Extra Eagle

Even signatures by blood don’t necessarily count

2009-03-14T01:37:42Z

I’ve been preaching for a long time that the signature is not the most important thing in a contract. Here is a recent real example:

The (new) legal Writer has been following this story Gratuitous contract not enforceable, even when written in blood

Basically while drunk Mr. Son while drunk signed a contract in blood with Mr. Kim that said:

“Sir, forgive me. Because of my deeds, you have suffered financially. I will repay you to the best of my ability.”

Mr. Kim took Mr. Son to court about this and the court found that this was not a contract due to lack of consideration. Follow “”Gratuitous contract not enforceable, even when written in blood”:http://raymondpward.typepad.com/newlegalwriter/2009/03/gratuitous-contract-not-enforceable-even-when-written-in-blood.html for the full back story.

Consideration is the legal concept that roughly says that a contract has to be an exchange. It can not be one sided. In the above “contract” Mr. Kim didn’t offer anything in exchange. So it is not a contract and completely invalid no matter how cool the signature was.

You can think of consideration as an early an effective consumer protection scheme. To read more about how contracts work and why it really is far more important to worry about them than the actual signature check out the following two articles I wrote:

Remember though if you sign over your soul to the devil in blood in return for winning the next American Idol that would be Consideration and therefore a valid contract.

Also I would add using Agree2 to draft, negotiate and sign your contracts would be a lot fairer, cleaner and safer than using blood.

The Contract Killer

2009-03-12T20:20:09Z

Andy Clarke wrote a great article a couple of months back that I only just discovered called Contract Killer which every single freelance or small design/coder shop should read.

Andy is a pretty phenomenal graphic designer and very well known in the web standards community. His article first talks about why contracts are vital to freelancers and small design shops. Please go read the full thing when you finish here, but check out this passage in particular:

If signing a contract I didn’t fully understand made me a stupid son-of-a-bitch, not asking my customers to sign one just makes me plain dumb. I’ve not always been so careful about asking my customers to sign contracts with me as I am now. Somehow in the past I felt that insisting on a contract went against the friendly, trusting relationship that I like to build with my customers. Most of the time the game went my way. On rare the occasions when a fight broke out, I ended up bruised and bloodied. I learned that asking my customers to sign a contract matters to both sides, but what also matters to me is that these contracts should be more meaningful, understandable and less complicated than any of those that I have ever autographed.

I described a similar situation where I personally got into a contract dispute in my article Pragmatic Contract Law for Programmers.

If you haven’t had anything like that happen to you, you probably will, which is why it is so important to have a well written, readable agreement that both parties fully understand. I can’t stress how important it is that both parties understand it.

I have started a project to Refactor the Consulting Agreement for exactly these purposes. Let me just repeat the last paragraph in the quote from Andy above:

... but what also matters to me is that these contracts should be more meaningful, understandable and less complicated than any of those that I have ever autographed.

Andy also actually does os the favor of sharing his contract template with us. With his permission I’ve Agree2ized it and added it to Agree2 where you can use it straight away and have your own clients sign it.

Andy’s Killer Contract is a masterful piece of writing and insight into the human mind. It is based firmly on his own experiences and on his field of work.

So rather than having 2-3 paragraphs of boilerplate liability protection that someone wrote 70 years ago because a horse drawn carriage crashed into a steam train, he actually covers issues that he has experienced personally, such as the clients changing needs:

What appear at first to be a straight-forward projects can sometimes turn long and complicated and unless you play it straight from the beginning your relationship with your customer can suffer under the strain. Customers do, and should have the opportunity to, change their minds and give you new assignments. After-all, projects should be flexible and few customers know from the get-go exactly what they want to see. If you handle this well from the beginning you will help to keep yourself and your customers from becoming frustrated. You will also help yourself to dodge bullets in the event of a fire-fight.

Another refreshing aspect of Andy’s writing is humor in the contract. I’ve always thought it a good idea as well. Perhaps blog post specific to this is a good idea. Basically I think anything that doesn’t of course compromise the agreement, but makes someone actually want to read the it is a good thing. An example from the Contract Killer:

Just like a parking ticket, you cannot transfer this contract to anyone else without our permission.

It doesn’t change the meaning, but covers a serious subject in a light way.

We also use humor in our own Agree2 User Agreement to cover a very serious issue:

However we do not want to go to jail for something you do, so we will follow local rules. Which is exactly what you need to do. If you plan to do something with Agree2, that could get you in trouble at home, please don’t. We can not take responsibility for learning all the laws of the world.

We are men of principles, but stronger men than us have changed principles with 3 hovering black helicopters over them. If you know what I mean.

Anyway now go read Andy’s Contract Killer and then go use it or one of the other Freelance Agreements on Agree2

Refactoring the Consulting Agreement

2009-03-11T18:37:22Z

Consulting Agreements are probably the contract type that most freelancers and consultants are most familiar with. I don’t think I have ever been given one at less than 5 pages. It really needs a Refactoring as us computer nerds like to put it.

Of course the people who give it to you normally understand as little about what it says as most other non lawyers as they tend to be written in dense legalese with lots of fluffy words, that look impressive such as:

Waiver by one party hereto of breach of any provision of this Agreement by the other shall not operate or be construed as a continuing waiver.

But what does this mean? I don’t know. Many agreements nowadays come with a human readable addendum that actually specifies the real terms of the agreement, such as rate, parties, duties, payment terms etc. Shouldn’t there be a better way?

Agree2 has a few different consulting agreement templates that our users have submitted. In particular this Software Development Agreement by Andre Lewis took a great step towards conciseness and readability.

I’ve decided to start working on a new that could be used either as is or used as a starting point for other more special purpose consulting agreements for industries such as Software Development, Graphics Design.

General purpose concise Consulting Agreement template

So the requirements for this is to be readable/skimmable. No legalese allowed. No repetition.

No Legacy code

Also reduce the amount of clauses protecting against highly unlikely situations. Many of the standard clauses found in these boilerplates are there, because once 35 years ago someone somewhere did something that someone wanted to protect themselves against in the future.

Programmers like me know this as legacy code. In many companies people are scared to change or remove this code, because no one remembers what it does or the last person who understood the code left the company years ago.

So any clause that doesn’t make any sense and is there because, you know it’s always been there is out. These can always be added back again with in plain English, if someone knows why its important.

Introducing the text.

You can always go in and view and contribute to the General Purpose Concise Consulting Agreement template on Agree2. This is going to be a wiki like template, any registered user can edit it and comment on it. Feel free to use it of course for your own contracts.

I’ll go over each clause here to explain my reasoning behind it.

Words surrounded by square brackets such as [client name] are what we in Agree2 call Smart Fields. These automatically become text input fields in the template and can later be used to build reports as well. Anything within that followed by a ‘=’ such as [rate=$100] is a default value.

Overview

[client company] would like to hire [consultant name] as an hourly paid consultant to perform [task] on the [project] project.

Explain the contract in a single sentence. The twitterable version of the contract so to speak. Who are the parties and what is it about.

Task would be say “rails development”, “graphic design”, “translation services” etc. Project would be the project within the company. Eg. GMail would be a project within Google.

Client

[client company] is represented in this agreement by [client name] with email address of [client email].

This just explains clearly in one line who the client is and who is the actual person within performing the contract.

Consultant

[consultant name] with email address of [consultant email] works through [consultant company].

The same for the consultant. Most consultants work (at least they should) through their own company, LLC or even through an agency. Many contracts I have seen leave this out, causing some ambiguity about who the contract is with.

Description of Task

[description of task]

A blank space to describe in as much or as little detail as you want about what the task is. For large gigs this may be fairly vague, but for small short contracts you should probably be more specific. eg. “Improve performance of the so and so feature.” or “Create a logo for the site”.

The description of the task is where many real world disagreements stem from. So don’t skip it.

Start and Length of Agreement

This agreement is valid from [valid_from=today] until [valid to=1 year from now].

This should be obvious. Agree2 actually allows you to put english terms like today and 1 month from now in certain date like smart fields and it will translate it to a real date.

Hourly Rate

In return [client company] will pay [consultant name] the hourly rate of [rate]. [consultant name] should limit the weekly hours invoiced to [max hours=50] hours.

Again this should be fairly straight forward. It specifies as concisely as possible as the rate.

Where the “Description of Task” above outlines the consultants part of the agreement, this is the clients part. Remember for it to be a legal contract, all parties have to do something.

Reporting of hours worked

[consultant name] will keep [client company] informed on the progress and send them an email at the end of each week to [client email] containing the amount of hours worked as well a brief description on what was done. Instead of an email an on-line time tracking service may also be used.

This is also often something that unnecessarily causes contention in contracts. Sometimes clients change on the whim how they want this. It’s better for all parties to just spell it out from the outset. No need to get more complicated than this.

Invoicing and Payment

[consultant name] will send an invoice to [client company] every [payment frequency=two weeks] for the work done in the prior [payment frequency=two weeks] as well as any expenses approved by [client company]. [client company] will pay [consultant name] within [payment terms=15 days].

This should also be straightforward. I added the part about expenses as there sometimes can be expenses on a gig, but not very often (in 13 years of consulting I’ve only had to expense something once). I have seen contracts with 4 or 5 paragraphs outlining convoluted expense procedures, I don’t think more than this is necessary. Maybe it should be left completely out? Tell me what you think.

Confidentiality

[client company] may share secrets with [consultant name]. In return, [consultant name] agrees to use any secrets shared only as directed by [client company].

[client company]’s secrets are anything owned by (or in the possession of) [client company] that:
* are not generally known or discoverable through legal methods;
* provide a competitive advantage, have economic value or relate to individual privacy; and
* are kept secret by [client company].

This clause was stolen pretty much verbatim from Zak Greant’s fantastically short Simple Non Disclosure Agreement

These clauses sometimes fill multiple pages. I recently received one where the confidentiality clauses consisted of 11 pages!!! They even wanted me to sign an additional NDA on top of it. Zak did a fantastic job condensing this down to two paragraphs.

Liability

In no event shall [consultant name] be liable to [client company] for [client company]’s lost profits or other damages.

I am not a big fan of Liability statements like this. From what I understand they are more there to scare the parties than actually serve a real function should something reach a court as Tort Law and/or Criminal law would override anything in the contract anyway.

Now, I am not a lawyer, but if you think I am wrong please do comment. But in any event I left a very short Liability clause in just to keep us all on our toes.

Independent Contractor

[consultant name] is not an employee of [client company], but rather an independent contractor. This means that [consultant name] may perform work for other clients, can generally decide how and where [consultant sex=he] works. [consultant name] is responsible for paying whatever taxes are due on payments from this agreement.

As far as I understand this clause needs to be there in the US or the IRS could consider it an employment contract. Your country may have similar rules. While I find it extremely annoying and pointless, for these kind of hourly projects I believe it is necessary, and it certainly wouldn’t harm anything even if you’re not in the US.

Disagreements

Disagreements happen. If it does happen and [consultant name] and [client company] is in disagreement of about this agreement, we both will attempt as much as posible to come to agreement. If we can’t resolve a dispute between us all disputes arising out of or in connection with the present contract should be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with their Rules.

This could probably be left out. Most agreements of this sort never hit the courts anyway. But just in case Arbitration is normally a cheaper and fairer option for all parties. Should I leave it out?

Help contribute

If you are a consultant/freelancer or whatever else you might call yourself, you probably have an opinion about contracts. Please add your comments, rewrite sections, add clauses etc. Also if you do use this for your own contracts, please let us know of any problems you experienced with it.

Also if you think I am going about it completely wrong, please start your own hopefully even more radical consulting agreement template.

What changed in your agreement?

2009-03-02T19:41:04Z

When you invite someone to an agreement in Agree2, you are both able to negotiate, by proposing changes to the agreement. These might be small but important changes, such as a price, but they could also be extra clauses or changes in the text.

Agree2 manages a history of these changes, which is often called a version history. We also provide a very easy tool for finding out exactly what changed with each version.

This is the version history of the OAuth Non Assertion Covenant where you can see how the OAuth Standards Group collaboratively wrote the text.

From your agreement’s page you will see this little note about who proposed the last change to the agreement. Click the “See what changed” link:

This screen will show you what has changed between this and the previous version. You can see what has changed between this and any other version by clicking the magnifying glass in the version list on the right hand side.

Changes to fields

In many cases the changes you might negotiate are the easy to change smart fields, which might contain the price or other such items in a standard agreement template. If any of these are changed they are highlighted at the top of the agreement:

Changes to text

Some substantial changes to the agreements text might be easy to see, but often there are smaller changes that could change the meaning of the agreement.

The two versions are listed side by side. We highlight the Paragraph and the exact words that have changed to make it easy to see what changed.

Reverting to previous versions

If you or your client made a change that you aren’t happy about, you can always revert back to a particular version. You should be aware that this does create a whole new version in the version history, so you still have a history of the negotiation in the future.

Try it your self

These features are part of every Agree2 account. Why not try it your self and sign up for our 30 day free trial.

50% off on most plans

2009-02-15T15:28:40Z

We at Agree2 have spent a lot of time talking to our users about pricing since we’ve launched. In these times we are all looking to cut cost, so through consensus with our users we have decided to cut our prices.

For all but the largest plan we are talking about half the original price. These prices are valid for both new and old users. New users will also as always get the first 30 days for free.

To be able to lower the prices we have reduced the amount of agreements you can create on the free plan to 1. We feel this is fair as the $6/month plan really should allow just about everyone to afford a paid plan.

Anyone including members of the free plan can create as many templates as they want and are always protected by SSL encrypted connections.

Introducing a new Solo Plan and a few other changes

2008-11-24T20:55:15Z

Startups launching products can often spend lots of time trying to work out their service plans. Sometimes you get it right and sometimes you’re missing out a spot.

Several people have told us that they would love to have a paid plan, but couldn’t justify the $24 plan since they only perform a few agreements a month.

As a response we have now created a new solo plan at $12/m which we hope will help many of these smaller businesses. Besides a smaller amount of agreements allowed a month this account also only allows a single member.

Brand your Agreements

One important feature to many small businesses that you get on all the paid plans over the free plan is themes. This allows you add your logo to your agreements as well as change the color scheme to match your business colors.

Unlimited templates and declarations

We realized that templates shouldn’t really count in your amount of agreements used. So now you can create as many templates as you want. These can be either private or public. This is also true for people on the free plan.

Why Multiple Users is a smart idea for your Agree2 account

We still recommend the small plan or medium plan for most businesses as they allow for more members per account as well as more agreements a month.

You might not necessarily think of having more members as being all that important. However if you are in partnership it is important for all partners to be able to review agreements made on their behalf.

If you are just yourself you may still want to give your spouse, Dad or lawyer access to your account so they can help you review and draft agreements and templates.

Agree2 is launched

2008-11-19T20:23:16Z

Goodbye Fax, Goodbye Fedex, Goodbye Mont Blanc pens... Hello Agree2.

What started as a proof of concept prototype in creating agreements roughly 2 years ago is now officially launched. We have been in beta for a long time, but now we feel the time is right to lift the beta tag and introduce our commercial plans.

But first let me explain what Agree2 is all about. Plain and simple we are all about helping you reach agreement.

Agreements are core to any business and it should be easy to create and accept them. Too much ritual have been created about reaching agreement and we are trying to make it as easy as sending an email or shaking hands.

Both of the Agree2 founders Pelle and Lau are freelance software developers. Agree2 was born out of our annoyance with the eternal cycle of faxing or fedexing paper agreements around. There was no good modern alternative. This just seemed wrong to us.

What kind of agreements can you create in Agree2? Almost any type of agreement is possible. Consulting Agreements, Non Disclosure Agreements, User Agreements etc.

There is no extra software to install. Just use your web browser and your email program. Have a look at the video above to see how easy it is.

Find out more

Agree2 has a multitude of unique features:

Our plans

Anyone who is already signed up with Agree2 during our beta period can continue using their account with no charge. We also still offer a limited free plan, which may suit you if you only create occasional agreements.

Multi User Plans

Most small businesses consist of more than one person. Even if the other person is a spouse, Dad or other advisor. These can help draft and otherwise collaborate with you on creating agreements.

Our various commercial plans will let you have from 3 to 100 users in an account.

Branding

Our commercial plans allow you to create themes to help brand your services to your clients and customers. You can add a logo and change the color scheme.

Advanced Web service features

Our free plan supports simple creation of agreements and is great for just getting started. Our commercial plans offers several new features that haven’t been available before.

Application Callbacks

If you enable Callback support for your application, we will let your server know when a user has accepted an agreement. You can use this to “unlock” part of your application or enable the users account.

Application Signing

Application Signing lets your application perform a digital signature of a new agreement. This means that you can automatically create and sign an agreement in one step from your application. We use this feature ourself for our customized user agreement.

New Ruby Library

Our new Agree2 Ruby Library is available on GitHub.

We will soon be offering documentation for non ruby users, demonstration applications and special subscription plans for developers of web applications.

Sign up today

We are offering 30 days free on all our commercial plans. You can downgrade to a free plan at any point before the 30 days are over.

Dilbert and legal drafting

2008-11-19T20:24:21Z

via New Legal Writer

Agree2 now supports the Universal Edit Button

2008-06-20T00:44:38Z

We now support the new fledgeling standard Universal Edit Button, which aims to create a common user interface for wikis etc.

If your browser supports the Universal Edit Button a tiny edit icon will appear in the URL field, which allows you to quickly and intuitively edit the agreement or template you’re currently on.

At time of writing the only browser which supports this is FireFox, you will also have to install a free extension. See here for instructions

Public review of Agree2 User Agreement

2008-05-20T19:47:08Z

We are very close to going out of beta with Agree2 and have been working on a new user agreement. While most people don’t really take them serious there is a small yet active group of people who thankfully read through these and take offense. I think this is great and we would like to publicly post the new user agreement for debate before we officially roll it in.

Go to the Public review version of the new Agree2 user agreement to read it and propose any changes you want. You can also add comments to it if you would like.

We will take any comments and changes that people suggest and try to incorporate them over the next week or two.

With whatever experiences we have here, we will probably start a new generic terms of services template that you can use for your own services. Feel free to do so already if you would like to submit your sites terms of services as a new template.

We have looked at several other user agreements on a variety of sites and included some aspects of these, albeit customized to our needs.

Here are some of my notes to various sections:

Whats the Exchange

For a contract/agreement to be legally binding the number one determining factor is that there is an exchange. This does not have to be a monetary exchange and it might be hard to put it in words for a user agreement. We attempt to spell this out in the two sections “What you get?” and “What we require from you?”.

So our part of it is:

We provide you a service where you can create agreements between you and your current or future business partners. We may also provide a series of related services with regards to managing agreements.

This is kind of like a more formalized elevator pitch. However I think it’s a good idea not to limit exactly what kind of services you might want to do in the future.

What we require from you is really our basic ground rules for you.

Active Agreements in Agree2

You will notice we have this clause:

An Active agreement is one that both you and another party has agreed to. It would not be fair to the other party if you could delete agreements made with them. These can not be deleted as they provide documentation for real agreements between you and the other party.

Most user agreements have some clause about closing your account and getting rid of your stuff. However since an active agreement is not just yours, but also the other party we can’t just delete them because one part wants to. This is not really normal so we have to mention this somehow.

Legal Advice

A series of US state laws require us to specifically state that we are not lawyers and that we aren’t offering legal advice. This is kind of annoying for a community site as people like to give advice. For this reason we are following recommended practice and have a big disclaimer about this.

Agree2 is only a platform for creating and negotiating agreements. Our services should not be considered legal advice. You should only use a contract template if you are comfortable that the text makes sense to you. If you have any questions or fears, please leave a comment on the template or ask questions in the forum. If you are still worried please consult a legal professional.

To protect our members from similar liability we also have the following piece:

Unless members in Agree2 specifically identify themselves as lawyers and specifically offer their legal advice, then remember that you need to thoroughly analyze any advice given and perhaps consult with a lawyer if it could affect you seriously economically or otherwise.

You will also notice that wherever you can make comments as a member of Agree2 you will have a little disclaimer next to you, unless you said you are an actual lawyer and you accept that it is legal advice:

Dispute resolution

Disputes should really be handled between us and you. If we can’t do this privately we would like to encourage you to use our support site at Satisfaction. Hopefully all disputes and complaints can be handled there. I think it’s extremely important that we can relate to each other personally and solve the issues, which is pretty much what we say here:

If you have a problem please write me personally at pelle@agree2.com. I doubt that there would ever be anything we couldn’t work out. Let’s leave the lawyers billing people other than us. If you feel it is important to share this dispute publicly with other Agree2 users, please do so on our public support site at Get Satisfaction.

Arbitration

Courts are expensive things for small businesses. They cost a lot and can take a very long time to make a ruling. There are much better alternatives though known as arbitrators. I’ll let Wikipedia describe it Arbitration as they do a way better job than I do. I’m hoping that even cheaper online alternatives will be coming along soon. We will do what we can to integrate with such services (hint, hint).

Anyway we require that disputes that we can’t solve between us go to arbitration. In theory this means that if someone takes us to court anyway the judge will throw it back to arbitration.

If we can’t resolve a dispute between us all disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.

Improperly filed claims

Improperly filed claims would be if someone had a complaint against us and didn’t follow the procedure that we outlined above. Lets say someone skipped personal contact and arbitration and went straight for the courts, this clause which was first invented by EBay is designed to cut frivolous law suits. One of EBay’s lawyers describes it on this Standford Law Podcast about User Agreements

Any claims you bring against Extra Eagle LLC must be done either directly or through arbitration as mentioned above. Should you file a claim contrary to this we may recover attorneys fees of up to $1000, provided we have notified you in writing of such an improperly filed claim and you do not withdraw it promptly.

Please help us help you

Anyway this should give some food for thought. Please read through it and ask us anything about it either here or directly on the Public review version of the new Agree2 user agreement.