I am selling my e-commerce business – what needs to go in the contract?

Here at LegalVision, we like to think we know a thing or two about business done on the World Wide Web. That includes the sale or transfer of business conducted on such a platform and, in particular, what needs to be included in the all-important sale of business agreement. Here is a guide on the legal considerations when selling an e-commerce business.
Legal considerations when selling an e-commerce business
If you’re selling your e-commerce or internet-based business, here are some things to think about, which should be addressed appropriately in your sale of business agreement:
- Registrations and domains – usually fundamental to any e-commerce business, how the domain names and registrations with third parties, like Google, are to be transferred, should be clearly set out in the sale of business agreement;
- Intellectual property – similarly, the registered trademarks, design of your site and any branding should be transferred correctly;
- Copyright – your site undoubtedly contains some copyright material, including terms and conditions, product descriptions, and images – the ownership of that copyright will need to be transferred, too;
- Releases and indemnities – the last thing you want after the sale of a business is to be met with a law suit when your liability extends beyond the sale. The sale of business agreement should contain specific indemnities and releases to protect both parties;
- Restraint of trade – your purchaser will want to ensure you don’t use your knowledge and know-how to duplicate the business post sale, so a properly drafted restraint provision is vital in the sale of e-commerce businesses. A restraint clause is a provision which will likely prevent you operating a similar e-commerce business within a specified jurisdiction.
- Third party contracts – it may be the case that your business relies on third party supplies or drop ship arrangements. A mechanism for transfer will need to be included in the contract for sale.
Conclusion
Before you agree to sale terms with a purchaser, talk to a business lawyer about these and other important variables. Failure to do so may have serious ramifications or complications, even after the sale is completed.
Raising Capital: Getting Investment Ready
Tuesday 6 April | 12:00 - 12:45pm
Online
The COVID-19 Vaccine Rollout: Considerations for Employers
Thursday 22 April | 11:00 - 11:45am
Online
Was this article helpful?
Thanks!
We appreciate your feedback – your submission has been successfully received.
About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.
If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.