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Having 2 names, instead of 1 on a contributor agreement?

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Hello,

So a bit ago I got a contributor from my project.

 put myself down as "The Company", and have people sign the IP over to me as the project administrator.

 

I asked the lawyer I bought the contract from if it would be possible to put 2 names down as "the company" instead of just one.

He said he that would make things too complicated, and If I wanted to do that, why not just start a company with the person as partner. 

 

That is what I intend to do, but we're not quite there yet.

 

So in the meantime, is it possible, or advisable to put 2 names down on the contract that people are signing their IP rights over to?

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Written contracts generally are not there for when things are working out. While things are working the contract is in the file cabinet gathering dust.

The contracts are there for when things go bad.

When things go bad people start going back to the contract to figure out exactly who is responsible for what, exactly what must be done, and the exact details of who is responsible for what.

When a contract says multiple people are responsible for a single thing it gets complicated. Which person is responsible? If there are problems, which do you call upon? If things go extremely bad, which do you sue? Making to people equally and jointly responsible is possible, but the lawyer is right that it needs some specific language.

Making two people unequally responsible in an agreement with a third, so both are responsible for different things, would require a major revision to most contracts. It is basically two or three contracts between three people combined: contracts between A&B, A&C, and possibly B&C. Each with their own responsibilities, each with their own termination clauses. Don't do that, because if things get bad, it will be difficult to figure out exactly who is responsible for what.

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Having the rights assigned to two people doesnt really make sense? What would happen if the two people disagree? You'd need a separate agreement to handle that, which I assume is what your lawyer means with it complicating things too much.

Forming a separate legal entity from the two people, which will own the rights is the normal and straight forward way to handle situations like this

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It would probably be just fine. But I wouldn't recommend it.

 

First by transferring the IP to both people, you are probably giving two people complete control rights. Which is really only a problem if you don't like what the other person is doing.  You have no power to stop them. If they are part owners of a company that owns the IP, depending on the bylaws, they can't act without your consent.

 

Second, the contract is only properly worded for 1 entity. For example if you had "Company will pay IP-Owner $1000 for the IP"  that is clear enough, but if you change it to "Jack and John will pay IP-Owner $1000 for the IP" suddenly you have some contract interpretation problems.  Are Jack and John each paying $1000? Are they splitting the bill? How should it be split?  So if you did change it to two people there would probably be several instances where this kind of thing would be a problem.  

 

You could transfer the IP to you right now and then when you form a company transfer the IP to the company. If you do it when the company is formed it would not be considered a sale or exchange so it is a tax free event.

 

Or if you want you could just rewrite the contract to make sure it makes sense with two people.  This is actually a really bad option because if anything goes south, you'll whole project wont just go down hill, it will straight up be pushed off a cliff. 

 

But there is no law saying you can't sign a bad contract.  You are free to sign anything you want. 

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