Pros and Cons of Non Disclosure Agreements (NDAs)

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I prefer to do my domain name deals with a non-disclosure agreement in place, or an agreement with the other party to not disclose details about a domain name deal. People in this business tend to feel strongly one way or another about using NDAs.

I thought I would put together a list of pros and cons about using non-diisclosure agreements on domain name sales. Since a non-disclosure agreement may impact the buyer and seller differently, I set it up from a buyer’s perspective and from a seller’s perspective. There is some overlap.

As always, I would be interested in reading what you have to say about using a non-disclosure agreement on a domain name sale. I am sure I left out some of the  pros and cons.

BUYER PROS:

  • Can keep a purchase private to not reveal what you are paying for a specific type of domain name.
  • Prevent others from learning about the domain names you are buying so the prices don’t get raised and you can continue buying them.
  • Keep competitors unaware of a product or service launch or a chance of strategy.
  • Don’t let others know what you paid in the event of a quick resale.
  • Reduce spam from people who might want to sell you other domain names.

BUYER CONS:

  • Unable to announce a large investment by sharing the amount of money spent.
  • May not be offered similar domain names from other domain name owners.

SELLER PROS:

  • Can keep revenue and profit information private.
  • Prevent others from learning about client and what client is spending on domain names.
  • Strategic divestments that competitors shouldn’t know about can be kept private.
  • Prevent others from seeing an “undersold” domain name.

SELLER CONS:

  • Can’t get public credit or additional credibility for a large domain name sale.
  • Can’t announce a deal that might increase value of other domain name holdings.

1 COMMENT

  1. One other pro (for both sides) is that an NDA can provide some certainty and protection for the parties after the sale.

    If the other party violates the NDA and discloses, the NDA can say where you can sue them (for example, if you’re in MA, in MA courts so you don’t have to chase them or sue in their state or country), what you can sue for (money damages and/or injunction, etc.) and that you can recover your costs to enforce the NDA (including your attorney’s fees) from them if you win.

    These might be big pluses for you and save expense and aggravation.

  2. Excellent food for thought, thank you Elliot. I’ve never required an NDA but from a business strategy point, the pros seem to outweigh the cons, for both buyer and seller. Of course, as a seller, not being able to reveal a large sale would be frustrating, but there are tradeoffs in all aspects of life and business.

  3. @Elliot Silver

    can you please share your complete NDA sample agreement(s) for both of your small as well as very big sales ?

    Also please tell how do you and other party signs on that agreement ? Is it electronic signatures within the email of that agreement or some sort of paper work ?

    Furthermore, your procedure is same for far away foreign buyers / transactions ?

    Thanks

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