Ultrashock Forums - View Single Post

Andy-M · 2008-04-18 #5

dlmaslow, FYI, I deleted your double post. Cheers!

Anyway back on topic. dlmaslow brought up a good point and that's personal liability. Even Limited Liability Companies (LLC) can still go after personal assets if the violation is due to negligence. Even with contracts, there are so many things that can go wrong.

Here's an example which I faced in real life too:
- took on a small project for client
- made multiple mock-ups to the point that the client used up all their mock-ups (they didn't like anything)
- client said "I'll have to sit on them and get back to you"
- client never got back to us
- we called the client repeatedly and they said they needed more time
- client got back to us months later and asked what took so long for us to get it done
- client then threatened to sue for their deposit PLUS damages incurred due to loss of revenue that they WOULD have gotten if the website was up
- We ended up settling by giving back their deposit. Client still wanted to sue for compensatory damages. We said no way and prepared for a lawsuit.

Lawsuit never happened because the client didn't have a case (mainly because it was mostly his fault - technically we could have kept the deposit but a lawsuit is a lot of stress). Also, our contract said that we are not responsible for loss of revenue or any other liquidated damages. In this case, there were no compensatory damages because "loss of sales" is something that's not concrete and has to be estimated. Also, the courts work by awarding damages to put the plaintiff back in the position they were had the contract breach not occurred - in this case...no website. Our contract stated our position in terms of liability for liquidated damages (i.e. loss of revenue) which was $0. Therefore, a good contract and knowledge of the law avoided a lawsuit - regardless of how absurd the client's case was.

Since then our contracts are even more airtight. e.g. proposals are "for discussion purposes only" and upon contract creation, proposals become "exhibit A of the business contract".

Put it this way, being on the right side of the law means you'll probably win all the lawsuits against you but there will always be people who use lawsuits as a form of blackmail. In order to protect yourself against that, you should be fluent with contract law, you should have an airtight contract, and you should have a lawyer just in case. Remember that you want to AVOID litigation as opposed to winning them. And having a contract doesn't stop some people from suing. (Suing for negligence and collecting on "damages" is VERY common).

In terms of getting a lawyer, you should get a lawyer that is well versed in intellectual property/patent law as well as business/contract law. They need to know about ownership of copyright as well as how bidding/proposals work. Larger legal firms are usually more reliable because in the event of litigation, if there's one aspect your lawyer might not know, there will be other lawyers he/she can go to for advice. Also, fees can be reduced as they can have some work done by junior lawyers.

	Andy-M	2008-04-18 #5
	dlmaslow, FYI, I deleted your double post. Cheers! Anyway back on topic. dlmaslow brought up a good point and that's personal liability. Even Limited Liability Companies (LLC) can still go after personal assets if the violation is due to negligence. Even with contracts, there are so many things that can go wrong. Here's an example which I faced in real life too: - took on a small project for client - made multiple mock-ups to the point that the client used up all their mock-ups (they didn't like anything) - client said "I'll have to sit on them and get back to you" - client never got back to us - we called the client repeatedly and they said they needed more time - client got back to us months later and asked what took so long for us to get it done - client then threatened to sue for their deposit PLUS damages incurred due to loss of revenue that they WOULD have gotten if the website was up - We ended up settling by giving back their deposit. Client still wanted to sue for compensatory damages. We said no way and prepared for a lawsuit. Lawsuit never happened because the client didn't have a case (mainly because it was mostly his fault - technically we could have kept the deposit but a lawsuit is a lot of stress). Also, our contract said that we are not responsible for loss of revenue or any other liquidated damages. In this case, there were no compensatory damages because "loss of sales" is something that's not concrete and has to be estimated. Also, the courts work by awarding damages to put the plaintiff back in the position they were had the contract breach not occurred - in this case...no website. Our contract stated our position in terms of liability for liquidated damages (i.e. loss of revenue) which was $0. Therefore, a good contract and knowledge of the law avoided a lawsuit - regardless of how absurd the client's case was. Since then our contracts are even more airtight. e.g. proposals are "for discussion purposes only" and upon contract creation, proposals become "exhibit A of the business contract". Put it this way, being on the right side of the law means you'll probably win all the lawsuits against you but there will always be people who use lawsuits as a form of blackmail. In order to protect yourself against that, you should be fluent with contract law, you should have an airtight contract, and you should have a lawyer just in case. Remember that you want to AVOID litigation as opposed to winning them. And having a contract doesn't stop some people from suing. (Suing for negligence and collecting on "damages" is VERY common). In terms of getting a lawyer, you should get a lawyer that is well versed in intellectual property/patent law as well as business/contract law. They need to know about ownership of copyright as well as how bidding/proposals work. Larger legal firms are usually more reliable because in the event of litigation, if there's one aspect your lawyer might not know, there will be other lawyers he/she can go to for advice. Also, fees can be reduced as they can have some work done by junior lawyers.