How can I protect my interest while selling my website?
September 20, 2011 9:05 AM   Subscribe

How can I protect my interest while selling my website?

I have an offer to purchase a website that I operate. The site employs a unique technique to generate images based on user input. The value of the site lies in both the domain name/traffic and the techniques that are evident within the source code. The site also delivers consistent advertising revenue

The buyer is a firm in UK. I am in Washington state US. The buyer approached me. We have no previous business relationship

The purchase offer consists of using an escrow service where the buyer deposits his payment. I would then deliver all source code and transfer the domain names for "review and to verify they are fully operational". After review, the buyer would release the escrow payment.

My concern is that the buyer will get the source code and domains then walk on the deal. I end up with nothing. Even if the buyer returns the domains and source code, I have revealed my intellectual property.

How can I get this deal done while protecting my interests prior to closing?
posted by jorlando to Law & Government (6 answers total) 1 user marked this as a favorite
Use a lawyer.
posted by JohnnyGunn at 9:15 AM on September 20, 2011 [1 favorite]

Your transaction will get him in a heap of trouble if he cheats. This is because the escrow company will know the terms of the transaction and will be able to verify that they cheated in court. The buyer knows this so they won't cheat.

If you have specific concerns about their saying "hey, this script doesn't work we won't pay" etc., you need to specify all that stuff in the contract down to every last cronjob if need be. As was said above, this is where a lawyer who does website sales helps. (Especially if the lawyer has been on the other side of the table with their lawyer before. Those two will be calmer than you and the buyer for sure.)
posted by michaelh at 9:37 AM on September 20, 2011

You should have employed a lawyer to protect your interests long before entering into a purchase contract with these people.

IANAL, but a freelance graphic designer.
posted by These Birds of a Feather at 9:47 AM on September 20, 2011 [1 favorite]

Response by poster: There is no signed purchased agreement at this point. This is what is being proposed. I'm trying to figure out my response.

The transaction is only ~US$25k so it will be easy to burn through much of that with attorney fees.
posted by jorlando at 9:57 AM on September 20, 2011

I sold a domain name at one point where I was approached by the prospective buyer. They wrote a contract of sale. I had a lawyer look at it, and (I think) their lawyer acted as escrow agent. I asked my lawyer if I was putting myself at risk by letting their lawyer act as escrow agent, and he said "no law office would jeopardize their standing over this amount of money" (similar to yours).

There are sketchy domain-name escrow services out there, so make sure you don't use one of those.
posted by adamrice at 10:50 AM on September 20, 2011

You're really selling two things, which is what worries me. It's not just code but a proprietary system. I think that's valuable.

BUT that's not what you asked.

So if I were selling something in this price range, I would make sure this contract is in writing as NO REFUNDS, sold AS IS, as in "yes it's functional, you can see it happening right now, what are you even talking about?!" then, 1. make sure the escrow company was legit, 2. make sure the buyer were legit, 3. read the offer, 4. have a lawyer FRIEND read the offer, and then likely do it.

This is bad advice, of course, but it's what I do. If I were a better version of me, I would have a lawyer handle this.
posted by RJ Reynolds at 10:56 AM on September 20, 2011

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