Why You Need a Website Sales Agreement
There are advantages to acquiring existing websites.
You don’t have to spend considerable time, effort and money developing a site for your business or personal purpose. However, there are also some risks involved since it’s an online transaction involving a non-physical product.
Some unscrupulous people will sell websites offering features that are either exaggerated or simply non-existent. For example, they may present an unrealistic profit margin or a list of non-existent subscribers.
So whether you’re purchasing a website privately or through a platform, you could mitigate the dangers through a sales contract.
When procuring a website, you need to have a clear and detailed record of what you’re receiving. For example, will the sale include rights to the content, both text and images? Are there any existing problems that might affect the website’s search engine ranking? These are a few of the various concerns related to a website sale.
Since you’re dealing with a transfer of digital property, a written contract is an absolute necessity. Also, you have to take into account other legal aspects like intellectual property rights and seller warranties.
Under the terms and conditions of your agreement, you need to verify what kind of website you are purchasing.
Websites are classified by the following:
- Those created by developers intended to be sold or ‘flipped’ and are often monetized by ads or affiliate links
- Blog, fan or information websites
- Used to restore an expired domain name
- Suitable to a buyer’s plan like an empty e-commerce site where the buyer can advertise his products.
- Web-based application hosted on a third-party server
If the website is a full-functional and existing e-commerce site, the terms and conditions are more extensive. You have to take into account conditions like an offline relationship with suppliers.
Often, the one intending to purchase a website has a greater incentive to produce a sales agreement. Since the sale involves a digital product and not a physical one, buyer assumes most of the risks.
The Website sales contract will require the following
1) Website Sales Agreement – A Definition of terms
Selling a website involves the use of many technical terms. So to ensure that both parties understand each other, this section is used to define what a particular word means. For example, what do you know about words like, intellectual property, domain name or ISP?
2) Terms and conditions agreed upon by both seller and buyer
Generally, this section covers the intention of the parties, the applicable laws, and warranties. Also, the part discusses the specific items that are covered by the sale like website, intellectual property right, and domain name. Furthermore, you also need to set an agreed date and time as to when the transfer of ownership will take place.
3) Important details of the sale
(a) A specific description of items sold
Would you purchase a car if it doesn’t include a steering wheel or tires? Similarly, a website is also composed of several components like domain name and intellectual property rights.
For e-commerce sites, you need to ensure that other related or offline information is part of the sale. Before agreeing, ensure to include the following items:
- Manuals, procedures or process accumulated in the development of the website
- Ads, content, images and their related copyright
- Database of current and even former customers
- Subscribers list
- The people working for the site like bloggers
- Licenses, permits or permissions
- Social media engagement
The section contains the agreed price, form of payment, and who will pay the taxes from the sale if any.
(c ) Date of complete transfer
You need to set a definite date as to when the buyer will have complete control of the website. If possible, the transfer of ownership and control should commence once the agreement is signed. If not, at least within the day.
4) Warranties and other future restrictions like non-compete clauses
If the seller provides some warranties, ensure to put those in writing. Also, consider inserting provisions that prevents them from setting up a similar one that will directly compete with yours.
For those unfamiliar with the sale of websites, consider enlisting the help of experts. You can seek the help contract review services companies to know more about the terms and conditions in your contract. You may also need advice with regards to any ‘hidden provisions’ the seller may include in the terms.
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Flippa is especially good for smaller sites making under $100,000 per year in profit – although they do handle larger transactions.
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Website Sales Agreement – Conclusion
Purchasing a website is a bit risky, but the potential benefits are worth the gamble. However, you can place the odds in your favour by writing all your oral agreements in a contract. Such a deal is crucial because it’s the only physical proof you have of owning a digital property. Also in case of disputes it’s an essential piece of evidence. Creating one is not easy since it will require expert knowledge of the technology applicable laws. So consider getting help from a contract consultant or lawyer.
~ Website Sales Agreement: Don’t Sell A Website Without One ~
Author’s Bio: Kerry Gibbs is a legal expert at BEB Contract and Legal Services. BEB provides small to medium-sized businesses with legal and contractual support. They offer various legal contracts and agreements including terms and conditions, service agreements, retainers, shareholder agreements, service level agreements and many more.
They specialise in writing terms in plain English to help your business grow.