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When is a Contract Not a Contract?
posted by mpawlo on Wednesday August 28, @02:05PM
from the pact-sunt-servanda dept.
News dcm writes "Delene Garafano has written an account of her experience working for the Stones as a contractor, over at Stoned Out Loud. It seems she did some contracting without getting it in writing. A version of the article with an email to the publisher and links to background material can be found online.

This item poses some interesting questions about technology and the law. Specifically, this woman was contracted to sell her time to the Rolling Stones for the duration of their 2 year tour. Part of what she was asked to to was design a website. She did, (links to it in the story) and now is attempting to get paid. Her position is that she has very little chance a collecting, but she has not given up.

Another legal issue is that of contracting, contracts, and their definition. Is there such a thing as an oral contract? Having been tendered an offer, and having accepted it, and then performed on it, is any such contract still considered to be in execution?

Food for thought."

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    When is a Contract Not a Contract? | Login/Create an Account | Top | 5 comments | Search Discussion
    Threshold:
    The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
    Yes. (Score:1)
    by bwtaylor on Wednesday August 28, @04:10PM (#253)
    User #184 Info
    There is nothing wrong with an oral contract. In fact, if there is no agreement here, then they are committing copyright infringement, because unless they have a written, signed transfer of IP ownership, or she is a normal employee on the good old work-for-hire payroll, then she is the author, not them, and she retains copyright. She should sue for both breach of contract and copyright infringement. The burden of proof is usually on the potential infringer to prove they had a licence, so I would think they would get into pretty hot water pretty quickly by trying to say that there was no agreement that involved them paying money unless they have evidence to back that up. She would just respond "If I had given them my work for free as a gift, then I wouldn't be suing them, would I."
    Re:Yes. (Score:1)
    by dcm on Friday August 30, @04:26AM (#260)
    User #418 Info | http://www.stoned-out-loud.com/
    a few comments, a few questions.

    >There is nothing wrong with an oral contract.

    so far so good.

    > In fact, if there is no agreement here,
    > then they are committing copyright
    >infringement, because unless they have a
    >written, signed transfer of IP ownership,
    >or she is a normal employee on the good old
    >work-for-hire payroll, then she is the author,
    >not them, and she retains copyright.

    I don't see what You mean. The site she created was intended as a mockup, or prototype, something to throw darts at. The client rep who let the contract would not pay for a commercial host, and being short of operating funds, the contractor just went out to a "free home page" place and created the site.

    They are not on the payroll. No work for hire.

    She is the author, copyright notice at the bottom of the page (http://stonestour.tripod.com [tripod.com]), and every other page there.

    The domain is a "virtual subdomain" created by Tripod. Sign up to make a page there, their admins do it up so it *looks* to outside hosts like a subdomain, whereas in fact it is only a user directory, presumably (under unix) looking something like /home/username .

    So no IP registration has ever been done.

    As for copyright infringement, Yes, the contractor created and copyrighted the site in question, but it uses images whose ownership is in question, as well as images that are copyrighted by the client who is in default on the contract - presumably, with permission, as the client's representative pressured the contractor to get the site done and to use these images and materials.

    >She should sue for both breach of contract
    >and copyright infringement. The burden of proof
    >is usually on the potential infringer to prove
    > they had a licence, so I would think they
    >would get into pretty hot water pretty quickly
    >by trying to say that there was no agreement
    > that involved them paying money unless they
    > have evidence to back that up.

    That's the whole dilemna. It's all hot air. Nothing in writing .. or very little. To me it looks like this:

    Either they contracted for 2 years of this Person's *time*, or some deliverable thing, like a newsletter or website (or a series of items over the term).

    If they contracted for this Person's time , then they are in default qua having not paid anything since the contract began at the beginning of March, 2002. The term was March 2002 to March 2004.

    On the other hand, If they contracted for a deliverable , say, the website, then they are in default by virtue of the fact that they have made no payment for the site before, during,or after it's creation.

    So either way - they're in default.

    Time - default qua no$
    Deliverable - default qua no$

    In fact, the Person who let the contract for the Client has even expressed, "I don't care either way whether You get paid."

    >She would just respond "If I had given them
    >my work for free as a gift, then I wouldn't be
    > suing them, would I."

    Ah. She has no functioning Counsel at the moment, and is not likely to be able to afford one. That's a problem.

    What technology issue? Getting paid is old! (Score:2)
    by Seth Finkelstein (reversethis-{moc.fhtes} {ta} {fhtes}) on Wednesday August 28, @05:00PM (#254)
    User #31 Info | http://sethf.com/
    I'm uncertain what technology issue there is here, except for the element that part of the work involved a web-site.

    Any contractor can tell you that not getting paid from flaky employers is an occupational hazard. Even with a written contract, it's sometimes a problem. Sure, you can sue. That is, if you have the time and money to spend going after them, or on a lawyer. It's not trivial. If they're flaky enough not to pay, they tend to be flaky enough that suing them isn't magic.

    I sympathize with the story as given. But it's not exactly a hi-tech innovation.

    Seth Finkelstein [sethf.com]

    Other Collection Alternatives (re:What tech..old!) (Score:1)
    by dcm on Friday August 30, @05:33AM (#261)
    User #418 Info | http://www.stoned-out-loud.com/
    >Even with a written contract, it's sometimes
    >a problem. Sure, you can sue. That is, if you
    >have the time and money to spend going after them,
    >or on a lawyer. It's not trivial. If they're
    >flaky enough not to pay, they tend to be flaky
    >enough that suing them isn't magic.

    Ain't it the truth! (grin)

    There may be a few other avenues, but then, I'm not an attorney, so I don't know.

    She could chalk it up to a bad experience, send them a regular bill repeatedly, and then write it off her income tax as a bad debt.

    Anybody know what the limit is, if any, on bad-debt deductions? How would the IRS feel about a Person of modest means, living on a fixed income derived from Social Security-Disability, suddenly writing off $140,000.00 of bad debt for two years in a row (I'm assuming she would split the write-off between the two years of the defaulted contract)?

    There's also the possibility of Attachments and Liens. The Person who represents the Rolling Stones who let the contract works out of his home in Stamford, and has an extensive collection of Rolling Stones unreleased soundboard tapes and other assorted memorabilia and bric-a-brac of value only to diehard fans...but of great value to them, such that they could conceiveably fetch enough at auction, if siezed, to satisfy the entire $260,000.00 plus (expenses incurred thus far) of the contract in default.

    What is the difference between attaching an asset and placing a lien on one?

    Being without competent legal representation in this matter, is this a matter this contractor could do herself? I mean, forms to file a lien, or hearing to get an attachment on the house and it's contents?

    What are the necessary steps this contractor could take to effect a siezure and auction to satisfy this debt?

    Any ideas?

    Also, that only covers immediate redress, from the client representative/liason who let the contract initially. The real target that might offer adequate solvency to satisfy the defaulted amounts due is the Rolling Stones, Musidor, and their Raindrop organisations. After all, why beat around the bush? The client is the Rolling Stones; and this Person, Contractor, has suffered real and continuing pain and suffering as a result of continuing mental abuse inflicted by the Rolling Stones' employee/representative who let the contract, as well as financial harm (accumulated expenses).

    To say this interlocked directorate of organisations' revenue stream dwarf's the contractor's income would be an understatement. The Stone's are rumored to be spending around a billion dollars staging this tour, a big sponsor is e-Trade (I'm not privy to these numbers). Now, e-Trade will get publicity from the Tour by having it's logo prominent and probably other promotional tie-ins, and the Stones wouldn't be spending this much (if they are) on staging the 2 year international tour if they didn't think they would not make back four or five times that much as a result (speculation).

    Example: They plan to wind up the whole thing by playing Beiijing ("It's already booked." -M. Decaro, the Rolling Stones). One reason they want to do this, one would surmise, would be to raise mainland young newly affluent Chinese awareness of the Stones, thereby opening up a vast new market for their products to be sold. That's a hell of a big nugget.

    Now, if one stipulates that they are, in fact, spending 1 billion dollars staging this tour, the amount of this contract they have defaulted on - $260,000.00 plus, say, 5 or 10 thousand in expenses; this amount represents around one-quarter of one percent, 0.25 percent, or 25/ten-thousandths of the total expenses for the tour.

    With those kinds of revenues, I would think they should just pay her off and keep Decaro on a leash from now on. That would seem to me to be the simplest solution all the way around. They wouldn't have the kind of public relations and business pr problems they are going to have if they fail to nip this in the bud.

    Here's what I mean. There are a number of news organisations that have already been made aware of this story. Sooner or later somebody is going to start asking questions, other than Stoned Out Loud.

    When they do (and they will), and the story spreads throughout the media, what kind of public relations will that be for their corporate sponsor, e-Trade? Big companies already have enough problems with credibility, what with Enron, Global Crossing, MCI collapsing, double-booking revenues, getting loans and booking them as revenues, etc.

    Should the client continue to do nothing about this defaulted contract of theirs, it is not unlikely (I speculate) that as the story spreads through the media, e-Trade may decide to pull out as a sponsor for the tour. They probably would not want to be associated with an organisation under fire for not paying their contractors or debts. This would be a prudent public relations move for such an organisation, and not at all unusual. But it would cost the client money, much more perhaps than the paltry sum owed this contractor. And it could endanger the tour itself, and that would be a shame. I personally would like to see the Stone's tour rock the world. Better to get it over with, imho, for what it's worth.

    oral contracts are good but... (Score:0)
    by Anonymous Coward on Sunday September 01, @10:43PM (#267)
    Is there such a thing as an oral contract? of course there is, oral contracts are made every day. However, contracts that cannot be performed in one year or less need to be in writing. Next time, get it in writing before you do any work, or make commitments.

    Humanity has the stars in its future, and that future is too important to be lost under the burden of juvenile folly and ignorant superstition. - Isaac Asimov

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