• Website Buying Contract For Buyers - Terms, Clauses and Caveats

    Thought I'd start a thread that could develop over the weeks/months into a good resource for the kind of protection a buyer needs to build into the contract for the purchase of a website business. Obviously, this applies to those looking to put together a written contract. If you know the seller well enough or it's a small value transaction, you might just work on a handshake.

    IANAL, this isn't a detailed guide to the law of any particular jurisdiction, each case could have traits that require coverage not mentioned here, and not all the below may be applicable or of interest in every case. But let's kick it off.

    All Sites.

    AS1: Make sure you define all the main terms well. Don't refer to "website" unless you have defined "website" as the domain name xyz.com plus all the content, design, scripts, subscribers, affiliates, other business relationships, licences, trademarks blah, blah.

    AS2: Define also who the parties to the transaction are. It's your responsibility to ensure that the seller is an adult, of sound mind and voluntarily entering into the agreement. If he happens to be a fifteen year old who claims he's an adult, the contract is void ab initio i.e. he could come back to you in a couple of years and demand the site back (for free) because the contract you entered into wasn't valid. You need to also be clear whether a party is acting in their own name or on behalf of an organisation.

    AS3: Build in a confidence clause to hold the seller from discussing details of the deal or, in fact, business operational, financial and other data - whether it's during the sale process or after completion

    AS4: Build a non-compete clause in. This is tricky as it can easily run foul of legislation to prevent "restriction of trade".

    AS5: Get a "No Outstanding Creditors" commitment from the seller. You could include taxes, fees, salaries, prize money (as you'd have with PTC and other incentivised sites), affiliate commissions etc.

    AS6: Describe how the payment and the transfer of the property will take place.

    AS7: Include a dispute resolution mechanism and agree a jurisdiction

    AS8: Include that if any part of the contract is not enforceable that it won't affect other parts

    AS9: Protect against the seller having any other agreements that conflict with this one by making him agree that there aren't any and that he won't be entering into any agreements which conflict

    AS10: Describe the "Consideration" i.e. price. It's essential to the contract. If there's no consideration, it's not a valid contract

    AS11: State that this is the complete agreement, supercedes any previous agreement and that rights in it can be assigned/transfered.

    AS12: If there are any liabilities being assumed by the buyer they need to be clearly and comprehensively stated

    AS13: For completeness, it's helpful to require a Bill of Sale at the end of the transaction that the seller can use to formally hand over ownership and rights

    AS14: At closing there shall be no material adverse change in the financial position of the buyer or the property.

    Then we have clauses and caveats that apply to certain types of sites. I've provided some examples below and am hoping you can add some.

    Content Sites

    CS1: Establish ownership of the content and rights to the content. If any of it was created by third-parties, are there contracts with those parties giving full rights to the site owner?

    CS2: Get the seller to certify that no content infringes the rights of others.


    PPC Sites (content sites, product sites or any other sites that use PPC to drive traffic)

    PPC1: A clause that details of campaigns run so far, conversion information etc., will remain confidential and won't be shared with any other party during or after the sale.

    PPC2: A list of keywords and terms that the seller agrees not to compete on for X months after handover.


    Contextual Programs (sites earning from Adsense etc)

    CP1: An agreement on whether the contextual program accounts are included with the sale or not.

    CP2: Detailed stats for the last X months will be provided in CSV/XLS format on handover. Information on "channels" used in the contextual program and the performance of those channels will be provided broken down by day and by channel. Seller will keep his contextual account in good standing for X months after handover and provide other stats info from the history as and when required


    Product Sales

    PS1: Define whether existing inventory is part of the sale.

    Your contributions for titles and/or clauses/caveats to be considered when drawing up the contract? Don't be shy, all suggestions gratefully received whatever your level of experience.
    This article was originally published in forum thread: Website Buying Contract For Buyers - Terms, Clauses and Caveats started by Clinton View original post
    Comments 1 Comment
    1. Clinton's Avatar
      Clinton -
      Full thread here.