
Don’t Sign That Non-Disclosure Agreement Yet - ohjeez
https://shift.newco.co/dont-sign-that-non-disclosure-agreement-not-yet-anyway-27ef5557fd9a#.q4y4mlkri
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chollida1
I'm not sure if this is good advice or not. I am most certainly not a lawyer.

I will say that when dealing with companies in a bankruptcy or wind down
situation be very careful.

Often you'll find that their bankruptcy trustee will expect you to follow to
the letter of the law the contract you signed while at the same time they'll
use the shield of bankruptcy to their advantage to try and get out of their
own duties.

I've seen this play out more than a few times. Usually with a small company
providing a service to a larger one. When the small company goes under they'll
still try to collect all revenue due from the larger company while telling the
larger company that they are creditor 128 in line to collect what they are
owed.

I think Joel Spolsky alluded to something similar, though much more dubious,
where in the first dot com companies would sign contracts where it would be
one company selling $200,000 of services to another, but in order to beef up
the revenue of both companies they'd also do a "swap" of services so the
contract would end up looking like A pays B $1,200,000 and B pays A
$1,000,000.

So in theory things would net out to A paying B $200,000. However if A went
bankrupt it would still try to collect the $1,000,000 owed to it by B but do
their best to get a hair cut from anything they had to pay.

~~~
freddyc
I personally don't think it's great advice - you're effectively working on the
promise of a third party you don't know without any structure around
deliverables, timing, payments etc. What if they turn around in 6 months time
and say "Oh! We don't really need that. But no worries, we don't have a
contract so we're all good."

Better advice IMO is for service providers to spend a little money up front
and develop their own standard form contract that they can serve up at the
beginning of any engagement. If the buyer insists on using their form (say, if
they're a big company) then at least they have a template to compare it to and
make sure they're covered in the areas that matter.

~~~
khedoros1
This advice seems to cover a corner case: If you might not be paid, don't put
yourself under contractual obligation to complete the work. It opens up
problems for both sides, though. I thought that proof of a signed contract
would've been a given in this situation before any information would be shared
and before the work would commence. It seems like a no-brainer.

The NDA itself? Well, if they aren't forcing you to sign that, I'm not so sure
why you would.

~~~
walshemj
Surly not being paid means the contact is frustrated

~~~
soreal
IANAL and this is not legal advice

But yes, generally the terms of a work-for-hire contract specify an exchange
of money in return for the work

However, most NDAs are completely independent of getting paid. Thus the
author's advice to sign the main contract but leave off the NDA.

~~~
geoelectric
AFAIK, work for hire is separate from being contracted as well. Unless things
have changed in the last 10-20 years you can have a valid contract to spend
time and deliver software without the copyright assignment that comes with
WFH.

In fact, this was common practice for doing enterprise consulting to small
businesses when I was doing it at the start of my career. You could frequently
reuse layouts and components between jobs since it was mostly basic 4GL+RDB,
and it was typical to have no work-for-hire clause at all or a very limited
one excluding reusables; or to charge a higher price if the client insisted on
the clause to cover redevelopment.

I believe this was also the model that early open source companies such as
Cygnus (who I also worked for) was built on. Large companies paid us to port
the toolchains to their systems, but I believe the copyright was retained by
Cygnus (and presumably reassigned to the FSF).

If someone had work for hire in a separate agreement, and I was otherwise
inclined to take the "wait until requested" route, I'd probably wait on
returning it too. I don't think I'd sit on the contract that said I'd get paid
though, and I'm sure they're usually combined. I just wouldn't point out the
omission if I got a contract without one.

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xenity7
This isn't good advice in general - sure, in this situation you happened to
have all the leverage because you were developing a core product of the
company they needed to own to raise funding, but that's a corner case.

It's just as likely the situation be flipped and the client refuses to pay
because there's no contract. The contract is there to protect both parties.

Starting work without a contract puts you at risk as a consultant - maybe the
funds haven't been approved yet and the contract will never be approved, maybe
the ultimate approver will disagree with the scope and you'll go down the
wrong path with your day to day contact ...

Most companies hiring contractors are going to be larger than a handful of
people and it's dangerous to assume you understand the internal dynamics as an
outsider.

Just like a client will check that you can uphold your end of the contract by
checking your references and qualifications, it's ok to ask a smaller client
like a startup for assurances that they can actually pay.

~~~
wvenable
I think both you and the author have valid points. If the contract is
favorable to you, then you'll probably want to sign it. And pretty much all
contracts should be favorable to both parties (if it isn't, then don't sign it
until it is).

However an NDA isn't favorable to you on it's own. If they forget to make you
sign it, then it's a slight net-positive to you. But normally you'll sign an
NDA to get their business which is favorable to you and a reasonable exchange.

I think as a general sniff test, it's not a bad one. Both parties should be
equally responsible and this is one way to perhaps demonstrate a lack of
responsibility from the other party. Conversely, if you want someone else to
sign your contract, you should follow up to make sure it happens.

~~~
xenity7
I agree with you that often the consultant gets nothing out of the NDA (bar
the case where the consultant is sharing a proprietary method). Larger
consulting firms actually often include their own form of NDA in engagement
letters forbidding the client from sharing work product with third parties
without permission.

The NDA is typically separate from the actual engagement letter in my
experience, and to your point I've actually worked on projects where we signed
the engagement letter but "forgot" to sign the NDA and that piece fell through
the cracks

We scrupulously acted as though we had though to prevent the reputational
damage that would come from violating confidentiality - NDA or no NDA.

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edblarney
There are far more problems than NDA's and IP ownership going on here.

Moreover - I don't think the failure to sign an NDA would change the nature or
'who owns what' for the most part (unless it governed paid work, which most
NDA's don't - they are simply 'non disclosures' i.e. 'keep this a secret' type
docs).

Finally - it's hard to imagine a contract that specifies that the code that
consultants write is 'owned' by the company - when payments are not made.

A consultant could require that the code does not belong to the company until
it's paid for, legally.

More pragmatically - all legalities aside - if a company is not paying for
services rendered, it's easy enough to withhold the code.

If the company wants to move forward - they can pay for it. The last thing a
startup wants to do is start a big legal process and go through courts to 'get
access to their code'.

In the end all these problems are not due to legal documents, they are due to
people not being paid for services as per their agreement.

~~~
karmajunkie
I've seen a lot of contracts try to do exactly that—IP ownership is the
company's regardless of outstanding bills. I refuse to sign those clauses, of
course.

Most likely what would end up happening is that the startup wouldn't be able
to close any new investment if they were in this situation.

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edwhitesell
In my experience, it's far simpler to have a standard contract where IP isn't
owned by the customer until the project is paid in full.

NDAs are well and good, they make lawyers feel more comfortable. But, you
can't "own" something until you "pay" for it. Two things, not related.

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AcerbicZero
I'm inclined to agree. I don't see any reason to sign an NDA unless it's
actually required. If the other party doesn't care enough to validate, they're
probably not using the NDA for its intended purpose anyway.

~~~
edblarney
Though it's a good idea to not sign an NDA unless required - any company worth
their salt will (very reasonably) ask you to sign and NDA if you're going to
be working on their stuff.

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wiz21c
I don't like the way they did it... That's not karma-positive. They should
have insisted on signing the thing before starting, a contract has two
parties.

I experienced first hand that situation. And all the anger that came out of
that is simply too much for me. Moreover, if you trap someone like this, he
might fight back with other parts of the contracts you have not read
carefully, or even with innocuous mails or whatever their lawyers can find.
And if you're like me, a coder-at-heart, believe me, you're out of your league
with those guys...

------
loteck
From the buyer's end, what's notable in both cases described here is that the
customer asked the vendor to sign the NDA after having already divulged the
project scope and details. You're doing it wrong!

The whole purpose of an NDA in these cases is to protect the proprietary
information that is handed over by the buyer in the normal course of scoping
and proposing a project. Karma and politeness aside, when you are out in the
marketplace, you need to protect yourself.

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module0000
Five months of unpaid invoices? That's wild that they would allow it to go
that far... if there is no contract in place and you've somehow stiffed me for
5 months, I'm shopping your source code to your leading competitors to recoup
my cost.

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JumpCrisscross
Or, put a clause into the NDA and WFH agreements that makes them unenforceable
if you haven't been paid. Working without a contract is ill-advised.

~~~
ThrustVectoring
I remember seeing advice to include a clause that makes their ownership of
intellectual property contingent on paying you in full. It's easy to get them
to agree to up front, because they intend on paying you (or at least want to
look like they do), so it's irrelevant as long as you get paid. If you don't,
however, it means you have actual leverage and their BATNA is getting owned in
a lawsuit.

~~~
vlod
It's from: Mike Monteiro - "Fuck you pay me" talk.

Here's a link to the relevant bit in the video:
[https://youtu.be/6h3RJhoqgK8?t=21m24s](https://youtu.be/6h3RJhoqgK8?t=21m24s)

I would however, recommend the whole vid.

------
jbyers
There's an angle to this that I appreciate spiritually - making sure your
client is conscientious and committed - and an angle that is legally and
ethically highly risky.

Instead of putting contracts in the drawer and setting yourself up for future
legal peril (and dissection of any implied contracts you may have entered)
figure out if your client is trustworthy and liquid early. If there's risk,
structure contracts to manage the risk, such as a short-term engagement
leading to a longer / higher-value contract that locks you in. If you can't
agree that structure you probably shouldn't take the contract in any case.

If they don't pay the first bill, fire them like any good contract will allow.
Don't wait five months.

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btown
In certain states such as NY, oral agreements may be enforceable, so don't
count on this strategy. [http://www.nisarlaw.com/blog/2013/july/litigating-
breach-of-...](http://www.nisarlaw.com/blog/2013/july/litigating-breach-of-
oral-contracts/)

(IANAL)

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crb002
A contract is there to protect both parties. Failure to negotiate a fair
contract is only going to lead to a headache. This is terrible advise.

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blazespin
It's also a gating mechanism for interviewees who don't complete their
paperwork.

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imagist
I don't understand this. What does the NDA have to do with who owns the code?

A better plan is to get paid up front. At least partially.

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joesmo
The main lesson here is to leave a company that doesn't pay you immediately.
The rest of the lesson is only for the idiots who didn't do that like the
author.

~~~
SamBam
The problem is that most contractors will feel trapped by the sunk costs --
fallacy or not.

If you've put a month of work towards something, and they say "funding's
coming through, give us a couple weeks for the first payment," you have two
choices: keep working and have a _chance_ that you'll get paid, or stop
working and be guaranteed you'll never be paid for that month you put in.

~~~
kefka
There's your first problem. You had a shitty contract that isn't paying you
for billable hours.

If you quit paying me, or on net 30, you __will __pay for the work I 've done.
And if you don't, I'll take your ass to court. "Fuck you, pay me."

Very relevant video:
[https://www.youtube.com/watch?v=6h3RJhoqgK8](https://www.youtube.com/watch?v=6h3RJhoqgK8)

