Are legal loopholes ethical?

Queeb Salaron · Post by **Queeb Salaron** » 2005-04-02 09:25pm

Look, whether this was a partnership contract or a business contract, it doesn't matter. You can still cut him out of it. In the case of a partnership, all other parties have to agree that this guy should be cut out, unlike a business contract where only an executor of the corporation has the right to nullify it. And you always have the option of cutting yourself out. It's called termination of contract, and if you drafted it, I'm sure you must have stipulated terms upon which the contract could be terminated.

Please tell me this is the case.

And I can't really tell you much more without actually seeing the contract that was signed, and the claims made against it. But if you feel this guy is resorting to extortion and/or unethical business practices, then you can simply cut him loose. And if you're lucky, you can keep any software he developed while acting as a partner in this corporation.

Again, hire a lawyer.

Lord MJ · Post by **Lord MJ** » 2005-04-02 10:47pm

PostPosted: Sat Apr 02, 2005 2:27 am Post subject:
Once again this isn't a business contract.

It was a partnership contract.

Whoops, that should have said

This wasn't an employment contract.

It was a partnership contract.

It most certainly was a business contract

But basically since the contract called for the formation of a corporation and that the software would be the IP of the corp instead of us individually. There was no mechanism for him to get out of the deal, and maintain ownership of the software. The basic agreement was that the Corp would own the software and he would be part owner of the Corp. He demanded a piece bigger than that specified in the contract (we wanted to own half at a minimum.)

The breach occurred when he then decided to take the software and form his own own company as a sole proprietorship selling the software because he doesn't want to share the profit and ownership with the other shareholders of the corporation.

Queeb Salaron · Post by **Queeb Salaron** » 2005-04-03 01:20am

Okay, part of this boils down to copyright law, too.

Did the contract explicitly state that in signing the contract, the undersigned agrees to grant the corporation all copyright priveleges, including resale rights? Because if it did, then this guy has broken the law.

If, however, the contract does not explicitly state that the corporation obtains all rights to the software upon signature (in exchange for Y% ownership of the company), then as the creator / distributor of the software, this guy has the legal right to sell it on his own.

Really, contracts NEED to be airtight. I can see exactly how this guy thinks he might have the right to sell his software, and I don't think it's a loophole at all if you failed to include this provision in the contract.

Lord MJ · Post by **Lord MJ** » 2005-04-03 01:42am

Queeb Salaron wrote:Okay, part of this boils down to copyright law, too.

Did the contract explicitly state that in signing the contract, the undersigned agrees to grant the corporation all copyright priveleges, including resale rights? Because if it did, then this guy has broken the law.

If, however, the contract does not explicitly state that the corporation obtains all rights to the software upon signature (in exchange for Y% ownership of the company), then as the creator / distributor of the software, this guy has the legal right to sell it on his own.

Really, contracts NEED to be airtight. I can see exactly how this guy thinks he might have the right to sell his software, and I don't think it's a loophole at all if you failed to include this provision in the contract.

That provision that the software became the IP of the Corp was explicitly stated. It's one of the things that led him to accusing us of trying to cheat him out of his product after he decided to renege on the contract. The whole reason he's searching for loopholes is that that particular section is air tight. Which is leading to that napkin bullshit I've mentioned before.

Queeb Salaron · Post by **Queeb Salaron** » 2005-04-03 01:50am

First of all, don't worry about that napkin shit. Any judge in the world would recognize that the name of the software in a contract refers not to the name itself (unless explicitly stated), but to the software the name represents. Language is associative, after all.

And if the contract says that the software is the IP of the corporation, then you've got nothing to worry about. Deny him a raise, call his bluff, hire a lawyer, and sue him for breach of contract.

Again, without a copy of the contract and a specific list of complaints, I can't really give you much more help than that.