My Buddy Elliot yesterday posted a great article on his blog about the ethical and moral implications of Seller’s backing out of deals on domain sales. I thought I would follow up on the post and look at the legal side of the situation.
Normal contract law talks about two parties having a meeting of the minds on all material aspects of the deal.
This may be in writing, or may be oral, like a deal being struck on the telephone.
Of course it is very hard, if not impossible to prove there was a meeting of the minds on a purely oral deal, unless there is some follow up written documentation (e-mail) which support the oral agreement theory.
Price is just one of the material aspects of a deal.
Someone looking to get out of a deal can make the argument that there was an agreement on price, but there was no agreement on how payment was to be made or how the transfer of the domain would take place, or the time frame for payment and transfer.
There is also a difference between having an agreement of the minds and simple negotiations. Some will argue although one party thought they had a deal, the other party thought they we still negotiating.
Our site, mostwanteddomains.com does a volume of retail sales annually into the seven figures, mostly to people not in the business.
We have had problems with buyer’s changing their minds (buyer’s remorse) or trying to change the deal after the deal has been struck.
To try to deal with this situation we have a long discussion in our terms and use on our site which attempt to clarify when we have a deal and when the deal is finalized. Included in these terms and conditions are time frames for acceptance of the offer, payment and transfer of the domain, choice of jurisdiction, and responsibility for attorney fees.
Basically we believe we have a deal and a legally binding contract in place once either both parties have gone into escrow.com and entered into an agreement, each party executes a written contract, or the party buying the domain makes payment, thereby partially performing on the contract.
Yesterday’s situation as discussed by Elliot no doubt met all these criteria, the seller just sold the domain twice.
That aside since most of the deals we do come from an e-mail address with the potential buyers not even identifying themselves, it is almost impossible to take legal action against anyone until further action is taken.
It is also important to know that if you are planning on taking legal action you may have to sue them in the jurisdiction they live in, unless you can prove sufficient ties to the jurisdiction you live in or have clearly stated differently in e-mails, a written document, or terms of service (as we do).
Also unless you have a provision included in your written document to the contrary, your going to have to pay your own attorney fees, which will add to the cost of the domain if your buying, or reduce the proceeds of the domain if you are selling.
I was the buyer mentioned in Eliot’s post. Seller emailed me with a bunch of names. I pick one and ask for price. He names price and I agree. He starts Escrow.com transaction. I agree to terms and submit payment within minutes. An hour later he emails “I was brokering this name for a friend but he does not want to do this deal.” Later he posts his story about two seperate buyers. I got the $80 escrow fee back, but what about my time and what about the domain name I contracted to buy? I’m not one to let little things suck up my valuable time, but perhaps making this guy a poster boy for contract accountability would help clean up this industry a bit. The domaining world is headed in the wrong direction and an infusion of ethics and professionalism in 2008 would help enhance our standing in the business world.