Website Purchase Agreement: What to Include

If you are purchasing a website, it is important that you have a custom website purchase agreement drafted to accurately capture the transaction. If you do not obtain a custom website purchase agreement, you may later find yourself in costly litigation over the transaction because the duties of the parties were not sufficiently defined. A well drafted website purchase agreement should have the following terms:

• An accurate recital explaining the transaction in layman’s terms;
• A seller’s warranties section, under which the seller warrants that it is a duly authorized business entity, that it has adequate rights to the website, including the intellectual property contained therein (or any intellectual property created by third party contractors), that a transfer of the website content will not violate the terms of the website’s existing terms of use agreement, privacy policy, or rights of its users, that the website is not subject to any pending claims (including litigation), and that the seller has adequate rights to transfer any user-generated content contained within the website content;
• A buyer’s warranties section, under which the buyer warrants that it is a duly authorized business entity, that it will perform its payment obligations under the website purchase agreement, and that it is not prohibited from entering into the website purchase agreement by any other preexisting agreement;
• An intellectual property assignment section, under which the website content and its associated intellectual property rights is assigned to the buyer;
• Payment provisions, which outline the payment duties of the buyer, whether in installments or otherwise;
• Confidentiality and trade secret provisions, which protect the confidentiality of the transaction and any trade secrets inherent in the business model or website;
• Reciprocal indemnification provisions under which the seller indemnifies the buyer for its breach of any warranty, term, or condition of the website purchase agreement and the buyer indemnifies the seller for its breach of any warranty or subsequent action after the transfer;
• A non-compete clause, which prohibits the seller from creating a website that is similar to or competitive with the website that the buyer is purchasing; and
• Standard contractual clauses, such as an integration clause, a severability clause, and an arbitration or dispute resolution clause.

This is by no means an exhaustive list, but it is a general roadmap for a website purchase agreement. If you need a website purchase agreement, contact the expert Internet lawyers at Revision Legal and we can draft one tailored to your specific situation.

Why Website Purchase Agreements Require Custom Drafting

Buying or selling a website is not like buying a piece of equipment or a physical storefront. A website is a bundle of intangible assets that include domain names, software code, databases, user data, content, branding, and third-party integrations—each of which is governed by different areas of law and may require specific handling in the transaction documents. A generic asset purchase agreement form, even one used for traditional business acquisitions, will not address the specific issues that arise when a website changes hands.

For example, the transfer of a website typically involves assigning the seller’s rights in any registered copyrights covering the website’s design, photographs, written content, and software. Under 17 U.S.C. § 204, a transfer of copyright ownership is not valid unless it is in writing and signed by the copyright owner. A purchase agreement that does not include an express copyright assignment—or that assigns rights the seller does not actually own because the work was created by a freelancer under terms that did not transfer copyright to the seller—can leave the buyer with a website it legally cannot operate.

Intellectual Property Due Diligence

Before executing a website purchase agreement, a buyer should conduct thorough intellectual property due diligence. This includes:

• Copyright audit: Identifying all content on the website and confirming the seller’s chain of title to each piece. This includes content created by employees (work-for-hire under 17 U.S.C. § 101), content created by independent contractors (which requires a written assignment to transfer copyright to the hiring party), and user-generated content (which typically involves a license from users under the website’s terms of use).
• Trademark clearance: Confirming that the website’s brand identity—name, logo, tagline—does not infringe any third-party trademarks and that any registered trademarks are properly assigned as part of the transaction.
• Domain name verification: Confirming that the domain name(s) are registered in the seller’s name, are not subject to any encumbrances, and can be transferred to the buyer without violating any registrar terms of service.
• Software licensing review: Identifying all third-party software used in the website—content management systems, plugins, APIs, libraries—and confirming that any applicable licenses transfer to the buyer or can be re-licensed.
• Data asset review: Confirming that any user data held by the website was collected in compliance with applicable privacy laws and that transfer of that data to a new owner does not violate those laws or the website’s own privacy policy.

User Data and Privacy Law Considerations

When a website is sold, its database of user information—names, email addresses, browsing history, purchase records, and any other personal data—often transfers to the buyer. This transfer must comply with the website’s existing privacy policy and applicable privacy law. The Federal Trade Commission has taken enforcement action against companies that transferred user data in a manner inconsistent with the representations made to users at the time the data was collected. State privacy laws, including the California Consumer Privacy Act (CCPA), impose additional requirements on businesses that acquire personal data through acquisitions.

A well-drafted website purchase agreement addresses these issues by requiring the seller to represent that user data was collected in compliance with applicable law and the website’s stated privacy policy, and by outlining the procedures for transferring user data to the buyer in a lawful manner. If the website’s privacy policy does not permit transfer of user data in a business acquisition context, the buyer may need to update the privacy policy and notify users before the transfer takes effect.

Non-Compete and Non-Solicitation Provisions

A non-compete clause in a website purchase agreement protects the buyer’s investment by preventing the seller from immediately turning around and building a competing website that draws on the same audience, relationships, and proprietary knowledge used to build the sold website. Courts in most jurisdictions enforce non-compete provisions in the context of business acquisitions—they are treated more favorably than employment non-competes because both parties are sophisticated businesses and the restriction is ancillary to the sale of goodwill.

Michigan courts enforce non-compete agreements in business acquisition contexts under MCL § 445.774a, which allows reasonable restrictions on competition. The restriction must be reasonable in scope (what activities are restricted), geography (where they are restricted), and duration (how long they last). For website transactions, the geographic restriction is often worldwide or nationwide, given the global reach of most websites, and the duration is typically between two and five years.

Contact the expert Internet lawyers at Revision Legal today for a consultation on your website purchase agreement. We draft and review website acquisition agreements for both buyers and sellers across the country, ensuring that transactions are structured to protect our clients’ interests at every stage.

Whether you are buying or selling a website, having experienced Internet lawyers on your side ensures that the transaction is structured to protect your interests, that all intellectual property is properly transferred, and that you avoid the legal problems that arise from poorly drafted or inadequate acquisition documents. Contact the Internet lawyers at Revision Legal today for a consultation on your website purchase or sale.