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Personal liability from bad signature blocks; sign work-made-for-hire first.
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Legal Landmines – It’s the Little Things

Legal Landmines – It’s the Little Things

Signatures…           and…          You Can’t Sell What You Don’t Own

 

I Signed Up for Personal Liability. The different signature blocks in a recent Canadian transaction reminded me of a frequent and costly mistake. An agent signing on behalf of a principal is not liable for the principal’s obligations under U.S. law. When signing as an officer (agent) on behalf of a company (the principal), the company, and not the officer, would be liable on the $1.5 million contract… assuming the officer properly signed as an agent. Otherwise, with the stroke of a pen, the officer exchanges zero liability for $1.5 million personal liability on the contract. A proper signature format is:

COMPANY NAME

 

By: ______________________

John Doe, President

What Do You Mean My Tech Company Doesn’t Own Software? The buyer’s attorney tells his client that your company does not own its principal asset and that your company can only sell a copyright infringement lawsuit. Herein lies the faulty assumption that you own the software you hired a consultant to write. Although there is never a good time to make this discovery, some times are worse than others:

  • during due diligence for the sale of the company;
  • after the software becomes enormously valuable (leading the consultant to realize he was grossly underpaid when he wrote the software); or
  • after the consultant has died.

One week ago, the Second Circuit Court of Appeals joined the 7th and 9th Circuits by ruling that a “work made for hire” agreement must be signed with a contractor/consultant before the “work” is created. Because a “work made for hire” written agreement did not predate the magazine columnist’s writings, his estate was allowed to sue the magazine for copyright infringement when it republished the columnist’s articles.

August 8, 2019

JD