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  1. #1
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    Who owns site (non payment)

    Per a verbal agreement with a close friend of many years I built a large commercial website which included online sales of products, etc. There has also been "extensive" SEO and various other marketing services provided. All of this was done via a verbal agreement that all of this was in exchange for a percentage of the company. Now, two years later (I already am aware of how asinine this whole thing is) the owner/friend has renigged.

    My question is can I take the site down completely? It was never paid for, ever. No money ever exchanged hands, except for a modest hosting fee was paid by owner. Technically who owns the site? There were no agreements in writing, although I did keep copies of all emails that discussed a future percentage, etc. for the past two years. Now, I want to take the site down, reverse my work and cut my losses.

    Does the owner have any legal rights to the work I've done even though no money was exchanged and no contract was ever signed?

  2. #2
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    You've already acknowledged that the site was paid for by percentage, not dollars so the fact that no money exchanged hands is neither here nor there. The crux of the issue is severability rights... and what you can or can not do. With no stated agreement you're in a rough place and could possibly face some sort of lawsuit if you just removed the site, especially after 2 years of having it online with your consent. Your best bet is to speak to the owner and/or an attorney (perhaps in reverse order) before you do anything. As much as we'd all love to give advice, there are bound to be a lot of legal idiosyncrasies that have to be addressed and without knowing them it's just about impossible to be able to give you any sort of answer other than to try and resolve it directly or with the support of counsel.

    Keep in mind pulling the site under any circumstance is likely to cost you the friendship (although if he reneged on you that may not matter), think about that and be sure you don't mind the tradeoff before you take any steps.

    Good luck!
    - Ted S

  3. #3
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    Hello Ted, thanks for responding.

    I think you misunderstood or perhaps I wasn't clear. I have NOT received a percentage. I was to receive a percentage in lieu of any payments for my work, but now the business is getting ready to really become successful, it is no longer in the cards as they have brought in another large partner and if I was given the percentage that was discussed since the beginning the owner would actually have less ownership than his partners. Funny how that works out. My percentage was only going to be a few points, but since 1/3 was given to another partner (non web related), apparently our deal is no longer in the cards. PLUS to top it off the new partner has not been told about the verbal agreement we had since the company first launched.

    So...besides a mere few dollars in hosting paid for, I've done all of the work all per this future arrangement and now it's no longer applicable.

    This is my hard lesson yes, and I'm not complaining. Since our verbal agreement is no longer applicable, I'm curious if I can just pull the site down and cut my losses. I sure don't want to have someone take over the two years of work I put in to it, he can just start over.

    Thanks again.

  4. #4
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    It doesn't sound like you have any grounds to shut down the site, and it wouldn't make sense to do so. If you are trying to get ownership of it somehow, it must be worth something so why would you want to kill it? If you 'reverse your work' you are essentially causing damages to him and you suddenly could become liable for his losses. How does that 'cut your losses'?

    Just because you never signed anything doesn't mean that a contract isn't in place. If you can show emails that document the fact that the two of you had a clear understanding that your work was going to be compensated for through some ownership of the business interest AND your emails show that both parties had a clear and compatible understanding of that agreement AND the emails show that both parties willing entered in to that contract and intended to exchanges the services for equity as you described, then it's possible that you DO have a contract.

    A signed agreement is easiest to prove, and a contract is a contract and if you can prove that a legal contract existed, it won't matter if it was signed.

    IF such a contract is found to be in existence (and this is getting into contract law and would depend on your evidence and the opinion of a court) THEN you could argue that unless the other party grants you the company equity that you were promised then they are nullifying the contract and the work you did shall remain yours. You could also compel them to give you the equity that was agreed upon as part of the deal, provided you came through with your part, too.

    Of course, there are lots of details here that could change things but this really begs the question: what do you want? do you want equity in the company? do you want cash? do you want your work back?

    I would first try and figure out if a contract exists legally. If one does, the next step depends on the value of the trade. If it's just a bit, you could go to small claims court. If it's more, you have to think it through more.

    Either way, 'cutting one's losses' isn't the same as 'screwing someone back' by taking their site down. So, take a sober look at where you are and what to do next.
    The fewer our wants, the nearer we resemble the gods. Socrates

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  5. #5
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    Yes I've kept most the emails which stipulate our discussions. Technically I have a contract in my opinion. By cutting my losses I mean not trying to screw anyone. Certainly not. I'm talking about taking it down because not only was I not paid but I will essentially NOT get paid and NOT get a percentage now. Cut and dry. Will the company be worth something? I'm certain of it.

    I'm not interested in going to court and wasting the next few years fighting in court. Could I win? I'm confident yes, but I'm not really interested. I'm only interested in moving past it. I don't want to GIVE them the site for FREE. The first year I figured I did approximately $50K in work.

    I want to be done. But not at the price where I walk and all else belongs to them.

  6. #6
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    If it's $50,000 worth of work, you have something to bargain with. I would recommend talking to the owner you made the verbal agreement with and explain your situation. Unless he's fulfilled his end of the "contract" the ownership and copyright of source files is a very gray area, and you could very well own the copyright to the site and files you developed since you were not compensated as an employee and did not sign them over to him in a contract.

    That would be for a judge/jury to decide, but it does give you leverage. I would offer him two choices - make you a partner (not very likely) or cough up a comparable fee for licensing the website you developed.

    Maybe settle with him for somewhere between the development costs and what you could expect to earn from the partnership in 5 years. If he doesn't want to settle, I would highly recommend contacting an attorney. I wouldn't let that much work turn into just a life lesson. Find out if you own the site and if so, take whatever action necessary to get payment (even if it means taking the site down or suing).

  7. #7
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    Don't destroy any value by just taking the site down. It will get you in trouble if you don't check your legal standing first.

    Send an invoice for the work you've done at market rate. Say that since it seems like your "friend" will not pay you in equity, at least it should be done in cash. The bottom line is that you have delivered your work, but not received payment. So send it to small claims court if necessary.

    You're doing very little wrong by sending an invoice. By it you're stating your claim and it's up to your friend then to respond to it/dispute it. More over this invoice could/should be presented to the new owner. If he has no knowledge of your agreement with your friend he too has been tricked, because you got a claim against the company that affect it's financial standing. It makes the company less worth. He should know about that.

    IANAL
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  8. #8
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    Quote Originally Posted by Pacifer View Post
    So send it to small claims court.
    Small claims court usually maxes out at $5000-7500, and I'm not sure he wants to settle for that. He is probably looking at a full-on lawsuit.

  9. #9
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    Quote Originally Posted by Pacifer View Post
    Don't destroy any value by just taking the site down. It will get you in trouble if you don't check your legal standing first.

    Send an invoice for the work you've done at market rate. Say that since it seems like your "friend" will not pay you in equity, at least it should be done in cash. The bottom line is that you have delivered your work, but not received payment. So send it to small claims court if necessary.

    You're doing very little wrong by sending an invoice. By it you're stating your claim and it's up to your friend then to respond to it/dispute it. More over this invoice could/should be presented to the new owner. If he has no knowledge of your agreement with your friend he too has been tricked, because you got a claim against the company that affect it's financial standing. It makes the company less worth. He should know about that.

    IANAL
    again - DONT send an invoice at your market rate. there was NEVER an agreement that you'd be paid at market rate, so why would you send an invoice? keep things simple by defining the contract that you believe is in place and following it exactly.
    The fewer our wants, the nearer we resemble the gods. Socrates

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  10. #10
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    Brandon I'm not sure if I agree with that analysis - it seems to me that if the poster thinks that he did $50,000 of work that is totally irrelevant because there was never any agreement that he would do work for money, at any value. So, such a valuation of his work has no place in this deal.

    Instead, an agreement was created where work would be done in exchange for equity in a company. That could be worth much less or much more than 50k, and if in fact a contract exists a judge would attempt to determine the real value of the company so that the percent-value could then be awarded to the working party.

    I definitely agree that his choices are to demand partnership (or ownership) OR to get a cash value for that ownership.

    As for taking the site down:

    Even if a contract was breached, I don't see any grounds to take down the site as this is sort of like burning down a house that you built for someone because they are late paying you for the labor. The debt is separate from the house.

    If he takes down the site, the only basis would be because the ex-partner refuse to compensate him according to the contract and he would be 'taking the work back'. But, unless he can only take down the parts of teh site that he worked on, he might causes material damages in excess of the original deal.

    I will tell you one thing: I have dealt with lots and lots of situations like this as a business consultant and the fact that you want to 'cut your losses and walk away' with nothing doesn't support the concept that you have a contract and did 50k of work (as you say). If in fact you have a contract and did 2 years of work, it's hard to imagine that you wouldn't be looking at more reasonable legal moves that might result in a recover for you.

    Nobody 'wastes years in court' over a 50k case, and if the site is worth something as you say, it's presumably worth more than 50k so you stand to gain much more. It sounds like either you are very emotional about this or you are not giving an accurate picture of what's going on.

    Either way, you simply need to

    1) determine if you have a contract or not (not your opinion, a legal analysis based on basic contract law. this is easy to do)

    2) determine the value of your claim (NOT the work you did, but the amount you are owed per the contract you claim exists)

    3) make a demand for that value, in writing, with very clear language and supporting facts and evidence. explain what your next steps will be and when

    If you have a legit claim, you shouldn't have a problem. Contract cases like this aren't very hard when there are only 2 people involved. The fact that the company is being purchased and might grow is actually GOOD for you - it means that your deal is increasing in value.
    The fewer our wants, the nearer we resemble the gods. Socrates

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  11. #11
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    Again, Sagewing comes to the rescue with excellent advice. He makes some really good points. I think if after you've done #1 and 2 he suggested, if you're owed any substantial sum of money, you'd be foolish not to pursue it in court.

  12. #12
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    Do like Sagewing says. I missed the significant size of this. I hope that this wasn't your main income these last two years. Consult a lawyer.
    George Skee
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  13. #13
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    I appreciate all of the advise that I have been given. I've been seriously considering speaking to a business law attorney. The company is not being purchased. The owner started out w/a in law as the bank in essense, then began talking to me two years ago stating that I would be workign for a percentage of the company in lieu of payment. I agreed and began work. I've created everything on the site. The only thing the company supplied was product photos, pricing, and things of that nature.

    Last month they brought in another partner for a 1/3 of the business, whom is a larger bank, so to speak. So for the past year I've inquired numerous times about getting a contract and I was always appeased and it has drawn out until this point. Now the owner (whom again has been a long time friend) states that he has not told the new partner of our agreement and that we would need to "discuss" this again. The company is changing financially at this time.

    No, this was not my source of income for the past two years. A side job which I worked on as much as any of my "real clients". :-)

    I think in short I should see an attorney because after all of this time being put off due to so much going on with the business I'm simply tired of all of it and want to get past it. Although I must admit I have no interest in basically "giving" them the site with all of the work I've put into it. I don't think I'm being emotional about this at all. I mean if I'm not going to get paid then I don't believe it is theirs so to speak and it would essentially be the company getting all of my time for absolutely no cost, which was never agreed upon.

    To be honest I'm not worried to much about what their rights are in regards to the site because while I don't have anything legal to protect myself, they don't either. All of us have invested in one way or another into rebuilding this company.

    One reason I don't want this to go to court is that the owner lives in one state, the relative (whom is an attorney, lol) lives in another, the new partner lives in another state and myself in another. There are essentially 4 main players that all reside in different parts of the country.

    I suppose I just need to get some unbiased opinions.

    Thanks to all of you.

  14. #14
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    Quote Originally Posted by akfletch View Post
    To be honest I'm not worried to much about what their rights are in regards to the site because while I don't have anything legal to protect myself, they don't either. All of us have invested in one way or another into rebuilding this company.
    You are making conclusions that aren't correct. Based on what you've described, you absolutely do have legal protection and rights (as do they) and there is certainly a way that this can all be sorted out in a legally sound manner. To say that you you don't have 'anything legal' to protect yourself doesn't make sense - if you put forth a claim in court and prove to a judge that you are owed something then that sounds pretty legal to me. There is hundreds of years of case law and current law to support you and a reasonably accessible legal system in the US so you are actually lucky that you have so much to govern the situation considering there is no written agreement.

    As for the part about them being in 4 states, that is a simple matter of determining venue which happens all the time in inter-state disputes. You are not the first one to be involved in a legal issue that spans multiple jurisdiction. You need only to make a determination about which state's law would govern the agreement based on the circumstances and file your case in that state - this is an ordinary thing in contracts law.
    The fewer our wants, the nearer we resemble the gods. Socrates

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  15. #15
    SitePoint Guru El Camino's Avatar
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    If not a formal contract do have any email discussions re your arrangement?


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