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Can you have a contract without a company?

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#1 totesmagotes   Members   

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Posted 14 May 2017 - 02:21 PM

 Say I hire an artist or a composer to do some work for me. I write up some contracts for them, stating that I own the license to the thing they're producing for me, etc.. Every contract I've seen has been between an individual and a company. Instead of having a contract read:

"This agreement is made by and between [companyLegal] and [Person's Name]"

having read:

 

"This agreement is made by and between [myName] and [Person's Name]"

 

You might be wondering: "Why not just register a business or LLC first?". The answer is, I'm planning on doing that, but I'm applying to a self-employment measure offered by the gov't of Quebec. It's for people on EI who want to start a business. I may not be able to qualify for it if I already have a business registered, and I could get my EI payments stopped if I register a business.

 

I could wait until I have a company registered, but I'd like my artist and composer to start sooner, rather than later.

 

edit: Bolded [myname]


Edited by totesmagotes, 14 May 2017 - 02:22 PM.


#2 Tom Sloper   Moderators   

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Posted 14 May 2017 - 02:33 PM

Of course there can be a contract between two individuals.
-- Tom Sloper
Sloperama Productions
Making games fun and getting them done.
www.sloperama.com

Please do not PM me. My email address is easy to find, but note that I do not give private advice.

#3 Hodgman   Moderators   

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Posted 14 May 2017 - 05:37 PM

Be careful about the wording in that contract. In some jurisdictions you can't reassign ownership of IP, but you can grant an exclusive unlimited license, which is pretty much the same effect, but would not occur with your wording, so you would lose any legal argument about ownership. A lawyer will use wording that's either completely unambiguous in the actual jurisdictions, and/or use wording that's vague enough to cover several legal options with slight diffences across many jurisdictions.

Also, look up the tax requirements in your area. e.g. in my country, me and my contractor's could operate without business registration, but we'd be slugged with a fixed 40% income tax withholding rate on every transaction, instead of 0% per transaction... In both cases you end up paying the same variable tax rate at the end of a financial year, but in the former situation you have to wait to get your hands on that 40% as part of your tax return.

#4 frob   Moderators   

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Posted 15 May 2017 - 01:16 PM

As you're familiar with code, you can look at some code and immediately recognize issues like code that doesn't test for null, data that is out of bounds, and functions that don't do what they claim to do.

Lawyers do exactly the same thing, but with legal code.  They immediately recognize when important stuff is missing, can see flaws where what you wrote doesn't do what you think it does, and so on.

 

Business lawyers are usually fairly cheap, especially for commonplace agreements like this and if you shop around. Spend a couple hundred bucks for some time with a lawyer to get the right contracts. Failure to get the correct contracts in place can cause serious issues. I've seen and even once been at a company where a buyout was aborted because of improper contracts.

Let's say you start to win the game industry jackpot and produce something amazing and popular that rakes in money. It could be five years down the road when your small studio is doing rather well, you get the option to make millions of dollars in a deal only to discover that due to a bad contract you don't own what you thought you owned, and you cannot find the person to get the rights you need. 

Talk to the lawyer. Get the proper forms. Do it right and take the grown-up approach to business instead of pretending to be in business like a young child writing their own pretend contracts.


Check out my book, Game Development with Unity, aimed at beginners who want to build fun games fast.

Also check out my personal website at bryanwagstaff.com, where I occasionally write about assorted stuff.


#5 monalaw   Moderators   

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Posted 18 May 2017 - 11:15 AM

Business lawyers are usually fairly cheap, especially for commonplace agreements like this and if you shop around. Spend a couple hundred bucks for some time with a lawyer to get the right contracts. Failure to get the correct contracts in place can cause serious issues. I've seen and even once been at a company where a buyout was aborted because of improper contracts.

 

 

 

Are you calling me cheap, Frob? ;)

Yes, it's perfectly legal to enter a contract with an individual as another individual. It sounds like you're interested in either a work for hire, an assignment, or an exclusive, royalty free, perpetual, universal, alienable, and sublicensable right and license in and to the assets. And generally the agreement you want will contain all three, each to cover the event of the other not being enforceable. You should have an attorney at least review anything you're putting together, especially when it comes to composer agreements, as there are multiple moving parts you need to consider. 

 


 


~Mona Ibrahim
Senior associate @ IELawgroup (we are all about games) Interactive Entertainment Law Group

#6 frob   Moderators   

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Posted 18 May 2017 - 01:42 PM

Are you calling me cheap, Frob? ;)

Perhaps a better wording than "fairly cheap" is "relatively inexpensive".

I don't know what monalaw or others in the group charge, but for basic business needs the group I use is $150/hr. The occasional work I need done is often one billable hour, rarely two or three hours.  That is far less expensive than the five-digit or six-digit figure needed for a legal defense, or the potentially millions lost on cancelling a major contract or business acquisition.


Check out my book, Game Development with Unity, aimed at beginners who want to build fun games fast.

Also check out my personal website at bryanwagstaff.com, where I occasionally write about assorted stuff.


#7 Kylotan   Moderators   

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Posted 19 May 2017 - 03:02 AM

We also have to be realistic though. A lot of assets are changing hands for much less than $150, or are done on a revenue share basis, so to get even just 1 hour of legal advice could be doubling or tripling someone's costs.



#8 Hodgman   Moderators   

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Posted 19 May 2017 - 05:21 AM

We also have to be realistic though. A lot of assets are changing hands for much less than $150, or are done on a revenue share basis, so to get even just 1 hour of legal advice could be doubling or tripling someone's costs.

Once you've got a contract drawn up you can reuse it for all your contractors, or get a few variations done at the same time. $150 is the retail price of a few AAA retail boxes - if someome's gamedev budget is in that range, they're a hobbyist, not a small business :)
IMHO they should stick to making freeware, or it nit and they need a contract for free, then http://docontract.com was invented to cover this too :D

#9 frob   Moderators   

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Posted 19 May 2017 - 02:11 PM

As in this case, looking to hire an artist and composer and form an LLC to develop a product for market.

The small cost of a few hours of lawyer time is dwarfed by those costs.


Check out my book, Game Development with Unity, aimed at beginners who want to build fun games fast.

Also check out my personal website at bryanwagstaff.com, where I occasionally write about assorted stuff.


#10 dpadam450   Members   

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Posted 19 May 2017 - 02:27 PM

 Say I hire an artist or a composer to do some work for me. I write up some contracts for them, stating that I own the license to the thing they're producing for me, etc..

 

I'd talk to someone quickly that can give actual legal advice. Since it was suggested above about transfer of IP rights or such, I would believe that since you paid them to do work it would be your IP per the contract. Not sure if music is any different.  You aren't paying to license already written music for a movie soundtrack, you are paying them for their time to compose music.



#11 frob   Moderators   

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Posted 19 May 2017 - 04:58 PM

That is generally true if it was a work for hire.  But a work for hire means making them an employee (requiring an employment contract and a host of legal regulations) or a contract to do the work assigning the rights as though it was a work for hire (requiring a contract that assigns rights).

Either way a contract is needed, and the appropriate professional to write either contract is a lawyer.

Back to the original problem: Use the right professional for the job, and if you can't get a lawyer then you probably aren't ready for the real business world.


Check out my book, Game Development with Unity, aimed at beginners who want to build fun games fast.

Also check out my personal website at bryanwagstaff.com, where I occasionally write about assorted stuff.