There are apparently still many independent contractor web site designers and site owners who are conducting the business of designing and hiring those to design sites without having a sufficient and legally enforceable written contract. In the world of web design and rights ownership, written contracts are not add ons to your business; written contracts are your business.
This practice of not having such written contracts seems unwise for both the site owner as well as the site designer. Neither side can win in this battle of the oral agreement, if for different reasons. But in the world of free market capitalism, there are no laws that mandate wisdom. Often wisdom comes after many hard, if indeed unnecessary lessons.
It therefor pays to explore the rights of both parties in this matter of their contractual relationship.
Section 2201 of the California Commercial Code states in part:
(1) Except as otherwise provided in this section a contract for the sale of goods for the price of five hundred dollars ($500) or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his or her authorized agent or broker.[emphasis added]
The Commercial Code goes on to define what are "goods" and the definition seems broad enough to cover a web site. In this regard, section 2105 states in part:
(1) "Goods" means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid,....
(2) Goods must be both existing and identified before any interest in them can pass. Goods which are not both existing and identified are "future" goods. A purported present sale of future goods or of any interest therein operates as a contract to sell.The above section seems to define a web site as "goods" that are movable (to distinguish them from real property). Transferring web sites around the Net, electronically, seems about as movable as one can get. It would thus seem that the creation of a web site is governed by the provisions of this code.
And section 2106 below defines a "contract for sale" and this, too, seems broad enough to encompass a web site design agreement.
(1) In this division unless the context otherwise requires "contract" and "agreement" are limited to those relating to the present or future sale of goods. "Contract for sale" includes both a present sale of goods and a contract to sell goods at a future time. A "sale" consists in the passing of title from the seller to the buyer for a price (Section 2401). A "present sale" means a sale which is accomplished by the making of the contract.The sum of all this legal verbiage is that, if the Code applies, and if the web site design agreement is for more than $500.00, then the designer risks not being able to enforce an oral promise to pay on the part of the site owner. No matter how much work the designer has put into the site, if the contract price is in excess of $500.00 the site owner may not be obligated to pay the price orally agreed upon if there is no sufficient writing signed by the site owner. This is known in law terms as "The Statute of Frauds," a concept that arose long ago with the intent to make it clear that in certain really important transactions, that the parties have it in writing. [There are some potential exceptions to this rule but they are beyond the scope of this article and depend upon the facts of the given situation.]
Thus, it is to the clear benefit of the designer to have a valid, binding agreement, in writing, signed by the site owner. The contents of that agreement are of course the subject of other articles on my site. Click on "Articles for Web Site Designers and Site Owners" in this regard.
The United States Copyright Act of 1976 states that the owner of all the rights in copyright is the creator, or author, of those rights. This means that from the moment that the designer creates something copyrightable and it becomes fixed in some tangible medium of expression, the copyright rights to that creation belong solely and exclusively to the designer. The site owner has no rights of any sort in that creation.
Section 201 of the United States Copyright Act states the following, in part:
Sec. 201. Ownership of copyright
(a) Initial Ownership. - Copyright in a work protected under this title vests initially in the author or authors of the work.Section 204 of the same Copyright Act goes on to state in part:
Sec. 204. Execution of transfers of copyright ownership
(a) A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent.Some of this may look familiar. It's a relative of our old friend "The Statute of Frauds" again. And taken together, what these provisions of the United States Copyright Act mean is that if the site owner does not get a written contract, signed by the designer, the site owner may end up owning nothing except perhaps some non-exclusive rights to the work as a web site only.
I do not know the answers to these questions. But I have been practicing law long enough to know that having it in writing is far better than not.
Maybe free market capitalism should mandate wisdom.
© 1997 Ivan Hoffman. All rights reserved
This article is not legal advice and is not intended as legal advice. This article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article is based on United States law. You should consult with an attorney familiar with the issues and the laws of your country. This article does not create any attorney client relationship and is not a solicitation.
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