Famous Last Words

DISCLAIMER: This column is intended for general educationaland entertainment purposes and is not legal advice. Every situation is unique. Anyone entering into a contract should have a lawyer who can provide counsel.

Jim Charne,

Attorney at Law

Seeking Permission to Work on Outside Projects (November 2009)

Dear Jim:
 
I recently came to a verbal agreement with the head of my studio regarding an exemption to the non-compete clause I signed upon employment.   I was asked for a write-up of the game to verify they had no interest in developing the idea and then he would follow through on the paperwork.  I submitted the design, but no paperwork has yet to be provided.  It’s a busy time, I don’t want to “bug the boss,” but I am concerned.
 
How much can I do based on word alone and how much do I need to insist on something in writing in order to proceed?  So far it is only my time that will be thrown away should there be a problem, but I am close bringing additional people into the project.  Can I do this safely or should I wait?  I don’t want to imply that I don’t trust my studio head’s word, but it was a closed door meeting between just the two of us and I really want to make sure that everything is done legally.

Nervous

Dear Nervous

First year law students learn that the elements of a contract are an offer, an acceptance, and consideration.  Provided that all three elements are present, there has been a meeting of the minds, and that constitutes a contract.

In this case, you offered to let your studio head see your game design in exchange for his or her agreement to waive the non-compete (and presumably the “no-moonlighting”) restriction from your employee agreement for this one game if the studio had no interest.  (Did he or she sign an NDA before you shared the document? – that’s another column topic.)

It appears to me the formation requirements of your contract may have been met. You showed the studio head your design.  You performed.  You are waiting for his or her reciprocal performance of your agreement.

But is an oral contract enforceable?

Movie mogul Samuel Goldwyn famously said, “A verbal contract is not worth the paper it is written on!”  But in the end, that is not really true.

A verbal contract is enforceable.  The difficulty comes in establishing that there was an agreement that rose to the level of a contract; and, once that requirement has been met, determining exactly what the contract is.  Proving these aspects is much simpler when everything is neatly down on paper.

In situations like this, it is good practice to create a paper trail.  An email describing the arrangement, sent right after the meeting, is a good way to start.  Then at each step along the way, a confirming email sets a record of the arrangement, your performance, and your expectation of performance of the other side.

It is more difficult for the other side to deny there was an agreement when you have been “papering” the performance, and there has been no response along the way denying or refuting the existence of your agreement.

Where a person has an opportunity to respond and disclaim the deal, but does not do so, it creates a presumption that there is such a deal.  And it becomes more and more difficult to deny its existence as time goes on.  The law recognizes this in the form of the doctrine of equitable estoppel (a party can not deny the existence of an agreement that has been partially performed, where that party has enjoyed the benefit of the other side’s performance).

The greater the extent of performance, the longer a party is permitted to continue to perform, the more difficult it becomes for the other side to deny there was an agreement

While the best-case scenario is to confirm in writing and continue to confirm in writing as performance continues, it is never too late to start.  I suggest a general email recounting the history of your meeting, the agreement reached, and a query as to whether a decision has been made as to interest in your design.

If a decision has been made and passed along to you, your email might state that in accordance with your arrangement, you take this as confirmation the studio has waived the non-compete - no moonlighing provisions in connection with this design.

If no response is received denying the deal, it sets a strong (but refutable) presumption that there is such an arrangement.

Each studio situation and culture is different.  But your question raises the point that exceptions can be made to employee agreements, and taking the initiative to ask can create individual opportunities for creative people that might otherwise not be available in the studio setting.
 

Jims Bio

Jim Charne practices law in Santa Monica, CA (www.charnelaw.com) where he represents developers, designers, composers and other clients in the games industry.  Jim has been a frequent speaker at GDC, is active in IGDA from whom he received an “MVP” Award at GDC 2006, in 2010 will chair the Practicing Law Institute video game law segment the week after GDC at its annual Entertainment Law Symposium in New York, and is a member of the Advisory Board of G.A.N.G.  Jim served as President of the Academy of Interactive Arts and Sciences from 1998 to 2001.

Is there language in your contract that has you scratching your head?  Found something confusing or worse?  Send it to “Famous Last Words” for developer-oriented analysis.

Famous Last Words is intended for general educational and entertainment purposes and is not legal advice.  Every situation and circumstance is unique.  Anyone entering into a software-related contract should have an experienced lawyer who can provide counsel throughout the process.

©2009 Jim Charne.  All rights reserved.