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missing exit clause on a freelane contract

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w98

Member
missing exit clause on a freelance contract

What is the name of your state? CALIFORNIA/MISSOURI

I'm in a freelance contract with a client in Missouri (I'm in California) and I'm running into a potential legal mess.

I need to resign from the project (time obligations for my upcoming wedding are far outweighing all freelance work I've been gradually winding down on), and there's no exit clause in the contract. My client claims I'm not finished, yet þey have not provided *detailed* information as to the original scope of work. They claim that due to 'gross negligence' in timely delivery that they want 50% of their money back if I walk away.

Part of the delay, for example, is that they've spent over two months arranging a merchant account to process credit cards online, which blocks a few different areas of their web site from being completed, yet they're claiming it's MY fault the software is late.

The 2-page contract states that they'll pay me a fixed rate per hour for a maximum of 200 hours of work, and I've met or exceeded that number of hours when including a friend they permitted to join on the contract for a 'push' in April to try to resolve all missing pieces. Since we're beyond that 200 hour mark, I want to know if that, then, releases me from further obligation since there's no defined 'due date' in the contract or any statements which state I'm obligated to finish the work within that 200 hours.

If anyone needs more information, I'm happy to post any other details.

edit: want to subscribe to the message so i get email notices of replies.
 
Last edited:


w98

Member
as a follow up, the payment clause in the contract says:

THE COMPANY will pay FREELANCER USD $30 per hour of work on The Project, not to exceed a sum total of USD $6000.00 (200 hours of work time) for the duration of The Project.

... but the "duration" is not defined anywhere in the contract. The only thing that comes close is the mention of 200 hours of work.

When my friend assisted me in April for getting a lot more work completed, we came within about 25 hours (at my rate) of time left in the budget. (somewhere between $700 and $800 left in the pot) I have FAR exceeded that remaining time, but in case I needed to pull my friend in on more work I didn't want him to work for free (he was $20/hr), so I decided after April to stop billing my client for my own time (my friend was billing at a reduced rate). But I have *logged* my time, and I'm *well* in excess of the 200 hours I originally agreed to.

So I've been working for FREE for them since mid-April. And now I want out.

Any advice to help me would be VERY much appreciated ... I can't afford to give back $2500 or I'll have to find a new fiancee ;)
 

w98

Member
(bump)

no takers?

My invoices to this guy total 199 hours, and my time logs from the server show 94.6 hours logged since my last invoice to him - over $2800 of my time that he's gotten for FREE since April. Is that grounds to counter-sue if he takes legal action?
 

w98

Member
They've paid a total of about $5100 - I had a friend help (with my client's permission) and we billed my client $20/hr for his work, but our total BILLED hours came to exactly 199 hours. Then factor in that I've worked about 95 hours on top of THAT which I haven't billed my client for, and I believe I'm way beyond my legal obligation...

We've always done the work directly on their systems (via SSH or immediate FTP upload after any changes were made), so they have never been without their software/design.
 

Crispix

Member
You did the hours, they have the work, and they paid you? The goal here is to move on and learn how to do it better next time.

The amount of money here is small. Does the contract state the jurisdiction? If it's CA, there's little chance they will sue you -- not worth it.

It is worth the money to have a lawyer review your standard contract and make it better for next time. At the same time he or she will advise how to respond to one of their nastygrams, if they send one. Don't try to get any more money out of them -- for the same reasons they probably won't sue you, you won't get anywhere with them.

If you feel the need to send them a "I'm firing you as a customer" letter, get a lawyer to review it first.

A good clause to have in this type of contract is that "payment indicates acceptance". Works like a charm. If you require a deposit first and progress payments during the course of a project, you never get into a situation like this. If they don't pay, you stop work until they do pay. Once they pay, they can't complain.

Also, you need to insist on better "scopes of work" up front. Once they start making it up as they go along, you are screwed. Anything with a "Not to Exceed" in it is really another term for "fixed price", and that is BAD. It's ok to give solid estimates in advance, but make it clear your work is hourly. Your invoices need to be detailed down to the quarter-hour, and you need to invoice every two weeks. This way, there is no doubt that it is an Time and Materials / hourly contract, and they will suddenly start approving work the first time around in order to save money!
 

w98

Member
Here's most of the text of the contract (forum said the full posting was too long)

In consideration of the freelance arrangement between the parties and the fees to be paid under Paragraph 5, and for other good and valuable consideration, the parties now agree as follows:

‘Previous Work’ shall include information, technical data, trade secrets, and know-how, including, without limitation, research, product plans, customer lists, markets, computer software, computer programs, developments, inventions, discoveries, processes, formulas, algorithms, technology, designs, drawings, marketing and other plans originally developed by FREELANCER before this Agreement came into effect. FREELANCER hereby grants to THE COMPANY a limited, non-exclusive, non-transferable, royalty free license to reproduce, distribute and use any portions of Previous Work used within The Project (as described below).

‘Open Source Software’ shall include any royalty-free public domain third-party software applications, or portions thereof, whose titles and ownerships belong neither to FREELANCER or THE COMPANY, and, as such, titles and ownership cannot be transferable to either party in this Agreement.

‘The Project’ shall contain any services performed for, or at the request of, THE COMPANY, at any time during FREELANCER’S freelance arrangement with THE COMPANY, which will include all New Work (as described below). The Project may or may not include portions of Previous Work and Open Source Software, but respective titles and ownerships of any Previous Work and Open Source Software used shall be maintained by their respective owners and not transferred to THE COMPANY as part of The Project.

‘New Work’ shall mean all original work product, works of authorship, improvements, modifications and derivative works, made, conceived, expressed, written or authored by FREELANCER, solely or jointly with others, in connection with this Agreement and The Project.


1.To respect THE COMPANY’S development schedule, THE COMPANY acknowledges that FREELANCER may make use of Previous Work or Open Source Software to enhance or compliment The Project for THE COMPANY. THE COMPANY hereby irrevocably acknowledges that the title and ownership of any Previous Work used in the project shall remain the property of FREELANCER, and that title and ownership of any Open Source Software shall remain with their respective creators and owners.

FREELANCER acknowledges that all New Works developed as part of The Project are and shall remain the sole property of THE COMPANY or its designee(s). FREELANCER acknowledges that all such New Works were intended to be, are, and shall be considered "works made for hire" under the U.S. Copyright Laws, belonging solely to THE COMPANY or its designee(s).

The Project as developed by FREELANCER for THE COMPANY shall be considered work done solely for THE COMPANY. To the extent that The Project under applicable law as outlined in Paragraph 4 may not be considered work made for hire by FREELANCER for THE COMPANY, FREELANCER hereby irrevocably assigns (or upon its creation, automatically and irrevocably assigns) to THE COMPANY, without any further consideration, all right, title and interest in and to The Project excluding any portions containing Open Source Software or Previous Work. THE COMPANY shall have the exclusive right (but no obligation) to use and/or dispose of The Project, whether original or derivative, in whole or in part, for all purposes without additional compensation or obligation to FREELANCER.

FREELANCER acknowledges that due to the sensitive nature of the information dealt with in the course of The Project, that FREELANCER may never maintain any New Works in their private library (which constitutes a portion of FREELANCER’S Previous Work) for future projects for other clients.

FREELANCER shall not challenge the validity of the ownership by THE COMPANY or its designee(s) of the New Works, or take any action that could reasonably be expected to limit or diminish THE COMPANY’S (or its designee(s)’s) rights in the New Works.

2.THE COMPANY hereby grants to FREELANCER a limited, non-exclusive, non-transferable, royalty free license to gain access to view, copy, transfer, and electronically publish any portions of The Project to its computers, servers, databases, and other electronic storage means for development, testing, publication, and finalizing of The Project. FREELANCER agrees that all development work will be done on servers and computers provided by means of remote access by THE COMPANY, unless otherwise directed or permitted in writing. FREELANCER may not sublicense or syndicate The Project to any third party, nor display FREELANCER’S name anywhere within The Project that could be viewed by the public; to maintain the licensing Agreements of Open Source Software and Previous Works, FREELANCE is permitted to write comments and documentation within The Project to direct other developers as to the licensing restrictions of those portions of The Project.


Any and all goodwill which may arise from the use of the THE COMPANY logo, or The Project, shall inure to the benefit of THE COMPANY.

3.FREELANCER will not disclose or use, at any time, except for the benefit of THE COMPANY, an affiliate of THE COMPANY, or any party that THE COMPANY specifically identifies to FREELANCER for such purpose, any Confidential Information (as herein defined). "Confidential Information" shall mean all THE COMPANY proprietary information, technical data, trade secrets, and know-how, including, without limitation, research, product plans, customer lists, markets, computer software, computer programs, developments, inventions, discoveries, processes, formulas, algorithms, technology, designs, drawings, marketing and other plans, business strategies and financial data and information, whether or not marked as "Confidential." "Confidential Information" shall also mean information received by THE COMPANY from customers of THE COMPANY, or from other third parties subject to a duty to keep confidential. "Confidential Information" shall not include information that FREELANCER can establish (i) is already in FREELANCER’s possession at the time of its disclosure through no wrongful act of FREELANCER; or (ii) is or becomes publicly known through no wrongful act of FREELANCER. Following termination, FREELANCER will not retain any written or other tangible or electronic material containing any Confidential Information.

4.This Agreement sets forth the entire Agreement of the parties with respect to the transactions set forth herein. This Agreement may only be amended in a writing signed by both parties. The parties to this Agreement are independent contractors, and nothing contained herein creates an agency, partnership, joint venture, or employment relationship between the parties. FREELANCER may not assign this Agreement or any right, interest or benefit hereunder without THE COMPANY’s prior written consent. THE COMPANY may assign this Agreement and any rights hereunder without consent to any entity or written notice to FREELANCER. This Agreement shall bind the parties and their respective permitted successors, heirs, and assigns. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Missouri, excluding its conflicts of law principles. For geographical consideration, the parties hereby irrevocably agree that any dispute arising from this Agreement will be dealt with through mutually-agreed arbitration before designating an exclusive venue for any legal action or proceeding in any way relating to this Agreement.

5.THE COMPANY will pay FREELANCER USD $30 per hour of work on The Project, not to exceed a sum total of USD $6000.00 (200 hours of work time) for the duration of The Project. FREELANCER may at their discretion, bill THE COMPANY for time already spent on The Project since initial contact on December 23, 2004. FREELANCER agrees to bill THE COMPANY on a weekly basis with invoices due each Monday until terminated, and THE COMPANY agrees to pay the invoice amount in full by company check or bank draft to FREELANCER’s address, or PayPal transfer to [email protected] within 15 calendar days. FREELANCER reserves the right to halt work or delivery of The Project until any remaining payments are paid in full.

ACCEPTED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE BY:

THE COMPANY
Signature:
Printed name:
Title:

FREELANCER
Signature:
Printed name:
Title:
Things to point out:

1. There was no written start date or end date, other than the date of the contract (I had to remove the intro of the contract with our names/addresses ... forum said my whole post was too long)

2. "The Project" was whatever work they wanted me to focus on at the moment, so having "clear scope" I guess was a dumb thing to argue with them.

3. The payment terms are $30/hr for work on The Project, not to exceed $6000 or 200 hours of work.

4. I have a lawyer reviewing the contract to make sure I can simply walk away - they've given me a new project deadline of une 19, but they KNOW I haven't got the time to finish the work (I offered them until the end of the month). I also quoted them $10k at the beginning, but they reduced it to only $6k which limited my hours.

5. They have been at least two to three weeks late the NET15 terms they agreed to on every single invoice I've sent them - I even had to resend an invoice because they lost it. Could this be considered breach? I promised to halt my work if they were late, but not cancel the agreement. There wasn't anything written that a late payment would be sbuject to cancellation.

Thanks again for the insight, any other comments are welcome. BTW, I offer this contract to anyone who wants to use it and modify it for their own needs.
 

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