A guide to Non-Fungible Tokens (NFTs), 2023 - Flipbook - Page 36
Buyer rights that require consideration include:
•
•
The terms of the contract with respect to future NFT issues. As a great deal
of the value surrounding NFTs lies with their exclusivity and uniqueness,
it is important that any buyer has an awareness of the link this has with
their value. Any future NFT issues in a collection that was previously limited
will clearly increase availability and therefore reduce the market value of
associated NFTs. The terms of any smart contract should be reviewed
closely to see what rights the minter or seller has in relation to the creation
of further issues.
The ownership and control rights granted by the smart contract in relation
to both the NFT and the underlying asset. See further at Control and
ownership.
Seller rights that require consideration include:
•
•
The rights that the seller will retain. Where the minting or sale takes place
by use of an online platform or marketplace, the terms and conditions
associated with this should be reviewed closely. The minter should ensure
that they are content with any rights that they will lose as a result of this
and, if not, should consider preparation of a bespoke smart contract to
adequately reflect their needs.
The current position with respect to any rights in the NFT and underlying
property. It is often the case that NFTs are sold on multiple times in a
trading-like fashion. In this instance, the seller may well not be the original
minter, and it is therefore crucial for a seller to correctly identify their own
rights in the NFT and underlying asset before considering what rights to
pass on to any potential buyer. Problems will arise where, for example, a
seller attempts to transfer IP in an asset where it does not have ownership
of the rights in the first place.
Dispute resolution mechanisms
There are a number of resolution mechanisms open to parties
engaged in NFT disputes, ranging from litigation to alternative
dispute resolution in the form of arbitration, expert determination or
mediation.
Parties may wish to consider incorporating the Digital Dispute Resolution Rules
(DDR Rules) into smart contracts concerning NFTs. These rules help create a
dispute resolution structure specifically applicable to resolving disputes in the
digital technology sector.
