“But what if something happens?? What if the site crashes? What if I’m late? What if..??”
“Do you think any of that stuff is going to happen?” he asked.
“Probably not. But what if it does?”
“Then you know what you do?” he said. “Tell them, ‘fucking sue me.’”
This is dangerous advice. It will work well right up until you come across someone who will "fucking sue you". A contract, once signed, is a legally binding promise. You have promised to deliver what's on the contract, and you can be held accountable in a court of law if you fail to do so. The financial penalties for violating a signed contract can easily drive one into bankruptcy, and the reputational penalties can make it very hard to recover.
Having been in these kinds of negotiations many times over the 15 years I've been in business, and having never been sued nor ever had a deal go seriously wrong, the dad's advice seems perfectly sound.
The real point here is this:
In every significant business transaction (or indeed, major life decision), you have to choose where you're going be on the risk continuum between sheer recklessness and complete security.
At some point your efforts to be prudent cross over into excessive paranoia and then a new form of risk: that all the money and time you spend to try and keep everyone safe will be wasted if the deal doesn't go ahead at all, or if it reduces the amount of time and money everyone has to actually do the work.
Sooner or later all the de-risking stops being de-risking and starts creating new forms of risk.
I'm pretty sure the dad in this story was just advising his son to avoid making that mistake.
As the story said, the son sincerely expected to be able to do the work as it was scoped, for the price on offer. If this wasn't the case, the dad's advice would have been very different.
The reality is that when a small business is providing a service to a large company, the threat of legal action isn't really much of a motivator, as the small business likely doesn't have anything they can be sued for (aside from any insurance coverage they may have), so it's just not worth the cost and hassle of taking legal action. As a supplier, your reputation, along with the satisfaction of doing good work, are much bigger motivators to deliver a good result.
So everyone really knows, in a deal like this, that the only real option is that everyone works together to get the work done well, and if it looks like it's going off track, then you re-negotiate the agreement and if it seems irredeemable, consider cutting ties.
Legal action will barely ever be a sensible option in a case like this. I'm sure this was a key part of the dad's advice.
It's really not[1]. The most important thing is to know who's sitting on the other side of the table. As a lawyer I've been asked to negotiate dozens of these contracts. And been sued on exactly one.
The irony? The one sued on was one the tightest and my client was 100% in the right. But the other guy was an asshole and we hoped the airtight contract would protect us.
We settled and paid him a non-trivial sum.
Have seen it repeatedly in situations short of lawsuits where the two sides are of markedly different sizes. The smaller party can negotiate whatever they want and then the big party will still proceed to do what they want and as long as there is still more business going on (sue them and lose the rest of the work).
[1] Of course there are exceptions: the most important of them is stipulations that will actually cost you money. That is, the business terms. Then there are terms that can cost you reputation and non-compete clauses that make you lose other work. There are terms you want to watch out for, but my experience discussed above is that it's not the contract that gets you sued, it's the asshole on the other side that you decided to do business with.
For a lifestyle or contracting business, you are too worried. For a ventured backed or exit oriented business the thing to worry about is how an investor or an acquirer will think about the contract. "You're getting $50k per year from this customer but exposed to unlimited liability in the event of any software bug? We can't take on that risk, our pockets are too deep." A good lawyer will pick out the important things and tell you why. As an entrepreneur you will still need to decide what to let slide, no lawyer will ever say you are being safe enough.
I find a much better strategy is to try not doing business with assholes. No amount of money will make you feel good about spending time with an asshole, and an asshole is likely the one you'll get sued by. Source: did business with one asshole, subcontracted some of the work to another asshole, got screwed by the former, and sued by the latter.
I have been selling to big companies for a while. I always sign. The time and money I saved by not arguing legalese fineprints will easily pay for the costs of the first Client that will sue me. Not even counting time spent arguing legalese is a mood killer.
The kicker is that if something goes wrong, your contract won't protect you much anyway, and giving freebies and working the extra mile is more effective.
But if I listen to lawyers or wannabe entrepreneurs, most will tell me to read the fineprints and care about them.
It isn't my approach but I've seen it work just fine for people. Reasons are:
1) If you are protected (LLC/LLP/S-Corp/etc) then the only thing you have to lose is the company itself. It is hard to go after you personally. If all the company owns is some computers and you are paying yourself a salary, there is nothing of value for them to go after, even if you screw up royally. If they do, fold up shop and go start a new company.
2) Big companies don't really want to sue. It is much better for them to walk away and take the loss. A manager that enters a company into a lawsuit is going to get questioned as to why they let the situation get so out of control. I was pulled into a situation where the lead developer embezzled several hundred thousand dollars and the company still didn't sue him. They fired the guy and brought in other resources (myself and someone else) to clean up the mess.
My approach is:
1) I strike anything I can't stand by in the contract. I don't go as far as a lawyer might go, but they tend to draw a line that also protects them from any accusation of negligence, which can sometimes create hard to negotiate situations. Corporate lawyers attach all kinds of crazy things. A salesperson I know calls the first version of a contract from a large company the "F*ck you version".
2) For a set of standard services I provide, I use my own contract which was drawn up by a lawyer. This limits my liability to actual moneys paid to my company, and provides the client with an easy out in 30 days should they decide to drop me. I link to it in every invoice I send these clients. By the way, don't just search Google for sample contracts and try to modify for your use. It really is worth paying a lawyer to sit with you and figure out what your priorities are and craft a contract around them. He asked good questions and built something that works well in our state and represents our interests as best as possible.
IBM once decided to build a personal computer. They still need programming tools and an operating system so they went to a well known microcomputer language developer. Before they would disclose the project, they gave the young CEO IBM's standard 100 page super scary NDA.
He signed it without reading it because he really wanted his company to get IBMs business if they were to make a microcomputer. And it worked, they agreed to buy his languages for their PC, and asked for a referral to someone who could sell them an operating system. He personally referred them to the leading microcomputer OS maker, but could not disclose what IBM wanted to the OS maker. The IBM managers flew to meet with the OS company, but CEO could not make the meeting. His wife and lawyer did, and they actually read the NDA, and it horrified them. They spent all day wrangling over edits to it until the IBM guys left in a huff, without disclosing anything or conducting any business.
The lead IBM guy called the language company CEO and told them what had happened. The language company CEO told him not to worry, he could get them an operating system too. And he did, and he eventually became the wealthiest man in the world, all because he didn't read an NDA before signing it.
The moral of the story is that you can always be sued, regardless of the agreement. But most every customer doesn't want to sue, they want to succeed. If you get good customers, they will work with you so you both succeed.
My experience has been that, in general, lawyers who negotiate contracts go way too far trying to eliminate risk. If you are talking about a really big contract with serious money on the table, a good practice can be to befriend a lawyer with lots of litigation experience to help you balance that tendency. It's sometimes worthwhile to get the opinion of a lawyer whose eyes light up when someone else says, "Fuck you, sue me!"
I've worked for little companies and big companies/institutions.
Unless you have some magical political pull, your leverage is nil. The reality is, getting to the point that the fortune 50 or .gov is suing you means that you were asleep at the switch -- getting to that point means that the business unit you are working with has acknowledged defeat (a huge step) and is going to blame you and hurt you no matter what the contract says.
In addition to others' comments, note that a well set up business will shield your personal assets from lawsuits. And for a company like this, there are no assets. What are they going to do, take the office chairs?
Big question is if you even want to sign a contract if it's written in an obviously aggressive way. In my experience reasonable clients usually use reasonable contracts. If company insists on using a contract that is all in their favor, without giving a very good reason for that, that can be a sign that you'll run into many other problems with them in future (bad communication, hostile treatment, getting dragged into office politics, their own organizational problems that managers will try to blame you for, etc.)
What alternative is there? In my experience, if I'm providing anything other than work paid by the hour or day, then I am promising things I can't 100% guarantee I can deliver. I have every reason to believe I can deliver, but I can always think of some unlikely edge cases where things go terribly, irrecoverably wrong. This bugs me, sure, but the only way I can think of to never get sued for breach of contract is to never sign a contract.
It is bad advice! Some get burned and some don't, but you have to consider possibilities like personal liability that can take a huge toll on your life.
It's all well and good until you find yourself in a tense standoff with a client who happens to enjoy litigation since they have an in-house counsel and money to burn. You may not identify that aspect of their personality until it is too late. Or you might think the risk is worth it.
> The financial penalties for violating a signed contract can easily drive one into bankruptcy, and the reputational penalties can make it very hard to recover.
If you are properly incorporated, can it really do more than drive you out of business?
Also, sadly, being sued for a business deal can drive you out of a small business even if you had exactly the right contract and were completely in the right and would _probably_ have won the lawsuit eventually. Going to court is fucking expensive, if they have more money to spend on it than you, they will drive you out of business. And anyone can file a suit against you no matter how much you are in the right.
I agree more with you but also do somewhat subscribe to, I think, the author's intent.
First though, as for hiring a full time employee with only the ability to pay them for two months: if you're not up-front with this person you're a real jerk. I've solved this by bringing people in for contracts that are the duration and explaining that future contracts or conversion are dependent on more work coming in. Yeah, it's effectively the same except for in my scenario you may be offering the job to someone with dependents who is risk averse and definitely needs that paycheck in month three. This basically gives them the risk signal they deserve without you having to say "we've only got this much money and no idea what's going to happen in month three." I'll do almost anything before I screw up someone else's livelihood.
As for the contracts, I've gotten good enough to read most of them competently. I redline the sketchy parts and the parts my lawyers have redlined in the past. Submit my alternatives or reason why it should just be struck and keep going. It's generally around things like 100% payment at the end changed to milestones or 50/50, liable for all damages changing to liable for up to the value of the contract, etc.
There are some things you really can't mess with. If you've got a megacorp client and their AP policy is 90 days, don't bother. You're not getting it for AT LEAST 90. Likely 5-6 months if you're persistent/have a good project owner on their side. They will never agree to a change, and you're not going to sue them for a late invoice unless we're talking about large sums of money that would've dictated this is all being handled by lawyers anyway.
Other things get really tricky. Some will slide in IP ownership/transfer clauses that could essentially mean they have claim to anything your company's ever done. I've got some well written reaponse clauses that I re-submit with- but if they push back on those at all I instantly walk away.
So, yeah, do read the contracts, focus on a few key areas and look for over reach or hostile clauses and submit sane, fair responses that can be easily accepted. It's fine if you have a lawyer doing all this for you in an advisory role, by be the person who fronts the requests and make yourself part of the process. You'll learn the patterns very quickly and will need to pay your lawyer less frequently as well as you'll learn the counter-proposals so you can shape your proposals to reduce the counter proposals in the first place.
Let the esoteric stuff work itself out in a lawsuit, stuff has probably really hit the fan in that case.
As far as damages for outages and stuff, you have to assume that if you're working on a smallish (sub 500K) there's absolutely no way they're suing you for a few hours of down time if you provide good customer service during that period. I've had HUGE F ups that led to 6+ hour outages and still received highly positive post project feedback from clients because we had such a good relationship before our mistake(s), we were highly communicative and forthright during the issue, and provided a good post mortem quickly after resolution.
To that end, if you find that you often have like-warm relationships with clients, maybe you shouldn't take the risks and just have a good lawyer handy.
Not only that, but there is also something morally very questionable about making promises and don't giving a sh*t about whether you'll be able to deliver or not.
This a wrong attitude in its moral and legal aspects, and I think it tells us something about the very worrying ethical aspects of today's (or maybe it was always like that) startup environment.
My point about survivorship wasn't about startups succeeding or failing in general and whether they're here to tell their story. It was about taking on excess, uncalculated risk, in this case about not covering your legal arse.
You don't see (many) people here telling how they didn't put proper contacts in place, got sued and failed because of that alone.
And I postulate that it happens a lot more than most of us think.
1. Laying out legal remedies in cases of breach of contract
2. As a formalized negotiation tool to make sure both parties are on the same page
People focus on #1 but overwhelmingly, the utility for a contract comes from #2. In cases where business deals go sour, actual malice is a far trailing cause to misunderstanding and contract negotiations are a best faith effort to avoid this as much as possible.
This could just as well have been a blog post about what strategies he used to win the lottery. If anything would have gone wrong, the lesson learned would have been quite different.
If being successful in business was a 1-in-a-trillion random chance then yes. If success in business depends on taking certain risks and understanding which ones are worth taking, then no, I disagree.
That doesn't mean that this approach is the one single ingredient needed for success, of course.
In my experience with sending/receiving/signing contracts, I think they are pretty ineffective if you use them solely and entirely as a derisking tool. This is because there are many mechanism that one side can use to inflict pain to the other side and no contract can protect against all of it. This is why binding arbitration is a thing.
But as an entrepreneur, I use contracts as a way to set expectations early on in the relationship. Our side agrees to do X, your side agrees to Y, this is when we agree to do it, and lets mitigate some basic and common miscommunication.
The excessive legal back and forth for small businesses and mostly friendly deals is probably unnecessary in a lot of situations, but failure to effectively communicate expectations is a killer, because a client can decide not to pay and tell you to "fucking sue me."
The same year this was written, I received a contract to sign right in the middle of work. Oh oopsie! We meant to have you sign this before getting started! It was not an ordinary one page bi-directional NDA, or terms of service, or non-compete. It was a five page sprawling pile of crap: me indemnifying a multi-billion dollar company, a non-compete worded in a way that on strict reading I'd have no other customers, they own all IP conceived, produced, or derived.
I redlined pretty much four pages of the five page contract, and sent it back. That triggered an hour with their in-house lawyer were I proceeded to call the contract idiotic nonsense. Basically it was an hour of me saying, go fuck yourselves, because the contract wouldn't have let me say fucking sue me. It would have let me say uncle no matter what. It was that much of a one-way contract.
In retrospect, upon receiving the contract, it's clear it was gross incompetency and also possibly intended to scuttle the work in-progress and take ownership of what had been produced so far. It was a vindictive contract.
What I should have done, is publish the work with a sane research/education license (non-commercial), and published this stupid contract and outed the company and thrown them under the goddamn bus for trying to push me under one first. Dicks. 6 years later and that's what I regret not doing.
You should put those regrets to bed and feel better that you actually did the smart thing. Throwing that company under the bus could have opened up a legal nightmare that you'd still be contending with today.
> This lesson in total disregard for risk served me well.
> They say entrepreneurs are risk takers.
> I think of myself as too lazy and irresponsible to fully understand the risk.
What is the difference? He took fairly large risks and they paid off, the situation could have been different, but engineers working 80 hours/week to pay off debt don't usually write blog posts about how they came to be there.
This is some bad advice because there are people who will "Fucking sue [you]".
If you want to learn about how a professional deals with contracts, payments, and contracting I'd say to check out "Fuck you. Pay me" [0] that gives a reasoned explanation of negotiations, what to expect, and reasonable ways to react/behave.
On the one hand, I actually did something similar to his second story. I hired two full time employees with only enough cash for a short period of time. I relied on finding more clients to stay afloat. It didn't work out well in the end for me.
On the other hand, at no point during that process did I ever consider myself "too lazy to understand the risks". I don't think that's a good trait. I considered the risks and knew exactly what I was getting in to. I had backup plans and exit strategies. It was a calculated and considered risk that I decided was worth taking. I also decided that I was OK with the worst case scenario outcome.
Not knowing the risks is foolhardy. Knowing the risks, and making the conscious decision that some risks are worth taking is a different thing entirely.
(On the other hand, I failed, he succeeded, so full respect too him for making it work. Maybe his strategy is better after all. Maybe along the way there was a risk I consciously choose not to take that he would have blindly taken that would have changed the outcome for me. And there were limits for me. I was prepared to risk losing cash savings, but not my home, and I wasn't prepared to go into debt to make it work)
Case a: you're expecting to do ongoing business, do well, and both benefit. wrangling contract is not good for you, beyond a basic level. Make sure you're on the same page, and hooray.
Case b: This is a one-time deal, they have no reason to care. be more careful.
I am in no way an expert, but looking at the incentives the other side of the negotiating table is surely more important (and way cheaper and quicker) than lawyering up a contract?
I read my contracts. I make a risk assessment. I weigh it against likelihood.
I rarely question clients contracts unless they fuck with the payment terms, or unless they impose unreasonable work guarantees. Almost nothing else matters in a contract.
If the contract is unreasonable I don't hestitate to say "this bit isn't practical". If they don't agree to adjust to fair and reasonable terms I drop the client/contract.
I really hate working for companies who impose exploitative terms because they hold the more powerful position in the relationship. I'd rather tell em to go elsewhere.
I find this attitude to be correct for small companies. There are 100 things that can go wrong, so worrying about the 1% edge case is wrong. As companies grow, multiply the 1% edge case times dozens, or hundreds of clients and projects, and it becomes much more important.
I've been at companies who fight every contract tooth and nail, and companies who are much more relaxed. It's the large companies who (rightfully) have more to worry about in terms of law suits.
Legal risk is like any other. (Running out of cash is another) You just have to figure out which ones to protect against at which time. As they say in financial markets, "If you hedge away all the risks, you aren't left with any returns"
[+] [-] quanticle|8 years ago|reply
“Do you think any of that stuff is going to happen?” he asked.
“Probably not. But what if it does?”
“Then you know what you do?” he said. “Tell them, ‘fucking sue me.’”
This is dangerous advice. It will work well right up until you come across someone who will "fucking sue you". A contract, once signed, is a legally binding promise. You have promised to deliver what's on the contract, and you can be held accountable in a court of law if you fail to do so. The financial penalties for violating a signed contract can easily drive one into bankruptcy, and the reputational penalties can make it very hard to recover.
[+] [-] tomhoward|8 years ago|reply
Having been in these kinds of negotiations many times over the 15 years I've been in business, and having never been sued nor ever had a deal go seriously wrong, the dad's advice seems perfectly sound.
The real point here is this:
In every significant business transaction (or indeed, major life decision), you have to choose where you're going be on the risk continuum between sheer recklessness and complete security.
At some point your efforts to be prudent cross over into excessive paranoia and then a new form of risk: that all the money and time you spend to try and keep everyone safe will be wasted if the deal doesn't go ahead at all, or if it reduces the amount of time and money everyone has to actually do the work.
Sooner or later all the de-risking stops being de-risking and starts creating new forms of risk.
I'm pretty sure the dad in this story was just advising his son to avoid making that mistake.
As the story said, the son sincerely expected to be able to do the work as it was scoped, for the price on offer. If this wasn't the case, the dad's advice would have been very different.
The reality is that when a small business is providing a service to a large company, the threat of legal action isn't really much of a motivator, as the small business likely doesn't have anything they can be sued for (aside from any insurance coverage they may have), so it's just not worth the cost and hassle of taking legal action. As a supplier, your reputation, along with the satisfaction of doing good work, are much bigger motivators to deliver a good result.
So everyone really knows, in a deal like this, that the only real option is that everyone works together to get the work done well, and if it looks like it's going off track, then you re-negotiate the agreement and if it seems irredeemable, consider cutting ties.
Legal action will barely ever be a sensible option in a case like this. I'm sure this was a key part of the dad's advice.
[+] [-] ballenf|8 years ago|reply
The irony? The one sued on was one the tightest and my client was 100% in the right. But the other guy was an asshole and we hoped the airtight contract would protect us.
We settled and paid him a non-trivial sum.
Have seen it repeatedly in situations short of lawsuits where the two sides are of markedly different sizes. The smaller party can negotiate whatever they want and then the big party will still proceed to do what they want and as long as there is still more business going on (sue them and lose the rest of the work).
[1] Of course there are exceptions: the most important of them is stipulations that will actually cost you money. That is, the business terms. Then there are terms that can cost you reputation and non-compete clauses that make you lose other work. There are terms you want to watch out for, but my experience discussed above is that it's not the contract that gets you sued, it's the asshole on the other side that you decided to do business with.
[+] [-] tibbetts|8 years ago|reply
[+] [-] amorphid|8 years ago|reply
[+] [-] bisRepetita|8 years ago|reply
The kicker is that if something goes wrong, your contract won't protect you much anyway, and giving freebies and working the extra mile is more effective.
But if I listen to lawyers or wannabe entrepreneurs, most will tell me to read the fineprints and care about them.
[+] [-] bluetwo|8 years ago|reply
1) If you are protected (LLC/LLP/S-Corp/etc) then the only thing you have to lose is the company itself. It is hard to go after you personally. If all the company owns is some computers and you are paying yourself a salary, there is nothing of value for them to go after, even if you screw up royally. If they do, fold up shop and go start a new company.
2) Big companies don't really want to sue. It is much better for them to walk away and take the loss. A manager that enters a company into a lawsuit is going to get questioned as to why they let the situation get so out of control. I was pulled into a situation where the lead developer embezzled several hundred thousand dollars and the company still didn't sue him. They fired the guy and brought in other resources (myself and someone else) to clean up the mess.
My approach is:
1) I strike anything I can't stand by in the contract. I don't go as far as a lawyer might go, but they tend to draw a line that also protects them from any accusation of negligence, which can sometimes create hard to negotiate situations. Corporate lawyers attach all kinds of crazy things. A salesperson I know calls the first version of a contract from a large company the "F*ck you version".
2) For a set of standard services I provide, I use my own contract which was drawn up by a lawyer. This limits my liability to actual moneys paid to my company, and provides the client with an easy out in 30 days should they decide to drop me. I link to it in every invoice I send these clients. By the way, don't just search Google for sample contracts and try to modify for your use. It really is worth paying a lawyer to sit with you and figure out what your priorities are and craft a contract around them. He asked good questions and built something that works well in our state and represents our interests as best as possible.
[+] [-] valuearb|8 years ago|reply
He signed it without reading it because he really wanted his company to get IBMs business if they were to make a microcomputer. And it worked, they agreed to buy his languages for their PC, and asked for a referral to someone who could sell them an operating system. He personally referred them to the leading microcomputer OS maker, but could not disclose what IBM wanted to the OS maker. The IBM managers flew to meet with the OS company, but CEO could not make the meeting. His wife and lawyer did, and they actually read the NDA, and it horrified them. They spent all day wrangling over edits to it until the IBM guys left in a huff, without disclosing anything or conducting any business.
The lead IBM guy called the language company CEO and told them what had happened. The language company CEO told him not to worry, he could get them an operating system too. And he did, and he eventually became the wealthiest man in the world, all because he didn't read an NDA before signing it.
The moral of the story is that you can always be sued, regardless of the agreement. But most every customer doesn't want to sue, they want to succeed. If you get good customers, they will work with you so you both succeed.
[+] [-] sverige|8 years ago|reply
[+] [-] Spooky23|8 years ago|reply
Unless you have some magical political pull, your leverage is nil. The reality is, getting to the point that the fortune 50 or .gov is suing you means that you were asleep at the switch -- getting to that point means that the business unit you are working with has acknowledged defeat (a huge step) and is going to blame you and hurt you no matter what the contract says.
[+] [-] barbs|8 years ago|reply
[+] [-] mcguire|8 years ago|reply
[+] [-] ivanhoe|8 years ago|reply
[+] [-] rebuilder|8 years ago|reply
[+] [-] partisan|8 years ago|reply
It's all well and good until you find yourself in a tense standoff with a client who happens to enjoy litigation since they have an in-house counsel and money to burn. You may not identify that aspect of their personality until it is too late. Or you might think the risk is worth it.
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] jrochkind1|8 years ago|reply
If you are properly incorporated, can it really do more than drive you out of business?
Also, sadly, being sued for a business deal can drive you out of a small business even if you had exactly the right contract and were completely in the right and would _probably_ have won the lawsuit eventually. Going to court is fucking expensive, if they have more money to spend on it than you, they will drive you out of business. And anyone can file a suit against you no matter how much you are in the right.
[+] [-] manyxcxi|8 years ago|reply
First though, as for hiring a full time employee with only the ability to pay them for two months: if you're not up-front with this person you're a real jerk. I've solved this by bringing people in for contracts that are the duration and explaining that future contracts or conversion are dependent on more work coming in. Yeah, it's effectively the same except for in my scenario you may be offering the job to someone with dependents who is risk averse and definitely needs that paycheck in month three. This basically gives them the risk signal they deserve without you having to say "we've only got this much money and no idea what's going to happen in month three." I'll do almost anything before I screw up someone else's livelihood.
As for the contracts, I've gotten good enough to read most of them competently. I redline the sketchy parts and the parts my lawyers have redlined in the past. Submit my alternatives or reason why it should just be struck and keep going. It's generally around things like 100% payment at the end changed to milestones or 50/50, liable for all damages changing to liable for up to the value of the contract, etc.
There are some things you really can't mess with. If you've got a megacorp client and their AP policy is 90 days, don't bother. You're not getting it for AT LEAST 90. Likely 5-6 months if you're persistent/have a good project owner on their side. They will never agree to a change, and you're not going to sue them for a late invoice unless we're talking about large sums of money that would've dictated this is all being handled by lawyers anyway.
Other things get really tricky. Some will slide in IP ownership/transfer clauses that could essentially mean they have claim to anything your company's ever done. I've got some well written reaponse clauses that I re-submit with- but if they push back on those at all I instantly walk away.
So, yeah, do read the contracts, focus on a few key areas and look for over reach or hostile clauses and submit sane, fair responses that can be easily accepted. It's fine if you have a lawyer doing all this for you in an advisory role, by be the person who fronts the requests and make yourself part of the process. You'll learn the patterns very quickly and will need to pay your lawyer less frequently as well as you'll learn the counter-proposals so you can shape your proposals to reduce the counter proposals in the first place.
Let the esoteric stuff work itself out in a lawsuit, stuff has probably really hit the fan in that case.
As far as damages for outages and stuff, you have to assume that if you're working on a smallish (sub 500K) there's absolutely no way they're suing you for a few hours of down time if you provide good customer service during that period. I've had HUGE F ups that led to 6+ hour outages and still received highly positive post project feedback from clients because we had such a good relationship before our mistake(s), we were highly communicative and forthright during the issue, and provided a good post mortem quickly after resolution.
To that end, if you find that you often have like-warm relationships with clients, maybe you shouldn't take the risks and just have a good lawyer handy.
[+] [-] briandear|8 years ago|reply
[+] [-] alansammarone|8 years ago|reply
This a wrong attitude in its moral and legal aspects, and I think it tells us something about the very worrying ethical aspects of today's (or maybe it was always like that) startup environment.
[+] [-] igitur|8 years ago|reply
[+] [-] bkanber|8 years ago|reply
[+] [-] igitur|8 years ago|reply
You don't see (many) people here telling how they didn't put proper contacts in place, got sued and failed because of that alone.
And I postulate that it happens a lot more than most of us think.
[+] [-] shalmanese|8 years ago|reply
1. Laying out legal remedies in cases of breach of contract
2. As a formalized negotiation tool to make sure both parties are on the same page
People focus on #1 but overwhelmingly, the utility for a contract comes from #2. In cases where business deals go sour, actual malice is a far trailing cause to misunderstanding and contract negotiations are a best faith effort to avoid this as much as possible.
[+] [-] herrkanin|8 years ago|reply
[+] [-] ballenf|8 years ago|reply
That doesn't mean that this approach is the one single ingredient needed for success, of course.
[+] [-] wheelerwj|8 years ago|reply
But as an entrepreneur, I use contracts as a way to set expectations early on in the relationship. Our side agrees to do X, your side agrees to Y, this is when we agree to do it, and lets mitigate some basic and common miscommunication.
The excessive legal back and forth for small businesses and mostly friendly deals is probably unnecessary in a lot of situations, but failure to effectively communicate expectations is a killer, because a client can decide not to pay and tell you to "fucking sue me."
[+] [-] TwelveNights|8 years ago|reply
He seems to be a pretty nice guy overall! This one was particularly fun to read: http://pud.com/post/65374847162/how-i-deal-with-users-who-st...
[+] [-] cmurf|8 years ago|reply
I redlined pretty much four pages of the five page contract, and sent it back. That triggered an hour with their in-house lawyer were I proceeded to call the contract idiotic nonsense. Basically it was an hour of me saying, go fuck yourselves, because the contract wouldn't have let me say fucking sue me. It would have let me say uncle no matter what. It was that much of a one-way contract.
In retrospect, upon receiving the contract, it's clear it was gross incompetency and also possibly intended to scuttle the work in-progress and take ownership of what had been produced so far. It was a vindictive contract.
What I should have done, is publish the work with a sane research/education license (non-commercial), and published this stupid contract and outed the company and thrown them under the goddamn bus for trying to push me under one first. Dicks. 6 years later and that's what I regret not doing.
[+] [-] i_am_nomad|8 years ago|reply
[+] [-] dtech|8 years ago|reply
> They say entrepreneurs are risk takers.
> I think of myself as too lazy and irresponsible to fully understand the risk.
What is the difference? He took fairly large risks and they paid off, the situation could have been different, but engineers working 80 hours/week to pay off debt don't usually write blog posts about how they came to be there.
[+] [-] gravypod|8 years ago|reply
If you want to learn about how a professional deals with contracts, payments, and contracting I'd say to check out "Fuck you. Pay me" [0] that gives a reasoned explanation of negotiations, what to expect, and reasonable ways to react/behave.
[0] - https://www.youtube.com/watch?v=jVkLVRt6c1U
[+] [-] SimonPStevens|8 years ago|reply
On the one hand, I actually did something similar to his second story. I hired two full time employees with only enough cash for a short period of time. I relied on finding more clients to stay afloat. It didn't work out well in the end for me.
On the other hand, at no point during that process did I ever consider myself "too lazy to understand the risks". I don't think that's a good trait. I considered the risks and knew exactly what I was getting in to. I had backup plans and exit strategies. It was a calculated and considered risk that I decided was worth taking. I also decided that I was OK with the worst case scenario outcome.
Not knowing the risks is foolhardy. Knowing the risks, and making the conscious decision that some risks are worth taking is a different thing entirely.
(On the other hand, I failed, he succeeded, so full respect too him for making it work. Maybe his strategy is better after all. Maybe along the way there was a risk I consciously choose not to take that he would have blindly taken that would have changed the outcome for me. And there were limits for me. I was prepared to risk losing cash savings, but not my home, and I wasn't prepared to go into debt to make it work)
[+] [-] dang|8 years ago|reply
[+] [-] ktta|8 years ago|reply
Contracts aren't there for when things are going smoothly, they are there to save your ass when things go wrong.
[+] [-] penguat|8 years ago|reply
Case b: This is a one-time deal, they have no reason to care. be more careful.
I am in no way an expert, but looking at the incentives the other side of the negotiating table is surely more important (and way cheaper and quicker) than lawyering up a contract?
[+] [-] Ironchefpython|8 years ago|reply
https://en.wikipedia.org/wiki/Survivorship_bias
[+] [-] Animats|8 years ago|reply
Things like that are really bad to sign. You can end up with no business and a collection agency taking a cut of your salary for years.
[+] [-] frigen|8 years ago|reply
I rarely question clients contracts unless they fuck with the payment terms, or unless they impose unreasonable work guarantees. Almost nothing else matters in a contract.
If the contract is unreasonable I don't hestitate to say "this bit isn't practical". If they don't agree to adjust to fair and reasonable terms I drop the client/contract.
I really hate working for companies who impose exploitative terms because they hold the more powerful position in the relationship. I'd rather tell em to go elsewhere.
[+] [-] mxstbr|8 years ago|reply
I wonder if they still haven't gotten sued...
[+] [-] omginternets|8 years ago|reply
[+] [-] mathattack|8 years ago|reply
I've been at companies who fight every contract tooth and nail, and companies who are much more relaxed. It's the large companies who (rightfully) have more to worry about in terms of law suits.
Legal risk is like any other. (Running out of cash is another) You just have to figure out which ones to protect against at which time. As they say in financial markets, "If you hedge away all the risks, you aren't left with any returns"
[+] [-] libeclipse|8 years ago|reply
Aha, I laughed out loud. I love this guy.
[+] [-] rc_kas|8 years ago|reply
[+] [-] wyclif|8 years ago|reply