What legal things to think of when selling a domain

[JED]

Hi,

I have never sold a domain name but hoping to do so in the future.
I've some questions to all of you who've sold domain names:

1. What should a good domain selling contract, protecting both the seller and buyer contain?

2. What pitfalls does there exist when selling a domain name, i.e. responsible for what the buyer uses the domain for in the future?

3. If possible could you give examples of simple domain selling contracts you've used yourself and your own experience of the legal aspects good/bad when selling domains?

Thanks very much everyone for your replies.
Sincerely,
JED

[domaingenius]

Originally Posted by JED

Hi,

I have never sold a domain name but hoping to do so in the future.
I've some questions to all of you who've sold domain names:

1. What should a good domain selling contract, protecting both the seller and buyer contain?

2. What pitfalls does there exist when selling a domain name, i.e. responsible for what the buyer uses the domain for in the future?

3. If possible could you give examples of simple domain selling contracts you've used yourself and your own experience of the legal aspects good/bad when selling domains?

Thanks very much everyone for your replies.
Sincerely,
JED

1. I have never ever had a contract for selling.

2. No way one can be responsible for buyer's use.

3. I have always (apart from 2) been paid in advance and then
transferred domain after receipt of money.

DG

[JED]

Hello DomainGenius,

Thanks for your answer, I appreciate it.

Maybe a contract is more something you use when you lease a domain to somebody. But that's a good thing, now I wouldn't have to bother with drafting a complicated contract if I would sell a domain.

Thanks for clearing it up for me that you couldn't be repsonsible for what the buyer uses the domain for, I've heard that somewhere and was a little worried about that when selling a domain in the future.

Thanks again.
Sincerely,
JED

[fab]

1. I have never ever had a contract for selling.

True with most people as well, but doesn't mean it's not a good idea. If the domain is xxx,xxx definitely take a lawyer, xx,xxx; probably; less than that, do you best yourself.

I worded one myself once.

[JED]

Fab, thanks very much for your reply.

When you worded a contract yourself, what points did you mention in it? I mean in what ways did you need to protect yourself when selling a domain?

Thanks again.
Sincerely,
JED

[fab]

1. The sale is a binding sale, the domain is sold as is, there are no guarantees of whatever,
2. Word in a way that any claims against the domain are the new owners responsibility

[domaingenius]

The trouble with contracts I discovered in my "other life" is that (a) they are only as strong as the word of both parties (b) you start with 1 clause then you have to make a 2nd clause to cover something raised by clause 1 and then you need a clause 3 to cover or elaborate on something in clause 2 and so it goes on. If you make "A" contract then there is something for one of parties to grab onto and sue on.

DG

[fab]

The trouble with contracts I discovered in my "other life" is that (a) they are only as strong as the word of both parties

This is one of the main reasons of a contract, so that each party knows what they're getting involved in, and to hopefully avoid legal actions, except when one party doesn't follow through.

I would wonder what would happen if someone sold a domain for say $500, with a simple "no lawyer contract" and the buyer backed out, and the seller took the buyer to small claims court.

[domaingenius]

Originally Posted by fab

I would wonder what would happen if someone sold a domain for say $500, with a simple "no lawyer contract" and the buyer backed out, and the seller took the buyer to small claims court.

If you could prove that the buyer had agreed to your offer to sell and therefore there is a contract ,of course you could sue them but for the fact it is a waste of time and effort. Believe me, I have been through all the Courts from County Court to Court of Appeal and beaten many companies in my time and I would say it is a waste of time going to Court unless you like gambling.

DG

[Mediamarket]

The buyer will have some say in what is required and may ask for a contract or an escrow service.

I always try to use an escrow whether I'm a buyer or seller unless buyer is willing to wire payment first. As a buyer I would always use escrow unless I already know the seller -or- they transaction is small.

PM your email if you would like a copy of a simple contract I've used in the past.

[JED]

Thanks everyone for your replies.

If I understand correctly what you're saying a contract could itself cause problems if it isn't well formulated since the buyer could interpret it in another way. But when not dealing with Sedo or other domain broker, maybe it would be a good thing having some kind of contract where the buyer removes the seller from all possible future fees legal action etc which could be associated with the use/future sale of the domain...

Sincerely,
JED

[jberryhill]

This topic can potentially be quite lengthy, but this comment is worthy of some discussion:

2. No way one can be responsible for buyer's use.

There are a number of circumstances in which third party might bring action against the buyer of the domain name and the person who sold it to him. In the first case that I handled in the federal court for the Southern District of New York some years back, in fact, I represented the seller of a domain name against an idiot who sold both my client and the person to whom he sold the domain name.

oops... last line "who SUED both", not "who sold both"

[fab]

BTW, there was a standard domain sales contract posted here once. Try searching for that.

oops... last line "who SUED both", not "who sold both"

Hey, that's part of the legal section "no retractions"

[JED]

Jberryhill, thanks very much for your reply.
So I could in fact get sued in the future for a domain name I've sold, that's worth thinking some more about.
In the specific legal case where you represented the client, on what grounds were your client sued? I mean... was it just because of having owned the domain once? Or for placing it in the wrong hands by selling it to the other person sued?

Fab, I will search for the domain sales contract. Thanks!

Thanks once again.
Sincerely,
JED

[jberryhill]

I mean... was it just because of having owned the domain once? Or for placing it in the wrong hands by selling it to the other person sued?

Both.

[Fatbat]

In the case of two large sales and one large purchase that I have made for $X,XXX, low $XX,XXX and $X,XXX respectively I used Escrow.com. Money was sent to Escrow, domain was transfered, money was released to seller's bank account. Deal done.

The only thing you really need to clear up in your communications is who is going to pay the escrow fees.

No need for contracts or nonsense like that IMO.

Now, if the domain was high XX,XXX into the XXX,XXX+ range, I might consider legal representation. Maybe work the cost of that into the price or that is someone else dipping into your revenue.

[myst woman]

i answered an Im for revenue partner development on here and the first question the guy asked me was how many C & D letters I had got. I said NONE! I would say make a note that you have never received any trademark violation or cease use correspondence.