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I'm getting involved with an existing legitimate business that sells --
I'll call them -- widgets over the internet at a very low price. Their
existing website is a disaster and needs to be redone from scratch. It
is not selling many widgets mostly because the existing website is not
search engine friendly, and it was not properly promoted.
This company wants a new website and to put as little money into the
development of this new website as possible, because they have little
money. They want the developers of the new website to work for free in
exchange for a percentage of future profits from the new and improved
website.
An agreement needs to be made in order for the development to go
forward. Is there a name for this type of agreement (other than a
sucker's bet)?
Until the website is completed I don't see any legal grounds for an
agreement, i.e. there is no give and take, just take.
Any legal advice in this matter would be appreciated.
Thanks for your help.
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I'm getting involved with an existing legitimate business that
sells --
I'll call them -- widgets over the internet at a very low price.
Their
existing website is a disaster and needs to be redone from scratch.
It
is not selling many widgets mostly because the existing website is
not
search engine friendly, and it was not properly promoted.
This company wants a new website and to put as little money into the
development of this new website as possible, because they have
little
money. They want the developers of the new website to work for free
in
exchange for a percentage of future profits from the new and
improved
website.
An agreement needs to be made in order for the development to go
forward. Is there a name for this type of agreement (other than a
sucker's bet)?
Until the website is completed I don't see any legal grounds for an
agreement, i.e. there is no give and take, just take.
Any legal advice in this matter would be appreciated.
Thanks for your help.
You don't get legal advice on the internet...you get legal advice in a
lawyer's office. On the internet you get ideas from random people who
may or may not know what they are talking about. You should presume
that I fall into the latter category. It seems to me the best way to
protect yourself is to incorporate this entity as a company and become
a shareholder in possession of a shareholder's agreement that a lawyer
tells you is in your best interest. Another possible option is to
become a limited partner? As I said, you'll get some good ideas here
but this is something you should have legal advice on every step of
the way. Sounds like a minefield to me.
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I'm getting involved with an existing legitimate business that sells --
I'll call them -- widgets over the internet at a very low price. Their
existing website is a disaster and needs to be redone from scratch. It
is not selling many widgets mostly because the existing website is not
search engine friendly, and it was not properly promoted.
This company wants a new website and to put as little money into the
development of this new website as possible, because they have little
money. They want the developers of the new website to work for free in
exchange for a percentage of future profits from the new and improved
website.
An agreement needs to be made in order for the development to go
forward. Is there a name for this type of agreement (other than a
sucker's bet)?
Until the website is completed I don't see any legal grounds for an
agreement, i.e. there is no give and take, just take.
If you sign a written contract in which you promise to design the website
and the owner promises to pay you a percentage of the profits from the
website, you have entered into a perfectly valid contract. Whether there
actually will be any profits has nothing to do with the validity of the
contract. There is no requirement that the pay must be a sure thing or a
definite amount. All that is required is that the formula for determining
your pay is clear. You should have an attorney draft the agreement. The
key provision will be the formula for calculating how much you are entitled
to.
McGyver
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On Mon, 01 Dec 2003 13:17:25 -0500 Bruce W..1 <bruce@nodirectemail.com> whittled these words:
I'm getting involved with an existing legitimate business that sells --
I'll call them -- widgets over the internet at a very low price. Their
existing website is a disaster and needs to be redone from scratch. It
is not selling many widgets mostly because the existing website is not
search engine friendly, and it was not properly promoted.
This company wants a new website and to put as little money into the
development of this new website as possible, because they have little
money. They want the developers of the new website to work for free in
exchange for a percentage of future profits from the new and improved
website.
An agreement needs to be made in order for the development to go
forward. Is there a name for this type of agreement (other than a
sucker's bet)?
Until the website is completed I don't see any legal grounds for an
agreement, i.e. there is no give and take, just take.
If you are asking whether performance for a future promise can create a
valid, enforceable contract the answer is yes. It is called a
"unilateral contract" and is quite common.
Any legal advice in this matter would be appreciated.
If you want to know how, specifically, you should draft such a contract
in your case to protect your interests then you need someone willing and
competent to form an attorney-client relationship with you. That will
cost you something either now or in the future. (hint - try reading a
lawyer's contingency contract - if I win I get paid, if I lose I don't
- sound familiar?).
If you want to educate yourself in the hopes you can keep your costs down
you can try that as well. Its just a matter of deciding what level of
risks you are willing to take, and whether you prefer spending time over
money. The law library will have what you need to educate yourself on
contracts basics, perhaps even there are some books for non-lawyers that
will meet your needs. Check out http://www.nolo.com for one publisher
that specializes in legal materials for non-lawyers.
Diane Blackman
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Bruce! wrote:
I'm getting involved with an existing legitimate business that sells --
I'll call them -- widgets over the internet at a very low price. Their
existing website is a disaster and needs to be redone from scratch. It
is not selling many widgets mostly because the existing website is not
search engine friendly, and it was not properly promoted.
This company wants a new website and to put as little money into the
development of this new website as possible, because they have little
money. They want the developers of the new website to work for free in
exchange for a percentage of future profits from the new and improved
website.
An agreement needs to be made in order for the development to go
forward. Is there a name for this type of agreement (other than a
sucker's bet)?
Until the website is completed I don't see any legal grounds for an
agreement, i.e. there is no give and take, just take.
Any legal advice in this matter would be appreciated.
Thanks for your help.
A share of the profit? What if they have no profit after 10 years of selling
millions of these things?
I'd prefer taking a perecentage of the sales rather than the profit.
Say like a nickel on every sale.
"We saved a nickel per transaction."
"And we do over 2,000,000 transactions a year. We saved a nickel."
It adds up a lot quicker with "per sale".
Just my opinion.
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On Mon, 01 Dec 2003 13:17:25 -0500, "Bruce W..1"
<bruce@noDirectEmail.com> wrote:
This company wants a new website and to put as little money into the
development of this new website as possible, because they have little
money. They want the developers of the new website to work for free in
exchange for a percentage of future profits from the new and improved
website.
An agreement needs to be made in order for the development to go
forward. Is there a name for this type of agreement (other than a
sucker's bet)?
Yes, it's called an agreement for the development of a web site in
exchange for a percentage of future profits.
Until the website is completed I don't see any legal grounds for an
agreement, i.e. there is no give and take, just take.
No, no, no. You've just missed the point. Once the web site is
completed, it's too late for an agreement, because you've already
performed your part of the agreement with no promises whatsoever that
you will receive any compensation at all.
What you need is an agreement that specifies what services you will
perform, and then specifies exactly what percentage of profits you
will receive, and for how long. And you should get a signed agreement
BEFORE you do the work.
And you need a lawyer to help you, because there are a number of
tricky issues, such as how "profits" are to be determined. Just as an
example, suppose the business has been just about breaking even, and
income doubles after the website is updated, but the owners of the
business decide to reward their good management by doubling their
salaries, resulting in no increase in profit. What do you do then?
If you had a good lawyer, the agreement would specify that "profits"
would be computed BEFORE deducting the compensation of the principals,
or after deducting only present compensation, with no raises or
bonuses.
Even better, a lawyer might help you negotiate an agreement that
compensates you with a percentage of all increases in gross income (or
net sales), regardless of profits.
And there are other pitfalls, which is why you need a lawyer to help
you prepare the agreement.
**Dan Evans
**I post information, not advice.
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