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Can I get a critique on a Profit Sharing Agreement?

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So I recently started a Hobbyist Project on Game dev, to turn a project I've already created into a video game. I've recently hired a programmer I think looks promising and we are getting to work on the project. I don't expect profits and my main goal is to complete the project, but just in case I figured I should start a contract between us.

 

I know it's a good idea to just get a lawyer, but for a project that I have no *expectations* of making money, I'd like to keep the costs down. Someone suggest I just make a contract in plain english, so I did, I'm wondering if anyone here can critique it or offer advice. One possible complication is that I am in Canada and my programmer is in Saudi Arabia.

 

The basic thing I'm trying to get across is:

 

1) I still own the rights, including whatever he makes

2) We both get paid if the game makes money

3) It lasts for 5 years.

 

Anyways, here it is:

 

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This Profit Sharing Agreement is entered into as of (Date) by (My Name) located at (Address) and (Second Party), both of whom agree to be bound by this Agreement.

 

Whereas, (My name) has developed Wars of Keridor (“the game”) and holds ownership of all current intellectual property rights in this product, in addition to those developed by (Second Party) for the creation of the game.

 

(Second party) may not use works created for the game unless for a function that does not compete or hinder the sales of the game, or use its likeness in anyway.

 

The contract will be binding if the game is sold with coding created by efforts by (Second party). If the game is sold with no work created by (second party) the contract will be void. The contract does not apply to any derivative works, including but not limited to expansions or sequels where (second party) does not contribute additional work.

 

(My name) and (second party) will share profits realized from the sale of the game as follows:

 

% of net income will be kept by (My name)

% of net income will be kept by (Second party)

 

(Second party) will be paid any profits realized at these times:

 

At the end of each month following the release and sale of the game, if the game makes $250 Canadian or more within that time period.

 

Otherwise, at the end of each 3 months following the release and sale of the game, if the game makes $250 Canadian or more within that time period.

 

Otherwise, at the end of each year following the release and sale of the game.

 

This profit sharing contract will become null and void at the end of 5 years of the release and sale of the game.

 

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Thoughts?

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My thoughts are that if you really want to go down this route, don't ask for advice on the internet. Contact a lawyer with expertise in contract law.

 

You'll have to pay for this, but if you really think you're going to make money, this is the way forward.

 

Good luck!

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If you're going to cheap out and avoid a real lawyer, try this: http://docontract.com/

 

It can generate you a (probably) more legitimate contract, e.g.:

Agreement

This agreement is made by and between My Company LLC (or "My Company" in short), based 123 Fake St, and Mr Programmer (or "Programmer" in short), based 456 Faker St.

With this agreement, Programmer agrees to perform services for My Company for the project tentatively titled 'Wars of Keridor' on the following terms and conditions.

Services and deadlines

The services that Programmer will perform for Wars of Keridor include:

  • Programming.

My Company needs to approve the work resulting from the services before it is considered complete and payable, and My Company will approve or disapprove the work as soon as possible. Programmer is aware that minor adjustments and fixes to the work are also part of the services. The deadline for Programmer to complete the services is the release of the game.

When Programmer becomes aware that Programmer is unable to complete the services on the deadline, Programmer will immediately notify My Company. Together, My Company and Programmer can agree to set a new deadline or redefine the services to be performed for an existing deadline. If Programmer is unable to complete the services on the deadline and My Company and Programmer cannot agree on a new deadline, My Company can decide to no longer use Programmer’s services.

If My Company does not pay on time, Programmer can delay deadlines with as many days as My Company delays the owed payment. If My Company wants Programmer to perform services that are not listed above, My Company and Programmer can agree to add services to this agreement or sign a new agreement.

Compensation

 
Before Programmer performs any services, Programmer will estimate the hours needed to complete individual tasks of the services and share these estimates with My Company. Programmer can begin to work on individual tasks after written approval by My Company. When Programmer becomes aware that the hours needed to perform a task will be higher than estimated, Programmer will immediately make a new estimation that in turn needs written approval by My Company. When Programmer completes all individual tasks of the services, My Company agrees to pay Programmer 50 CAD for every hour spent within the estimate approved by My Company.
 

Starting from the release of Wars of Keridor, My Company agrees to pay Programmer for 15% of My Company’s gross receipts for Wars of Keridor once every month, until five years after release of the game. Gross receipts is defined as the money that My Company received from sales or other uses of Wars of Keridor on [platforms]. My Company will share an overview of these gross receipts with Programmer when Programmer wants to verify the payment amount.

For every month, if the amount that Programmer will receive is less than 250 CAD, it will add up to the amount of the next payment term and My Company will not pay this term. When Programmer stops receiving a percentage of the gross receipts, My Company will pay any remaining amount owed to Programmer.

All amounts in this agreement are excluding VAT (value added tax). My Company will make payment by bank transfer within 30 days from the day My Company owes Programmer the payment. Programmer will be responsible for all expenses made while performing the services under this agreement. Because Programmer is not an employee of My Company, Programmer is not entitled to worker's compensation, retirement, insurance or other benefits afforded to employees of My Company.

Rights to the work

Programmer fully transfers all rights to the work resulting from the services to My Company, including art, images, designs, audio, videos, code, typography, and text. If the law applicable to this agreement does not allow for the transfer of rights to the work, then Programmer gives My Company the exclusive worldwide right to use the work, not limited in time and for every distribution platform. Without permission from Programmer and without paying additional compensation to Programmer, My Company can distribute the work, make changes to the work, base other works on it, give and transfer rights to others, all as part of Wars of Keridor or as part of something else.

Programmer will make sure that My Company can make full use of the work, which means that Programmer will only deliver work that Programmer made, or work from others if it comes with a license that allows the work to be included in Wars of Keridor. If Programmer delivers work to My Company that is claimed to infringe the rights of others, then Programmer will defend My Company against these claims, and Programmer is responsible for all damages My Company may suffer.

My Company agrees to credit Programmer in- and outside of Wars of Keridor following the industry standard. Programmer can use the work resulting from the services for Programmer's portfolio, but if Wars of Keridor is still unreleased, Programmer needs written permission from My Company.

Confidential information

Programmer agrees not to disclose or use any confidential information of My Company or Wars of Keridor without My Company's written permission, both during and after the term of this agreement. Confidential information is defined as information that My Company has not made public.

In case of a disagreement

Both My Company and Programmer cannot end the agreement without a good reason. In case of a disagreement, My Company and Programmer will do their best to respectfully resolve the disagreement. If My Company and Programmer cannot find an immediate solution for their disagreement, and My Company or Programmer wants to end the agreement, they need to give a seven day deadline to get to a solution. During the time that My Company and Programmer try and resolve their disagreement, they cannot stop performing the obligations from this agreement they do not disagree about.

If My Company and Programmer did their best to resolve the disagreement during these seven days but could not come to a solution, this agreement can be ended, and any rights that My Company already paid for before the disagreement stay with My Company. My Company and Programmer can come to an additional agreement about any rights that My Company has not yet paid for.

The laws of My Home State, Home Country govern this agreement and legal disputes can only be resolved in My Home State, Home Country.

Signatures

My Company and Programmer have both signed every page of this agreement, and each have their own copy of the signed agreement for future reference. This agreement starts on the latest date that My Company or Programmer signs.

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