[An inconstantly emphasised discussion of contracts, with the geek in
A contract is a written agreement where all parties list their
obligations and expectations in simple, declarative sentences in plain
and unambiguous language.
A good contract is a win-win deal. It must pass three basic
1. Everyone gets what they want out of it.
2. Everyone is assured of equal measures of protection should the other
party or parties fail to meet their obligations (through malice,
incompetence, or simple circumstance)
3. It should be as simple as possible, and unambiguous.
Never deal with companies that refuse to negotiate their
contracts. This probably indicates a breach of (1) and possibly also
(2). Unwillingness to negotiate a contract 'as a matter of policy' means
they are thinking about themselves, and not you. You're thinking of
them, right? If you're not being unreasonable, then there's no reason
not to at least figure out where the middle-ground might be, even if you
or they decide that it's inadequate. People who won't even
consider contractual modifications are not worth the trouble of
Consider being suspicious if the person asking you to sign it hasn't
read it themselves (I'd like to say that that was an uncommon
situation, but it isn't). I feel that it should go without
saying that you should read it through as well. More on that in a
minute. In many cases, companies inherit contracts when a pet lawyer or
executive joins the company, bringing some contract with them from a
previous workplace. That contract itself may be from yet another
workplace previously. While the odd clause may have been added or
removed, it's possible that few people have ever read the thing the
whole way through. Having seen quite a few contracts over the years, I'm
convinced that there's less than a hundred of them roaming around, and
some probably date back to Alexander of Macedon.
(It's kind of disconcerting to discover that your contract to write
software signs over the intellectual property rights for any stock
embryos, or medicinal drugs developed during the course of your
contract. Face it...nobody cared enough to read the contract before they
handed it to you to sign, so it's just failed the second test. It
probably doesn't protect you)
Dealing with it
So, you're handed a contract. What do you do? You read it!
Contracts come with a glossary of terms embedded. Check it. Read through
by clause. If any term is ambiguous, ask what it means in the context of
the contract, and then pencil it into the glossary. These are
not sacred commandments graven in stone...they describe what you are
agreeing to do, and what you get for doing it, and what recourse you
have if you are screwed around or things go bad. Remember test (1). If
it doesn't suit both parties, then neither of you should sign it!
Once we have the definitions out of the way, look for sloppy and unclear
language. If you need a lawyer to read a clause, ask what it means, then
cross it out and pencil in the same thing in simple, unambiguous terms.
Next, once things are clear, hand it back. This is where the contract is
disambiguated. It's a clear statement. It may not be the right
statement, but that's coming up. More than once, I've shocked the person
across the table by restating sections of their contract in simple,
understandable english, and they've then realised that either I (or
they) would have to be idiots to agree to the terms that the
contract states. Until they see their own contracts in plain language,
many people who have read them (and occasionally had a hand in
writing them) have not understood them.
We're down to the wire. We've disambiguated the contract, and agreed to
a common definition of the terms. Now cross out anything you absolutely
will NOT agree to. Propose alternatives. Negotiate. Meet in the middle.
Come to an understanding. If you can't, then you can shake hands and
walk away. You and they would not have been happy doing business
together anyway. If you can come to mutually agreeable terms, then
great! You've got a contract! It'll only take a few minutes to type up
and print the changes. Usually it takes less time than it takes to tell
you how much of a hassle it is to do.
A contract doesn't force a party to do anything they don't want
to do. That's what the courts and the law are for. A breached contract
expedites the legal process (the more so if it's a clear and fair
contract), but you've got to be willing to go that far. If a party does
not want to honour an agreement, then they WON'T, and a piece of paper
called a contract will NOT compell them to do so. A dishonourable party
that you cannot take legal action against has nothing to fear from you
but your word. In geek circles, bad PR travels pretty damn far, but it
may not be far enough.
1. Everyone wins. Everyone gets what they want, feels good and warm and
fuzzy, and rides off into the sunset at the end of the day.
2. Everyone is protected. Every industry and every business can suffer
reversals or go sour. You can run into rabid middle-managers who don't
like your haircut/dog/gender/aura/competency/quantum-wave-function who
will insanely try to block your ability to do your job (or to recieve
your listed compensation for it) at every turn. The other party may
simply decide to do something else, and try to wriggle out. You have to
have as much protection as they do. They have to have as much as you.
Ask the person across the table: "Why does this protect you from a
breach and not me? That doesn't seem very fair, does it?"
3. Simple and unambiguous. You can sacrifice some of the former for the
latter, but if it can't be said fairly simply, maybe it
shouldn't be said at all....Or needs to be said in more clauses.
Sometimes you have to list a series of steps (like a program) to
describe - say - dispute resolution. Better to have 30 little clauses in
order, than a compound sentence with badly blocked semicolons. If it can
mean more than one thing, you can be guaranteed that it will!
I read EULAs and contracts whenever I can; wish I could read every
single one, but I do read many.
I read them for the same reasons as the author of this article--to see
what the legal competencies of the company are. I must admit that
Microsoft consistently has the most diverse contracts emitting from a
single source. They really do work hard on their contracts, and few of
them are 'boilerplated' (cut-n-paste from a template).
Some contracts are even funny. Most contracts are a short legalese
summary of the problems a company has encountered in the past--and now
they're trying to protect themselves. The ZEND contract (included with
their studio) I recently read was one of the most legalistic I ever
saw, extremely comprehensive.
Almost all contracts have a clause or two WHERE THEY BEGIN SHOUTING AT
YOU IN ALL CAPS AS IF THAT STRENGTHENED THEIR POSITION or whatever.
I don't have a problem with a company limiting their liabilities with
extreme detail. I personally have a policy of managing my own problems,
ie, once I own it except for an extreme problem, I solve the problem
myself, rather than resorting to legal channels and blaming someone
else. What I have a problem with is a contract that LIMITS me from
using software (or a product) from reasonable uses. Microsoft is good
for that kind of contract, and getting moreso. The GNU license, for
example, does not limit me from using the software, but it does demand
that IF I use it in certain manners, THEN I must also make source code
available. This is a really exciting use of contract, and I think
Microsoft does the opposite, when for example they frankly say "You
cannot use our software with SAMBA" (in legalese).
Information wants to be free.
An agreement isn't a contract unless it meets five criteria:
1. offer -- First one party or the other must offer an agreement.
2. acceptance -- After an offer has been made, the second party must
accept the offer.
3. consideration -- A contract must be supported by consideration. Each
party must get something and give something (this is stated crudely,
but you get the point). There are (several) rules about what does and
does not constitute consideration.
4. capacity -- You must have the legal capacity to form contracts.
Minors and the mentally retarded or insane do not have the capacity to
form contracts. I believe that this is also where duress fits in;
contracts formed under duress (threat of harm to you or your loved
ones) are not valid.
5. legality -- The subject matter of an agreement must be legal. An
agreement isn't legal if it is against statutory law or public policy
(among other things). So price fixing agreements are not contracts,
certain types of non-competition agreements are not contracts, and
certain types of non-disclosure agreements are not contracts.
In general (yes, there are exceptions), if an agreement isn't a
contract (i.e. if it doesn't meet all 5 requirements), it won't be
enforced by the courts. Beware, though, that many contracts are written
with a severability clause. This means that it any provision of the
contract is found to be invalid, the rest of the contract will still be
valid and enforceable. (So your employment contract's provisions about
non-competition might get squashed, but the patent assignment and non-
disclosure pieces will still stand.)
Hope this (non-thorough and VERY non-rigorous) introduction (by a non-