On Contracts And Business

On Contracts And Business

Background: Garrett Murray entered a contract with Brian Ball where Garrett would sell xPad to Brian. The relevant information can be found here. The contract contained the following escape clause:

If the buyer fails to make a payment after 90 days, this contract shall be void and terminated at which point all rights and license will revert back to the seller. At such a time, the buyer will no longer have rights to publish or use any of the materials covered in this contract. No refund will be made to the buyer.

According to Garrett, this clause was included at his insistence. Reading Garrett’s post, it seems that he wanted the clause to allow him to get out of the deal, but he didn’t intend for Brian to be able to use the clause.

Well, Brian used the clause. Brian stopped paying and allowed everything to revert back to Garrett. As the contract allows him to do.

In what is sadly become predictable fashion, the Mac community is up-in-arms mistrustful, hurling insults, and more.

One of the first things I learned in my Contract Law class is that the law is structured to allow contracts to be breached. It makes economic sense. Assume Business A and Business B have a contract where Business A agrees to purchase 50,000 widgets per month at $5.00 per widget for a period of 5 years. Now assume that 3 years into the contract, the market for widgets collapses and the going rate is now $1.00 per widget. Business A now has a choice. Does it continue paying 5 times the market price for the next 2 years while their competitors pay $1.00 (and thereby more likely can sell their competing product for less)? If Business A chooses, it can break the contract. At that point, Business B can sue for breach of contract. However, the law allows Business A to get out of a bad agreement. It’s perfectly legal and Business B can recoup the losses for the breach.

This is the reality of the business world. However, the majority of the Mac community seems to be completely oblivious to this or, in the alternative, would choose to paint Business A in a negative life. And if an independent developer isn’t familiar with this, well … who’s fault is that?

Garrett insisted on the escape clause to cover himself. Brian used the escape clause to cover himself. Where’s the issue? Garrett ended up with approximately $1,300 free and clear. And he still owns all rights to the product. Where’s the foul?

Oh, and I love this quote from Gruber:

Get your money up front if you sell an app to Brian Ball.

He certainly lives by that creed. He got my money and I’ve yet to receive the shirts. And he’s yet to respond to my two email on the matter.

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