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contracts to sign for shrink-wrapped software

About a year ago, one large US company sent us a 40 page contract to sign. The contract was in several parts.

This was despite the fact we sell software well under 100 USD per license.

After a couple of weeks, in which time we indicated we weren't happy with all the terms, the company lawyer told us one of the contract parts wasn't applicable as we weren't working onsite.

In the end we just thought the whole thing was silly and refused to sign the contract.

About 4 months later the company bought 10 copies. A month after that another 10 copies. Ditto.

Now the company has sent us another much shorter contract to sign. I asked them over the phone how much copies they wanted to buy this time and they said 30.

The contract is to provide them unlimited insurance (no time limit and non money limit) in case they get sued for IP violations using our software or in case our software contains viruses, trap-doors or hidden protection systems.

We are aware we have about 3 main competitors, but we have not come into direct contact with them or even indirect contract and our software products are all different.

We told them we could not sign the contract. The lawyer only gave us 2 days notice and said after that they will buy elsewhere.

We have registered all the names we use as trademarks in both the European Community and the United States.

Part of the contract they wanted us to sign was that we should provide them insurance in case they get sued using our trademarks.

I told the lawyer this was over-the-top. We can provide them insurance in case they get sued for using trademarks we have registered.

The lawyer said we are protected against using our trademarks but they are not and so that is why they need us to provide insurance.

This thing sounds crazy and that is why we decided not to sign it.
Robert Dobbs Send private email
Wednesday, September 09, 2009
 
 
Sorry the sentence

"We can provide them insurance in case they get sued for using trademarks we have registered."

should read

"We can't provide them insurance in case they get sued for using trademarks we have registered."

In effect they want the ability to use our trademarks and have us provide insurance in case they want to steal our trademarks!!!!!!!!!!
Robert Dobbs Send private email
Wednesday, September 09, 2009
 
 
I think the appropriate question to ask is:

"What would Joel do?"

Anyway the show is over now. We told them we can't sign the contract.
Robert Dobbs Send private email
Wednesday, September 09, 2009
 
 
Triple the unit price for any contract and then only sign your lawyer's version.

It's just a waste of your time otherwise.
Anonymoose Send private email
Wednesday, September 09, 2009
 
 
+1 "It's just a waste of your time"
This may be the best $2970 sale you never made.  Seriously, it is not uncommon that losing a particular sale is a better result than making a bad deal.  I hesitate to use the word "always,", but it is "almost always"  better in the long run to walk away from bad deals, especially if it doesn't affect your ability to get adequate food and shelter.
RGlasel Send private email
Wednesday, September 09, 2009
 
 
it does not sound like enough money to be worth the trouble. tell them they need a larger purchase before you would sign their contract.

Read it VERY carefully. Remember lawyers can stick all kinds of one sided things in contracts.

It sounds like they may be spending $3000 total. Is this really worth it?
Contractor Send private email
Wednesday, September 09, 2009
 
 
You should never sign a contract you haven't had reviewed by your own attorney. The only rates I can find online quickly are $200-$500 per hour for reviewing real estate contracts. And a two-page lease document takes about a half-hour to review.

Assuming their 40-page document is "standard", that's 20 hours. Best case you're looking at $4,000 just for initial legal review.
Drew Kime Send private email
Wednesday, September 09, 2009
 
 
"The contract is to provide them unlimited insurance"

We've already covered this exact topic here.

Unlimited insurance you can't provide, so you will have to purchase. For such a policy with no limit in costs that is in perpetuity, it might cost you tens of millions of dollars to buy. No insurance company is going to give you unlimited coverage anyway, they would limit it to a $1 million or $10 million policy.

If you really want to do this, contact Lloyds or such and ask for a quote. But really you're just wasting their time, there's no chance you'll buy such a policy now is there? Given that the only solution is to explain that to them. If they want insurance - buy it from the gottamn insurance company. Email them "Do I look like a frikkin insurance company to you?"
Scott Send private email
Wednesday, September 09, 2009
 
 
"The lawyer only gave us 2 days notice and said after that they will buy elsewhere."

I would send them the names, web sites and phone numbers of all your competitors and say that you are HAPPY to recommend all of them to persons wanting free unlimited liability protection.
Scott Send private email
Wednesday, September 09, 2009
 
 
"We can provide them insurance in case they get sued for using trademarks we have registered."

I sure hope you are registered with your national insurance board since in most jurisdictions it is illegal to run an insurance company without the proper licensing and compliance.
Scott Send private email
Wednesday, September 09, 2009
 
 
Instead of screwing around with the lawyer fucktard they have working for them, I would CC the CEO any response you send them explaining why the terms they request are outrageous and you want nothing to do with them as customers.
Scott Send private email
Wednesday, September 09, 2009
 
 
A $3000 purchase isn't worth the hassle or the risk involved. Remember these contracts tend to be loaded.

I would personally not respond. Even if you really need the $3000, the possible cost to you could include losing your home. Its not worth it. When you own the company, you are personally at risk.
Contractor Send private email
Wednesday, September 09, 2009
 
 
OP: "We have received your request that we sign a contract prior to your purchase of our software.  Note however that we have already sold 50 copies of our software to your company in the past 12 months and you have already accepted, 50 times, the only 'contract' we will entertain involving our software product: the obligation you acknowledge by accepting the End User License Agreement required to install our software.  This EULA specifically calls out our obligations and limitations, and by accepting it you have already specifically exempted us from any liability in any suits against you. (OP: this language is pretty common in any EULA)

"If you would like to purchase 30 additional copies of our software on the same basis we will be happy to sell them to you.
If for any reason you can no longer accept the terms of our EULA, you are advised to uninstall all copies of our software and cease using them.  This uninstallation will be done at your own expense, and we do not give refunds."

Don't ever let anyone bully you into doing something stupid.
Karl Perry Send private email
Wednesday, September 09, 2009
 
 
Well don't be wordy or play games with them, just say your EULA should cover their concerns and it's your company policy not to enter into individual contracts for sales of that size. That's all you need to say, then don't waste any more time on it.
CC Send private email
Wednesday, September 09, 2009
 
 
Geez, $3000... They'd have to pay at least $20K and even then use my own attorney's version before I'd think about it.
Anonymoose Send private email
Wednesday, September 09, 2009
 
 
@ 100 bucks per copy you need to have a standard software licensing agreement and stick to it. for all but the largest purchases. Even then, time with a lawyer and your countless hours are going to eat into the profit very quickly.

Ultimately you need to have faith in the value add of your product, and stick to your core values. If your license is reasonable then there's not much you can do to prevent them from wasting everyone's time, other than walk away.
Mark Dochstader Send private email
Wednesday, September 09, 2009
 
 
One time I got a contract for a consulting engagement that was absolutely limited to a maximum of $3500, although it was hourly and not fixed price.

The contract was about five pages long and had various kinds of "hold harmless" language.

Turned the work down, partly for that, partly for the limit, partly because I didn't like the vibes at all and it was for moonlighting, so the money wasn't that urgently needed.

Later I showed the contract a lawyer I knew socially.  Since the issue was dead it wasn't like I was trying to mooch free legal work, as I made absolutely clear.  Anyway he read it for about two minutes, just laughed at the thing, said it was both very one-sided and amateurish to boot.

So I'm happy to hear you've turned them down.

A decent review by a lawyer is going to cost you $500 at an absolute minimum, and likely more.  A lot more if the lawyer revises the contract and there are several back-and-forth exchanges.

Please do let us know if they order through normal channels.  It would make me, at least, laugh a little bit.
cal_programmer Send private email
Sunday, September 13, 2009
 
 

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