Domainers Back To The Basics: You Can Only Sell A Domain Once & Yes E-Mails Count
OK domainers it time to go back to the basics.
You can only sell a domain once.
If you agree to sell a domain and the buyer pays you, you have a done deal.
You have to transfer the domain or you can be sued.
and Yes e-mail’s count.
It Seems obvious to me but, I realized this was not the case with many domainers, when our good friend George Kirikos alerted me to the story that the first buyer of CamRoulette.com was suing the original seller of the domain and sent me the link to the discussion on the DnForum.com (post is now closed and taken down)
When I read through the post on DnForum, I almost fell off the chair.
This story needs to serve as a wake up call to domainers who don’t seem to know the most basic principals of contract law.
If you agree to sell a domain and the other party accepts you have a contract.
If the other party then pays you they have performed on the contract, done deal.
In the case of CamRoulette.com he is how the original Seller describes the transaction in detail in the forum post:
“”"Let me start by stating that I am a 20 years old. I’m self-employed and I am a high school graduate. I have a strong passion for the entire umbrella of internet marketing: be it affiliate marketing, PPC advertising, domaining, etc. I’ve been using the internet to make money since I was about 17 and I’ve always loved it.
Last year on the night of December 12th, I discovered ChatRoulette. Immediately I recognized that this was a pretty unique website and that it could grow. Maybe I’m ignorant, but with the platform of the site (being as it is not adult in nature) and the estimation of the bandwidth bill (wasn’t aware that in Flex, the cam-to-cam bandwidth is passed peer-to-peer), I was not under the impression that it would be worth millions. I could see the Alexa Top 100,000, but today it’s almost within the Top 1,000.
Upon some playing around on ChatRoulette, I decided I had some extra money and I’d like to invest in a site very similar. I thought of some little personal touches that could be added to improve the idea of the site right there on the spot, so I went and reserved my domain name. I ran a WHOIS on the domain name c*mr*ul*tte.com and saw it was unregistered. As the primary function of the website it to cam, and not to chat, I figured this made more sense. I spent less than $10 at Dynadot registering c*mr*ul*tte.com and I was prepared to make my little ChatRoulette clone site.
Months passed and I became increasingly busy. I never got around to developing the website and camroulette.com just sat. Exactly two months after hand registration, I received my first offer. It was $275 if I recall, an offer from a guy in Canada. I hardly considered it, but within the next two days I received another offer. This offer was from who we’ll call Person A. Person A offered me $700 for the domain. At that time, I was confused as to why after two months I was receiving absolutely no offers and then within two days I’ve received two. I figured maybe the domain was posted on a forum or something and a few people got an itchy trigger finger and wanted to gamble on the domain. With that in mind, I told Person A that I’d sell him the domain. I actually went as far as to request the $700 payment via PayPal that night.
When I woke up, things were different. The $700 invoice had been paid. I began looking into Dynadot and I was confused on how to push the domain. I haven’t used Dynadot so much. In the midst of this confusion, I received another offer, from Person B. This offer was for $1200 (I’ve confusingly cited this offer as $1400 on NamePros and a few other places, the offer was $1200). Upon receiving and confirming the offer, I refunded Person A his $700. I told Person A I was a little unsure of things and instructed him not to pay me again unless the domain was first in his account. I then decided and went through the transfer and sold the domain to Person B. He sent me $1200, I sent him camroulette.com. For a day or two, Person A was asking me what was going on. I was extremely busy and didn’t respond to any more emails from Person A.
A month passed and ChatRoulette hit local news stations, CNN, Jon Stewart, everything. Person B resold the domain name for $151,000, to put it in short.
This made me feel completely stupid. I was depressed about the whole situation and still today I question why I made any agreements to sell the domain and actually acted upon them. $151,000 would have done so much for me, but a deal was a deal. I sent him the domain, he sent me the money, and to me that is what signifies a deal and contract. I’ve thought on this enough so I won’t sit on it too much here, but it gets a whole lot worse than this.
On the 13th of this month, I received a letter via FedEx. I am now being sued by Person A for breach of contract in fraud, as I had previously agreed to sell him the domain name. The demand on the lawsuit is $150,300 (the difference between the resale price and the price I agreed to sell it to him for). To make this situation harder on me, I live in Florida. I am being sued in the state of NY, and I would have to appear in NY. I’ve never been on a plane and I don’t even think I can afford the travel and attorney fees. The man suing me is a millionaire. He is a gold medal Olympian and he sells diamonds to celebrities. He has a lawyer who has worked for major registrars and operates under one of the most respected firms in NY.
I am just lost here. I’m 20. I have 4 figures to my name. I’ve spent ~$500 in consultations, one with a local attorney who laughed at me and told me I was “screwed” and would need an NY attorney, and an NY attorney who told me that this guy would eat me alive and my best chance is to plead guilty and file for bankruptcy to save myself the stress of travel. I don’t know what to do here. When I look back on the incident, in principle I feel as if what I did wasn’t very smart. I had no idea I was entering a binding contract by exchanging those emails, it was like a casual sale to me. Obviously I had no idea this would blow to a 6-figure ordeal. I don’t want to sound desperate, but I feel like a minnow who is now being swam around by a shark, a 40-year-old guy with an amazing life and all the money in the world, and now he wants every cent I’ve ever had and wants to put a huge scar on my life over a domain name. In the complaint (which I will attach if requested) he cites me as the owner of www.TheCraigSnyder.com – a publisher and consultant. He is very likely under the impression that I have $150,300 and that I am around his age, as if that matters, but that’s not my situation.
I can’t fly back and forth to NY to defend a case I don’t even have a shot with. I don’t even think I can afford a lawyer to aid me through the process. Emotionally, this has troubled me so much recently and I don’t know what to do at this point. I feel as if all I can do is ignore these court demands coming to my home (I live with my parents) and wait until eventually I’m seen as “guilty.” When the demand of $150,300 comes, I file for bankruptcy and put a huge hole in my financial life.”"
So lets recap.
The Seller agrees to sell the domain in writing through a set of e-mails for $700, tells the buyer to paypal the funds which the buyer does and then the Seller decides not to sell to the first guy because he received a higher offer which he accepts from the 2nd guy and then suddenly figures out how to transfer a domain at Dyandot and does so.
Sorry Seller.
You lose.
If there was any question about the case before, your post on the forum doomed you.
Now I’m not going to get into the issue of damages. This is a little more complex and outside the scope of this article.
Besides the problem is bigger than just this one instance.
Almost more surprising than the Sellers post is some of the responses to the post.
Comment 1:
“”I don’t think the guy would have a case honestly. Just because nothing was in writing.”
Comment 2:
“email is not binding. personally i’d want to fly to NY just to beat the living shit out the person suing me… bad enough you lost out on a huge sale but now some sorry loser prick is suing you for it? good god. good luck man.”
Comment 3:
“”I am not an attorney but if he is going to sue you he needs to prove that he lost money. You refunded him the $700 so he didn’t lose any money. Potential income means jack (anyone can say “well, I could have sold it for $$$”). Emails can also be easily manipulated and I don’t think they’re normally taken in as evidence. I wonder if you win the case if you can sue him back for all your legal fees?”
Comment 4:
“”This is a bunch of bullshit. Any lawyer worth their salt will tell you that since you refunded Person A the money with no loss whatsoever”.
Wow.
Really you believe this?
Ok boys and girls.
First of all in theory you don’t need a written instrument to have a contract.
You can have an oral contract for most assets.
Of course with an oral contract your going to have a hard time proving it unless maybe there were witness who heard it.
Second of all, an e-mail is written instrument.
Yes an e-mail is written. Not hand written (although a hand written piece of paper can serve as a contract as well)
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.
Buyer’s have rights and don’t hate on them for pursing their rights.
For the record the following are not defenses to breach of contract:
I’m only 20 years old.
I don’t know what I’m doing.
I got greedy.
I made a mistake.
I have no money.
Also its probably not the best idea when your involved in litigation to go discuss it or post about it on the net.
He is a final comment from the Seller:
“”I would understand if I listed this domain on Sedo or some other domain marketplace. He sent an email to my personal email address that he snatched up from the WHOIS information. My only intent to sell was after I received an offer; it’s like someone came and knocked on my door offering to buy something, it’s not as if this was put up for auction at a local marketplace”"
Funny the Seller mentions this, because this is exactly what happened in another situation involving not 1, but 7 domains which looks like maybe heading to litigation.
In this case the winning bids totaled almost $200K and involved several different buyers.
In that case someone listed domains for auction on Sedo, allowed the auctions to conclude with sales, and after decided it was all a mistake and he is refusing to follow through. (since the seller is not officially in default I’m not going to discuss the exact domains, but will when and if the seller goes into contractual default)
Bottom line.
We all hate deadbeat bidders at auction.
There isn’t one domainer who is going to stand up and defend the guy who takes your $500 bid on a domain to $2,500 making you pay $2,600 just to find out he had no intention of paying the $2,500. Nor will you find one domainer who will defend the guy who bids $2,500 wins the auction and then doesn’t pay for the domain.
Domainers have no tolerance for dead beat bidders why do they defend non-performing sellers?
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RL: That obviously wasn’t Paul Keating’s comment.
Although he did refund the money , i think he is in the wrong , it’s an interesting can of worms , thanks for sharing
GK,
RE: “RL: That obviously wasn’t Paul Keating’s comment.”
The quotes provided by me were John Berrryhill’s comments at different places.
“Thanks, I have seen this: “I can’t believe some attorney charged him $500 for a consultation without at least telling him there is NO WAY he is going to be on the hook for the measure of damages being sought here.” and I also have seen this “Most likely not.”
The defendant has already confessed that he was not honest, he already had some legal expenses and it is very likely that he will have more. In effect he has become the hunted defendant and the predatory plaintiff has exposed his name to the domain industry world. This in itself is a significant punishment. Looking from the plaintiff perspective, in retrospect, both the plaintiff and defendant missed the $150K sale opportunity. Both are losers. Now they both have unnecessary legal expenses and the public exposure.
Whatever about this young guy’s ethics…
…He had a bit of bad luck, too…..If that reg fee domain hadn’t gone beserk, and sold – a month later – for $151,000 – he wouldn’t be in this spot now…
But, then….’Expect the Unexpected’.
He’s learned a lot of life’s lessons over this.
The underlying personal flaws in this transaction is greed and ethics.
The seller made a mistake. We don’t know if it was a momentary* lack of ethics blinded by greed or if that is his true ethical character.
( * moot point)
If the initial seller knew the domain was valuable, why did he lowball?
But, I don’t believe the domain is truly worth $ 150K. The final sale was an anomaly/outlier.
If the present owner put the domain up for auction on Namejet today, it probably would generate a $ 25K sale. $ 24K of the price because of its notoriety. $ 1K for its wholesale value.
I also agree with John B. regarding the initial buyer’s possible damages. If the seller had enough financial staying power to fight this case, it would eventually be abandoned ( and not financially settled).
With all of the MAJOR problems facing our industry, why are we wasting our time and mental energy arguing about a teenager that ran a red light.
He knows he made a mistake.
Lets move onto something we can solve.
And, to use an expression of RS – Next.
Another
The reason I wrote about it was not so much about the kid but the comments to the post on the forum (now taken down) that supported the kids actions and the argument that a bunch of e-mails don’t mean a thing and isn’t a contract.
Finally the jails are full of people that “made a mistake”.
MHB did a service to the domaining community posting this.
It is a valuable lesson to be learned regarding contract law. And apparently a lot still need to learn it.
The other lesson to be learned was provided by Mr. John Berryhill: Very rarely are things ever clearly black and white. Even when a case seems like a slam-dunk, it might not be upon further review…
Do the major – successful – business trained domainers really hang around and comment on DNF and NP like they did 7 yrs ago? I would say – NO.
We can not judge the ethical fiber and the legal knowledge of our industry based on the comments of a few (or more) forum members.
I would not want to paint with a wide brush since I did not read the initial thread on DNF. But, I would speculate the ones that thought the seller was correct in his actions do not represent the majority of domainers.
“Do the major – successful – business trained domainers really hang around and comment on DNF and NP like they did 7 yrs ago? I would say – NO.”
I would say this group of domainers is a very small minority…
Tony
I personally never hung out in the forums, 7 years ago or today
Another
I’m not judging “the ethical fiber and the legal knowledge of our industry”
When I see half of the comments on this post clearly showing that members of the domain community have no idea of the basic rules or laws of buying and selling domains, its worth writing about.
Couple that with the defaulting bidder at sedo for almost $200K in auctions and we have a problem
Once the domain was agreed to be given to Seller A then Seller A legally owns the domain, so any profit from that domain, be it ad profit, sales, etc, belong to Seller A. Since Seller A owned the domain when Seller B bought it from this guy, Seller A has right to all monetary and all other funds once he owns the domain.
Time to develop a web site that tracks, display and disgraces dead beat domain name bidders. Names, addresses, phone numbers – whatever you got. Hey, they entered into a contract – what part of that did they not understand? Too bad if they dont like it.
Want to get removed? Sure, pay for the domain immediately.
MHB, you’re comparing him to someone in confinement? I mean, I guess I can see how he’s comparable to someone who has committed robbery, rape, murder… Wait, didn’t he just commit to sell a domain name through email?
Where did I compare him to someone in jail?
It’s a valuable lesson in offer and accepatance. Maybe it would be worthwhile to have a basic contract review session at one of the conferences. There are very few “nuclear elements” of a contract. Price is certainly one. Parties to the contract are another. For example, if you make a deal with Bill Gates, it does not mean you have made a deal with Microsoft. Maybe Bill Gates was dealing personally, such as buying a mansion from you. Of course, if you broke that deal, then not only would you be surprised to be sued by Microsoft, but Microsoft wasn’t a party to any contract you may have formed with Bill Gates.
And, you might just want to reflect on that, given the various accounting of events we’ve seen in this instance.
Following up on Johnny Bee’s comment about the few “nuclear elements of a contract”, another important element is that a reasonable and equal transfer of compensatory “goods or services” are expected to be accomplished. You can’t have a contract where someone gets something for nothing (other than a “will”, but that isn’t a contract between the two parties directly).
Both parties, by reasonable and logical interpretation, must “perform” to balance out the equality of the contractual goal, and one side can’t expect to gain significantly higher ‘benefits’ from the contract than the other, especially through a later “undefined” interpretation that unfairly enriches on party – unless of course it’s an intangible. And there’s the rub.
I’m not an attorney, I just play one on TV.
“I’m not an attorney, I just play one on TV.”
And, I thought your full-time job was being a model for Play Girl Magazine.
“Once the domain was agreed to be given to Seller A then Seller A legally owns the domain”
Unlike, say, a car, where there is a separate title document evincing ownership, domain name registrations are odd, in that the registration itself is what passes for “title”.
In other words, it does not matter who is in possession of my car – if my name is on the title, then I own it. The notion that title passes here upon agreement to transfer, as opposed to actual transfer, is something upon which anyone who has ever been to, say, a real estate closing, might differ with that view.
In semi-related news, TechCrunch reported today that NBC is being sued for something similar
http://techcrunch.com/2010/06/04/nbc-done-lawsuit/
It appears they agreed via written contract to sell women.com and then backed out before the domain was transferred.
@another domainer
Dang — you rooted through my past and found out! I quit tho… they didn’t pay per “inch”, noting their lack of funds for paying such a “large fee” to me. 3-)
If a prospective buyer explicitly agrees to purchase a domain name for a specific price in an email and then several days later backs out of the deal (before money or domains have changed hands) – does the seller have any recourse?
MS
A seller could sue the prospective buyer.
Now the question is will they win and will the costs involved be worth it?
For a seller to have a good case it needs to get the buyer to identify themselves during the process as opposed as a bunch of e-mail’s from say a hotmail account.
Make sure you have an actual agreement.
I offer to sell you the domain xxxxx.com for $5,000 and the buyer says yes, or Ok or I agree, then you have the issue of how the transaction will be transacted.
Time frame, how will payment be made, how will the domain be transferred?
As long as there is agreement on these issue, you should have a decent shot at winning the case. Of course in absence of a written agreement between the parties, each party is responsible for their own attorney fees so if your suing someone for not buying a domain you agreed to sell for a few thousand dollars it most likely not going to be worth your costs.
In any case you need to consult with an attorney to get an opinion on your rights as each case if different and there is no general rule.
Awesome discussion. It really underlines the value of a lawyer in business transactions. Nothing… almost, is “certain” when good lawyers are involved.
I doubt any actual lawyer wants to go on record with actual statements about a pending case (because they have so little to gain and the act does assume some risk), but if you read the above, two of them have demonstrated there WOULD HAVE BEEN more than one way to handle this case’s claim. Of course the forums were consulted instead…
+1 for highlighting the comments in the original thread. If they don’t represent the domainer community, then that says something about DNForum.
According to the OP citing the original seller: ..”I began looking into Dynadot and I was confused on how to push the domain”…. “I told Person A I was a little unsure of things and instructed him not to pay me again unless the domain was first in his account. ***** I then decided and went through the transfer and sold the domain to Person B. He sent me $1200, I sent him camroulette.com.****”
So the self proclaimed ignorant seller figured out how the Dynadot or general domain transfers work in mear hours after receiving a larger sum of money. It says a lot about how fast you can learn things when the right motivation is there.
I followed this story since the original buyer’s remorse posting, and if you read all the early material and do a little research on the person, the original seller has some issues that aren’t being focused on anymore, since the story has now shifted to the greedy litigant and the dollars. Along the way some post information has disappeared.
This is not a naive 20 year old. He has past experience in domains and other things Internet. And how about the man in the middle? And what do these events say about pulling forum posts? Ahh, welcome to the world of domain investing.
Don’t people know, that once things hit the web, they never die, they just move into someone’s archive.
And there lies the real story in all of this: where does your social graph rest – for all to view at a later point in time?
so what is the plaintiff going to gain here? 150k minus fees and costs? vengeance on a kid? he’s not getting the domain. and that’s what he wanted.
if the kid/seller is reading this, take note:
relax. you are much smarter than the guy suing you in the areas that matter here: internet. (why did he want a silly domain? why would he be interested in the internet?) he’s not going to ruin your life. your life hasn’t even begun. the simple fact is you understand technology and he doesn’t. and you should see the vast potential in this- your life is just beginning. domain names are still, in all major respects, an issue of technology. good luck applying contract law, or property law, to the internet- we’ve been trying for decades. that’s not what *really* works and everyone in the business knows it. using lawyers or traditional business methods to secure domain names is not yet a viable strategy (that NBC case is a classic example). but intimidation will work on some people, e.g. kids. pretty sad if you asked me.
wild west. inconvenient but true.
DNW.com is reporting that the CamRoulette.com case has been settled, see:
http://domainnamewire.com/2010/08/30/lawsuit-against-original-camroulette-com-settled/