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.

Emma Jervis
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