E-Commerce Design; No Contract

[zsolv]

My question is, Company hires Consultant to develop/customize an e-commerce system for internet sales. By default with no contract in place: (i) Who 'owns' the software developed, (ii) Does Consultant have any liabilities to Company, (iii) If Company was involved in a lawsuit regarding the content or the items sold from their website is Consultant liable as well.

 

[loku]

(1) WHO 'OWNS' THE SOFTWARE DEVELOPED
If the consultant is an independent contractor and not an employee of the company, under the facts you gave, the consultant would own the copyright on the system.

(II) DOES CONSULTANT HAVE ANY LIABILITIES TO COMPANY,
If the consultant has agreed to provide a system for internet sales, that is what the consultant is responsible for. Either the consultant has to develop a commercially acceptable working system, or the consultant would be liable to the company to pay the cost of having such a system developed.

(III) IF COMPANY WAS INVOLVED IN A LAWSUIT REGARDING THE CONTENT OR THE ITEMS SOLD FROM THEIR WEBSITE IS CONSULTANT LIABLE AS WELL.
If the system itself was not the cause of the problem the plaintiff had, then the consultant would have no liability.

 

[zsolv]

In this case, with no contract. The consultant is in the state of NC and the Company is in the state of AZ. From what I understand this would then be covered under Standard Common Law. Can anyone explain what this means to the Consultant. Since I am the Consultant, is there anything I need to take into consideration or be aware of prior to getting involved in this?

 

[loku]

There is no “standard common law.” The law in many states is based on the common law, so there is a similarity, and often there are uniform statutes adopted by most states, particularly in commercial areas. The rules I gave in my post are very basic and would be valid contract law in every state.

I would warn you about one thing when dealing with people or companies out of your state: most of the time, if they breach your contract, you would have to sue them in their own state, because your state has no jurisdiction over them. Because of that, you are effectively barred from taking a case on your own (without lawyer’s fees and high court costs and delays) to Small Claims Court. So usually if relatively small amounts are involved, there would be no recourse.