Sign an Agreement Prior to Negotiating | DomainInvesting.com

Sign an Agreement Prior to Negotiating

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Domain sale negotiations can be a bit risky. I think two of the biggest potential pitfalls include 1) a prospective buyer using the negotiations in a UDRP or legal proceeding or 2) a buyer failing to follow through with an accepted offer.

I think a creative way that could reduce the risks is to have the prospective buyer sign an agreement prior to negotiating to buy a domain name. The agreement would list the terms and conditions of making an offer and discussing an acquisition. When you receive an offer to buy a domain name or an inquiry about a domain name, you can tell the prospective buyer that you require an agreement to be signed prior to negotiating the sale of a domain name.

I would obviously speak with an attorney to have an agreement such as this drafted, and some of the terms I would want to include in the agreement would be the following (along with my rationale):

  • Offers are binding – If an offer is made and accepted by either party, the buyer must follow through with the purchase.
  • Buyer must close within a set period of time using a set payment method – A prospective buyer could agree to a price but not be able to use reasonable payment terms. If the timing and payment method is known at the outset (7 day close via Escrow.com), this will prevent the other party from getting out of the deal.
  • Disclaim trademarks – By doing this, the domain owner will significantly reduce risk of UDRP and/or cybersquatting lawsuit. If buyer signs agreement but still files a UDRP or lawsuit, I presume the domain owner would have his or her own legal case.
  • Confidentiality – Whatever pricing is discussed by either party shall not be shared publicly. I wouldn’t want to give someone a great price on a domain name and have them write about it elsewhere.
  • Non-disparagement clause – Negotiations get heated, and I don’t want the other party to write that I am a cybersquatter, scumbag, or other disparaging term.

Keep in mind that this is something I have not done, nor have I consulted with an attorney about whether an agreement like this is feasible. I think it might cause friction at the beginning of a negotiation, but if someone is serious about buying a domain name, they would likely sign the agreement. I think this could replace a disclaimer since this requires a signature from the prospective buyer and it would be binding.

I am curious about what you think of this idea.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (40)

    John

    We had a 100k deal fall through with GoDaddy because they didn’t make it a “Binding” agreement-so yes you post is very valid.

    August 14th, 2015 at 11:34 am

      PublicDomains

      I see the value of this agreement only to protect yourself from an URDP action since it proves (even by a saved email conversation) that the potential buyer was asking to buy the domain, and not me proactively trying to sell. A similar situation saved me from URDP, showing that I wasn’t proactively trying to sale the domain, just listening offers.

      For domains lower than $2k, I wouldn’t mind since the URDP fee is about that price. For $2k – $10k, I would at least get the email conversation saved, always start with a disclaimer that you didn’t initiate the negotiations and was just listening offers. For $10k – $100k, go ahead and protect yourself with a signed agreement. And for $100k or more, have an additional reliable attorney handy for any problem with the negotiations.

      I wouldn’t bother to go after unpaid domain with legal actions for less than $10k. If there is more, i would consider it depending on how reliable is the information I have from the buyer, country and negotiations progress.

      Thanks for posting

      Publicdomains.com

      In reply to John | August 18th, 2015 at 12:05 pm

    Marian

    I have 24 UNPAID sales only at SEDO. Most are from unpaid auctions but there are 6 which where listed with a BUY NOW price. At SEDO all offers are binding and BUY NOW listings mean that if you press the BUY NOW button you are obligated to pay for that domain. This 24 UNPAID sales go from $1,500 to $10,000. The “buyers” are from all over the world: US, Europe, China, India … About 20 – 25 days after the UNPAID purchase SEDO allows you to see the “buyer´s” details: name and address (never the email or phone number). In some cases I could reach the “buyer” and I got answers like: “No more interested” ; “I decided not to go forward with the purchase” or one that told me he found the domain name to expensive (after he pressed the BUY NOW button). In outher cases I contacted local lawyers (from the place where the buyer was) but most of them told me that for small amounts like that (under $10K) they don´t take cases. SEDO said that they normally close the account of a NON-PAYER but I´m not really sure about that. I still see people that didn´t pay for a purchase, selling at SEDO. (I know the domains he owns). My conclusion is that even when a domain negociation closes on a marketplace there is no security the seller will be paid, so negociating privately even if you sign an upfront agreement there´s nothing guaranteed …

    August 14th, 2015 at 11:59 am

      Elliot Silver

      With a signed agreement, you have the option to pursue it legally. Whether you choose to do so or not is obviously your decision.

      In addition, with what I propose in my article, if someone files a UDRP or lawsuit after signing the agreement, your legal team would have some ammo.

      In reply to Marian | August 14th, 2015 at 12:13 pm

      John

      Having the “Option” to pursue someone legally doesn’t mean too much if the buyer is in China. To the best of my knowledge unlike real estate there’s no way to legally “cloud the title” during a dispute.Many people make the comparison between real estate and domain names and in some cases it fits and I agree they are a lot alike but the remedies on a default are far different.That said-a binding agreement certainly doesn’t hurt especially if your buyer is in the same country.

      In reply to Elliot Silver | August 14th, 2015 at 12:55 pm

      Tony

      Agree with Marian. Signed agreements, contracts, etc mean nothing. You always have the avenue of legal proceedings with or without signed agreements. 99% of the time it’s best to move on to the next prospective sale.

      In reply to Elliot Silver | August 14th, 2015 at 12:57 pm

    Sam

    Yes this would be good i like the idea.

    August 14th, 2015 at 12:38 pm

    brand

    The only way all this will change is if the big players in this industry stand up and confront these companies.

    I have talked about this problem for a few years now on most all blog sites and even emailed all the companies, sedo, flippa, afternic, godaddy and others, but got the same response from them all.

    We will take your suggestion into consideration
    That means nothing will be done.

    Funny thing, looks like i’m going to have a bogus buyer as we speak, but in no way are we talking big numbers, it’s not going to make me or break me, but that’s no the point.

    Again, the only people that can get the ball rolling and have a chance at changing this are the sherpa’s of this industry.

    I saw on domainshanes blog today that Adam Dicker maybe leaving.

    So Elliot, what about you on the show if he is truly leaving?

    August 14th, 2015 at 1:10 pm

    BullS

    Signed agreements, contracts, etc mean nothing.

    Someone living in a hut in a desert with no money can click the buy now and you want to go after that guy/gal?

    China does not follow rules!!

    August 14th, 2015 at 1:58 pm

    todd

    What a deal killer before the deal is even started. I would be surprised if you could get 1 out of every 10 to sign an agreement. I think most would just laugh in your face.

    August 14th, 2015 at 3:01 pm

      Elliot Silver

      If you’ve done a deal with someone who wants a domain name badly enough, they will happily sign.

      Nat Cohen’s company requires a nearly $20 payment to even submit an offer via SecuredOffers.com.

      I think a signed agreement would be less of a deal breaker to most than paying, especially when you will have already shown that you are willing to engage by responding with the agreement to sign.

      BTW, I wouldn’t do this on a $5k name or other low value type of deal. This would be for a larger deal that could move the deal.

      In reply to todd | August 14th, 2015 at 3:06 pm

      Tony

      The people who want the domain badly enough are the ones quick to agree on escrow.com and to pay, etc. Forcing them to sign an agreement does nothing. The issue is with the 10% of the population that is sociopathic and constitute the 90% responsible for the offers domainers receive. Agreements won’t get rid of them. Legal action, time and money will but they are simply not worth it. That’s why no big marketplace will ever bother with the trouble enforcing sales agreements etc.

      In reply to Elliot Silver | August 14th, 2015 at 3:47 pm

    todd

    “If you’ve done a deal with someone who wants a domain name badly enough, they will happily sign.”

    So someone you have already dealt with in the past you are going to make jump through one extra hoop to do another deal with you? That makes no sense. Past buyers are the ones you roll out the red carpet for and make them jump through less hoops not more.

    “Nat Cohen’s company requires a nearly $20 payment to even submit an offer via SecuredOffers.com.”

    He does this as a business venture to make money by connecting buyers with sellers. That’s the only reason he does this.

    “BTW, I wouldn’t do this on a $5k name or other low value type of deal. This would be for a larger deal that could move the deal.”

    Not sure I understand how making someone sign an agreement is going to help move the deal. It would hinder it.

    August 14th, 2015 at 4:24 pm

      Elliot Silver

      Sorry – tenses are wrong.

      Should read: If you’re doing a deal with someone who wants it badly enough, they will happily sign.

      Another typo (been a long day)

      Should read: “BTW, I wouldn’t do this on a $5k name or other low value type of deal. This would be for a larger deal that could move the needle.”

      In reply to todd | August 14th, 2015 at 4:27 pm

      Marian

      Just give up Elliot. Your proposal was/is just a bad/stupid idea.
      Nobody in his Right Mind will sign a contract/agreement to regulate
      a negociation. The emails you exchange with a possible buyer are private
      and have NO legal value. I can send you an email and offer you $1,000,000
      for LILAC.com and what ? You cannot legaly pursue me because an email has
      No legal value; first of all is a private communication and second it´s
      easy to adulterate so there´s impossible to open a legal pursue based on
      email communication. That´s it. Even if you deal with a large company for
      a valuable domain name, do you thing that they are stupid to sign an agreement
      to regulate the NEGOCIATION ? Nobody ever will do that. Asking such think you
      will always loose the deal. And about UDRPs don´t worry, emails exchanged
      between involved parties aren´t proofs either; even if someone use emails in a
      UDRP case a good lawyer turn´s down easily this “PROOFS”.

      In reply to Elliot Silver | August 14th, 2015 at 5:21 pm

      Elliot Silver

      I have seen plenty of email negotiations referenced in UDRP filings.

      In reply to Marian | August 14th, 2015 at 5:24 pm

      Marian

      People present them but those emails have NO legal value at all.

      In reply to Elliot Silver | August 14th, 2015 at 5:26 pm

      Elliot Silver

      I don’t agree, so I guess we will have to agree to disagree.

      I also think an email can be a binding contract, so we will have to agree to disagree again:

      http://www.thedomains.com/2010/05/31/domainers-back-to-the-basics-you-can-only-sell-a-domain-once-yes-e-mails-count/

      In reply to Marian | August 14th, 2015 at 5:27 pm

      Marian

      An email cannot be a legal proof as yuo can always allege that your email was hacked, that wasn´t you who wrote that, that those emails content is adulterated so a good lawyer will ALWAYS turn down such arguments/”PROOFS” and depending on the email you use nobody will ever know that it belongs to you: in most of my negociations I use an email registered via TOR browser. Who can proof that email is mine ?

      In reply to Elliot Silver | August 14th, 2015 at 5:38 pm

      Marian

      From the link you post above this is the most important part: (Copy-and-Paste):

      A series of e-mails becomes a string of written documents evidencing the sellers and buyers mind set and certainly can become a contract.

      Now if you want to claim that you didn’t send the e-mail, that someone hacked into your account or sent it from an e-mail you didn’t control then that’s a matter for the jury. But if you aren’t claiming that type of defense and admit the email were sent and received then you can have a contract based off of them.

      In reply to Elliot Silver | August 14th, 2015 at 6:03 pm

      Roscoe

      Marian obviously has no formal legal education.

      In reply to Marian | August 14th, 2015 at 6:23 pm

      Marian

      And you do S—-D ?

      In reply to Roscoe | August 14th, 2015 at 6:31 pm

      Roscoe

      Emails are used in court all the time. Have you ever done an activity called “reading”? You should try it. Lots of good information out there in books and newspapers.

      Try reading this! You may change your mind about all that nonsense you wrote.

      http://www.nycourts.gov/reporter/3dseries/2013/2013_05437.htm

      In reply to Marian | August 15th, 2015 at 4:28 pm

      Marian

      You have NO idea what you are talking about.
      You look like a scared newbie. I´m a lawyer
      and I can tell you that our buffet drops down
      all proofs based in writen EMAILS.
      Emails can be easily hacked or falsified …

      In reply to Roscoe | August 15th, 2015 at 4:43 pm

      Elliot Silver

      Where are you a lawyer?

      In reply to Marian | August 15th, 2015 at 4:44 pm

      Roscoe

      I guess the New York Courts have no idea what they are talking about either!

      This is my last post on this matter, I’ve already wasted too much time on nonesense. Anyone else who reads this comment thread will all quickly draw the same conclusion.

      @Elliot, there is no way they are a lawyer. They are a troll.

      In reply to Marian | August 15th, 2015 at 6:26 pm

    Mike

    “A contract is only as good as the people who sign it.” – Donald Trump

    August 14th, 2015 at 4:47 pm

    Kevin

    I think this would be more of a hassle than benefits you would derive.

    It’s a challenge to get agreements signed with people online. Especially if you have a professionally drafted one that has reall legal bite.

    If you try this strategy please keep a handle on the end results. Be curious to see the statistics after a few months.

    Perhaps just asking for a couple referrals from other domainers they’ve done business with would be more effective.

    August 14th, 2015 at 5:11 pm

    brand

    If you want to place a bid on a domain higher than 5k.
    A company should have you make a deposit, put your money down if you want to continue bidding.
    If you then back out, flake out, you lose your deposit.

    I think it’s dropcatch or another site called bido or maybe both, where you have to have money on account to place bids or you don’t play the game.

    In the real world of real estate deposits are made.
    Everything with selling domain is done on a hand shake.
    I don’t trust people enough to do a deal on a hand shake, those days are long gone.

    August 14th, 2015 at 6:06 pm

      John

      Brand you are 100% correct.

      In reply to brand | August 15th, 2015 at 8:53 am

      Elliot Silver

      It sounds like a good idea, but would you send a sales platform $5,000 knowing that your offer might not be accepted? I probably wouldn’t do that if it wasn’t one of the major platforms. It’s more of a nuisance, especially for people with good reputations.

      In reply to brand | August 15th, 2015 at 9:03 am

      brand

      Well, if i had 2 thousand in an account and i see the domain i’m interested in is now at 2,500 with an hour to go, i would sent them another two or three, or decide if it’s worth still bidding.

      If you really want that domain, you will do what it takes to get it.

      People with bad reputations always ruin it for the people with good reputations.
      I know it’s a nuisance, but as they say, that’s life.

      they keep the auction going as long as people are still bidding,so there would be plenty of time to put more cash in your account to continue bidding.

      In reply to Elliot Silver | August 15th, 2015 at 10:54 am

    T

    You can argue about the enforceability, usefulness, etc., of contracts, but it’s smart to think about what you can do to protect yourself in private sales. It’s no different than if you were selling a business or any other business asset. Of course, trying to get agreements, and whether it would even be worth the time or expense to bother, depends on the name and the potential sales price. No need to reinvent the wheel here, but it sounds like: 1. getting an NDA that contains a non disparagement clause at the beginning of negotiations; and then 2. when you accept an offer, sending a usual sale and transfer agreement with the conditions/protections/waivers you want gets you to where you want to be. If the prospective buyer doesn’t want to sign, then, of course, its a business decision whether to move on.

    The unpaid “buy nows”, etc., through Go Daddy, Sedo, etc. is a separate issue and one they need to look at.

    And apparently Donald Trump said something that made sense. Never thought I’d see the day . . . .

    August 15th, 2015 at 1:23 am

    Steve

    We have used email discussions comprising accepting & making offers as submitted documentation after “buyers” came down with “buyers remorse”. A letter or email from our Legal usually resulted in prompt payment and a resolved transaction.

    For high transactions, we use an agreement with a good faith payment (similar to real estate transactions) just prior to going into escrow.com. Both parties (Buyer & Seller) prefer this, as it deters either party from wiggling out of the deal (buyer or seller remorse, or the buyer getting a higher offer after having accepted the offer from the first buyer)

    August 15th, 2015 at 2:12 pm

    SoFreeDomains

    This is a good idea Elliot but may not be practicable due to geographical differences of actors and so many other reasons.

    August 17th, 2015 at 10:39 am

    Larry

    Had a case years ago with either afternic or sedo where communications with one of them as far as selling a domain was later used in a UDRP. In that particular case the end buyer would not be a party to any agreement that was signed with an agent. What good is a document signed by an agent if the seller comes after you?

    In the case of purchasing domains for others if any suspicion was raised by the seller or more importantly I felt they might be worried about this what I typically do is simply state up front that they buyer has no rights in the domain or that it is for a new venture which is typically what is happening anyway.. They are free to ask any qualifying questions if they want. I do this because I also sell domains so I can anticipate that it might be a concern.

    That also allows the seller to know that the buyer is not set on their domain and can afford to walk if the price is not agreeable.

    As far as signing anything that is a non-starter. Many times an agent is really looking at multiple names and can just go for an easier target. After all signing an agreement that is valid (with the actual buyer) would remove at least part (but not all) of the reason for a buyers agent.

    August 17th, 2015 at 1:34 pm

    Andy

    Hi Elliot,

    Curious as to why you have never used this approach, since you are a successful domainer, with likely thousands of transactions under your belt?

    Yes, I agree that there might be some friction up front…

    Thanks, Andy

    August 18th, 2015 at 12:14 pm

      Elliot Silver

      I had just thought about it prior to writing the article.

      August 18th, 2015 at 12:15 pm

    Dowmedia

    It’s an interesting suggestion Elliot. But I guess it would be just another layer of contract equally difficult to enforce in cross border negotiations as some of our non-native English speaking friends above have pointed out.

    Domaining used to be an enjoyable hobby. But with prices for many good generic names depressingly low and too many other ways available to bring customers to your front door domaining seems to create more heat than light.

    In summary it’s an interesting idea but one that underlines the frustration many feel due to a depressed domain name market and pikers who unfortunately have Internet access.

    August 18th, 2015 at 7:26 pm

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