Evolution and Iteration
That’s
it. Pretty simple huh? So, how do we end up with a 24 page written
publishing contract with over 200 pages of attachments? No, it’s not
just because all of us lawyers are out here making things more
complicated in order to make a living off of all your hard work. Well,
maybe some of it is...but the real reason is that most industry
business relationships are complicated and not merely a simple
bargained for exchange of goods for dollars. Even the basic
employer/employee relationships often involve multiple issues that
ought to be considered and resolved in advance. This is especially
true in an industry based on intellectual property like ours. And since
these are not simple purchase and sale agreements, the relationships
that most industry contract addresses are ongoing over time and involve
numerous mutual duties and obligations.
In
effect, they describe the parameters for these ongoing business
relationships and attempt to account for all of the foreseeable issues
that may arise so that the parties’ expectations are met and there is a
minimum of unknown risk throughout the relationship. We have all heard
stories of the early days in the industry when a publisher would give
several million dollars to a developer along with the simple directive,
“Make us some cool games.” Now there’s a publisher contact any
developer can live with. Unfortunately, those days are gone. And we
all know why. Unforeseen events occurred in the course of the
performance of these contracts and just like the way a game design
iterates over time, the contracts in our industry have iterated as
well. It is probably just a natural part of the maturation process of
our industry.
Things to Watch
The
problem for developers is that most of the folks we do business with,
especially publishers, have just done so many more deals than
developers do. That means that they have been able to address more
problem issues that negatively affect them in these deals. However,
they have not addressed the issues that have negatively affected
developers. Why should they? That’s not their job. That’s your job,
or mine. For example, contract provisions addressing what happens if
the developer goes into bankruptcy or receivership are in every
contract. What happens if the publisher goes under is never
addressed. Publishers go out of business all the time. And no
business person should want to get tied up in a bankruptcy proceeding,
especially someone else’s. It’s always a good idea to shoot for
mutuality throughout these various contract provisions. After all,
“what’s sauce for the goose is sauce for the gander.”
It
is also important to realize that these complex ongoing contracts are
not static. They represent the agreement regarding the ongoing
relationship between the parties and just as things changed in the
industry over time, thing change in any individual working relationship
over time as well. The business relationship is an organic one that by
necessity adapts to changes. Unfortunately, most written agreements
are static and do not account for these changes. Keep in mind that
even after the contract is signed, the deal is not done. The deal is
just starting. Make sure that at the end of the relationship the
contract accurately reflects that actual relationship, not the one you
planned at the beginning. And since virtually all of these written
contracts can not be modified by an oral agreement, make sure this gets
done by memorializing any significant changes in the performance of the
contract through written addenda signed by both parties.
Cowboy Up
Everyone has to deal with contracts, both inside and outside of our
jobs. Try to keep the basic elements in mind any time you make an
agreement. Cowboy up and accept responsibility for making sure that
you understand what you are getting into. Don’t get so involved in
performance that you forget to keep the terms of the contract in mind
throughout the entire term of the agreement. Ultimately, there is no
such thing as a good contract with a dishonest person, or a bad
contract with an honest one. But even in the best situations, things
come up that need to be dealt with. The more forethought you put into
the process in the beginning and the more vigilant you are throughout
the performance, the better off you’ll be.