it was obvious that the lawsuit is capitalizing on the subsequent fame of the sale; the complainant's loss is not $150k.
Correct. Over on TheDomains, someone had given the spread as 700/1200 instead of 700/1400 but, either way, the $150K damage figure is nonsense.
After the common question of "Can I get sued for X?", to which the answer is almost always yes, is the question of "for how much?"
In breach of contract situations, there are a couple of different measures depending on the circumstances. But this notion of "what it was really worth" based on some later sale is, in most instances, and in this instance, sheer silliness.
If that were the case, then every time a registrar screwed up processing an order, or was simply slow, and someone else registered a domain name, registrars would be getting these suits every day.
The simplest package of remedies is specific performance - i.e. forcing the deal to go through. That can't be done here, since the defendant no longer has the domain name.
I want to stop here and say that I know nothing of the underlying communications and jurisdictions alleged in this instance. I have no idea whether a contract was formed, or where a court might have competent jurisdiction over the claim, but that's not the angle of this set of circumstances with which everyone seems fascinated, so for the sake of discussion, I am leaving aside questions of contract formation and situs.
The policy behind the law is that we don't want people to break contracts, so we look to two other things where appropriate: (1) the extent to which the breaching party was unjustly enriched by the breach, or (2) the extent to which the non-breaching party suffered a loss.
(1) Unjust enrichment is the most common measure here, because breaching parties typically breach for a substantial amount. In this instance, the allegation is that the $700 contract was breached in favor of a $1400 sale. In other words, by breaching the alleged contract, the breaching party was enriched to the tune of $700. In order to dis-incentivize that type of breach, where specific performance is not possible, we simply put the breaching party in the same condition as if it had performed, and award the difference to the non-breaching party. That, plus interest, is the normal measure.
(2) Loss to Performing Party
I guess what everyone is latching onto here is that the domain name later sold to someone else for $150K, and that this is somehow a "loss" to the non-breaching party. It isn't, and there are several reasons for that. First of all, in any contract dispute, it is nigh unto impossible to get a court into issues of what the "real value" of something may be. The reason for that is that every economic transaction is based on the fact that the two parties have differing perceptions of value in the first place. If I sell you a widget for one dollar, the only reason that sale takes place is that I believe the widget is worth marginally less than $1, and you believe it is worth more than $1. If everything was priced at what it is "worth" in some absolute sense, then nothing would ever be sold. So, if I don't sell you that widget, you can't go crying, "But, to me, it was worth $100" and you certainly can't go crying, "To Stupid Bob down the street, it was worth $1000." Who cares what Stupid Bob down the street thinks - you were bargaining to buy a $1 widget.
Now there CAN be some additional measures here, and they are both species of what we call "reliance damages". For example, you agree to sell me a car. I don't have a garage. So, after we make our agreement, I pay someone else to build me a garage - in "reliance" on the fact that you are going to sell me a car. Now, if you breach the deal, and
if my reliance was reasonable under the circumstances; or if it was foreseeable that I would build a garage, then I might be able to get the amount that I spent on my now-useless garage (but we may look into whether I might be able to buy another car to go into that garage).
Another reliance situation is where the seller knows that the thing is necessary to some larger scheme of mine. For example, you are supplying the sound system for a U2 concert scheduled on a given date. That date comes, and you don't show up. Now, you know darn well that there is a huge amount of money riding on that sound system being delivered and functional for the concert, so it is not only foreseeable, but well within your knowledge that I'm going to lose a lot of money as a consequence of your failure to perform.
The "damages" here are remote and hypothetical. Going back to my car purchase. I may have been planning to modify that car, become a NASCAR driver, and win the Daytona 500. Do I get all of that back from you, because you didn't sell me the car? No. Whether or not I was going to win the Daytona 500 was not part of our deal, and there is no way you could have foreseen that or been responsible for it.
In our situation, the name itself seems to have been purchased because it had some ride-on value relative to something else entirely, which has grown in popularity. For all anyone knew at the time, ChatRoulette may have been just another flash in the pan, and died out within a few months as another passing internet fad. The fact that it didn't, and months later someone else thought the domain name was worth $150K, has nothing to do with the original proposal to sell the domain name for $700.
In the land of hypothetical damages, the claim, "Oh, I was going to develop the name and be a big success with it" is a non-starter. The $150K proposed damages is a statement of, "Oh, I knew perfectly well that months later someone would buy it from my for $150K". That's arrant nonsense, wholly speculative, and if the breaching party is held to that being foreseeable, then he certainly wouldn't have sold it for the $1400 OR the $700.
If the deal had gone through, then you might just as well ask whether the seller has a claim against the buyer for ripping him off by buying a $150K domain name for only $700. He doesn't. You might also ask, "If the domain name was so all-fired valuable to the proposed buyer, then why didn't he immediately seek to mitigate by buying the domain name for, say, $5000 from the guy who bought it at $1400, and then gone back against the original seller for the difference?" He didn't. Instead, upon hearing of the later sale, the proposed buyer opportunistically arose from the dead with the specious claim that he knew all along the domain name was "worth" $150K. I call bullshit on that.
The bottom line is that - yes, you should perform contracts or you will be held liable. Getting past that hurdle, however, because someone has breached a contract, it does not mean that the sky is the limit on what you can recover, where you can be sued, or what other circumstances might limit or deny recovery. If I have a domain name listed on Afternic, for example, and you send me an email wanting to know what I'd sell it for on Afternic, then you don't go running off to Network Solutions to submit a certified offer in that amount and claim I'm breaching a contract (and, yes, I've seen situations like that).
I get a ton of emails to the effect of "some guy said he'd sell me a domain name for $200, and he went off and sold it for $300, will you help me sue that guy?" Quite frankly, the time it takes to explain why it is not worth pursuing is itself of greater value than explaining why it is not worth pursuing, so it may be that some folks get the wrong idea. It's not a question of whether you have a claim, it is simply not worth thousands of dollars to pursue a $100 claim.
At its core, this domain name was never "worth" $150K to either the seller, the proposed buyer, or the actual buyer. The seller made off with a couple hundred dollars by breaching the contract. That's the measure here. The rest is opportunistic and speculative nonsense.
ound:
