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

##### 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.

##### 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

Create your own internship agreement and tailor it to your needs on our ecommerce store


Internship Agreement Contract

Documents Related to this post

###### 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

Hello Contract and Barter McKellar are delighted to announce that Barter McKellar Attorneys will be joining Hello Contract’s legal document platform as a partner. The partnership will strengthen Hello Contract’s service offering by assisting with delivering scalable contract solutions and legal services, to further support profitable revenue growth for clients.

Heidi Barter, a founder and partner at Barter McKellar stated, “*The partnership is the logical next step following the rapid growth of our law practice, and it perfectly aligns with the needs of our growing client base. Hello Contract provides our clients’ with affordable contracts in an instant. If our clients need a simple contract they now have access to it within a few clicks*”.

Hello Contract is aiming to grow its legal contract/document database from 60 documents/contracts to almost 200 documents/contracts in the coming 12 months. Further establishing their position as the country’s largest supplier of legal documents.

“*Together, we offer clients and partners a framework approach to legal, providing both the legal documents, know how, and now extensive legal services through our platform*”.  Said Vincent Gaemers of Hello Contract.

The partnership has also allowed Hello Contract to expand its offering. Aside from the ecommerce store, Hello Contract is now offering a product tailored to the corporate market, specially departments with heavy repetative labour in legal documents- Providing a product that allows for customised automated agreements, online collaboration, an online audit trail and electronic signing. Introducing Hello Contract Legal Suite.

“*We are really pushing the boundaries of the capabilities of the current Legal Document Management landscape with this product, I am extremely excited*” says Kyle Torrington, the companies Lead Attorney.

At Hello Contract we believe in an entrepreneurial future. We believe in going to work every day to provide people with the legal tools necessary to build their own company and their own future.

For more information

Vincent Gaemers <Vincent@hellocontract.co.za>

Caleb McKellar <Caleb@HelloContract.co.za>


Barter McKellar and Hello Contract announce partnership and announce Hello Contract’s Legal Suite

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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. This would ordinarily entail having to go to a firm of attorneys who would need to prepare and draft the necessary documents and contracts in order to successfully transfer those shares.


Sales of Shares Template

A Share Transfer Form goes along with a [Sale of Shares Agreement | Agreement Sale of Shares Template ](https://shop.hellocontract.co.za/permalink/5fd1db42-2ad3-4625-9b93-6d0aa0945772)in that it is the instrument of transfer, and perfects (completes) a sale of shares. It also go along with any other form of transfer of shares from one shareholder to another.


Share Transfer Form

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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.


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