Hi, i am trying to figure out what kinda contract i need to get into?
An acquaintance recently approached me with a proposition. He has had an idea for a product for a long time now and he wants to produce and sell it. He offered me in exchange of my designing, drafting and engineering services 15% of the profit (if ever made!). I agreed, we decided to sign a contract. He recently sent me the contract he made up but its very basic, states that he gives me 15% ownership of his idea in exchange of my services. There is no mention of subjects such as: dissolution, profit distribution, liability, responsibility distribution, capital contributions and so on...Also i am not sure if it is binding that he gives me a portion of some idea he doesn't even own yet. I am unsure of which type of partnership agreement i need to get into, partnership contract or a limited liability contract, a contract i don't even know? I am suppose to only provide my designing services, no financial contributions and he is suppose to manage the whole thing. Since i am not contributing financially, i don't want to end up with taking over 15% of his depth, if ever happens! I need some direction to draw a contract that will protect me, allowing me to get out when i need to, and his idea. I was wondering if there are some standard contracts for Ontario maybe!? Do i need a partnership or employment contract?how should i go about this?
Thanks for your help,
Erdem
Asked over 2 years ago in Unknown
Categories:
Business Law
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 Ontario lawyer
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Hi Erdem,
Unfortunately, there are not many standard contracts for private business matters. You are raising some of the key issues and each issue and alternative has various implications, including potential liability and tax. If you want the best result, you should engage a lawyer and/or accountant to help you structure the relationship in a way that is best suited to your situation. If you want simple advice, keep the contract simple - no partnership or corporation - just an independent contractor providing services for a fee to be determined by a formula. To make it simpler, ask for a share of revenue instead of profit - he does not want you (and you don't really want) to have a say on what his expenses are. Make sure you define revenue broadly enough to include direct and indirect receipts as well as a sale of an interest in the business, etc. He should have to give you regular reports and, unless he plans to have them audited anyway, you need the right to request an audit.
Cheers,
Larry
Posted over 2 years ago
Larry Crossan, BCom, JD, MBA
Certified Specialist (Corporate and Commercial Law)
P: 519.858.2222 | F: 519.858.2323
629 Wellington Street, London, ON N6A 3R8
www.lexcor.ca
Strictly Business®
Please note that this is for informational purposes only and does not constitute legal advice to you. Legal advice pertaining to your particular situation can only be provided by a lawyer who has met with you to obtain all pertinent background information necessary to give you a formal legal opinion. For formal legal advice, hire a lawyer (many give a free first consultation).
Contact Larry Crossan, search
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Ontario lawyer |
Posted about 2 years ago
Please note that this is for informational purposes only and does not constitute legal advice to you. Legal advice pertaining to your particular situation can only be provided by a lawyer who has met with you to obtain all pertinent background information necessary to give you a formal legal opinion. For formal legal advice, hire a lawyer (many give a free first consultation).
Contact Michael Carabash, search
the Lawyer Directory, or use our free Lawyer Referral Service.
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