5

Suppose I, or a company I own, want to purchase a domain name from an existing owner. Am I allowed to blatantly lie about the interests I represent and why I want the domain?

Can I, for example, buy the domain from them (as an individual) under the pretense that I just think the name sounds cool, or because I'm raising money to found a co-op of the same name and the domain would be helpful, and then immediately shift ownership to my for-profit company (which is, say, a plumbing company)?

What truths must I convey during negotiations? In what matters is misrepresentation allowed?

E.g., is it illegal to tell them I'm acting on behalf of a charity or other entity that actually exists but with which I am unaffiliated?

I am in the U.S. I'm curious about the answer to this question if the person with whom I'm negotiating is in the U.S., but also if they are not. And I'm curious if the answer is different when I'm representing a company from when I'm representing only myself.

  • 1
    To clarify, I'm not asking because I want to con anyone or screw anyone over, but I also don't want some domain-squatter wasting my time holding out because they think they can get more money. Essentially, I want to pay the amount that the seller thinks the domain is worth, and not the amount the seller thinks I'm worth. I want to not get ripped off. – Parthian Shot Jun 24 '15 at 21:21
  • I love the core question! I just edited it to make it more broadly applicable and answerable. – feetwet Aug 24 '15 at 1:27
  • So, if you have a registered trademark, victims of cyber squating offers some protections now to the owner of a registered trademark/business. Under some circumstances you can sue under the provisions of the Anticybersquatting Consumer Protection Act (ACPA), if this is occurring. This link offers some information: nolo.com/legal-encyclopedia/… – gracey209 Aug 24 '15 at 4:45
3

The hypothetical situation would be a material misrepresentation of the facts, as well as a fraudulent misrepresentation - both are grounds for nullifying the contract. Under your hypothetical this is almost certainly material and is certainly a fraudulent misrepresentation.

A fraudulent misrepresentation of the facts pertinent to a contract occurs when one party, to a bargain for exchange, misstates a fact and either knows or believes that the fact is not true, or is not sure whether or not his statement is true but claims it to be true nonetheless.

If a party to the contract relies on the fraudulent misrepresentation and enters into a contract based on that misrepresentation, the contract is voidable by the innocent party.

A material misrepresentation is a misstatement of fact that will induce a reasonable person to enter into a contract. If a misrepresentation is material to the contract, the contract will be voidable by the relying party even if the misrepresentation is not fraudulent.

So, in this scenario, the contact would be voidable because there is both a material misrepresentation, as well as a fraudulent one. If the other party suffers a monetary loss because of the deceit, you would almost certainly be held responsible for any damages that may flow from the inducement.

| improve this answer | |
  • 1
    Really? So if you want something really really badly you got to say that in front? – Sharen Eayrs May 2 '18 at 19:55
-1

Deception

If the transaction was connected with Australia you would be in breach of Section 52 of the Trade Practices Act which prohibits deceptive and misleading conduct in trade or commerce. Note that under this law it is the effect (it could reasonably mislead) not the intention (you intended to mislead) that matters. This is an offence against the state and would be prosecuted by the ACCC.

This law only applies to corporations but the various Fair Trading laws in each state and territory have similar effect and apply to natural persons.

I cannot speak for statutes in other countries but in most common law countries (of which the US is one) you would be committing at the least misrepresentation, probably the tort of deceit and possibly fraud (which is a crime).

At a minimum, any contract you formed would be open to rescission.

Negotiation

When you enter a negotiation to buy anything where price regulation is not an issue, the price the seller asks/will settle for is a matter for the seller. They are perfectly entitled to take into account their perception of your capacity to pay and/or desire for the product. Go the free market!

You are entitled to conceal these things; you are not entitled to misrepresent them.

As to buying for yourself or as an agent of a company, either would be permissible.

The main problem you face is that a specific domain name is of value only to a tiny number of potential buyers - the mere fact that you are enquiring tells the seller that, for whatever reason, you are one of those who value it.

| improve this answer | |
  • So, just to clarify, if I intended to buy something simply for the purpose of giving it / reselling it to another entity, I wouldn't need to disclose the existence of the other entity, but I would not be able to claim some other intent- I would need to simply remain silent on the subject? – Parthian Shot Jun 24 '15 at 23:53
  • Once you own something, you can do what you like with it (within the law). A buyer is under no obligation to tell a seller what they intend to do with the goods/services. Your difficulty comes from the fact that a specific domain name is useful only to a very tiny customer base - the mere fact that you start enquiries tells the seller it is valuable to you. – Dale M Jun 24 '15 at 23:58
  • 1
    True, but if I'm allowed to actively mislead them into believing the asset has less value to me than it actually has (by pretending that I only want it for something relatively low-key), and that a buyer who might ostensibly place a higher value on the product demonstrably does not (by concealing their connection to me, and ensuring that they collude with me not to contact the original seller directly), then their perspective (may be) shifted to the degree that they part with what they're selling for less money. – Parthian Shot Jun 25 '15 at 0:12
  • However, your answer appears to imply I am disallowed from doing that. Which is sad. I mean, I suppose on the one hand there's no way to prove intent, but if it's been resold the next day or the next month that would be pretty obvious. As, of course, would this question. – Parthian Shot Jun 25 '15 at 0:14
  • 1
    @Dale the Trade Practices Act s 52 only prohibits a corporation from engaging in deceptive conduct, not natural persons. The Act in general applies to corporations rather than natural persons, iirc. – jimsug Jun 25 '15 at 0:16

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.