e-Commerce Website Returns Policy should at the very least have the following terms contained in it:

#### **Circumstances in which returns are allowed:**

It is very important to record when returns will be permitted. For example, this might include that the incorrect product was delivered to the client, the client no longer wants the product, or that a product which is of the incorrect size or specifications was delivered to the customer.

#### **Timeframe in which returns are permitted:**

The timeframe for a return should also be recorded. This will prevent customers from using the product for a significant period of time prior to their return. For example, you might impose a 14 day window from the date of purchase in which a customer is required to initiate a return through your website.

#### **Choices upon return:**

Once a product has been returned, your website might allow for one or more of the following, which needs to be recorded:

*   a customer has their account credited;

*   the amount be refunded to them; or

*   that a replacement product be delivered to the customer.

#### **How returns are initiated:**

It should clearly be recorded what the procedure is to return a product. This might include, for example, that an email is sent to a specific email address or that there is a page on your website with a form devoted specifically to returns.

Furthermore, it should set out the contents of what might need to be included in the return request. For example, this might include the reason for the return, the choice as to what they would like to occur upon the return, such as their account being credited, and the like.

#### **Condition of the product returned:**

It is very important to stipulate the circumstances in which you will permit a product to be returned. For example, this might include that the product needs to be undamaged, unused and in original packaging. It goes without saying that products which have been extensively used should not be permitted to be returned to you.

#### **Manner of return:**

Should you have the ability to collect the product to be returned from the client, it should be mentioned that the customer has the choice of the product being collected from them or that they may deliver the product to you for the return.

#### **Product inspection:**

We suggest that it is very important to include a clause in your e-Commerce website terms of service that permits you to inspect the product which is being returned prior to you validating its return.

### **Website Privacy Policy**

A Website Privacy Policy is required by law in terms of the Protection of Personal Information Act No 4 of 2013. It sets out what personal information you collect from customers, what you do with that personal information, and who that information is shared with.

**A Website Privacy Policy should at the very least set out the following:**

#### **What personal information is collected:**

In operating an e-Commerce website, generally speaking, you will collect the following personal information from a customer which needs to be recorded in your Website Privacy Policy:

*   name of the customer;

*   email address;

*   physical address for delivery;

*   payment and/or credit card information.

To the extent that you collect any further personal information from a customer in the process of their ordering through your e-Commerce website, please note that this needs to be recorded in the Website Privacy Policy as it is required by law.

#### **The reason for collecting personal information:**

Your Website Privacy Policy should clearly set out the reason for which the personal information is collected. For example, this most likely will include the fact that the information has been collected in order that you as the e-Commerce website owner, have enough information in order to accurately and timeously deliver the product to the correct customer.

Further to the above, it also might include the fact that you might in future market to the customer of certain of your other products and/or services.

All reasons for which you collect personal information need to be clearly recorded in your Website Privacy Policy.

#### **Sharing of personal information:**

It needs to be recorded the categories and types of persons and/or entities to which any personal information is shared with.

For example, and in the circumstances of an e-Commerce website, you would need to share address information with any couriers which will deliver the products. In addition, payment information will be shared with the necessary payment processors of your website.

### **All the documents you need on our website:**

At Hello Contract, we have all of the above documents available on our website so that you can generate these documents entirely on a self-service basis without getting lawyers involved. All that you need to do is select the appropriate documents that you would like to generate, answer a few questions and our document generation software will automatically compile the e-Commerce Website Terms of Service, e-Commerce Website Returns Policy and Website Privacy Policy for you.

**All of these are available at the following links:**

1.  [e-Commerce website terms of service;](https://shop.hellocontract.co.za/permalink/65f57b59-b4a5-42ae-bc96-ae7648c39833)

2.  [e-Commerce website returns policy](https://shop.hellocontract.co.za/permalink/4af54f52-67a8-4e9d-8571-0b212b8d82d0); and

3.  [Website privacy policy.](https://shop.hellocontract.co.za/permalink/ba81b288-0e26-45da-91c1-0233b63e424b)



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Blogs and Knowledge

We like to explain things

Our Best posts

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Contracts

Everything you need to know about Profit and Revenue Share Agreements in South Africa

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Freelancers

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Websites and eCommerce

A Guide to a Social Media Policy

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Understanding eCommerce terms and conditions

ECommerce return policy

Website Terms and Conditions

ECommerce legal website documentation

Couldn't find what you were looking for?