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Need Opinions Regarding Deadline Payment
by Helmet » Thu Feb 04, 2010 2:15 pm
- Helmet
- White Belt
- Posts: 14
- Joined: Mon Dec 14, 2009 8:25 pm
Our product is supposed to be released in March but it is looking like it is going to be delayed again. It was estimated to take 1.5 years to bring to market and in June it will be FIVE YEARS!
Our contract stipulates we are due a $75K 'past-work' payment in June if our product is not on the market by then. We are not sure that the investors are aware that the payment deadline is coming up and my partner and I disagree as to whether we remind them of it now or not.
The company really has no money as the CEO is just covering the costs of development. It does have 600K in assets in the molds and also owns the intellectual property and patent to our product.
My feeling is that we keep quiet about it now. The samples of our product were sent out and tested for two months and we should receive the surveys by next week. The CEO seems optimistic that we are getting close but we don't see it hitting the first quarter release by a long shot. I don't want to add more frustration to the CEO right now and would rather see it play out. I would much rather see the product released than to receive the payment.
My partner feels that they need the extra incentive to get this to market and reminding them about the payment will just speed them up and want to get it finished.
I think that reminding them now would be akin to threatening them with a lawsuit. And since the CEO would be responsible for the payment and we have become close friends it would come off as being very disloyal after all he has done (like putting in almost all the capital and working for us for the last five years for no pay!).
If you have been kind enough to read all the way through this, we would very much appreciate your opinions!!
Helmet
**P.S.** I highly recommend to anyone selling their invention to a company to include a deadline clause where you will be
owed a payment if the product is not released in a reasonable amount of time. At least we will receive some
compensation for the time that we have had to wait for our products release!
Our contract stipulates we are due a $75K 'past-work' payment in June if our product is not on the market by then. We are not sure that the investors are aware that the payment deadline is coming up and my partner and I disagree as to whether we remind them of it now or not.
The company really has no money as the CEO is just covering the costs of development. It does have 600K in assets in the molds and also owns the intellectual property and patent to our product.
My feeling is that we keep quiet about it now. The samples of our product were sent out and tested for two months and we should receive the surveys by next week. The CEO seems optimistic that we are getting close but we don't see it hitting the first quarter release by a long shot. I don't want to add more frustration to the CEO right now and would rather see it play out. I would much rather see the product released than to receive the payment.
My partner feels that they need the extra incentive to get this to market and reminding them about the payment will just speed them up and want to get it finished.
I think that reminding them now would be akin to threatening them with a lawsuit. And since the CEO would be responsible for the payment and we have become close friends it would come off as being very disloyal after all he has done (like putting in almost all the capital and working for us for the last five years for no pay!).
If you have been kind enough to read all the way through this, we would very much appreciate your opinions!!
Helmet
**P.S.** I highly recommend to anyone selling their invention to a company to include a deadline clause where you will be
owed a payment if the product is not released in a reasonable amount of time. At least we will receive some
compensation for the time that we have had to wait for our products release!
Re: Need Opinions Regarding Deadline Payment
by CriterionD » Thu Feb 04, 2010 9:56 pm
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CriterionD - Blue Belt
- Posts: 431
- Joined: Mon Feb 19, 2007 6:23 pm
- Location: Tempe, AZ
For the sake of providing a reply,
As long as the $75k is clearly due as per your guys' contract, and the company you have licensed to is not about to declare bankruptcy, and you guys are not desperate for cash, you can always take action at a later date, and hence I might err on the side of caution if you think action could ruin a key relationship.
At the same time I would recommend seeking legal advice in a non-public forum, if this subject is important to you.
I also think its tough to provide much commentary here without knowing the reasons as to why the product launch has been delayed...If this is a product that the licensee expects to be profitable, they have at least as much motivation as you do to get the product to market.
I don't know if that helps...
As long as the $75k is clearly due as per your guys' contract, and the company you have licensed to is not about to declare bankruptcy, and you guys are not desperate for cash, you can always take action at a later date, and hence I might err on the side of caution if you think action could ruin a key relationship.
At the same time I would recommend seeking legal advice in a non-public forum, if this subject is important to you.
I also think its tough to provide much commentary here without knowing the reasons as to why the product launch has been delayed...If this is a product that the licensee expects to be profitable, they have at least as much motivation as you do to get the product to market.
I don't know if that helps...
Re: Need Opinions Regarding Deadline Payment
by rather-be-golfing » Mon Feb 08, 2010 10:20 am
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rather-be-golfing - Green Belt
- Posts: 204
- Joined: Mon Feb 25, 2008 12:25 pm
My opinion.....
My most recent negotiation was on a very friendly note and we agreed on most details up until they started to miss agreed dates for formal documents. My advisor is a successful businessman and he pushed me to push them. I did and the tone of everything changed instantly.
They pushed back and the deal fell apart.
What I learned from that was to make sure that I was more agressive up front to weed out the tire-kickers!
Clearly you are way beyond that and have a legal agreement in place but if you have a good, friendly relationship perhaps you can work it into a conversation without it sounding like a warning?
Something along these lines...."Man, I don't want a deadline payment! I want to be opening champagne with you."
or....can your lawyer remind his lawyer? They are used to doing the dirty work.
Do they have legitimate reasons for the delay or do you feel that they do not expect you to enforce the agreement because of the 'friendly' relationship?
Just my non-legal opinion which is based solely on human nature rather than experience!
My most recent negotiation was on a very friendly note and we agreed on most details up until they started to miss agreed dates for formal documents. My advisor is a successful businessman and he pushed me to push them. I did and the tone of everything changed instantly.
They pushed back and the deal fell apart.
What I learned from that was to make sure that I was more agressive up front to weed out the tire-kickers!
Clearly you are way beyond that and have a legal agreement in place but if you have a good, friendly relationship perhaps you can work it into a conversation without it sounding like a warning?
Something along these lines...."Man, I don't want a deadline payment! I want to be opening champagne with you."
or....can your lawyer remind his lawyer? They are used to doing the dirty work.
Do they have legitimate reasons for the delay or do you feel that they do not expect you to enforce the agreement because of the 'friendly' relationship?
Just my non-legal opinion which is based solely on human nature rather than experience!
Re: Need Opinions Regarding Deadline Payment
by Helmet » Mon Feb 08, 2010 3:27 pm
- Helmet
- White Belt
- Posts: 14
- Joined: Mon Dec 14, 2009 8:25 pm
Thank you both very much for your input!
Delays have been due to the fact that our product will set new standards in plastic manufacturing and involves using new plastic materials that are made from recyclable products. We have also had delays on the mold makers side as well as the manufacturer.
Only once have we been stymied by a lack of capital from one of the investors so they are really not to blame.
After reading your posts I am going to insist that we don't mention the payment at this time. Changing the tone of our relationship is exactly what I don't want to happen and I don't want to take any chances.
Thanks again for taking your time!!
Delays have been due to the fact that our product will set new standards in plastic manufacturing and involves using new plastic materials that are made from recyclable products. We have also had delays on the mold makers side as well as the manufacturer.
Only once have we been stymied by a lack of capital from one of the investors so they are really not to blame.
After reading your posts I am going to insist that we don't mention the payment at this time. Changing the tone of our relationship is exactly what I don't want to happen and I don't want to take any chances.
Thanks again for taking your time!!
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