We are often contacted by customers who want to know how they can file a lien on someone's house or vehicle. Many people have the idea that if someone owes them money for any reason, they have the right to place a lien on the debtor's property. Often the answer is no. First you need to understand what a lien is, how lien rights are created, and whether or not you have the right to file that lien.
If you've already signed a purchase or lease contract, is there any way you can legally get out of it now? Maybe there is. Many countries, states, provinces and territories have laws in place to protect the rights of consumers and to ensure that they are well informed about the goods or services they are purchasing or leasing.
Many web developers prefer to create their own Website Development Agreements for clients. Do you know if your agreement template addresses all of the key issues it should? This article provides a checklist of the provisions that you should be including in your standard form agreement. At the very least, you need to include clauses covering:
Provide detailed specifications for the design of the website, which will then serve as criteria for final testing of the website to determine if the specifications have been met and if acceptance of the website is warranted. The specifications must be approved or modified by the client before work commences on the development of the site.
Clearly define the developer's performance obligations to avoid any ambiguity between the parties. Clarify how extra work will be approved and billed.
If the project warrants it, the Agreement should contemplate appointing a project manager to oversee and coordinate the development and to be the point of contact with the client.
Set out a timetable for development / performance milestones and for progress meetings at key points in the timetable, and include the payment schedule attached to those milestones and key points.
List all deliverables and resources required from the client and the times at which these are required. Include provisions which cover the implications if the client is late in delivering these items, i.e. how it will affect the timetable and completion date. Clarify what happens if a milestone is not met or the completion date is missed through no fault of the client.
Ensure that the Agreement allows you to subcontract any part of the development services if necessary.
The developer's performance obligations should include providing documentation and source code for all software used during the process.
Include everything that is included in the price, such as software licensing fees and applicable taxes.
Payment should be tied to performance milestones. At least 1/3 of payment should be held back until the website has been thoroughly developed, delivered, tested and accepted by the client, and the website is ready to go live.
There should also be a further holdback (10%-15%) for a reasonable period following acceptance to ensure that all defects have been detected and fixed.
Unless otherwise agreed to with the client, the Agreement should expressly provide that the work done under the Agreement is a work-made-for-hire, and that all content, graphics, domain names, files and the look-and-feel of the site (together with all underlying code, software, digital programming) are the sole property of the client. A copyright notice should be displayed on the website.
For greater certainty, the developer should sign over all proprietary rights in the work to the client under an assignment provision. Unless the developer is an employee of the client, the developer must convey copyright ownership to the client in writing in order for the client to acquire all rights reserved to the author under the copyright laws.
Clarify whether the developer retains any rights to use any materials or software created during the development.
If the developer is providing any of the hardware, are any manufacturer's warranties being provided?
If the developer is using any proprietary software in the development of the website, include provisions for the client to be able to license the software and access the source code in the event that the relationship between the parties is terminated or the developer goes out of business or becomes otherwise unavailable. The license granted to the client should be perpetual, royalty-free, irrevocable and worldwide, and should be transferable.
Is any third party software or material (such as graphics) being used in the development? Have the required licenses / consents been obtained? Who is responsible for, and who pays the costs for, obtaining them? And who is liable for the performance of that software?
Each of the parties should provide warranties that none of the material they provided infringes any intellectual property rights or other proprietary rights of any third party.
There should also be mutual indemnification by each party of the other party.
The developer should carry adequate liability insurance coverage to protect against third party claims.
The Agreement should contain confidentiality clauses to protect each party's confidential information and proprietary data.
The Agreement should also contain a non-solicitation provision barring either party from soliciting the other's employees during and for a reasonable period of time following completion of the project.
If either party wishes to refer to the relationship in its marketing materials (including putting the developer's name and/or link on the website), this should be agreed to in the contract.
If the website collects any personal information from site visitors, all applicable local and international privacy and data security laws must be complied with.
If the website is an e-commerce site which will be processing payment transactions, PCI compliance must be included in the scope of services.
The website must contain all the required notices and disclosures for users (privacy, use of personal information, cookies, copyright, etc.)
Each party should indemnify the other for any loss or damages arising as a result of such party's breach of its obligations. The liability should be limited to the total of the fees paid by the client under the Agreement.
Each party should indemnify the other against third party infringement claims with respect to content, material or resources supplied by that party.
The Development Agreement should clearly specify the anticipated functionality of the website, including page load times, connection speed, mobile friendliness, download speed, number of simultaneous connections and response times for user requests, compatibility with all Internet browsers, security protocols, checkout and payment systems.
The functionality provisions should also cover integration of the site with the client's existing data server structure.
The client must be able to make changes to the website without interfering with the site's operation or functionality.
Website functionality should also include the procedure for accessing, recording and compiling user data and analytics.
The developer is responsible for transferring and installing the site and all associated software and files on the client's web server.
The Agreement must address the following questions:
Who will take responsibility for acceptance testing?
Who will determine whether the testing has been successful?
Will acceptance testing occur in stages?
The client should have the right to reject the site if the site fails to meet designated specifications and does not pass the acceptance tests.
In addition to the developer's warranty that there are no infringing materials, the developer should also warrant that the website will be delivered free from all known viruses and material defects, and will conform to the specifications. There should be a reasonable period of time allotted to resolve any defects or shortcomings.
The client should provide a warranty that it has complied with all legal, financial and data protection matters.
Determine how long the developer's warranty should be in effect, and set out the start date and end date.
Determine whether the client will require training (e.g. html, CMS functionality, etc.) and if so, whether and for how long the developer will provide that training, and at what cost.
Will the developer be providing support and maintenance after completion? Is this tied to a warranty period? If not, then consider signing a separate support and maintenance agreement.
Determine the service level requirements, the costs to be billed to the customer, and billing and payment schedules.
Image courtesy of Pixabay.com
Are you a software developer? More to the point, are you a software developer who wants to draft up a standard form of contract yourself, instead of having a lawyer do it? This checklist can help you cover the bases, but remember that it's always advisable to have a lawyer review your final form of agreement before anyone signs it, to make sure everyone's interests are addressed (it saves on litigation costs later).
Let's look at each of the sections that should be included in a standard-form Software Development Agreement, and the issues that should be addressed to protect your interests and those of your clients.
Every contract should begin with the names, addresses and contact information of the parties. If any party is a corporate entity, the jurisdiction in which it was incorporated should be included as well.
All of these items should be addressed. They can be briefly described in the main body of the Development Agreement, with the detailed specifics attached as a schedule or appendix.
Any background technology (e.g. existing code and applications that will be utilized in the development of the software) must be described in sufficient detail, and the ownership of that background technology established - whether it is owned by the customer or the developer.
Each party will be providing such things as business data, source code, and other types of confidential information. The term 'proprietary information' should be defined, as it applies to both the developer and customer.
The section of the Agreement that deals with payment of the development fee should deal with more than just how much and when payments are to be made. All of the following should be addressed:
The developer's warranties to the customer should include:
The customer should also provide a warranty of ownership if any of the customer's background technology was used in the development, and should indemnify the developer against claims and damages in that regard.
There are certain boilerplate clauses that are included (in whole or in part) in all legal agreements:
To get you started, you can find template software licensing and development contracts at MegaDox.com. These are fully editable templates which are easily customized to include all the details of your client transactions.
This is a question that we get asked frequently, so it seemed like a natural topic for a blog post. Let's do a comparison of the two structures.
A partnership is a business entity that is not registered as a corporation or a limited liability company and which is owned and carried on by two or more parties for the purpose of generating profit for the partners.
A joint venture or (JV) is formed when two or more parties join together to take on a specific project. The parties share the costs and the risks, as well as any gains and benefits, and contribute money, property, effort and know-how to the venture.
While a joint venture is usually set up for a fixed time frame (i.e. the life of the project), a partnership is typically long-term and is intended to carry on as long as the partners want to continue doing business together.
Participants in a JV do not usually intend to conduct a common business with the other co-venturers, and they're free to carry on their own businesses outside of the business of the JV. Partners in a partnership, on the other hand, are typically already carrying on their business within the context of the partnership (for instance, attorneys or accountants).
Participants in a joint venture are required to contribute money, property, expertise, knowledge, time and other resources to be used by the joint venture. They are also entitled to receive a percentage of the revenues or proceeds from the business of the joint venture in proportion to the resources they contribute.
In a partnership arrangement, the partners may also contribute money, property, know-how, and other resources to the partnership, but they are not required to do so. Partners are also entitled to a commensurate share of the profits from the partnership.
Partners usually intend to treat any property contributed to the partnership as partnership property. In a joint venture, the property contributed by the co-venturers is returned to each of them when the joint venture is wrapped up unless it has been sold to the other participants.
The day-to-day business of a joint venture might be carried out by one co-venturer on behalf of all of them, but usually major strategic and operational decisions will require the consent of all the participants and cannot be made by one co-venturer as agent for the rest. This helps to ensure that the participants have mutual control.
In a partnership, mutual control is not always a consideration. Sometimes only particular partners (such as senior partners in a law firm) have management roles. And a general partner can act as the agent for all other partners and can transact business and enter into contractual obligations and debts without the consent of the other partners.
Image by Gerd Altmann from Pixabay
There are risks in either type of relationship and it is important that you have a good level of trust in the people you are partnering or venturing with. Do some background checking on the other parties to make sure you feel comfortable about entering into a relationship with them.
There are significant differences between the way taxes are calculated for joint ventures vs. partnerships, and tax laws vary from country to country. International ventures must also be aware of the rules governing their business under existing or future double tax treaties. Obtain the services of a tax consultant who knows the tax laws for partnerships / joint ventures in your own country and in any other country you're going to be doing business in.
For legal purposes, neither partnerships nor joint ventures are considered corporate entities separate and apart from their participants. But for income tax purposes, the net profit or loss of a partnership (i.e. expenses, capital cost allowances, etc are deducted) is calculated before a share of the net profit or loss is allocated to each partner, even though the partners will be taxed on that allocation. In a joint venture, the gross revenues / production, expenses, and capital receipts and outlays are allocated among the co-venturers based on their respective interests, and each of the participants then calculates its own net profit or loss and tax payable.
The transfer of a partnership interest typically requires the consent of the other partners. And because the partners generally have an indirect interest in the property and assets of the partnership, a partner can transfer its interest in the partnership itself but NOT its interest in the partnership assets. The partnership retains the beneficial interest in the partnership assets as long as the partnership is in operation, and the partners will not be entitled to a share of the net proceeds from those assets until the partnership is dissolved.
In a joint venture, the co-venturers retain their individual ownership of the property they have contributed to the joint venture, so they have full control over the contributed property. This means that the assets of the joint venture are not owned jointly by the co-venturers, and typically a co-venturer would be able to sell its interest without obtaining the consent of the other co-venturers (subject to any rights of first refusal the other participants may have under the terms of the Joint Venture Agreement).
A partnership interest is generally considered capital property for income tax purposes, and the sale of that interest would result in a capital gain or loss. An interest in a joint venture is not considered capital property and is taxed on the same basis as the sale of an interest in each of the assets of the venture.
Since a joint venture is usually limited to a single project or undertaking and only exists for a finite time, the death of one of the participants will not normally terminate the joint venture (unless the joint venture contract is a personal service contract), whereas the death of a partner has a significant impact on a partnership and may well mean the end of the partnership.
Whether you're setting up a partnership or joint venture, Do Your Research and get legal and accounting advice before you start. The participants should then put together a written agreement which clearly defines the terms of the relationship, the responsibilities of each of the participants, a procedure for transferring a party's interest, and a mechanism for terminating the agreement.
A written agreement is required if you intend to make a joint venture election for tax purposes. It is important to agree in writing as to the value of each participant's contribution of capital and resources, and to specify the proportionate interest of each participant in the profits or production of the JV in order to reduce the potential for conflict down the road. For instance, if the JV's activities involve the manufacture of products a participant's specified interest might be a percentage of each product produced.
Keep in mind that the foregoing information is a generalization and is intended as an overview. To get information about the specific laws and requirements in your area, you should obtain legal and financial advice from local experts.
Image by Gerd Altmann from Pixabay
