5 reasons why you should use a website purchase agreement when buying or selling a website.

When it comes to online transactions, especially the bigger ones, its important that you take precautions. Im still amazed at how often I read on various forums about how someone got burnt and lost $10,000 on the sale or purchase of a website. Protecting yourself legally is absolutely vital, when buying or selling website. Especially if you don’t know the person you are carrying out the transaction with.



If youre about to either buy or sell a website, here are 5 reasons why you should use a website purchase agreement or contract when doing so.



1. Legal protection.



This should be obvious. Theres no point finalising a transaction via email and a handshake. A business transaction is exacty that – business, and it should be treated as such. Always when performing online transactions, use proper legally binding contracts, and this includes a website sales contract or purchase agreement. The benefits of doing so are substantial. Not only do you have something that is considered legally binding, but you also have a signed agreement, in writing that could be used as evidence, should any disputes or issues arise post sale. I wouldn’t enter into any website purchase without one, regardless of whether im buying a $500 website or a $500,000 website.



2. Ownerhip of Assets.



This is an area that can often be overlooked. Especially non competes and asset "recycling". By this I mean, taking code from a particular website that has just sold, and implementing it elsewhere, either for personal or monetary gains. Ownerhip of the newly purchased website, along with all rights and licensing, should be granted to the new owner, unless otherwise agreed. Ive often found that when selling a website, the buyer will ask that I sign a non compete and request that I sign over all rights to not only the website itself, but everything associated with it – ie, code, database, marketing materials, and so on.



3. Payment terms.



Determining payment terms is vital and should be laid out clearly for both parties. Payment terms should cover more than just how much is due or outstanding to finalise settlement. Payment terms should also cover due dates and expected payment methods. If the seller is expecting an Escrow transfer within 10 days of the website being sold, or receiving the initial deposit, and the buyer is wanting to pay via paypal, this can lead to delays or unnecessary disputes.



4. Clarity.



When using a website purchase agreement you can itemise whats called an assets inclusion list. This list is a full inventory of the assets included in the sale. These are the assets that the new owner will be taking possession of once hand over is finalised. Another option is adding in the opposite – an exclusions list. This list might consist of a number of listed items that are not included in the sale. It might sound odd, but you want to ensure you are clear and concise on whats included and excluded to prevent any potential disputes later on.



5. Book keeping.



Its always best to have something on hand that you can referr to when needed. In most cases, this will be during tax time. Its important to keep records of all financial transactions so that your tax advisor can process the necessary documents come end of financial year. These records should include the actual sales contract itself, along with all accompanying invoices and receipts.