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Thread: Law Question.

  1. #1

    Question Law Question.

    A client who will remain un named signed up for a hosting account which came equiped with a free domain name, however upon signup they were presented with a terms and conditions agreement, which states the following:

    "All domain names which come free with a selected hosting package are owned by bbdimension. bbdimension has the right to continue to own any domain name if free with the package, if the client terminates their contract early. If the client does not terminate the account early the domain name will no longer be owned by us once its allocated time runs out. In which the client can then purchase it from there own registrar.

    This agreement can be changed at any time, without any prior knowledge to the reader or bbdimensions clients."

    The client has asked us to unlock the domain name so they can transfer this, naturally we said sorry we could not do this, however they are persisting we do it and are threatening legal action.

    The server is a US Server, we are located in the UK and they are located in Australia.

    Does anyone have any thoughts on this?
    http://www.bbdimension.com - Website Design and Development from as low as 250 euros (limited time only) - 15yrs experience.

  2. #2
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    Unfortunately, it looks like you've engaged in unethical marketing. Here's why: the domain is not really free if the client does not even own it. Even with the clause in your TOS, I think they've got you. It would be best to go ahead and let them have this one, and change your marketing and/or TOS.

  3. #3
    Since they dont own it why should I give them it for free?
    http://www.bbdimension.com - Website Design and Development from as low as 250 euros (limited time only) - 15yrs experience.

  4. #4
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    You are offering a free domain - As far as i can see you never say that the client owns the domain, just that you supply a free domain. Secondly your terms of service backs this up.

    Let the client threaten legal action against you, it will cost him far more money then the domain will ever be worth. I wouldnt sign over the domain to them for free of charge, allow them to buy it from you for what ever you wish.

    Also want to keep in mind that TOS usually do not stand up in court, also this is an ethical battle, so chances of a court actually allowing this to happen would slim to none i do believe.

    Though, it would probably be less of a headache to just give him the domain, it is up to you in this matter. I think I would just offer him the ability to purchase the domain from you at your listed price of your site, cause obviously you had to pay for it too.

    Lane

  5. #5
    Thankyou for the reply. I have offered them half of the listed price and am awaiting his reply, I will keep you updated.

    thanks
    Graham Barnes
    http://www.bbdimension.com - Website Design and Development from as low as 250 euros (limited time only) - 15yrs experience.

  6. #6
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    Yeah I agree with DeadEnd.

    You stated the terms clearly enough (based on your original post) and other than that it looks more like someone tried to scam a free domain from you.

    You did exactly what your terms says and yes it is 'free' and it is given to them free as long as they meet the conditions of your terms.

    I'd reply with "If you feel you need to move forward with legal representation I feel at this point and future communications should be through legal counsel"

    I think you'll find they don't have any and will shut up.
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  7. #7
    Hello xpguy,

    honestly, you cannot have such a clause in your TOS. The most you can do is have a clause which indicates that the domain is free once a years worth of the hosting contract is completed. If they cancel before the term is completed, you are obligated to allow the client to have access to their domain. Having said this, you can charge them your normal rates for that domain name (ie if they request the domain to be transferred or they request access to change nameservers, you must provide them this access if they pay for the domain)

    In your case, once a years worth of hosting service has been completed, they automatically pay for that domain and as it appears you are doing, you provide the client full access at that point. However, if they wish to cancel the agreement early, you cannot hold their domain hostage, but, you can charge them for a years worth of registration since they have not contractually completed the terms for the "free domain" offer.

    Hope this helps...

    *EDIT - wonderful to see a host doing the right thing here and not trying to hide behind a clause they should not be using - it is impossible to know about all of these things until you run into them - and I cant tell you how many similar clauses we have fought on behalf of our clients to get their domain name back - its just better for everyone if providers do the right thing (like you are here)
    Last edited by cartika-andrew; 12-23-2006 at 06:24 PM.

  8. #8
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    as CartikaHosting has suggested your terms may seem a little heavy handed BUT i think it's more to do with how you've phrased it rather than your intention. It seems clear that your intention is to avoid customers getting the free domain and taking it elsewhere immediately. But as others have suggested it would be more adviseable to achieve this by making it clear that it the "free" domain is provided on the understanding that your hosting services will be used for the following 12 months (and that this 12 month period is reset every time the domain is renewed) and if this is not the case and the contract is terminated the domain will be released on payment of your standard rate.You could calculate the rate using any method you choose (but a pro-rata type assessment may seem reasonably fair, or even add an 'administration fee' to it too).

  9. #9
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    What Andrew (Cartikahosting) and zlod said is pretty good advice.

    I'd like to ask though that since the company is in the UK and they are in Australia, wouldn't the UK laws supersede and as such may allow you to have this clause? (Not that it's ethical or unethical but allowed by law as the customer has brought up legal action.) Hopefully you have a governing law clause to state what courts and laws the TOS is stated under. As it's a contractual issue it would fall under the governing law.
    -Steven | u2-web, LLC - Clustered Shared Hosting
    "It is the mark of an educated mind to be able to entertain a thought without accepting it" -Aristotle

  10. #10
    Hi Steven, you are obviously correct, each country has its own legislation and processes and definitions of contractual obligations and associated legalities...

    However,

    as far as domain names go, this is actually icaan legislation. If the domain "owner", ie the person who can prove usage/intellectual property of the domain files a domain dispute with icaan and wins (and in a case like this they would) - they can then follow up with legislative action in their country and also receive compensation for any damages they can prove utilizing the icaan decision as a foundation to prove rightful ownership along with any evidence they have proving fiscal losses. This is the one area where hosting companies are quite exposed and most of them are not fully aware of it.

    Having said all of this, I am obviously not an expert with respect to legalities in the UK (or even in CAD or the US for that matter ) and you are correct to point that out. The best advise that can be given here is to recommend that they seek legal counsel with this specific expertise. Thanks for pointing that out, as it certainly is the best possible advise...

  11. #11
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    This agreement can be changed at any time, without any prior knowledge to the reader or bbdimensions clients.
    Is that even permitted in a terms of service? I could have sworn you have to inform users of changes to their contract.

  12. #12
    Every TOS I have ever stated says something along these lines: "This agreement can be changed at any time, without any prior knowledge to the reader or bbdimensions clients." Why would the client who bought the service win if the domain name wasn't purchased but was given free and the client agreed to the Terms and Conditions before they paid for the service?

    Also I asked namecheap which is the registrar we use and they side with me on this one, however to make sure I have also asked the datacenter and some other people, those other people are also siding with me, none of them are clients. I am still awaiting the datacenters decision. They ignorred my question asking if they would like to pay half and I think they are going ahead with legal council.
    Last edited by xpguy; 12-24-2006 at 11:01 AM.
    http://www.bbdimension.com - Website Design and Development from as low as 250 euros (limited time only) - 15yrs experience.

  13. #13
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    This seems a bit silly to me, any domain that'd be worth getting legal council for I wouldn't trust to my webhost, as much as I like them

    Besides, they're unwilling to pay the $3-5 dollars for 1/2 the cost? That sounds much cheaper then even meeting with an attorney to discuss your problem. The legal junk they'd mail you is going to cost more then 3-5 bucks

  14. #14
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    I don't even see how to get a free domain on your site.

    I'd suggest that you give the guy his domain and quit trying to write your TOS to cover yourself. Have whoever wrote it include what you're trying to include. The section you just wrote (about "free" domain name) doesn't make sense. Give the project to someone who can make it work.

    Since it obviously wasn't there when you entered into contract with the customer, you can't add it (even if it made sense) and hold him to it.

    Give him his domain. Have someone write this section for you. Grow.
    There is no best host. There is only the host that's best for you.

  15. #15
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    Quote Originally Posted by pixelized
    Is that even permitted in a terms of service? I could have sworn you have to inform users of changes to their contract.
    Again, it depends on the laws in your territory I believe. One place may say you can change a contract without notice as long as the contract says it can do so, while another says you can't period and a new one is required and yet another may say it's okay to change as long as you give notice. Also, some places may require a TOS and a service agreement whereas the service agreement is the legally binding contract. Every TOS I've ever read states that it can be changed at any time by the company with or without notice.

    A lawyer that specializes in the customer service industry -- specially online -- is needed. http://hostlegal.com/ (I haven't used their services but heard of them through here) might know of some good UK lawyers. It's always good to have a lawyer in mind in case something does come of this so you can contact them ASAP.
    -Steven | u2-web, LLC - Clustered Shared Hosting
    "It is the mark of an educated mind to be able to entertain a thought without accepting it" -Aristotle

  16. #16
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    Hi

    Just thinking about it, thought Id give my 2 cents.

    I dont know anything about law but couldnt the host in question say: they are supplying it to the user for free to use with there hosting as a gesture of goodwill, if they then want to own it they pay $x

    dont know if i have followed this correctly!

    Benji

  17. #17
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    Actually, in regards to an ICANN dispute, if the host can show the client has "never" paid anything towards the domain, and the client can not prove they paid for the domain they may win the dispute but will still have to pay the fees associated.

    If the client is offered the domain for the yearly fee (being reasonable on fees of course) then ICANN will actually rule in favor of the agency who owns the domain.

    You can review ICANN dispute records to see this happening for yourself.

    I think the comment that you should offer them the domain at the registration price is your best bet to get this resolved.

  18. #18
    Just my 2cents here...

    Your TOS clearly spells out that they do NOT get a free domain when they use your services, they only get USE of YOUR domain. This clearly does not agree with your "free domain" offer. Legally, they can demand ownership of the domain since you have conflicting information presented to the customer.

    The domain is free to use the domain with the stipulation that they maintain their hosting package with you, but is never actually owned by the customer. If they terminate early they should have the options of keeping ownership of the domain, but be charged your normal registration charges, or giving up ownership. If they fulfill their obligations of their hosting contract, they should own the domain, free of charge.

    At this point I would say, bill them for the domain and let them have it.
    Last edited by SNorton; 12-24-2006 at 05:56 PM.

  19. #19
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    Quote Originally Posted by SNorton
    Your TOS clearly spells out that they do NOT get a free domain when they use your services ...
    I don't see that section of the TOS being very clear.

    Besides, it didn't even have the bit about the domain a couple days ago.
    There is no best host. There is only the host that's best for you.

  20. #20
    Quote Originally Posted by SantaRevue
    I don't see that section of the TOS being very clear.
    I was only basing it on what I saw in the first post.

    Quote Originally Posted by SantaRevue
    Besides, it didn't even have the bit about the domain a couple days ago.
    Ouch! Now that DOES seem kinda sleazy. If there was no stipulation when the hosting and domain were created, then I'd say that the customer owns it and the hosting company should eat the costs as a learning experience.

  21. #21
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    With regard to the TOS, there is no such thing as the "State of Lincolnshire", let alone that "State" having its own laws.

    Looks like a rip off from a US TOS.

    Looks sleazier by the minute.

  22. #22
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    Quote Originally Posted by SantaRevue
    I don't see that section of the TOS being very clear.

    Besides, it didn't even have the bit about the domain a couple days ago.
    LOL nice! Google Cache ownage
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  23. #23
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    All this talk over $10 or so... Even leaving the above embarrassment aside, would it have been worth it? Hardly.

  24. #24
    Xpguy


    First off your TOS is not right in my opinion. Second anyone that read your TOS and took the free domain name was stupid in the first place. I would never sign up for a place that gave free domain names with the option to take them back at any time. That is unethical in my book. When a person gets a domain name they usually put a lot of work into their web site trying to make it successful. Then to have someone take it from then it totally not right in my book.


    If it were me I would just give him the domain name and have the whole thing over with. What are you going to do lose a whole $25 from the domain name? To hell with trying to give it to him for price. I would rather lose $25 then deal with all the bull crap your going to end up dealing with.

  25. #25
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    What did your attorney say in this matter? You should be speaking to the counsel that helped you with the TOS

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    Quote Originally Posted by Corey Bryant
    What did your attorney say in this matter? You should be speaking to the counsel that helped you with the TOS
    I think it's pretty clear that the terms are a 'cut and paste' half-baked semi-coherent attempt.

    Quote Originally Posted by DanTheSnowman
    All this talk over $10 or so... Even leaving the above embarrassment aside, would it have been worth it? Hardly.
    I think you hit the nail on the head. Regardless of whether it's moral or not, ethical or not, or legal or not (i would suggest that UK law may permit the terms in the case of business-to-business contracts but not where you are supplying a consumer (as there is potentially a very persuasive argument that the terms would be contrary to the Unfair Terms in Consumer Contract Regulations)) - it does suggest pretty poor business practice.

    It'll only take one (ex-) customer to be sufficiently annoyed to become motivated enough to post a few (terrible) reviews of your company - and it'll cost more than the handful of dollars the domain cost.

    By all means protect yourself from people grabbing the domain and running - but that is adequately achieved by requiring them to pay for the domain, rather than keeping ownership of it. And the few cases that have made it to court in the UK regarding domain names do suggest that the courts don't look favourably on companies holding domains 'hostage' - if you kept the domain - you'd risk being accused of "passing off", or trade mark infringement.

  27. #27
    Quote Originally Posted by XSI-Larry
    If the client is offered the domain for the yearly fee (being reasonable on fees of course) then ICANN will actually rule in favor of the agency who owns the domain.
    I don't know where you got that idea, but ICANN doesn't get involved in individual
    domain name disputes:

    http://www.icann.org/compliance/faq.html

    Complaints and Disputes

    If I have customer service questions or problems related to my domain name registration, whom should I contact?

    You should contact the registrar that registered your domain name.

    How do I find out who my registrar is?

    Find registrar contact details in the Accredited Registrar Directory

    If I'm having a problem with my registrar, should I report it to ICANN?

    If you have a problem with one of the registrars, you should first try to resolve it with that registrar.

    If you cannot resolve your complaint with the registrar, you should address it to private-sector agencies involved in addressing customer complaints or governmental consumer-protection agencies. The appropriate agency will vary depending on the jurisdiction of the registrar and the customer.

    Although ICANN's limited technical mission does not include resolving individual customer-service complaints, ICANN does collect and monitor such complaints to discern trends. If you would like to submit a complaint about a registrar for ICANN's records, please use the Registrar Problem Report Form located at the InterNIC website. As a courtesy, ICANN will forward your complaint to the registrar for review and further handling. (Please note that there is no guarantee that the registrar will reply.)
    But they have since enacted a process for intellectual property holders to have a
    degree of redress:

    http://www.icann.org/dndr/udrp/policy.htm

    1. Purpose. This Uniform Domain Name Dispute Resolution Policy (the "Policy") has been adopted by the Internet Corporation for Assigned Names and Numbers ("ICANN"), is incorporated by reference into your Registration Agreement, and sets forth the terms and conditions in connection with a dispute between you and any party other than us (the registrar) over the registration and use of an Internet domain name registered by you. Proceedings under Paragraph 4 of this Policy will be conducted according to the Rules for Uniform Domain Name Dispute Resolution Policy (the "Rules of Procedure"), which are available at www.icann.org/udrp/udrp-rules-24oct99.htm, and the selected administrative-dispute-resolution service provider's supplemental rules.
    The gist of this thread is it's a "dispute" between the hosting provider and their
    ex-client. Unfortunately that's something ICANN doesn't bother itself with.

  28. #28
    The gist of this thread is it's a "dispute" between the hosting provider and their
    ex-client. Unfortunately that's something ICANN doesn't bother itself with.
    This isnt entirely true. The domain dispute process can be used by anyone who feels they are the "rightful" owners of the domain.

    There is obviously a HUGE grey area here, and again, I am not an expert by any means. But, just by seeing some of the things are clients have gone through and reading some case studies on the ICANN site - anything is possible - and unfortunately/fortunately (depending on your perspective) - if ICANN rules in favour of one party or another - typically most countries legal systems will take that decision as proof of ownership - then the entire concept of liabilities suddenly becomes a discussion.

    Again, please, as steven as suggested, seek proper legal counsel - I am simply re circumstances we have witnessed/experienced (seen some strange things that certainly open your eyes)

  29. #29
    Quote Originally Posted by CartikaHosting
    This isnt entirely true. The domain dispute process can be used by anyone who feels they are the "rightful" owners of the domain.

    There is obviously a HUGE grey area here, and again, I am not an expert by any means. But, just by seeing some of the things are clients have gone through and reading some case studies on the ICANN site - anything is possible - and unfortunately/fortunately (depending on your perspective) - if ICANN rules in favour of one party or another - typically most countries legal systems will take that decision as proof of ownership - then the entire concept of liabilities suddenly becomes a discussion.
    If you're referring to the UDRP, it's meant to resolve no-brainer blatantly obvious
    cybersquatting disputes. There is at least one decision where the complainant had
    successfully gotten the domain name from the defunct hosting provider, but that's
    because they managed to (barely) meet the requirements set.

    If I can remember that exact domain name decision, I'll post it here.

    Now I've worked with a domain registrar for more than 4 years. This is one of the
    most common issues I've dealt with, and not once did ICANN intervene at any of
    those.

    That's one reason why I said they don't delve into these specific issues. This can
    get potentially complex depending on circumstances of each "case", which doesn't
    necessarily dictate how all should turn out.

    Go through ICANN's site again. You should find at least 3 processes for 3 things
    (UDRP, TDRP, registrar/registry compliance), but none of the 3 include this one.

    I understand you don't claim to be an expert. I don't either.

    But...attorneys I know who specialize in such disputes tell me they've yet to see a
    Court decision in any country use a UDRP ruling as a basis for their decision. They
    don't see the point or necessity in doing so.

    And that's my point: this is a potential legal dispute between the 2 parties. Legal
    disputes are best (and hopefully) settled before reaching Court.

    Then again, yeah, anything is possible. ICANN's recent decisions on certain things
    attest to that.

  30. #30
    But...attorneys I know who specialize in such disputes tell me they've yet to see a
    Court decision in any country use a UDRP ruling as a basis for their decision. They
    don't see the point or necessity in doing so.
    Hi Dave, first off, thank you very much for your insight. I certainly learned something here.

    I have seen a court in Canada use an ICANN ownership decision as a foundation for determining damages. Honestly, seeing that a year or so ago, gave me an entirely new perspective on these things (though again it is purely observational, and mostly uneducated at this point)

    Then again, yeah, anything is possible. ICANN's recent decisions on certain things
    attest to that.
    This is what really scares me - I am seeing stranger and stranger occurances and alot of them are conflicting...

    Eitherway, I still think the best thing to do in these situations is to not try and hold a domain hostage. Obviously the legal ramifications arent fully understood, or even defined -

    Anyway, thanks again - your perspective and insights were appreciated and helpful (at least to me )

  31. #31
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    Just give his domain back!
    I could tell you a joke about UDP. But I'm not sure you would get it!

  32. #32
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    There is no way anyone in their right mind would take you to court over a $8 domain, unless said domain was worth $500 000 (doubtful). These are the terms of which he agreed upon at the time of purchase. Keep the domain.
    Kdoubt.net - Gameing discussion, arcade, all around good fun

  33. #33
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    Hay - you have two options - pull this guys bluff for legal action. if your in the UK he is in Aussie (close to me) it will cost him more than its worth but remember if he is really disgruntled and he has money and is willing to pursue this for the principle of it then he could do so as obviously Australia is a commonwealth nation and most early laws are based off the UK like here in NZ.

    Second - i would give it to him at cost, if it is a .com they cost jack all to register and it will probably cost you more later down the track with bad publicity. As Warren Buffet said - it takes 20 years to build a reputation, it only takes 5 minutes to destroy it! So i would hand it over to him free of charge. and make sure you get it done nicely and offer him say a credit if he ever came back.
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  34. #34
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    Quote Originally Posted by Kdoubt
    ...These are the terms of which he agreed upon at the time of purchase. Keep the domain.
    I don't think so (as explained above). That's the problem.
    There is no best host. There is only the host that's best for you.

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