11 ms·

You are entering a legally binding contract with the seller. They must oblige or else refund you. Now of course anyone with any smarts runs a Kickstarter throu

You are entering a legally binding contract with the seller. They must oblige or else refund you. Now of course anyone with any smarts runs a Kickstarter through an LLC to avoid being liable but it isn't a completely free space. Think of it like preordering from a local store. If they go bankrupt you are SOL. Kickstarter just isn't the one taking on the risk in contrast to, say, buying from a random merchant on Amazon works. Where Amazon guarantees completion (as well as it is willing to). Now if a nationwide Kickstarter runs and fails is the original developer's LLC impossible to sue if they don't deliver as long as they take reasonable steps towards delivery? 100%. But again there is a difference between a contract with a random and a playground.

jacquesm 3y ago
> You are entering a legally binding contract with the seller. They must oblige or else refund you. Where does it say that? > Think of it like preordering from a local store. No, again: Kickstarter is not a store. How is it even possible to have this level of misunderstanding when it says exactly that on the linked page. https://help.kickstarter.com/hc/en-us/articles/115005028834-What-is-a-creator-obligated-to-do-once-their-project-is-funded- https://help.kickstarter.com/hc/en-us/articles/115005028834-... "At the same time, backers must understand that Kickstarter is not a store. When you back a project on Kickstarter, you’re helping create something new — not pre-ordering something that already exists. As Kickstarter does not offer refunds, we encourage backers to investigate the project idea first, to vet the creator thoroughly, and to assess the inherent risk of the project for themselves before making a pledge. There’s always a chance something could happen that prevents the creator from being able to finish the project as promised. " And that's from the current terms of service, the previous ones (which were in effect when this project launched) were even more lenient. And that's also why it is called a 'pledge' and not a 'sale'.
- verve_rat 3y ago
  I mean, they can say whatever they want on the site, but the real question is: what does the legislation, regulation, and common law say about this? Has anyone successfully sued a project? Is there case law?
  - jacquesm 3y ago
    Regret isn't a reason for a restatement of the terms of agreement. If you think that you are going to need a lawyer or sue someone because you backed a Kickstarter short of being fraudulent I suggest you don't ever use Kickstarter at all. That's so against the spirit of what the whole thing is about.
  - Guvante 3y ago
    Most Kickstarter backers out in $50 or less. The filing fee for small claims court is usually $20 and that assumes you live near each other. They are usually judgement proof but that isn't uncommon in other fields too.
    - jacquesm 3y ago
      The thing that allows Kickstarter to work in the first place is that it uses low risk on the one side (the backers) to enable the initiators to engage in much higher risk ventures than they would ever be able to do on their own. If the backers 'back out' because they see that risk as too high retrospectively they should not have engaged in the first place. Because you are out only $50 or less. But collectively you've enabled someone to take on a risk that they could not have carried by themselves, as a backer you underwrite that risk. This is such a fundamental component of crowdsourcing that I find it bizarre that it needs to be spelled out like this. Legal recourse should be reserved for outright fraud, no less.
      - verve_rat 3y ago
        Yes, that is the theory behind crowdsourcing, but what is the actual legal reality? We often don't know that until it has been tested in a court.
        jacquesm 3y ago
        You normally speaking shouldn't care. But there have actually been Kickstarter cases brought to court that were resolved in the favor of the backers. Examples: https://arstechnica.com/tech-policy/2015/06/feds-take-first-action-against-a-failed-kickstarter-with-112k-judgment/ https://arstechnica.com/tech-policy/2015/06/feds-take-first-... (most likely fraud) https://icv2.com/articles/news/view/32334/court-orders-fines-payments-kickstarter-case https://icv2.com/articles/news/view/32334/court-orders-fines... (seems to have been either bad timing or someone that needed the court to get off their ass) https://massivelyop.com/2022/10/12/chronicles-of-elyria-dev-celebrates-dismissal-of-backer-lawsuit-as-next-phase-of-heros-journey/ https://massivelyop.com/2022/10/12/chronicles-of-elyria-dev-... (many millions of $, case dismissed) So it's a bit of a toss-up. Especially the second is weird because the state is awarded $54K versus a pittance to the backers and apparently the backers did in fact receive their stuff. All in all, other than outright fraud I don't see much in terms of real world recourse here, and even then you have to wonder if you shouldn't just write it off. The last one is interesting: by handing a lot of $ to a project initiator you are also effectively funding them from defending from you suing them...
- jldugger 3y ago
  > Where does it say that? Well, the Terms of Use[1] in force at the time make it pretty clear: > By creating a fundraising campaign on Kickstarter, you as the Project Creator are offering the public the opportunity to enter into a contract with you. And later on, it suggests backers should expect rewards promised or their money back: > Project Creators are required to fulfill all rewards of their successful fundraising campaigns or refund any Backer whose reward they do not or cannot fulfill. Obviously you and I know better than to expect these to happen, but lets not pretend like everyone participating should have known they were bearing equity-like risk. [1]: https://www.kickstarter.com/terms-of-use/oct2012 https://www.kickstarter.com/terms-of-use/oct2012
  - renewiltord 3y ago
    Sure, but the same contract offers arbitrary delivery dates: > The Estimated Delivery Date listed on each reward is not a promise to fulfill by that date, but is merely an estimate of when the Project Creator hopes to fulfill by. Project Creators agree to make a good faith attempt to fulfill each reward by its Estimated Delivery Date The point of this site is to gather enough money to make a good faith attempt at something. That's pretty obvious. Even an LLM can figure that out.
    - Guvante 3y ago
      Honestly to my understanding that is very common terms in contract law. Normally you have a right to a full refund if a date is specified and missed (specifically you can liquidate the contract for failure to fulfill which allows you to retrieve your consideration). But pretty much everybody ensures the contract avoids that by either specifying damages for a missed date (which avoids full liquidation) or specifies that no real date is for open ended projects. Note that with no end date you can still sue for failure to uphold if say updates stop.
      - jacquesm 3y ago
        Yes, you can sue. But that will likely put the initiator in the poor house, whether you win or lose doesn't even matter. Is that what you had in mind as one of the possible outcomes when backed a project? If so: then don't back that project. People do Kickstarters without vetting as to their business acumen, skills, planning capabilities, ability to source components, product safety knowledge and so on. This dramatically changes the situation from ordering a good from a store or company and you should adjust your expectation as to delivery, quality of workmanship, product safety and guarantees accordingly. It is precisely why I've never done a Kickstarter even if there have been multiple occasions where people indicated they would love it if I did that. But I could see the potential trouble down the line with some clarity: I could easily put in a ton of effort, ultimately fail through some unknown factor and still be morally (and in some jurisdictions even legally) on the hook for either the delivery or a refund. This has such a chilling effect that it never even was a consideration to try. And that's precisely what Kickstarter is: to give people a chance to try to achieve their goal. Best effort, at best, and success as a lucky nice-to-have. And that's why I'm more than happy to back some projects that have low chance of success but where I hope that the initiator will either learn something or in an odd case that it will result in something tangible. I'm pleasantly surprised when it works and I don't sweat it when it doesn't. And I think that's the best match attitude wise for what Kickstarter offers, higher expectations than that and you will be disappointed.
varjag 3y ago
Amazon sells existing products. There is always a chasm to be crossed between a napkin idea and delivering a product, and your role here is closer to that of a nano-investor.
- imtringued 3y ago
  In fact, crowd investing for returns is a thing in Germany.
flir 3y ago
> You are entering a legally binding contract with the seller. They must oblige or else refund you. Is that how it works for angel investors too?
- jacquesm 3y ago
  I wish :)
- AdamN 3y ago
  The convertible debt sort of does work like that in theory ... except that the expectation is that the goal is big growth or bankruptcy while trying (in which case the debt is discharged).
- Guvante 3y ago
  Investors usually have terms which defines the contract you both agree to. Investments usually result in an ownership transfer though which doesn't have the same kind of hard stops necessarily.
  - jacquesm 3y ago
    That ownership is worth exactly nil if the company fails or fails to deliver. In fact being an investor in an early stage start-up has substantially worse expectations on a per-project basis than Kickstarters. Kickstarters are 6 times more likely to succeed compared to angel investments. And when you lose your angel investment it will be a large multiple (1000x) of what you would put behind a typical Kickstarter. That increase in risk and increase in capital involved is what powers the legal requirements, and that's where there is no document with a signature on it or any legal stuff to review before you can back a Kickstarter with $50 or $100 of your hard earned money: the risk is negligible compared to an angel investment. And investments do not necessarily result in an ownership transfer, at the seed and angel level convertible loans effectively postpone that transfer, possibly in perpetuity unless the business manages to raise a later round. Because everybody involved recognizes that if that doesn't happen there is no point in engaging in the song-and-dance of ownership transfer at a non-realistic valuation. Your typical start-up team is far more capable in terms of business savvy than your typical Bickstarter initiator (artists, tinkerers, hobbyists, wannabe entrepreneurs) and they tend to be much less sure of their ability to bring the project to term. They will most likely underestimate their costs and runtime, overestimate their ability and availability of parts. This should factor heavily into the decision of whether or not you want to back a Kickstarter at all, no matter what the desirable features of the gadget are.
renewiltord 3y ago
For the things I back on Kickstarter, I see it as expressing honest interest in a long tail product. It's okay if it doesn't arrive. I just want the guy to give it an honest shot. And I'm comfortable knowing that I have to be the one who evaluates whether this is a risk worth taking. I'm glad something like this exists in the world so that other people like me can do this together with me. I really wish people like you wouldn't use this sort of site. If you wouldn't be okay with the effort failing, then please just go elsewhere.
- jacquesm 3y ago
  Exactly. If you want to use a store: use a store, don't use Kickstarter. At the same time I've seen things come by on Kickstarter that I think they should have never accepted in the first place. They were 100% sure to fail.

jacquesm 3y ago

> You are entering a legally binding contract with the seller. They must oblige or else refund you. Where does it say that? > Think of it like preordering from a local store. No, again: Kickstarter is not a store. How is it even possible to have this level of misunderstanding when it says exactly that on the linked page. https://help.kickstarter.com/hc/en-us/articles/115005028834-What-is-a-creator-obligated-to-do-once-their-project-is-funded- https://help.kickstarter.com/hc/en-us/articles/115005028834-... "At the same time, backers must understand that Kickstarter is not a store. When you back a project on Kickstarter, you’re helping create something new — not pre-ordering something that already exists. As Kickstarter does not offer refunds, we encourage backers to investigate the project idea first, to vet the creator thoroughly, and to assess the inherent risk of the project for themselves before making a pledge. There’s always a chance something could happen that prevents the creator from being able to finish the project as promised. " And that's from the current terms of service, the previous ones (which were in effect when this project launched) were even more lenient. And that's also why it is called a 'pledge' and not a 'sale'.

verve_rat 3y ago
I mean, they can say whatever they want on the site, but the real question is: what does the legislation, regulation, and common law say about this? Has anyone successfully sued a project? Is there case law?
- jacquesm 3y ago
  Regret isn't a reason for a restatement of the terms of agreement. If you think that you are going to need a lawyer or sue someone because you backed a Kickstarter short of being fraudulent I suggest you don't ever use Kickstarter at all. That's so against the spirit of what the whole thing is about.
- Guvante 3y ago
  Most Kickstarter backers out in $50 or less. The filing fee for small claims court is usually $20 and that assumes you live near each other. They are usually judgement proof but that isn't uncommon in other fields too.
  - jacquesm 3y ago
    The thing that allows Kickstarter to work in the first place is that it uses low risk on the one side (the backers) to enable the initiators to engage in much higher risk ventures than they would ever be able to do on their own. If the backers 'back out' because they see that risk as too high retrospectively they should not have engaged in the first place. Because you are out only $50 or less. But collectively you've enabled someone to take on a risk that they could not have carried by themselves, as a backer you underwrite that risk. This is such a fundamental component of crowdsourcing that I find it bizarre that it needs to be spelled out like this. Legal recourse should be reserved for outright fraud, no less.
    - verve_rat 3y ago
      Yes, that is the theory behind crowdsourcing, but what is the actual legal reality? We often don't know that until it has been tested in a court.
      - jacquesm 3y ago
        You normally speaking shouldn't care. But there have actually been Kickstarter cases brought to court that were resolved in the favor of the backers. Examples: https://arstechnica.com/tech-policy/2015/06/feds-take-first-action-against-a-failed-kickstarter-with-112k-judgment/ https://arstechnica.com/tech-policy/2015/06/feds-take-first-... (most likely fraud) https://icv2.com/articles/news/view/32334/court-orders-fines-payments-kickstarter-case https://icv2.com/articles/news/view/32334/court-orders-fines... (seems to have been either bad timing or someone that needed the court to get off their ass) https://massivelyop.com/2022/10/12/chronicles-of-elyria-dev-celebrates-dismissal-of-backer-lawsuit-as-next-phase-of-heros-journey/ https://massivelyop.com/2022/10/12/chronicles-of-elyria-dev-... (many millions of $, case dismissed) So it's a bit of a toss-up. Especially the second is weird because the state is awarded $54K versus a pittance to the backers and apparently the backers did in fact receive their stuff. All in all, other than outright fraud I don't see much in terms of real world recourse here, and even then you have to wonder if you shouldn't just write it off. The last one is interesting: by handing a lot of $ to a project initiator you are also effectively funding them from defending from you suing them...
jldugger 3y ago
> Where does it say that? Well, the Terms of Use[1] in force at the time make it pretty clear: > By creating a fundraising campaign on Kickstarter, you as the Project Creator are offering the public the opportunity to enter into a contract with you. And later on, it suggests backers should expect rewards promised or their money back: > Project Creators are required to fulfill all rewards of their successful fundraising campaigns or refund any Backer whose reward they do not or cannot fulfill. Obviously you and I know better than to expect these to happen, but lets not pretend like everyone participating should have known they were bearing equity-like risk. [1]: https://www.kickstarter.com/terms-of-use/oct2012 https://www.kickstarter.com/terms-of-use/oct2012
- renewiltord 3y ago
  Sure, but the same contract offers arbitrary delivery dates: > The Estimated Delivery Date listed on each reward is not a promise to fulfill by that date, but is merely an estimate of when the Project Creator hopes to fulfill by. Project Creators agree to make a good faith attempt to fulfill each reward by its Estimated Delivery Date The point of this site is to gather enough money to make a good faith attempt at something. That's pretty obvious. Even an LLM can figure that out.
  - Guvante 3y ago
    Honestly to my understanding that is very common terms in contract law. Normally you have a right to a full refund if a date is specified and missed (specifically you can liquidate the contract for failure to fulfill which allows you to retrieve your consideration). But pretty much everybody ensures the contract avoids that by either specifying damages for a missed date (which avoids full liquidation) or specifies that no real date is for open ended projects. Note that with no end date you can still sue for failure to uphold if say updates stop.
    - jacquesm 3y ago
      Yes, you can sue. But that will likely put the initiator in the poor house, whether you win or lose doesn't even matter. Is that what you had in mind as one of the possible outcomes when backed a project? If so: then don't back that project. People do Kickstarters without vetting as to their business acumen, skills, planning capabilities, ability to source components, product safety knowledge and so on. This dramatically changes the situation from ordering a good from a store or company and you should adjust your expectation as to delivery, quality of workmanship, product safety and guarantees accordingly. It is precisely why I've never done a Kickstarter even if there have been multiple occasions where people indicated they would love it if I did that. But I could see the potential trouble down the line with some clarity: I could easily put in a ton of effort, ultimately fail through some unknown factor and still be morally (and in some jurisdictions even legally) on the hook for either the delivery or a refund. This has such a chilling effect that it never even was a consideration to try. And that's precisely what Kickstarter is: to give people a chance to try to achieve their goal. Best effort, at best, and success as a lucky nice-to-have. And that's why I'm more than happy to back some projects that have low chance of success but where I hope that the initiator will either learn something or in an odd case that it will result in something tangible. I'm pleasantly surprised when it works and I don't sweat it when it doesn't. And I think that's the best match attitude wise for what Kickstarter offers, higher expectations than that and you will be disappointed.

varjag 3y ago

Amazon sells existing products. There is always a chasm to be crossed between a napkin idea and delivering a product, and your role here is closer to that of a nano-investor.

imtringued 3y ago
In fact, crowd investing for returns is a thing in Germany.

flir 3y ago

> You are entering a legally binding contract with the seller. They must oblige or else refund you. Is that how it works for angel investors too?

jacquesm 3y ago
I wish :)
AdamN 3y ago
The convertible debt sort of does work like that in theory ... except that the expectation is that the goal is big growth or bankruptcy while trying (in which case the debt is discharged).
Guvante 3y ago
Investors usually have terms which defines the contract you both agree to. Investments usually result in an ownership transfer though which doesn't have the same kind of hard stops necessarily.
- jacquesm 3y ago
  That ownership is worth exactly nil if the company fails or fails to deliver. In fact being an investor in an early stage start-up has substantially worse expectations on a per-project basis than Kickstarters. Kickstarters are 6 times more likely to succeed compared to angel investments. And when you lose your angel investment it will be a large multiple (1000x) of what you would put behind a typical Kickstarter. That increase in risk and increase in capital involved is what powers the legal requirements, and that's where there is no document with a signature on it or any legal stuff to review before you can back a Kickstarter with $50 or $100 of your hard earned money: the risk is negligible compared to an angel investment. And investments do not necessarily result in an ownership transfer, at the seed and angel level convertible loans effectively postpone that transfer, possibly in perpetuity unless the business manages to raise a later round. Because everybody involved recognizes that if that doesn't happen there is no point in engaging in the song-and-dance of ownership transfer at a non-realistic valuation. Your typical start-up team is far more capable in terms of business savvy than your typical Bickstarter initiator (artists, tinkerers, hobbyists, wannabe entrepreneurs) and they tend to be much less sure of their ability to bring the project to term. They will most likely underestimate their costs and runtime, overestimate their ability and availability of parts. This should factor heavily into the decision of whether or not you want to back a Kickstarter at all, no matter what the desirable features of the gadget are.

renewiltord 3y ago

For the things I back on Kickstarter, I see it as expressing honest interest in a long tail product. It's okay if it doesn't arrive. I just want the guy to give it an honest shot. And I'm comfortable knowing that I have to be the one who evaluates whether this is a risk worth taking. I'm glad something like this exists in the world so that other people like me can do this together with me. I really wish people like you wouldn't use this sort of site. If you wouldn't be okay with the effort failing, then please just go elsewhere.

jacquesm 3y ago
Exactly. If you want to use a store: use a store, don't use Kickstarter. At the same time I've seen things come by on Kickstarter that I think they should have never accepted in the first place. They were 100% sure to fail.