Website Development Liability

[jessebhunt]

Hi Everyone:

First of all, I understand that most of us here are not lawyers. However, I thought maybe some of you had experienced similar situations, and could therefore offer some insight.


I had to sign a non-disclosure agreement, so I'm limited on how much I can say. So, I'll keep this conversation general and exclude the details.

Here's the general idea of my problem:

I met with a potential customer today who is wanting a website developed to promote his soon-to-open, brick & mortar storefront. Everything on the website would be perfectly legal, so no problems there.

The problem, however, is with his brick & mortar store. His idea is quite unique, and actually, it appears to be a very good idea. I'm just not sure that it is legal to do what he's wanting to do within the store. (Please note... it's not unethical, I'm just not sure that it is legal within the local laws.)

He tells me that he has consulted with his lawyers, and they've worked out all the details. However, it would take me MANY, MANY hours to verify this on my own.


So, here is my question:

If I developed a website for his business, and it later turned out that their business model is not legal; could I be in a liability because I developed his website?

I may still consult an attorney about this issue. First, however, I'd like to hear your opinions and any related stories.

Thanks in advance.

[jonoxer]

You really know how to pique our curiousity, don't you! Now *everyone* wants to know exactly what they're intending to do ;-)

First off: if you're in doubt, definitely see a lawyer. There are two levels you could consult with them on: firstly, whether you have any liability exposure if the client does end up with legal problems, and secondly whether the client's business practises are themselves illegal. It should be vastly easier to determine the first rather than the second.

If you can be assured that you don't face any potential liability directly irrespective of the legality of your client's actions (and dependent or your foreknowledge of those actions) then it becomes more of a moral decision, ie: whether you have satisfied yourself to the best of your ability / knowledge that what your client is doing is legal. Obviously it's impossible for us as developers to know everything that a client is going to do or has done in their business. Just because a client does something illegal doesn't make you automatically liable because you provided some service to them at some point, unless your provision of that service was specifically to assist them to perform that illegal act.

You can't ever really be sure that a service provided with the best intentions won't be misused. For example, maybe you provide a client who is a photographer with gallery software that you wrote. You finish the job, everything's cool, you go on with your business and they go on with theirs. But what you *didn't* know is that they supply kiddie porn on the side, and they use the gallery you created for them to undertake that illegal (and reprehensible!) activity. That would be a nightmare scenario of course because if you found out about it you'd feel partly responsible, even though you didn't provide the software for that purpose. You gave them a tool that's purpose-agnostic, but they used it for a bad purpose. Not your fault, but still a bad situation to be in.

Anyway, hope those random thoughts help!

[jessebhunt]

If you can be assured that you don't face any potential liability directly irrespective of the legality of your client's actions (and dependent or your foreknowledge of those actions) then it becomes more of a moral decision, ie: whether you have satisfied yourself to the best of your ability / knowledge that what your client is doing is legal.

To be COMPLETELY honest, I don't care whether the clients operation is legal or not. It's not morally wrong, or anything like that, so I don't have any ethics concerns which steer me away from the project.

My ONLY concern is that I'm not placing my self in a liability which could result in fines or other penalties.

Just because a client does something illegal doesn't make you automatically liable because you provided some service to them at some point, unless your provision of that service was specifically to assist them to perform that illegal act.

Agreed. So, what I'm trying to figure out is whether or not helping them to develop a marketing tool for this business constitutes "assisting them to perform an illegal act."



Similarly, could a yellow page directory be liable for assisting in the marketing of an illegal business???

[jonoxer]

My ONLY concern is that I'm not placing my self in a liability which could result in fines or other penalties.
...
So, what I'm trying to figure out is whether or not helping them to develop a marketing tool for this business constitutes "assisting them to perform an illegal act."

Yep, and I think that's a question that only your lawyer will be able to answer with any authority. However, I suspect ...

Similarly, could a yellow page directory be liable for assisting in the marketing of an illegal business???

... that at least part if it will come down to foreknowledge, to the extent that is reasonable to ascertain or expect. I'm not a lawyer by any stretch of the imagination but in some basic training I did many years ago the impression I got is that many legal judgements are applied based on an assessment of what a "reasonable person" would have done in the same circumstances, whatever that means. So if someone called up the Yellow Pages and said "I want to place an ad for my people smuggling operation and drug distribution service" then the YP would probably be liable if they carried the ad, because a "reasonable person" should have understood that the advertised service is illegal.

So, see your lawer!

[Ravedesigns]

Hmmm..I'm still trying to figure out how something that's ethical may be illegal, but in any case, you might want to read this page from the FTC Website especially this part...

Sellers are responsible for claims they make about their products and services. Third parties - such as advertising agencies or website designers and catalog marketers - also may be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims.

• Advertising agencies or website designers are responsible for reviewing the information used to substantiate ad claims. They may not simply rely on an advertiser's assurance that the claims are substantiated. In determining whether an ad agency should be held liable, the FTC looks at the extent of the agency's participation in the preparation of the challenged ad, and whether the agency knew or should have known that the ad included false or deceptive claims.
  

Now that may or may not apply to what this client is doing in his store, but I'd be very careful if you think something you'd call unethical is going on.

Cheers,

Steve

P.S.

Similarly, could a yellow page directory be liable for assisting in the marketing of an illegal business???

lol - I'm still trying to figure out how they get away with advertising for escort services and those shady massage parlors that they promote.

[beley]

Well, since I don't know anything about the industry or his business I won't even get into why's. I'll just answer your question...

The indemnification cluase in your contract should protect you against lawsuits, but as far as legal action I have no idea. However, is the website in any way illegal, even if the business is?

If it is found that this business is illegal, and you knew this, then I think you could be held partly liable.

If it were me, I'd steer far away, but that's just me. There are a lot of "examples" being made every day - you don't want to be one of them!

[Matt Mickiewicz]

Everything is insurable.

In Australia for example, in order to bid on Government projects/work, a company is required to have errors & ommissions insurance.

You can insure an ecommerce Website for outages, your web development work for errors & ommissions, media liability (if you're a publisher), network liability (if you own a hosting company or host clients websites) and much more. If you have any substansive assets, or you make a full-time living off the web, it's worth protecting yourself and your business.

Read up:
Cyber Liability http://www.insurenewmedia.com/pages/cyberliability.asp
Intellectual Property http://www.insurenewmedia.com/pages/...-insurance.asp
Media Liability http://www.insurenewmedia.com/pages/media-liability.asp
Tech Errors & Ommissions http://www.insurenewmedia.com/pages/...-omissions.asp
Network Liability http://www.insurenewmedia.com/pages/...-liability.asp

US Insurance Websites:
http://www.techinsurance.com/default.aspx
http://www.insurenewmedia.com/

[jonoxer]

Everything is insurable.

Not quite. You can't insure against criminal liability!

"Well judge, I don't really care that you found me guilty of deceptive conduct under section 56 of the Trade Practices Act. I've got insurance against that!"

In Australia for example, in order to bid on Government projects/work, a company is required to have errors & ommissions insurance.

One of the requirements of being placed on the Australian Treasury Department's Preferred Suppliers list (which is used by many other departments, although some run their own Preferred Supplier program with different criteria) is $10m professional indemnity insurance, but that sure wouldn't protect you if you did something illegal.

[busy]

You could ask for a letter from his lawyers to verify that they reviewed the legality of everything. Since they already did so it shouldn't be a big deal right? I would imagine a letter from a lawyer verifying what you are doing is legal would be a pretty strong argument that you had covered your bases.

[jessebhunt]

Hi Everyone:

Thanks for all of your advice.

I consulted with my attorney today. His advice was quite simply to leave this project alone.

He mentioned that my participation in the marketing of this venture (if it turned out to be illegal) could result in a conspiracy indictment. He went on to say that since I live in one state, and the customers business is in another, that I could POTENTIALLY face FEDERAL conspiracy charges.

As if this really needs to be said... Federal conspiracy indictments don't sound like a lot of fun!

So, even though this project could have resulted in a very nice paycheck, I'm going to contact the customer and politely decline the job.

It's simply not worth taking a chance on losing my assets, and potentially facing criminal charges.

Thanks again for taking the time to share your opinions.

[phantomceo]

do teh job...charge him a premium and transfer ALL copyrights, source code and liabilty to him by doing this job as "work for hire" and have his lawyers draft a letter releasing you of any responsibilty.

then its his problem. as long as its not porn, alcohol, tobacco, gambling or firearms...your prob ok

if it makes you uneasy...do as your atty says.

D