8 ms·

“But what if something happens?? What if the site crashes? What if I’m late? What if..??” “Do you think any of that stuff is going to happen?” he asked. “Prob

“But what if something happens?? What if the site crashes? What if I’m late? What if..??” “Do you think any of that stuff is going to happen?” he asked. “Probably not. But what if it does?” “Then you know what you do?” he said. “Tell them, ‘fucking sue me.’” This is dangerous advice. It will work well right up until you come across someone who will "fucking sue you". A contract, once signed, is a legally binding promise. You have promised to deliver what's on the contract, and you can be held accountable in a court of law if you fail to do so. The financial penalties for violating a signed contract can easily drive one into bankruptcy, and the reputational penalties can make it very hard to recover.

alansammarone 9y ago
Not only that, but there is also something morally very questionable about making promises and don't giving a sh*t about whether you'll be able to deliver or not. This a wrong attitude in its moral and legal aspects, and I think it tells us something about the very worrying ethical aspects of today's (or maybe it was always like that) startup environment.
- quanticle 9y ago
  I think it tells us more about the ethical system of the OP's father. There are some people for whom "everything is negotiable". These people will make promises and then try to renegotiate their price before they deliver, betting that you need them more than they need you. This doesn't always work. Heck, I'm not even sure it even works in a majority of cases. However, when it does work, it can pay off extremely well. Thus, thanks to survivorship and availability biases, it may seem like the majority of startup founders are ethical degenerates, when in reality, it's a minority that happens to be overrepresented in the tiny subgroup of startup founders who become successful enough to become household names.
- tluyben2 9y ago
  > but there is also something morally very questionable about making promises That really depends; some company's legal department might go overboard with the stuff they make you sign 'or no deal'. I have seen a lot of them myself. It is comparable to job ads; 'wanted, junior with 40 years experience in React and every other tech ever invented'. Lawyers just want/need to cover ever eventuality. If you sign that doesn't mean you broke your promise; it's just how it works. If you don't sign this kind of contract you might never get this kind of work. Maybe it works different in different parts of the world, but we signed some crazy things (which were dealbreakers if not signed) in the past and no-one ever sued us for it ; it's just their legal department making sure the company is protected in the event of malice. Nothing to do with morals. It depends a lot about the case though and reading Pud (who is a known shoot from the hip guy), I would say as worded here it's generally bad advice to do it like that.
  - quanticle 9y ago
    That really depends; some company's legal department might go overboard with the stuff they make you sign 'or no deal'. Mike Monteiro talks about this in his "Fuck you, pay me" talk [1]. He says that a lot of companies have boilerplate contracts which have outdated provisions like requiring you to hand over printouts of source code, or delivering software on floppy diskettes. The proper response is to have a lawyer yourself who can review the contract and explain to the company's legal counsel that 1) these contract provisions are unreasonable and outdated and 2) that striking these provisions will not create additional liabilities for the company. The reasons these contracts go overboard is because every time the company gets burned, it adds some scar tissue to the contract to prevent that same eventually from occurring again, regardless of whether it's applicable to the task at hand. Maybe it works different in different parts of the world, but we signed some crazy things (which were dealbreakers if not signed) in the past and no-one ever sued us for it I will be extremely honest. You got lucky. You put your head in the mouth of the lion, and it didn't bite. It doesn't mean that what you did was a good idea, it just means that you got away with it. [1]: https://www.youtube.com/watch?v=jVkLVRt6c1U https://www.youtube.com/watch?v=jVkLVRt6c1U
  - bitwize 9y ago
    > It is comparable to job ads; 'wanted, junior with 40 years experience in React and every other tech ever invented'. My experience has always been that if a job req calls for n years of experience in technology X, not having that demonstrable experience means you won't even get called in for an interview. Period. So if it really is like that then these contracts are to be taken seriously, as companies will expect to be able to hold you to the terms.
    - tluyben2 9y ago
      Again, maybe it differs from region to region / country to country, but I have seen many many job ads asking for more years of experience than the technology actually exists. Or asking for juniors with more than 5 years experience which is simply not a junior. I don't think it will be hard to find job ads that simply are not realistic or actually cannot be filled. That happens on purpose as well in some countries; if you cannot fill a job locally, you can get people from other countries.
- Applejinx 9y ago
  But this is also the 'move fast break stuff' attitude, and kind of like the Prisoner's Dilemma tournaments, bands of 'move fast break stuff' can knock other people out of the environment through all being irresponsible together. That's what I take out of the anecdotes. In a sense the guy's Dad was right: the people the guy was dealing with were in another class from him and to join that class required not giving a shit and signing away his life. If he was to question it, that defined him as a person who deserved to lose everything to lawsuits (or never get the opportunity). He'd have asked questions. Not asking questions put him in the company of those who moved fast and broke stuff and didn't ask questions, and he shared in the money and opportunity. I have a counterexample: I do a Patreon business dedicated to audio software. I've got a couple intermediate goals in there: at $700 I begin releasing certain extra plugins off a list, and at $800 I begin opensourcing my stuff one plugin at a time, my pick (there's another goal where the community specifies what's to come next, and others to accelerate the whole process). I was at around $720 and releasing the extra plugins as promised, when a single person jumped in with $80 a month (which may or may not have been even real, sometimes pledges are fake), putting it to $800 at a stroke. The risk there is that they'd progressively dial it back as that was their pet reward they wanted, causing all further pledges to feel like they had accomplished nothing. I didn't mention this but I did ask the person if they'd be OK with a pledge level that was less than 10% of my whole Patreon all by themselves (which is the more responsible approach: try to build off smaller stuff that is more predictable) They were offended at the idea I'd even question their money whims and bailed off the site entirely, and then another person (possibly seeing how this went?) at a $30 level bailed too, dropping it down under the $700: goodbye, extra plugin off the list. At the time I saw this as just evidence that courting rich people with completely disposable cash was dangerous: they can be totally fickle and turn on you without even being that mad at you. My progress over months got absolutely reversed at a stroke by two people. That's annoying. Reading this article, I see another side to it. In so many ways, dealing with rich people is a matter of virtue signaling: you simply cannot join that class without internalizing their thinking. To question the contract implies you're not going to be so rich that you can weasel your way out of any problem that might arise. If you can't think in terms of that kind of extreme liquidity and freedom of action, you're potentially a danger, a person who'll make the wrong judgement call in a crisis and bring that reality principle in. To ascend you must be breathing helium and not air, and the effect can be heard in your voice and seen in your actions, and it quickly shows up in reality: breathe more helium, lift off, stop questioning and get rich along with the other rich helium-breathers. Yes, I'm skeptical, hence the analogy. But I'm also openly wondering if I did the right thing. Perhaps rather than asking sensible questions of some rich person who might have not had my best interests at heart, I should have excitedly celebrated the 'good fortune' and attracted another rich person who'd pledge $100 and so on, or $1000: maybe I should have carried on until my world depended on continually finding a new person who'd pledge equal to all previous people. Sort of a fractal patronage, starkly counter to my plan of doing it through sheer numbers and having a stable, predictable patronage expressed in largely statistical terms. The people do exist, for the 'fractal' type. There's a person out there who'd pledge $1000 without blinking, and one who'd pledge $2000, $8000 and so on, provided the dream is big enough. I feel that all those people are increasingly liable to bail and vanish in the wind when you 'call in the lawyers' or start asking questions, because it's placing a burden on their whims, and you're stepping into a world of whims where you too are expected to think nothing of all this. The startup environment breathes dreams, not air. It's a mechanism where you will do yourself tangible harm by slowing down or questioning anything, even by sensible questions. I feel I've had a hint of that already, and I'm still deciding what to do about it, and what kind of stand to take. You see, part of my job is being able to jump out of the 'dream' and take a larger view. I'm doing so here. I'm puzzled and undecided, because I see how this works: I do see a moral problem with chasing the fractal patronage and hyping illusory dreams, but I also see that the dream is the product and there are those who are happy to buy it if you'll avoid popping their bubble. And one of the conditions is: you're now part of the abundance, money means nothing, don't ask questions. Money, rules, laws become meaningless. What is your dream? I don't know whether to step into that world. I know exactly how I can prevent it 100%: ask practical questions and care wrongly. Who cares if some pissant with 1$ feels let down if they pledge and the rich people adjust their pledges to optimize their return? I'm expected to not even blink at that because my goal is bringing in even larger pledges, and we know the drill. Move Fast Break Stuff, and it's easy to identify who's breathing the helium. And I know I can imagine stuff that's pure helium, if I try; I have notebooks full of it. But I CAN'T stop asking questions and seeing the larger picture…
- tomhoward 9y ago
  Not only that, but there is also something morally very questionable about making promises and don't giving a sh.t about whether you'll be able to deliver or not. That's an unfair misrepresentation of the article. The dad didn't say you shouldn't care whether or not you'll be able to deliver; just that endless refining of the contract won't actually help you much if something goes wrong.
barbs 9y ago
You're probably right, but the tongue-in-cheek tone of the article implies that the author knows this as well.
tomhoward 9y ago
"This is dangerous advice." Having been in these kinds of negotiations many times over the 15 years I've been in business, and having never been sued nor ever had a deal go seriously wrong, the dad's advice seems perfectly sound. The real point here is this: In every significant business transaction (or indeed, major life decision), you have to choose where you're going be on the risk continuum between sheer recklessness and complete security. At some point your efforts to be prudent cross over into excessive paranoia and then a new form of risk: that all the money and time you spend to try and keep everyone safe will be wasted if the deal doesn't go ahead at all, or if it reduces the amount of time and money everyone has to actually do the work. Sooner or later all the de-risking stops being de-risking and starts creating new forms of risk. I'm pretty sure the dad in this story was just advising his son to avoid making that mistake. As the story said, the son sincerely expected to be able to do the work as it was scoped, for the price on offer. If this wasn't the case, the dad's advice would have been very different. The reality is that when a small business is providing a service to a large company, the threat of legal action isn't really much of a motivator, as the small business likely doesn't have anything they can be sued for (aside from any insurance coverage they may have), so it's just not worth the cost and hassle of taking legal action. As a supplier, your reputation, along with the satisfaction of doing good work, are much bigger motivators to deliver a good result. So everyone really knows, in a deal like this, that the only real option is that everyone works together to get the work done well, and if it looks like it's going off track, then you re-negotiate the agreement and if it seems irredeemable, consider cutting ties. Legal action will barely ever be a sensible option in a case like this. I'm sure this was a key part of the dad's advice.
- sillysaurus3 9y ago
  Meanwhile, my friend is being sued by a nutty old rich guy that thought my friend went out of their way to sabotage him. (They did no such thing, but when a "startup" goes wrong, people go crazy.) More specifically, my friend entered into a contract to deliver X for the old guy. When X turned out not to resonate with customers, the old guy sued him. Nobody saw it coming. My friend will probably win, and he was very lucky that he was able to get a lawyer for free. But what a massive PITA.
rebuilder 9y ago
What alternative is there? In my experience, if I'm providing anything other than work paid by the hour or day, then I am promising things I can't 100% guarantee I can deliver. I have every reason to believe I can deliver, but I can always think of some unlikely edge cases where things go terribly, irrecoverably wrong. This bugs me, sure, but the only way I can think of to never get sued for breach of contract is to never sign a contract.
ballenf 9y ago
It's really not[1]. The most important thing is to know who's sitting on the other side of the table. As a lawyer I've been asked to negotiate dozens of these contracts. And been sued on exactly one. The irony? The one sued on was one the tightest and my client was 100% in the right. But the other guy was an asshole and we hoped the airtight contract would protect us. We settled and paid him a non-trivial sum. Have seen it repeatedly in situations short of lawsuits where the two sides are of markedly different sizes. The smaller party can negotiate whatever they want and then the big party will still proceed to do what they want and as long as there is still more business going on (sue them and lose the rest of the work). [1] Of course there are exceptions: the most important of them is stipulations that will actually cost you money. That is, the business terms. Then there are terms that can cost you reputation and non-compete clauses that make you lose other work. There are terms you want to watch out for, but my experience discussed above is that it's not the contract that gets you sued, it's the asshole on the other side that you decided to do business with.
- john_moscow 9y ago
  Out of curiosity, what made you settle given the contract in your favor?
  - jrochkind1 9y ago
    I'm not the one who you are asking, but I've seen it happen so I know the answer -- because even when you're sure the contract is in your favor, it's going to cost you a heck of a lot of money to litigate, and you _might_ still lose even more money. Cut your losses (and write em off on your taxes), get back to business. And think about how you can be better at picking clients next time.
    - ballenf 9y ago
      Nailed it. You can never predict an outcome, unless you're willing to spend a load of money on appeals. You rarely (in the US) can collect attorneys fees even if you prevail. The non-trivial amount we paid out was a little less than winning would have cost.
partisan 9y ago
It is bad advice! Some get burned and some don't, but you have to consider possibilities like personal liability that can take a huge toll on your life. It's all well and good until you find yourself in a tense standoff with a client who happens to enjoy litigation since they have an in-house counsel and money to burn. You may not identify that aspect of their personality until it is too late. Or you might think the risk is worth it.
- bitJericho 9y ago
  A contract won't stop him from suing you.
  - steveeq1 9y ago
    yeah, but a bad contract makes it easier to.
    - bitJericho 9y ago
      If you say so.
bisRepetita 9y ago
I have been selling to big companies for a while. I always sign. The time and money I saved by not arguing legalese fineprints will easily pay for the costs of the first Client that will sue me. Not even counting time spent arguing legalese is a mood killer. The kicker is that if something goes wrong, your contract won't protect you much anyway, and giving freebies and working the extra mile is more effective. But if I listen to lawyers or wannabe entrepreneurs, most will tell me to read the fineprints and care about them.
- meritt 9y ago
  > wannabe entrepreneurs Bingo. HN seems to have this ingrained assumption that anyone who can construct a reasonable argument must be a wildly successful entrepreneur doling out the most sagely of advice. When in reality it's just another programmer who punches the clock for one of the big tech employers and has never taken on more risk than deciding to eat sushi or ramen in the employee-cafeteria.
  - OtterCoder 9y ago
    Heck, I've taken enormous risks and lost the farm a couple of times. That doesn't mean I have a lot to say either. I can tell you three things that will guarantee failure, but I can't say much for sure beyond that.
sverige 9y ago
My experience has been that, in general, lawyers who negotiate contracts go way too far trying to eliminate risk. If you are talking about a really big contract with serious money on the table, a good practice can be to befriend a lawyer with lots of litigation experience to help you balance that tendency. It's sometimes worthwhile to get the opinion of a lawyer whose eyes light up when someone else says, "Fuck you, sue me!"
amorphid 9y ago
I find a much better strategy is to try not doing business with assholes. No amount of money will make you feel good about spending time with an asshole, and an asshole is likely the one you'll get sued by. Source: did business with one asshole, subcontracted some of the work to another asshole, got screwed by the former, and sued by the latter.
- tedeh 9y ago
  So then the right question changes from what a good contract to sign is, to who is an asshole or not. Do you have any specifics that you look out for that you would like to share?
  - fencepost 9y ago
    Well, I'd start with checking whether the person has a history of suing or being sued (e.g. by stiffed subcontractors). Also whether they take apparent pride in that history. Further, ask people he's been in business with in the past not about him but about whether they'd do business with him in the future.
    - amorphid 9y ago
      This is pretty good advice. The person who sued me had also sued other people. If your local court(s) have a searchable online database, search for the person's name and/or the name of their company. I'd also recommend trying to not putt yourself in a position where you can only pay a subcontractor when you get paid. When you're client is late on payment, and your subcontractor starts hounding you for cash, you won't have a good time.
  - amorphid 9y ago
    Asshole is a pretty subjective measurement. Warning signs are people who push you around, rush into getting a contract signed, ask too many questions for a really small contract, try to control details of how you'd do the work, etc. A lot of it you learn by experience.
Spooky23 9y ago
I've worked for little companies and big companies/institutions. Unless you have some magical political pull, your leverage is nil. The reality is, getting to the point that the fortune 50 or .gov is suing you means that you were asleep at the switch -- getting to that point means that the business unit you are working with has acknowledged defeat (a huge step) and is going to blame you and hurt you no matter what the contract says.
- ChemicalWarfare 9y ago
  true. large companies are way less likely to sue or be anal in general than small companies/individuals. also it's way easier to negotiate the "definition of done" with them. typically if all of their requirements are addressed and bugs reported in UAT are fixed by the go-live they are good. their teams take over and unless you're hosting the system (which would be covered by a separate hosting agreement) - you're pretty much done. also smaller companies tend to demand "warranty" after the go-live (mostly due to the fact they don't have the staff to maintain the system).
  - hxtk 9y ago
    > "definition of done" My first programming job had exactly this problem. Spec started at "connect these two services together using webhooks for $700" and creeped its way up to "build a database-backed web service that replaces both of the original services and then some for $4000, plus development expenses." It's still not done. It'll never be done. But thankfully, I got out after it was off the ground and someone else maintains it now.
mcguire 9y ago
In addition to others' comments, note that a well set up business will shield your personal assets from lawsuits. And for a company like this, there are no assets. What are they going to do, take the office chairs?
tibbetts 9y ago
For a lifestyle or contracting business, you are too worried. For a ventured backed or exit oriented business the thing to worry about is how an investor or an acquirer will think about the contract. "You're getting $50k per year from this customer but exposed to unlimited liability in the event of any software bug? We can't take on that risk, our pockets are too deep." A good lawyer will pick out the important things and tell you why. As an entrepreneur you will still need to decide what to let slide, no lawyer will ever say you are being safe enough.
- jsjohnst 9y ago
  Sage advise I've received re: lawyers... "You don't pay lawyers to tell you what to do or not do, their job is to tell you the risk in doing or not doing the action. It's your responsibility to decide what risk you're willing to tolerate." Sounds like you agree!
briandear 9y ago
That’s why you set up business entities and never buy or do anything as a sole proprietor.
- tptacek 9y ago
  Limited liability might protect you in contract disputes, but you'll remain liable for your torts, which is where the real black swan liability in running a company hides.
manyxcxi 9y ago
I agree more with you but also do somewhat subscribe to, I think, the author's intent. First though, as for hiring a full time employee with only the ability to pay them for two months: if you're not up-front with this person you're a real jerk. I've solved this by bringing people in for contracts that are the duration and explaining that future contracts or conversion are dependent on more work coming in. Yeah, it's effectively the same except for in my scenario you may be offering the job to someone with dependents who is risk averse and definitely needs that paycheck in month three. This basically gives them the risk signal they deserve without you having to say "we've only got this much money and no idea what's going to happen in month three." I'll do almost anything before I screw up someone else's livelihood. As for the contracts, I've gotten good enough to read most of them competently. I redline the sketchy parts and the parts my lawyers have redlined in the past. Submit my alternatives or reason why it should just be struck and keep going. It's generally around things like 100% payment at the end changed to milestones or 50/50, liable for all damages changing to liable for up to the value of the contract, etc. There are some things you really can't mess with. If you've got a megacorp client and their AP policy is 90 days, don't bother. You're not getting it for AT LEAST 90. Likely 5-6 months if you're persistent/have a good project owner on their side. They will never agree to a change, and you're not going to sue them for a late invoice unless we're talking about large sums of money that would've dictated this is all being handled by lawyers anyway. Other things get really tricky. Some will slide in IP ownership/transfer clauses that could essentially mean they have claim to anything your company's ever done. I've got some well written reaponse clauses that I re-submit with- but if they push back on those at all I instantly walk away. So, yeah, do read the contracts, focus on a few key areas and look for over reach or hostile clauses and submit sane, fair responses that can be easily accepted. It's fine if you have a lawyer doing all this for you in an advisory role, by be the person who fronts the requests and make yourself part of the process. You'll learn the patterns very quickly and will need to pay your lawyer less frequently as well as you'll learn the counter-proposals so you can shape your proposals to reduce the counter proposals in the first place. Let the esoteric stuff work itself out in a lawsuit, stuff has probably really hit the fan in that case. As far as damages for outages and stuff, you have to assume that if you're working on a smallish (sub 500K) there's absolutely no way they're suing you for a few hours of down time if you provide good customer service during that period. I've had HUGE F ups that led to 6+ hour outages and still received highly positive post project feedback from clients because we had such a good relationship before our mistake(s), we were highly communicative and forthright during the issue, and provided a good post mortem quickly after resolution. To that end, if you find that you often have like-warm relationships with clients, maybe you shouldn't take the risks and just have a good lawyer handy.
bluetwo 9y ago
It isn't my approach but I've seen it work just fine for people. Reasons are: 1) If you are protected (LLC/LLP/S-Corp/etc) then the only thing you have to lose is the company itself. It is hard to go after you personally. If all the company owns is some computers and you are paying yourself a salary, there is nothing of value for them to go after, even if you screw up royally. If they do, fold up shop and go start a new company. 2) Big companies don't really want to sue. It is much better for them to walk away and take the loss. A manager that enters a company into a lawsuit is going to get questioned as to why they let the situation get so out of control. I was pulled into a situation where the lead developer embezzled several hundred thousand dollars and the company still didn't sue him. They fired the guy and brought in other resources (myself and someone else) to clean up the mess. My approach is: 1) I strike anything I can't stand by in the contract. I don't go as far as a lawyer might go, but they tend to draw a line that also protects them from any accusation of negligence, which can sometimes create hard to negotiate situations. Corporate lawyers attach all kinds of crazy things. A salesperson I know calls the first version of a contract from a large company the "F*ck you version". 2) For a set of standard services I provide, I use my own contract which was drawn up by a lawyer. This limits my liability to actual moneys paid to my company, and provides the client with an easy out in 30 days should they decide to drop me. I link to it in every invoice I send these clients. By the way, don't just search Google for sample contracts and try to modify for your use. It really is worth paying a lawyer to sit with you and figure out what your priorities are and craft a contract around them. He asked good questions and built something that works well in our state and represents our interests as best as possible.
jrochkind1 9y ago
> The financial penalties for violating a signed contract can easily drive one into bankruptcy, and the reputational penalties can make it very hard to recover. If you are properly incorporated, can it really do more than drive you out of business? Also, sadly, being sued for a business deal can drive you out of a small business even if you had exactly the right contract and were completely in the right and would _probably_ have won the lawsuit eventually. Going to court is fucking expensive, if they have more money to spend on it than you, they will drive you out of business. And anyone can file a suit against you no matter how much you are in the right.
deleted 9y ago
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valuearb 9y ago
IBM once decided to build a personal computer. They still need programming tools and an operating system so they went to a well known microcomputer language developer. Before they would disclose the project, they gave the young CEO IBM's standard 100 page super scary NDA. He signed it without reading it because he really wanted his company to get IBMs business if they were to make a microcomputer. And it worked, they agreed to buy his languages for their PC, and asked for a referral to someone who could sell them an operating system. He personally referred them to the leading microcomputer OS maker, but could not disclose what IBM wanted to the OS maker. The IBM managers flew to meet with the OS company, but CEO could not make the meeting. His wife and lawyer did, and they actually read the NDA, and it horrified them. They spent all day wrangling over edits to it until the IBM guys left in a huff, without disclosing anything or conducting any business. The lead IBM guy called the language company CEO and told them what had happened. The language company CEO told him not to worry, he could get them an operating system too. And he did, and he eventually became the wealthiest man in the world, all because he didn't read an NDA before signing it. The moral of the story is that you can always be sued, regardless of the agreement. But most every customer doesn't want to sue, they want to succeed. If you get good customers, they will work with you so you both succeed.
ivanhoe 9y ago
Big question is if you even want to sign a contract if it's written in an obviously aggressive way. In my experience reasonable clients usually use reasonable contracts. If company insists on using a contract that is all in their favor, without giving a very good reason for that, that can be a sign that you'll run into many other problems with them in future (bad communication, hostile treatment, getting dragged into office politics, their own organizational problems that managers will try to blame you for, etc.)

alansammarone 9y ago

Not only that, but there is also something morally very questionable about making promises and don't giving a sh*t about whether you'll be able to deliver or not. This a wrong attitude in its moral and legal aspects, and I think it tells us something about the very worrying ethical aspects of today's (or maybe it was always like that) startup environment.

quanticle 9y ago
I think it tells us more about the ethical system of the OP's father. There are some people for whom "everything is negotiable". These people will make promises and then try to renegotiate their price before they deliver, betting that you need them more than they need you. This doesn't always work. Heck, I'm not even sure it even works in a majority of cases. However, when it does work, it can pay off extremely well. Thus, thanks to survivorship and availability biases, it may seem like the majority of startup founders are ethical degenerates, when in reality, it's a minority that happens to be overrepresented in the tiny subgroup of startup founders who become successful enough to become household names.
tluyben2 9y ago
> but there is also something morally very questionable about making promises That really depends; some company's legal department might go overboard with the stuff they make you sign 'or no deal'. I have seen a lot of them myself. It is comparable to job ads; 'wanted, junior with 40 years experience in React and every other tech ever invented'. Lawyers just want/need to cover ever eventuality. If you sign that doesn't mean you broke your promise; it's just how it works. If you don't sign this kind of contract you might never get this kind of work. Maybe it works different in different parts of the world, but we signed some crazy things (which were dealbreakers if not signed) in the past and no-one ever sued us for it ; it's just their legal department making sure the company is protected in the event of malice. Nothing to do with morals. It depends a lot about the case though and reading Pud (who is a known shoot from the hip guy), I would say as worded here it's generally bad advice to do it like that.
- quanticle 9y ago
  That really depends; some company's legal department might go overboard with the stuff they make you sign 'or no deal'. Mike Monteiro talks about this in his "Fuck you, pay me" talk [1]. He says that a lot of companies have boilerplate contracts which have outdated provisions like requiring you to hand over printouts of source code, or delivering software on floppy diskettes. The proper response is to have a lawyer yourself who can review the contract and explain to the company's legal counsel that 1) these contract provisions are unreasonable and outdated and 2) that striking these provisions will not create additional liabilities for the company. The reasons these contracts go overboard is because every time the company gets burned, it adds some scar tissue to the contract to prevent that same eventually from occurring again, regardless of whether it's applicable to the task at hand. Maybe it works different in different parts of the world, but we signed some crazy things (which were dealbreakers if not signed) in the past and no-one ever sued us for it I will be extremely honest. You got lucky. You put your head in the mouth of the lion, and it didn't bite. It doesn't mean that what you did was a good idea, it just means that you got away with it. [1]: https://www.youtube.com/watch?v=jVkLVRt6c1U https://www.youtube.com/watch?v=jVkLVRt6c1U
- bitwize 9y ago
  > It is comparable to job ads; 'wanted, junior with 40 years experience in React and every other tech ever invented'. My experience has always been that if a job req calls for n years of experience in technology X, not having that demonstrable experience means you won't even get called in for an interview. Period. So if it really is like that then these contracts are to be taken seriously, as companies will expect to be able to hold you to the terms.
  - tluyben2 9y ago
    Again, maybe it differs from region to region / country to country, but I have seen many many job ads asking for more years of experience than the technology actually exists. Or asking for juniors with more than 5 years experience which is simply not a junior. I don't think it will be hard to find job ads that simply are not realistic or actually cannot be filled. That happens on purpose as well in some countries; if you cannot fill a job locally, you can get people from other countries.
Applejinx 9y ago
But this is also the 'move fast break stuff' attitude, and kind of like the Prisoner's Dilemma tournaments, bands of 'move fast break stuff' can knock other people out of the environment through all being irresponsible together. That's what I take out of the anecdotes. In a sense the guy's Dad was right: the people the guy was dealing with were in another class from him and to join that class required not giving a shit and signing away his life. If he was to question it, that defined him as a person who deserved to lose everything to lawsuits (or never get the opportunity). He'd have asked questions. Not asking questions put him in the company of those who moved fast and broke stuff and didn't ask questions, and he shared in the money and opportunity. I have a counterexample: I do a Patreon business dedicated to audio software. I've got a couple intermediate goals in there: at $700 I begin releasing certain extra plugins off a list, and at $800 I begin opensourcing my stuff one plugin at a time, my pick (there's another goal where the community specifies what's to come next, and others to accelerate the whole process). I was at around $720 and releasing the extra plugins as promised, when a single person jumped in with $80 a month (which may or may not have been even real, sometimes pledges are fake), putting it to $800 at a stroke. The risk there is that they'd progressively dial it back as that was their pet reward they wanted, causing all further pledges to feel like they had accomplished nothing. I didn't mention this but I did ask the person if they'd be OK with a pledge level that was less than 10% of my whole Patreon all by themselves (which is the more responsible approach: try to build off smaller stuff that is more predictable) They were offended at the idea I'd even question their money whims and bailed off the site entirely, and then another person (possibly seeing how this went?) at a $30 level bailed too, dropping it down under the $700: goodbye, extra plugin off the list. At the time I saw this as just evidence that courting rich people with completely disposable cash was dangerous: they can be totally fickle and turn on you without even being that mad at you. My progress over months got absolutely reversed at a stroke by two people. That's annoying. Reading this article, I see another side to it. In so many ways, dealing with rich people is a matter of virtue signaling: you simply cannot join that class without internalizing their thinking. To question the contract implies you're not going to be so rich that you can weasel your way out of any problem that might arise. If you can't think in terms of that kind of extreme liquidity and freedom of action, you're potentially a danger, a person who'll make the wrong judgement call in a crisis and bring that reality principle in. To ascend you must be breathing helium and not air, and the effect can be heard in your voice and seen in your actions, and it quickly shows up in reality: breathe more helium, lift off, stop questioning and get rich along with the other rich helium-breathers. Yes, I'm skeptical, hence the analogy. But I'm also openly wondering if I did the right thing. Perhaps rather than asking sensible questions of some rich person who might have not had my best interests at heart, I should have excitedly celebrated the 'good fortune' and attracted another rich person who'd pledge $100 and so on, or $1000: maybe I should have carried on until my world depended on continually finding a new person who'd pledge equal to all previous people. Sort of a fractal patronage, starkly counter to my plan of doing it through sheer numbers and having a stable, predictable patronage expressed in largely statistical terms. The people do exist, for the 'fractal' type. There's a person out there who'd pledge $1000 without blinking, and one who'd pledge $2000, $8000 and so on, provided the dream is big enough. I feel that all those people are increasingly liable to bail and vanish in the wind when you 'call in the lawyers' or start asking questions, because it's placing a burden on their whims, and you're stepping into a world of whims where you too are expected to think nothing of all this. The startup environment breathes dreams, not air. It's a mechanism where you will do yourself tangible harm by slowing down or questioning anything, even by sensible questions. I feel I've had a hint of that already, and I'm still deciding what to do about it, and what kind of stand to take. You see, part of my job is being able to jump out of the 'dream' and take a larger view. I'm doing so here. I'm puzzled and undecided, because I see how this works: I do see a moral problem with chasing the fractal patronage and hyping illusory dreams, but I also see that the dream is the product and there are those who are happy to buy it if you'll avoid popping their bubble. And one of the conditions is: you're now part of the abundance, money means nothing, don't ask questions. Money, rules, laws become meaningless. What is your dream? I don't know whether to step into that world. I know exactly how I can prevent it 100%: ask practical questions and care wrongly. Who cares if some pissant with 1$ feels let down if they pledge and the rich people adjust their pledges to optimize their return? I'm expected to not even blink at that because my goal is bringing in even larger pledges, and we know the drill. Move Fast Break Stuff, and it's easy to identify who's breathing the helium. And I know I can imagine stuff that's pure helium, if I try; I have notebooks full of it. But I CAN'T stop asking questions and seeing the larger picture…
tomhoward 9y ago
Not only that, but there is also something morally very questionable about making promises and don't giving a sh.t about whether you'll be able to deliver or not. That's an unfair misrepresentation of the article. The dad didn't say you shouldn't care whether or not you'll be able to deliver; just that endless refining of the contract won't actually help you much if something goes wrong.

barbs 9y ago

You're probably right, but the tongue-in-cheek tone of the article implies that the author knows this as well.

tomhoward 9y ago

"This is dangerous advice." Having been in these kinds of negotiations many times over the 15 years I've been in business, and having never been sued nor ever had a deal go seriously wrong, the dad's advice seems perfectly sound. The real point here is this: In every significant business transaction (or indeed, major life decision), you have to choose where you're going be on the risk continuum between sheer recklessness and complete security. At some point your efforts to be prudent cross over into excessive paranoia and then a new form of risk: that all the money and time you spend to try and keep everyone safe will be wasted if the deal doesn't go ahead at all, or if it reduces the amount of time and money everyone has to actually do the work. Sooner or later all the de-risking stops being de-risking and starts creating new forms of risk. I'm pretty sure the dad in this story was just advising his son to avoid making that mistake. As the story said, the son sincerely expected to be able to do the work as it was scoped, for the price on offer. If this wasn't the case, the dad's advice would have been very different. The reality is that when a small business is providing a service to a large company, the threat of legal action isn't really much of a motivator, as the small business likely doesn't have anything they can be sued for (aside from any insurance coverage they may have), so it's just not worth the cost and hassle of taking legal action. As a supplier, your reputation, along with the satisfaction of doing good work, are much bigger motivators to deliver a good result. So everyone really knows, in a deal like this, that the only real option is that everyone works together to get the work done well, and if it looks like it's going off track, then you re-negotiate the agreement and if it seems irredeemable, consider cutting ties. Legal action will barely ever be a sensible option in a case like this. I'm sure this was a key part of the dad's advice.

sillysaurus3 9y ago
Meanwhile, my friend is being sued by a nutty old rich guy that thought my friend went out of their way to sabotage him. (They did no such thing, but when a "startup" goes wrong, people go crazy.) More specifically, my friend entered into a contract to deliver X for the old guy. When X turned out not to resonate with customers, the old guy sued him. Nobody saw it coming. My friend will probably win, and he was very lucky that he was able to get a lawyer for free. But what a massive PITA.

rebuilder 9y ago

What alternative is there? In my experience, if I'm providing anything other than work paid by the hour or day, then I am promising things I can't 100% guarantee I can deliver. I have every reason to believe I can deliver, but I can always think of some unlikely edge cases where things go terribly, irrecoverably wrong. This bugs me, sure, but the only way I can think of to never get sued for breach of contract is to never sign a contract.

ballenf 9y ago

It's really not[1]. The most important thing is to know who's sitting on the other side of the table. As a lawyer I've been asked to negotiate dozens of these contracts. And been sued on exactly one. The irony? The one sued on was one the tightest and my client was 100% in the right. But the other guy was an asshole and we hoped the airtight contract would protect us. We settled and paid him a non-trivial sum. Have seen it repeatedly in situations short of lawsuits where the two sides are of markedly different sizes. The smaller party can negotiate whatever they want and then the big party will still proceed to do what they want and as long as there is still more business going on (sue them and lose the rest of the work). [1] Of course there are exceptions: the most important of them is stipulations that will actually cost you money. That is, the business terms. Then there are terms that can cost you reputation and non-compete clauses that make you lose other work. There are terms you want to watch out for, but my experience discussed above is that it's not the contract that gets you sued, it's the asshole on the other side that you decided to do business with.

john_moscow 9y ago
Out of curiosity, what made you settle given the contract in your favor?
- jrochkind1 9y ago
  I'm not the one who you are asking, but I've seen it happen so I know the answer -- because even when you're sure the contract is in your favor, it's going to cost you a heck of a lot of money to litigate, and you _might_ still lose even more money. Cut your losses (and write em off on your taxes), get back to business. And think about how you can be better at picking clients next time.
  - ballenf 9y ago
    Nailed it. You can never predict an outcome, unless you're willing to spend a load of money on appeals. You rarely (in the US) can collect attorneys fees even if you prevail. The non-trivial amount we paid out was a little less than winning would have cost.

partisan 9y ago

It is bad advice! Some get burned and some don't, but you have to consider possibilities like personal liability that can take a huge toll on your life. It's all well and good until you find yourself in a tense standoff with a client who happens to enjoy litigation since they have an in-house counsel and money to burn. You may not identify that aspect of their personality until it is too late. Or you might think the risk is worth it.

bitJericho 9y ago
A contract won't stop him from suing you.
- steveeq1 9y ago
  yeah, but a bad contract makes it easier to.
  - bitJericho 9y ago
    If you say so.

bisRepetita 9y ago

I have been selling to big companies for a while. I always sign. The time and money I saved by not arguing legalese fineprints will easily pay for the costs of the first Client that will sue me. Not even counting time spent arguing legalese is a mood killer. The kicker is that if something goes wrong, your contract won't protect you much anyway, and giving freebies and working the extra mile is more effective. But if I listen to lawyers or wannabe entrepreneurs, most will tell me to read the fineprints and care about them.

meritt 9y ago
> wannabe entrepreneurs Bingo. HN seems to have this ingrained assumption that anyone who can construct a reasonable argument must be a wildly successful entrepreneur doling out the most sagely of advice. When in reality it's just another programmer who punches the clock for one of the big tech employers and has never taken on more risk than deciding to eat sushi or ramen in the employee-cafeteria.
- OtterCoder 9y ago
  Heck, I've taken enormous risks and lost the farm a couple of times. That doesn't mean I have a lot to say either. I can tell you three things that will guarantee failure, but I can't say much for sure beyond that.

sverige 9y ago

My experience has been that, in general, lawyers who negotiate contracts go way too far trying to eliminate risk. If you are talking about a really big contract with serious money on the table, a good practice can be to befriend a lawyer with lots of litigation experience to help you balance that tendency. It's sometimes worthwhile to get the opinion of a lawyer whose eyes light up when someone else says, "Fuck you, sue me!"

amorphid 9y ago

I find a much better strategy is to try not doing business with assholes. No amount of money will make you feel good about spending time with an asshole, and an asshole is likely the one you'll get sued by. Source: did business with one asshole, subcontracted some of the work to another asshole, got screwed by the former, and sued by the latter.

tedeh 9y ago
So then the right question changes from what a good contract to sign is, to who is an asshole or not. Do you have any specifics that you look out for that you would like to share?
- fencepost 9y ago
  Well, I'd start with checking whether the person has a history of suing or being sued (e.g. by stiffed subcontractors). Also whether they take apparent pride in that history. Further, ask people he's been in business with in the past not about him but about whether they'd do business with him in the future.
  - amorphid 9y ago
    This is pretty good advice. The person who sued me had also sued other people. If your local court(s) have a searchable online database, search for the person's name and/or the name of their company. I'd also recommend trying to not putt yourself in a position where you can only pay a subcontractor when you get paid. When you're client is late on payment, and your subcontractor starts hounding you for cash, you won't have a good time.
- amorphid 9y ago
  Asshole is a pretty subjective measurement. Warning signs are people who push you around, rush into getting a contract signed, ask too many questions for a really small contract, try to control details of how you'd do the work, etc. A lot of it you learn by experience.

Spooky23 9y ago

I've worked for little companies and big companies/institutions. Unless you have some magical political pull, your leverage is nil. The reality is, getting to the point that the fortune 50 or .gov is suing you means that you were asleep at the switch -- getting to that point means that the business unit you are working with has acknowledged defeat (a huge step) and is going to blame you and hurt you no matter what the contract says.

ChemicalWarfare 9y ago
true. large companies are way less likely to sue or be anal in general than small companies/individuals. also it's way easier to negotiate the "definition of done" with them. typically if all of their requirements are addressed and bugs reported in UAT are fixed by the go-live they are good. their teams take over and unless you're hosting the system (which would be covered by a separate hosting agreement) - you're pretty much done. also smaller companies tend to demand "warranty" after the go-live (mostly due to the fact they don't have the staff to maintain the system).
- hxtk 9y ago
  > "definition of done" My first programming job had exactly this problem. Spec started at "connect these two services together using webhooks for $700" and creeped its way up to "build a database-backed web service that replaces both of the original services and then some for $4000, plus development expenses." It's still not done. It'll never be done. But thankfully, I got out after it was off the ground and someone else maintains it now.

mcguire 9y ago

In addition to others' comments, note that a well set up business will shield your personal assets from lawsuits. And for a company like this, there are no assets. What are they going to do, take the office chairs?

tibbetts 9y ago

For a lifestyle or contracting business, you are too worried. For a ventured backed or exit oriented business the thing to worry about is how an investor or an acquirer will think about the contract. "You're getting $50k per year from this customer but exposed to unlimited liability in the event of any software bug? We can't take on that risk, our pockets are too deep." A good lawyer will pick out the important things and tell you why. As an entrepreneur you will still need to decide what to let slide, no lawyer will ever say you are being safe enough.

jsjohnst 9y ago
Sage advise I've received re: lawyers... "You don't pay lawyers to tell you what to do or not do, their job is to tell you the risk in doing or not doing the action. It's your responsibility to decide what risk you're willing to tolerate." Sounds like you agree!

briandear 9y ago

That’s why you set up business entities and never buy or do anything as a sole proprietor.

tptacek 9y ago
Limited liability might protect you in contract disputes, but you'll remain liable for your torts, which is where the real black swan liability in running a company hides.

manyxcxi 9y ago

I agree more with you but also do somewhat subscribe to, I think, the author's intent. First though, as for hiring a full time employee with only the ability to pay them for two months: if you're not up-front with this person you're a real jerk. I've solved this by bringing people in for contracts that are the duration and explaining that future contracts or conversion are dependent on more work coming in. Yeah, it's effectively the same except for in my scenario you may be offering the job to someone with dependents who is risk averse and definitely needs that paycheck in month three. This basically gives them the risk signal they deserve without you having to say "we've only got this much money and no idea what's going to happen in month three." I'll do almost anything before I screw up someone else's livelihood. As for the contracts, I've gotten good enough to read most of them competently. I redline the sketchy parts and the parts my lawyers have redlined in the past. Submit my alternatives or reason why it should just be struck and keep going. It's generally around things like 100% payment at the end changed to milestones or 50/50, liable for all damages changing to liable for up to the value of the contract, etc. There are some things you really can't mess with. If you've got a megacorp client and their AP policy is 90 days, don't bother. You're not getting it for AT LEAST 90. Likely 5-6 months if you're persistent/have a good project owner on their side. They will never agree to a change, and you're not going to sue them for a late invoice unless we're talking about large sums of money that would've dictated this is all being handled by lawyers anyway. Other things get really tricky. Some will slide in IP ownership/transfer clauses that could essentially mean they have claim to anything your company's ever done. I've got some well written reaponse clauses that I re-submit with- but if they push back on those at all I instantly walk away. So, yeah, do read the contracts, focus on a few key areas and look for over reach or hostile clauses and submit sane, fair responses that can be easily accepted. It's fine if you have a lawyer doing all this for you in an advisory role, by be the person who fronts the requests and make yourself part of the process. You'll learn the patterns very quickly and will need to pay your lawyer less frequently as well as you'll learn the counter-proposals so you can shape your proposals to reduce the counter proposals in the first place. Let the esoteric stuff work itself out in a lawsuit, stuff has probably really hit the fan in that case. As far as damages for outages and stuff, you have to assume that if you're working on a smallish (sub 500K) there's absolutely no way they're suing you for a few hours of down time if you provide good customer service during that period. I've had HUGE F ups that led to 6+ hour outages and still received highly positive post project feedback from clients because we had such a good relationship before our mistake(s), we were highly communicative and forthright during the issue, and provided a good post mortem quickly after resolution. To that end, if you find that you often have like-warm relationships with clients, maybe you shouldn't take the risks and just have a good lawyer handy.

bluetwo 9y ago

It isn't my approach but I've seen it work just fine for people. Reasons are: 1) If you are protected (LLC/LLP/S-Corp/etc) then the only thing you have to lose is the company itself. It is hard to go after you personally. If all the company owns is some computers and you are paying yourself a salary, there is nothing of value for them to go after, even if you screw up royally. If they do, fold up shop and go start a new company. 2) Big companies don't really want to sue. It is much better for them to walk away and take the loss. A manager that enters a company into a lawsuit is going to get questioned as to why they let the situation get so out of control. I was pulled into a situation where the lead developer embezzled several hundred thousand dollars and the company still didn't sue him. They fired the guy and brought in other resources (myself and someone else) to clean up the mess. My approach is: 1) I strike anything I can't stand by in the contract. I don't go as far as a lawyer might go, but they tend to draw a line that also protects them from any accusation of negligence, which can sometimes create hard to negotiate situations. Corporate lawyers attach all kinds of crazy things. A salesperson I know calls the first version of a contract from a large company the "F*ck you version". 2) For a set of standard services I provide, I use my own contract which was drawn up by a lawyer. This limits my liability to actual moneys paid to my company, and provides the client with an easy out in 30 days should they decide to drop me. I link to it in every invoice I send these clients. By the way, don't just search Google for sample contracts and try to modify for your use. It really is worth paying a lawyer to sit with you and figure out what your priorities are and craft a contract around them. He asked good questions and built something that works well in our state and represents our interests as best as possible.

jrochkind1 9y ago

> The financial penalties for violating a signed contract can easily drive one into bankruptcy, and the reputational penalties can make it very hard to recover. If you are properly incorporated, can it really do more than drive you out of business? Also, sadly, being sued for a business deal can drive you out of a small business even if you had exactly the right contract and were completely in the right and would _probably_ have won the lawsuit eventually. Going to court is fucking expensive, if they have more money to spend on it than you, they will drive you out of business. And anyone can file a suit against you no matter how much you are in the right.

deleted 9y ago

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valuearb 9y ago

IBM once decided to build a personal computer. They still need programming tools and an operating system so they went to a well known microcomputer language developer. Before they would disclose the project, they gave the young CEO IBM's standard 100 page super scary NDA. He signed it without reading it because he really wanted his company to get IBMs business if they were to make a microcomputer. And it worked, they agreed to buy his languages for their PC, and asked for a referral to someone who could sell them an operating system. He personally referred them to the leading microcomputer OS maker, but could not disclose what IBM wanted to the OS maker. The IBM managers flew to meet with the OS company, but CEO could not make the meeting. His wife and lawyer did, and they actually read the NDA, and it horrified them. They spent all day wrangling over edits to it until the IBM guys left in a huff, without disclosing anything or conducting any business. The lead IBM guy called the language company CEO and told them what had happened. The language company CEO told him not to worry, he could get them an operating system too. And he did, and he eventually became the wealthiest man in the world, all because he didn't read an NDA before signing it. The moral of the story is that you can always be sued, regardless of the agreement. But most every customer doesn't want to sue, they want to succeed. If you get good customers, they will work with you so you both succeed.

ivanhoe 9y ago

Big question is if you even want to sign a contract if it's written in an obviously aggressive way. In my experience reasonable clients usually use reasonable contracts. If company insists on using a contract that is all in their favor, without giving a very good reason for that, that can be a sign that you'll run into many other problems with them in future (bad communication, hostile treatment, getting dragged into office politics, their own organizational problems that managers will try to blame you for, etc.)