I’ve converted my old personal website to a blog format. Not sure why it took me so long - I’ve been using WordPress over at InhouseBlog for some time now. Will I post to this as a blog? We’ll see. I primarily intend to use this as a placeholder for technology law links and tips that I want to keep track of - but I’ll also add articles and news items from time to time.
INTRODUCTION
In a highly competitive marketplace, most web developers would do just about anything for a long-term website development relationship with a stable Fortune 500 company. Decision-makers in IT departments are keenly aware that the balance of power has shifted from the early days of the dot-com era, and that their financial resources can provide them with significant bargaining power on price as well as in structuring the legal terms that govern the development relationship. The key for web developers in this market is to aggressively close deals while ensuring that their development agreements provide adequate legal protection and a minimum of liability exposure. With a flexible development agreement, web developers can increase the number of deals consummated while addressing purchaser concerns in a timely fashion. This article discusses some of the key sticking points that often arise in negotiations between purchasers and developers.
1. Preparing for the Deal. At the outset, website developers should make sure that they are organized in an entity that can minimize liability exposure. Web developers often choose corporations or limited liability companies, which can help limit liability. If a developer is signing an agreement in a personal capacity, a client may be able to sue the developer personally if the deal goes bad. While forming limited liability entities is a relatively simple procedure in most states, developers should make sure that they “observe the formalities” of the entity that they form. These formalities include holding meetings of directors or members, observing annual meetings and bylaws and keeping the finances of the principals separate from those of the limited liability entity.
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Originally published in 1998, Website Development Agreements: A Guide to Planning and Drafting has been subsequently reprinted in several CLE publications, as classroom materials at a law school, and most recently in Bowne Publishing’s The Best in Ecommerce Law. The article focuses on the issues that should addressed in a website development agreement and is written for practitioners as well as companies contemplating an online presence. This article is too old to be of much use these days - but I may revise it in the future.