Question on a partnership agreement

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MisterBigglesworth

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Someone has approached me to basically support, update, fix enhance etc a system they got developed by a company and they are now selling. The agreement between us is that I will be paid a percentage of the sales, and I am happy with that. So everything regarding the partnership agreement is fine, except I am a little uncertain about a section where it states

"...the agreement is in effect from the signed date and will remain in force until either party decides to exit for whatever reason..."
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This is the part that is irking me a little. How I see it, if he decides to exit the agreement I lose out - completely. I could invest X hours of my time, make major updates etc and he can then just exit the agreement and I will lose out. I feel like this is there more for his protection and there is very little here for my protection.

Anyone have some tips on wording so we are both covered? I understand he doesn't want me to just run off an leave him hanging, and the same my side...so not sure how to amend this wording? :confused:
 
Vaughan said:
Until both parties agree to exit
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Wont work. Clause is one-sided.
Who is responsible for sales? Him? So if he wants to exit and you don't he just stops selling and you are stuffed.

Best to draw up a partnership. Then put a value on the effort you spend monthly. So you make a contribution of a certain value and so does he. Whether it is money or effort in sales. The revenue that the sales generate goes into the partnership and you both draw a 'salary'. As much as he needs to trust you to put in effort in dev/support; as much you need to trust him to put honest energy into sales. It will show.

But by all means if you do not fully trust your prospective partner and trust in his ability to perform his duties competently, then dont enter into the partnership.

I partnered up with an ex colleague many years ago. He fancied himself a businessman after we exited our startup with a handsome share payout each. He was/is useless as a businessman. So we faffed around for 3 years in which time neither of us drew a salary until I hit the wall financially speaking.
 
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Spacerat said:
Wont work. Clause is one-sided.
Who is responsible for sales? Him? So if he wants to exit and you don't he just stops selling and you are stuffed.

Best to draw up a partnership. Then put a value on the effort you spend monthly. So you make a contribution of a certain value and so does he. Whether it is money or effort in sales. The revenue that the sales generate goes into the partnership and you both draw a 'salary'. As much as he needs to trust you to put in effort in dev/support; as much you need to trust him to put honest energy into sales. It will show.

But by all means if you do not fully trust your prospective partner and trust in his ability to perform his duties competently, then dont enter into the partnership
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Yep, he is responsible for sales.

I see your point. I honestly don't know much about him, I don't even trust people closest to me so he is really on the other end of the trust scale here.

All I'm wanting is an agreement with both parties interests at heart, and not have it one sided. The application belongs to him, so if one day he decides to toss me to the curb, he can really just find someone else. It's not such a big deal for him I think...it's a bigger risk for me.

I know someone in the employment law field, think I should chat with her about this for guidance - thought it would be easy to get an agreement document setup between 2 people...thanks for your suggestion though
 
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I would suggest then rather he contracts you on a basic plus commission basis. To get your services for free is no risk to him and all the risk to you. If he believes in his application and his selling skills then your fixed monthly cost should not be an issue to him. You also need to assess the app and what potential it has to make money before you commit. Also if it's a shoddy app then support will kill you. I would also suggest that depending on the app (if enterprise type app), there is a support agreement with customers. Then at least the revenue from support can be channeled to fund you.

I run my own small dev house and took over a application that was bliksemed together by incompetents. I did not know that at the time. The app fell over all the time. Bugs galore. The support got so much that I told the customer to shove it (they did not want a support agreement). So what I am saying is that it is a potential minefield. Your potential partner maybe above board, but he could also be a douche-bag - and there are many out there.

Care to share what the app does?
 
Maybe you should consider a service agreement, include a hefty penalty fee in the event that he decides to terminate the agreement prematurely. Partnerships are risky, especially with if you don't really know or trust the other person. There's no separate legal personality with partnerships and partners are jointly and severally liable.
 
I would never enter into an agreement like that. Pay me for the time I spend on the project, not a % in sales (that might not even happen). Sounds like you will lose, no matter what the contract says
 
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