The vast majority of the work I do for developers involves contracts -
reviewing proposed contracts, analyzing contracts, discussing
contracts, drafting contracts, negotiating contracts and, sometimes,
litigating contracts. All sorts of contracts - contracts for leases,
licenses, publishing, distribution, employment, termination,
confidentiality, non disclosure, non circumvention, consulting,
development, buy outs, asset sales, asset purchases, stock sales, IP
transfers...like I said, all sorts of contracts.
are at the core of most of the good and the bad stuff that goes with
running a successful studio. A significant part of the time I spend on
these agreements is with clients helping them understand what different
contract provisions mean and their potential impact on the deal and the
studio might be. So, I though it might be good to provide a little
basic “Contracts 101" for developers to provide a little insight into
the basic elements of any contract to help demystify them a little.
contract is basically an agreement between two or more parties. It can
be to do or to not do something and sets out the duties and
responsibilities of each to the other. It is the common agreement
between the parties, what is referred to as the “meeting of the minds”
that establishes the contract. Once this “meeting of the minds”
occurs, the contract is formed. In general, oral contracts are just as
valid and enforceable as written ones, though certain types of
contracts must be written.
term “hand shake” agreement reflects the tradition of confirming the
“meeting of the minds” by the mutual acknowledgment by the parties by
the parties shaking hands to seal the deal. At the core of every
argument is this acknowledgment, though we usually see it in the form
of a signature on the bottom line.
is a term used by lawyers to describe the subject matter of the
contract. By that I mean whatever of value that is being delivered or
exchanged. The dollar for the candy bar or money for the source code
are the easiest examples. It is basically what the contract is really
about and is a necessary part of any contract. Without mutual
“consideration” it’s not really a contract, it’s a gift and as such may
not be enforceable. Finally, the parties to the contract also must
have the legal capacity to enter into the agreement. That means that
they are competent to know what they are getting into. This goes back
to the whole “meeting of the minds” thing...no mind, nomeeting.