Do you know the Apple ID for this phone? If not you may have a problem. It is a simple thing to get past the Passcode lock with a DFU restore, but an icloud lock is currently un breakable. The only way to restore an icloud locked iphone is to enter the Apple ID and password that was used to activate the phone. This feature is turned on by default with IOS 7.0.4. to initiate a DFU restore: http://www.iclarified.com/entry/?enid=10...
Open iTunes and connect the iPhone to your Mac or PC.
Press and hold the Home button and the Sleep/Wake button at the same time.
After exactly 10 seconds release the Sleep/Wake button. Continue holding the home button until your iTunes pops up a message telling you that it has detected an iPhone in recovery mode.
The iPhone screen will remain black. If the Apple logo appears your timing was off.
A standard recovery mode, and a DFU recovery mode appear the same on your computer, but the apple logo appears in standard and the screen is dark in DFU.
After the recovery is complete you choose language>country>wifi>and the next screen asks if you want to enter your Apple ID. at this point if it gives you the option to "skip this step" you are home free. If not, you Must enter the correct Apple ID or the phone is locked from progressing past this screen until you do, or the person who had the phone before logs into icloud on his computer using the Apple id that he used on that phone, and "removes" it from his list of devices.
A side note here. If you are reading this, and you have legitimately sold or traded your iphone to another person, Please in the name of all that is Holy do the right thing and go to icloud.com right now, do not wait! and remove your old device. Those of us who purchase these old phones are getting screwed along with the thieves who steal phones, by phone owners who sell their phones without "handing over the title" as it were, so "If you sold it, Disown it" Thank You