What would you have done in my place?

Hi, folks - I am a member of this forum - however, so as not to skew the answers to my question, I have logged out and am posting this as "Unregistered".

The Scene:

I run a business; spare time, through a separate company, I do some web design work. I pitched for a job with a neighboring business to supply and design a web site, although detailed negotiations did not take place and no contract was signed.

In the middle of the discussions, I bought two generic domain names for this contract, because I thought it was going to go ahead. The other business owner sat by my side as I registered them and was given the opportunity to pay for them there and then and put their business details on the registration. They chose not to do so at that point, therefore I registered the domains using my details

I set up a demo shopping cart site on one of the domains which was picked up by the search engines and did particularly well for one pertinent search term (No 1. in google).

Several months go by and, at the end of October, one of my employees was informed rather brusquely that their new web site was going live the next day.

So far, I have received no communication, verbal or written, to say that I didn't get the web design contract. However, word has reached me that they still expect me to sell them the generic domain names.

What would you do?