I'm going to go out on a limb and register a slight discomfort with the increasing use of HN as a "court of public opinion" in very fact-bound disputes like this one. I can sort of see resorting to it out of desperation, but I'm afraid the Internet Lynch Mob has a very high ratio of outrage to effort spent actually investigating. This post has 84 upvotes in 21 minutes, which suggests a very quick investigation! So, the potential for erroneous snap judgments in such a Court seems high. The designer here may very well be in the right, but I don't feel qualified to judge or do anything about it based on the available information, any more than I do with the hundreds of other designer-client disputes that happen on a regular basis.
On the other hand, this is a vibrant case study for both inexperienced founders and freelancers about the importance of doing the boring shit right. Sign a contract. Set a price. Get paid. Make sure there is a meeting of the minds, as the lawyers like to say.
This, right here, is exactly why we do these things.
While I agree this is a good learning experience, and so deserves some attention, we disagree on the lesson. The actual lesson, for the founder, is this:
>>Verbal contracts are binding.<<
You cannot legally agree to something on the phone and then change your mind when it comes time to sign the written form of the contract. Period.
We don't even really know that this is what happened. Even if it were, we don't know the context or the tone of the e-mails leading up to this. You are jumping to a ton of conclusions from a post whose goal is just to induce a lynch mob... even the specific quotations, were they actually 100% accurate, are not things I can easily see having been totally reasonable if (and I personally find this much more likely) the contractor was being belligerent and was doing little more than threatening lawsuits and ownership claims in their side of the correspondence (possibly even /before/ there was the alleged billing dispute).
I would think the written contract becomes a new agreement that supersedes the verbal one. What if there's a dispute in the terms of the written contract that was never brought up verbally?
I actually am looking for clarification b/c I would be interested in knowing if the prior verbal agreement trumps all future written discussions. It just isn't what I guess would be the case, and I can certainly see how someone would interpret being asked to sign a contract a renegotiation of terms, which is what I think happened in this case.
Doesn't matter. The founder hired the designer verbally. I imagine that the judge will first determine if there was a verbal agreement, and then, if there is disagreement about the terms, use common sense and vague standards to determine the correct remuneration. It's not actually that complicated.
Golly, how dysfunctional do you think our justice system is? Do you think that people have absolutely no recourse to address small disputes like this one? It's true that when you need something other than money and/or money over $10k (in CA) you need a general lawsuit, but small claims court exists for handling stuff like this.
Regarding venue, the rule is that you have to file in the location the offense occurred. Stuff on the internet genrally favors the plaintiff, because they can claim it happened near them, forcing the defendant to travel. Travel costs alone can eclipse the amounts in these cases, so deciding venue is important.
The algorithm takes many things into account, one of which is the url. Self-posts for instance need a lot more upvotes to get high up on the frontpage. So You can't quite know.
looks like they've assigned a larger weight to this post so it falls faster but there's no way to be sure of course. I don't see why so many regular HNers would flag this post.
Poor guy is hard up for cash and getting it up here might get someone in authority at YC to fix the problem. As for lynch mobs, her twitter profile shows no signs of such a thing. That's 1 for Reddit/HN and 0 for her as far as maturity is concerned.
Lastly, I wouldn't care even if some internet lynch mobbing were going on. Between being broke for no fault of mine because x behaved irresponsibly and making x's life miserable so that I can be slightly better than broke, I would pick the latter.
The problem with mobs is that they don't bother to first check that the complainant has a point. You've only heard one side of the story - why do you assume it's all you need to hear?
Say you run a business. Someone posts false allegations about you. Do you:
1. Answer them, and risk: a) inflating the story and keeping it in the press, b) being treated negatively by many bloggers/internet pundits who don't believe you because you're a company vs. an individual, c) risk saying something that will later hurt you in court?
Or:
2. Listen to the advice of your lawyers, who tell you that it's best to keep silent?
If somebody makes a statement of fact saying a certain person sent him an email and gives exact strings from that email, merely saying "That was not in the text of my email" will hardly be a legal problem.
I would have agreed with you if the statement was a subjective one such as "The CEO of the company was being racist or was biased because of my gender". Refuting such a thing is hard and you may inadvertently say something that hurts you later but this is not such a case.
Also, she hasn't quite been silent. She clarified the amount due on this thread (unless you want me to believe that was a part of some grand conspiracy). A similar clarification on the content of the emails could have been made if that guy made those lines up.
I think those votes convey a hope that someone of authority will look into the matter and voting will help bring the issue to their attention. I wouldn't just assume anyone who upvoted instantly agrees with OP and trusts him completely.
Small claims court? How many days outstanding is the invoice? You want to take a guess about the longest it's ever taken us to get paid for an invoice?
Net-30 (meaning, let's just pretend we're going to pay you within 30 days of getting invoiced so we can stop talking about this part of the contract) is a standard term. Is it your expectation that when you don't have a contract, you can expect "Net-1" payment?
Of course not! "Small claims court" doesn't mean now. To even file a claim you must have sent a demand letter. So he's still got some hoops to jump through. That said, I don't think he has to wait 30 days if the client has already indicated that they've decided to breach the contract. What he needs to do now is send a real-life letter demanding an agreement to pay within the week, and if that agreement is not forthcoming, then he should file in small claims court. Really, it's not all that dramatic either.
Well said. I think a good "public shaming" can be appropriate in some cases, but I'd consider it more of a measure of last resort. As we've seen in the past ( cough Duke Lacrosse Case cough ) trying people in the media can lead to some really bad situations.
I disagree. It's impossible to tell from a screenshot how long something took.
I could easily recreate that screenshot in a couple hours in photoshop - but that doesn't mean it TOOK a couple hours in photoshop.
The majority of design is thinking through how the app will be used, researching similar apps, figuring out intended user goals, etc etc. Then theres a long process of experimentation until you get to a point where you're comfortable to send it to the client.
Looking at that design makes me think the designer is fresh out of school. Lack of a real understanding for client management and asking the client real hard questions about strategy and long term goals. A bunch of whiners, get over it learn to handle your clients better.
Sure. 5 hours @ somewhere between $67-20/hour* is $337-$100. Since the post doesn't mention a specific amount, we have no way of knowing if their bill was for more or less... all we can guess is it was > $100 (three $'s used when blanking the price).
That seems pretty reasonable to me for a professional freelance design from scratch like that. I normally expect individual pages to cost in the range of $1k from scratch.
Whoa $780 for that design? I personally would not have even charged for that preliminary design. Why are you designing any way. Where are the rough sketches and wireframes? Did you not learn that in school? Wireframes first, then discuss with management to get a better understanding of the underlying goals and objectives. Get them on the phone and ask lots of questions about the company, management, customers and the overall scope of the project.
It is possible that people expect YC funded companies to have high moral integrity and that drives the posts when YC funded companies do things that are against this purposely built-up group of persons moral compasses.
I don't understand what happened here. The CEO told him to submit his invoice to legal@. Did he do that? What did their legal say? Did the company formally decline to pay the invoice? Or did he just assume he wasn't going to get paid and jump the gun?
But anyways: LESSON LEARNED for startup CEOs. Here it is, it's very simple:
If you want to question or slowroll an invoice, direct it to finance@, not legal@.
You have exactly the same set of options with finance@, and your legal can still review the invoice, ping the vendor, or what-have-you, but you haven't escalated the situation.
Surely the lesson for start-up CEOs is even simpler: you are responsible for everything in your organisation.
Like most here, I wouldn't have let myself get into the position of this freelance designer or chosen to air my dirty laundry in public. On the other hand, if I had sent a legitimate invoice and a CEO tried to fob me off with the kind of attitude claimed here (he says, noting that we haven't heard the other side of the story yet) then I would be extremely unsympathetic to flippant comments and requests to mess around with underlings. I imagine my response would be to send the final claim letter by registered post with a note that legal action would follow if the invoice remained unpaid after a reasonable period.
Of course, in this case, it doesn't matter: the Internet hype machine has been started, and if the reported claims are accurate, it is presumably a matter of time before everyone who has anything to do with this start-up starts forgetting to return their calls. Who wants to be associated with someone who thinks it's funny not to pay their bills, particularly when it's a small business working with another small business?
That may be true, but it's a risky thing to do just to see if someone's serious. The moment you refer me to real laywers, you have probably removed any opportunity for me to be nice to you and settle the disagreement amicably, even if you subsequently realise you've been an ass all along and want to make it all go away quietly. If nothing else, if I think you're asking me to speak to your lawyers, it's probably not me who's calling, it's my lawyers. And now everyone's paying someone's legal fees, and if you were trying to screw me, I'm pretty much going to make sure it's you who pays everything if at all possible. (Clearly this varies somewhat by where you are and how your local legal system works.)
Are we debating? I don't think we are. I think "send it to legal@" was poor messaging; "send it to finance@" would have accomplished the same thing without escalating the situation.
Having said that: "send it to legal@" is not "breach of contract". Sorry, it just isn't.
I think we probably agree here. I was just pointing out that your alternative suggestion (how_serious_are_you@) might not be much of an improvement from a business point of view over the original (fuckoff@). Ultimately, asking someone to contact legal@ is still significantly escalating a situation where there appears to be very little potential upside from doing so, whatever the underlying intent might be.
Escalating the situation or overtly signaling displeasure is a bad strategy.
Expressing passive skepticism and slow-rolling an invoice you don't believe you should pay is not a bad strategy, at least not always. There is an upside to it.
> Expressing passive skepticism and slow-rolling an invoice you don't believe you should pay is not a bad strategy.
Do you not believe the vendor's story? or are you saying it's okay to be a dick as long as you delude yourself into thinking you don't owe people money?
Usually, startups are small. That means everybody knows everybody, and the CEO should know everyone. Why didn't she just forward the e-mail to their legal department/person internally, with a simple "thank you, your invoice will be reviewed"? Their response sounds like "Oh, you entered the wrong door, this is reserved for important persons. Go to the servant's door, just outside to the left".
Because they want to slow the process down to figure out what their response should be. Don't like that? Tough shit. Freelancers get Net-15 or Net-30 payment terms if they're lucky. Clients have weeks to honor invoices.
I am speaking here, by the way, as a representative of the "consultant" camp, not of the "client" camp.
I don't even think we have enough context to learn that lesson. I can easily see the email from the CEO having been an apology/prayer (with the understanding that it migh not have worked out), followed by not just a stern "no, seriously" but instead including a threat of legal action.
People throw these threats into all kinds I thins, whether it be something as simple as a request for a refund on a $1 purchase or a thousand dollar consulting bill. People even seem to believe that it helps: that it provides motivation to be heard.
On my end, however, the second there is a threat is the moment I cannot help you any more: I refer you to legal. If you threaten legal action, it is no longer a business decision, it is a legal one. Likewise, of I threaten legal action, it is because I've already given up on business and have already talked to a lawyer, and actually want to talk to yours.
Here, we just don't know. We have some sentences taken out of context that are designed to make this designer seem reasonable. ...but... that "I figured :)" from the CEO is, to me, really telling: it tells me that this person probably thought the designer was "over the top" in their reaction and of course would try to escalate with lynch mob...
So, in that possible context: does "talk to finance help"? If it does, I feel like it would send the wrong message: that you really are now in legal land, not in finance or business land. Again, though: just "possible context", as we don't have the entire email exchange (leading me to be stuck in "people who have reacted like this at me had these associated behaviors" world).
Yes. It helps. You cannot whip up a storm of angry Redditors when you are told by a client "send this invoice to finance@", because that is where invoices normally go.
From what I've seen so far, this client did two things wrong:
* They scoffed at the invoice
* They told the vendor to send the invoice to legal@
If the client had declined to do EITHER of those things --- not both, just not do one of them --- there wouldn't be even half as much drama as there is now. "Send it to legal@" was just a dumb move.
No: all we have is that they said "please send your claim to our legal team: legal@xxxapp.com": key word being "claim". I can easily see the e-mail in the middle from the contractor being one of those massive supposedly-motivating "I will sue you if you don't do what I want, as I believe you did X and Y and Z illegally" e-mails.
If so, it wouldn't make sense to say "send your invoice to finance": the correct response is "send your claim to legal". I really don't think we can claim anyone in this situation can learn any lessons without the complete and full e-mail context, as I honestly have dealt with enough irritating people to not put even a single iota of trust that the contractor is explaining even the sequence of events in a way that isn't designed to make them seem like they didn't send a screaming pile of pain in their side of the conversation.
Do most YC S12 companies have a legal department? Or a finance department for that matter?
Im sure this particular situation is nuanced, and both parties seem to be unhappy. I haven't worked with many contractors yet, but my 2 rules of thumb are:
Don't ask people to do work for you unless you plan to pay them for it.
Pay promptly and in full.
It's pretty simple. If the CEO was never planning to pay, the conversation shouldn't have gotten that far and the contractor shouldn't have had the idea that they should go and make something.
Most companies don't have "legal departments"; they have outside counsel they retain for random stuff. Like this.
The onus was on the vendor to actually submit the invoice to the email address the CEO said to send it to. That's not a hardship. Try invoicing a Fortune 500 company for the first time. Goat sacrifice may be involved.
Note that I have no idea at all whether he actually did do that.
In the real world, it is actually allowed to question an invoice. You probably end up paying regardless, but you are in fact allowed to ask the questions.
Thomas, this is a fine example of why I've got your comments bookmarked (and Patrick's too): At least every couple of days or so, I can count on you not just for insight but for a laugh too.
That was my read also, that the CEO realized that she may have screwed up, and therefore the situation called for her to stop talking and let someone more familiar with contract law decide what she had or hadn't already agreed to, before digging more holes. That doesn't necessarily mean that legal@ is actually going to refuse to pay the invoice, though I can see how you could interpret it as an unfriendly hint that they may be looking closely at whether they really have to do so. Forwarding it to something called finance@ instead for the same decision is an interesting PR suggestion, since it suggests merely bureaucracy rather than opposition, even if it amounts to the same.
Hey everyone: can we hold on for just one minute before forming an Internet Lynch Mob and maybe try to get the other side's perspective?
Because we only have one side of the story right now.
How do you know the OP isn't lying? Or that OP isn't a competitor trying to destroy this company's credibility?
Or, maybe this was just a simple misunderstanding/miscommunication?
I'm not accusing the OP of lying, but there's zero evidence here right now. Think rationally and consider every possibility.
I don't know the founders and I have no connection to the company in question (other than participating in a previous YC batch).
Without saying anything about this particular situation, can I just point out for the four hundredth time that $780 invoices generate far, far, far more stupidity than $7,800 or $78,000 invoices do? This is the fault of both people who send $780 invoices and people who generate work likely to cause $780 invoices. Many of you will be able to pick whether you are either of these types of people. I suggest being neither.
Without saying anything about this particular situation, can I just point out for the four hundredth time that $780 invoices generate far, far, far more stupidity than $7,800 or $78,000 invoices do?
Your argument is a classic case of the correlation/causation fallacy.
A modest invoice does not "generate" stupidity. Millions of freelancers around the world make a good living doing relatively small jobs for satisfied customers and submitting modest invoices that get paid on time.
If you are in a position to work on higher-value deals, then naturally you will be dealing with other people of the same level. To get to that level typically requires a certain degree of professionalism, whichever side of the deal you're on. So sure, people working with higher-value contracts tend to have less hassle.
But being messed around by someone who won't pay your invoice doesn't mysteriously become your fault just because the invoice amount was under $1,000. That really is akin to saying that it's your fault you were robbed because you forgot to lock your home, or that she was asking for it because she was wearing a short skirt and had a couple of drinks.
Many of you will be able to pick whether you are either of these types of people. I suggest being neither.
I usually agree with your comments, but in this case, I'm afraid your advice is like saying "Make sure you run a successful business and deal only with great clients!" If it were that easy, everyone would be doing it. In reality, even those of us who are successful today were the new guy once, and I expect that almost all of us have made at least one deal we would have preferred to avoid, so that we could pay the rent or fund a side project.
I'm really not sure I see how you're able to get 4 paragraphs of objections from such a simple point.
We're talking about a $780 invoice. The invoice was generated before written contracts were completed because... it's a $780 invoice. The project was worth so little to the client and was so trivial to the vendor that it was able to commence with neither a full spec, nor a master agreement, nor a simple statement of work.
This isn't about "pick great clients"; it's about avoiding the rats nest of potential projects where there will always be a temptation to work under fly-by-night terms like this.
And once again, every time someone says "pick better clients", someone here has to come out of the woodwork to preach the gospel of the freelancer- who- makes- a- great- living- servicing- small- clients- and- we- can't- all- be- Patrick- Mckenzie. Well, with all due respect to my friend Patrick, but I have hung out with him many times and I can assure you he has not been bitten by any radioactive spider, at least so that I can perceive it. The guy built a bingo card generator --- a kind of Platonic minima for value derivable from software --- and parlayed it into his current business.
For cripes sake, you're on the same message board as he is; do what he did, get better clients. Stop complaining when people in very similar situations as you, or who started in very similar situations to you, tell you how to do better. Look at the advice you're getting: none of it involves kissing the ass of some financier at a VC firm. (1) Pick a specialization more narrow than "software development" so you're not competing on oDesk; (2) Segment your market so you can identify the most lucrative clients; (3) Tailor what you get good at to that market; (4) Be choosier; (5) Get paid. More.
I don't know whether English is your native language, Thomas, so perhaps that is the problem here. In any case, do you realise that you come across as extremely rude sometimes? In particular, you often seem to assume that others (me, in this particular case, but I've seen you do it to people before too) are not successful or do not know what we are talking about because we happen to disagree with you or someone you agree with. That is a very annoying habit, and it does nothing to promote interesting and informative discussions. I hope you will forgive my bluntness here, but you seem like a man who prefers honesty.
As it happens, I run multiple businesses today, one of which does work on bespoke projects for outside clients, and we do just fine with our calibre of clients and we send them invoices for a lot more than $1,000. In other words, I have no axe to grind here. But I don't see how that is relevant, really, anyway.
I simply objected to Patrick's characterisation of people who have problems with clients as being at fault themselves. I also object to the implication, which you seem to be making as well, that $780 is somehow a trivial amount of money and not worth bothering about, which is obviously not true for a lot of people out there particularly in the current economic climate.
It is not OK for someone to act unprofessionally, including not paying legitimate invoices within a reasonable period, regardless of the size of the deal. It would not be OK at $100,000. It would not be OK at $1,000. It would not be OK at $10. Whether or not it is worth involving lawyers as a practical matter has nothing to do with the ethics of the situation.
I therefore found the implication that someone new to the industry -- a position we were all in once -- somehow brought such poor behaviour upon themselves merely by taking on a relatively small job to be distasteful, the casual dismissal of the value of sub-$1,000 contracts to be rather conceited, and the whole post unnecessarily discouraging towards beginners who are taking their first steps into what often feels like a new and uncertain world.
I am sorry that you are getting lumped in with a caricature of all the objections to this "pick better clients" message that exists mostly in my head. That's not fair.
But my points stand:
* It does not matter what you think is "OK" or "Not OK". Taking a month to pay an invoice is standard practice. Even if you negotiate Net-15 payment, it's standard practice: nobody pays on time. Complaining about a receivable when it has taken single-digit days to pay out is unprofessional.
* By working without a written contract, and in particular without any agreement as to how invoices will be paid, the freelancer has taken some of the responsibility for the payment drama.
* Choosing better clients, or (if it makes you feel better to say it this way) different kinds of projects to work on for clients, will produce better results for freelancers. If only because high-value projects almost never execute this carelessly.
* $780 is a trivial amount of money. Even for this person. By their own admission, we're talking about 12 billable hours. If you're a day and a half from bankruptcy, you're not ready to be working for yourself. Real clients will drag 9 months on invoices whether you think that's OK or "ethical". You can complain to them about it, or to the public, but you'll get paid on the same schedule either way, and you'll poison your reputation in the process.
While I see what you're getting at, I make a lot of my income from invoices between $400 and $2000. The smaller ones are usually the most profitable, by a lot.
I've also never had anything even remotely approaching this sort of problem. It's jus so easily avoided by insisting on the basics of communication.
So I think you've got it backwards. People willing and able to work for $78k invoices have probably figured this out at some point (either the easy way or the hard way). People on the low end may or may not have. That's not a reason to avoid the low end. It's a reason to figure this stuff out.
It's just 3 days of work. Did she seriously point to her lawyers to fight 3 days worth of wages? Not only is the CEO irresponsible, she sounds pretentious. Does Eligible have a legal team?
I don't understand this, people. They're YC funded, in the worst case they have how much now, 10k? Risk your reputation for a few hundred dollars, having a few thousand in the pocket, why?
Same here. I am not taking sides, but just for drama reasons I would always prefer having these things go away for a few hundred bucks than go trying to argue with the interwebs.
They didn't sign anything, and the "CEO" of any YC startup early enough to need to outsource product development isn't promising anything despite their words.
the "CEO" of any YC startup early enough to need to outsource product development isn't promising anything despite their words.
Well... Yes. Yes, they are.
There is no probation period when you start a business and become a legal officer of a company. If you want to be a CEO, you'd better act like it from 9am on day 1, because chances are you have the power to commit your business to any obligation it can legally undertake. Once you do, your business will be on the hook for any such commitments you make, forever. And depending on where you are, you might get away with failing to honour a commitment if you made an honest mistake and the business failed, but if you were just blatantly negligent about your responsibility to run the company properly then your corporate legal shield might not be as solid as you'd like either, leaving you on the hook personally as well.
I outsource my startup development heavily and I didn't bother signing anything either. Yes, I've lost a few hundred (probably even a couple of thousand) this way, paying for the job that went directly to the dumpster. It's a cost of doing business. And I didn't raise money this time, this is all my consulting revenue, I could have paid an income tax on it and put it in my pocket. But if you want to build a beautiful house there will be sawdust. These money is the sawdust.
You get what you pay for I guess. Their mobile app looks terrible, tries to copy the Path sharing functionality in a completely strange context. When something like this could be created with a far cleaner interface.
In a strange way I understand the position the CEO may be in. They may have thought because they weren't going to use it they shouldn't have to pay. In the past I've paid a designer for work only to change my mind on a product but that isn't the designer's fault. You still have to pay whomever completes work for you, even if you don't use it.
Just sounds like across the board naivety, rather than malice especially with the legal department comment. It's always best to sort problems out immediately and directly or they get in the way.
Based on the screenshot currently gracing the eligibleapp.com home page, perhaps the CEO specifically requested a Path knock-off. ("We really love the Path app, can you make it look like that?")
My advice? Get up, dust yourself off, and move on.
These scenarios might result in a deluge of support from others in your field, but for a lot of managers, this puts you on a special kind of blacklist. We can't know all the details of the circumstance, but we do know for sure that you were willing to "name & shame" the client here on HN. For some, that's enough.
Just to be clear, it definitely sounds like you got a raw deal here, but I've only heard your side of the story. Experience tells me that people who find themselves in this position are there because they cut corners (work order and statement of work), or trusted someone too early. Both of these are poor judgement calls. Take ownership of that, learn from it, and go find new clients. If you're not in a financial position to take it on the chin, file your small claims paperwork and have your day in court. I just doubt that the name & shame approach is the best thing for the future of your career as a freelancer.
I really wonder what this world would be like if everyone who had a career, family, or life to risk over being a whistleblower took the safe, sure path and shut up and dealt with it.
Perspective! Freelancers are an army of one. How you spend your time will have a large impact on your success. No one likes to take it on the chin, but sometimes you have to step back, look at how hard the hit is, and decide if you really want to get in to a brawl over the matter.
Think of this as a judgement call. IMO, it shows either lack of preparedness or poor judgement on the part of the freelancer in this case. When you run your own business, the buck stops at you. In any given scenario, you must be willing to accept your portion of the responsibility. It has been my experience that the more responsibility someone is willing to accept, the better they are at getting things done. It's a pretty good indicator of success. Those who always look to push the burden of responsibility off on others will dwindle their time looking everyone but at themselves.
I'm not saying that the freelancer is 100% responsible here, but I am saying that it doesn't matter much. If your goal is to be successful, you can't be distracted by these stupid little hiccups. You have to get up, dust yourself off, and move on.
I totally agree, this happens when you first start. Call it inexperience or just plan ignorance. Either way if this designer is any good they will have new work in no time. Learn to manage your clients better and how to actually approach a project correctly. On another note, take them to court if you think it's worth the time. Or if you can take them out to lunch and figure it out with out legal council. See if you can make a new friend, it's better to have them as a friend than an enemy.
This happened to me as well with a YC company. I then found out that YC companies are known for this kind of thing since they're so early-stage. Always get a contract.
How much does it really matter in these situations whether or not you have a "signed contract"? My understanding is that any agreement to do work for compensation is a contract, and these days even a "signed" contract is likely to just be a PDF which is as easily faked as an emailed "$65/hr? Sounds good, go ahead and get started."
Is it just one of those things where someone's less likely to try to rip you off if they put their signature on something? Or is it more to make sure you get the words in front of a couple of lawyers who are much less likely to lie than the involved parties?
It matters a LOT. A you-said they-said dispute over a verbal contract can be expensive to resolve --- almost certainly way more expensive than the total value of this dev contract.
Startups who hire outside vendors should be very careful to foreclose on any potential verbal contract --- "do not start working for us until we have a signed master agreement and a statement of work" --- and that's for a lot of reasons, not just misunderstandings like this.
Obviously, if a company operator deliberately leads a vendor to believe there's an authorization to start work, they're morally on the hook for billed hours. But in reality, consultants go into engagements like that knowing that they're on the hook if anything goes wrong. This comes up a lot in consulting, because legal negotiation over master agreements can take weeks and sometimes threaten to ice deals that can be kept alive by just starting ahead of the contract.
But it's not a verbal contract if it's over email, right? It's right there in writing, we both have copies of it, it can (theoretically) be verified by a third party.
If I go to small claims with a copy of an email, what can they say that they couldn't say just as well if I go in with a piece of paper I claim they signed?
I've never seen someone say "Don't start working without a notarized contract", but that's the hidden message, right? Otherwise we're just playing at semantics.
Edit: As above, I notice now the OP did have a purely verbal contract. I was referring to emailed agreement which is common in our line of work, though.
It is worth noting that there are reasons beyond enforceability for having written contracts - making sure both parties are on the same page about important elements of the contract such as scope of work, deliverables, acceptance criteria, and payment terms.
I'm not implying that this is what happened here, but it isn't at all uncommon for two parties to verbally negotiate something like this in good faith and come away with different understandings of subtle, but important, elements.
Writing it down doesn't prevent this entirely, but it goes a long way to clearing up possible misunderstandings.
Certainly, nobody deserves to go unpaid for their work, but anyone starting work without a clear written understanding of the facts is setting themselves up for all sorts of problems.
Here's one reason why putting it in writing is best, even if forgery is possible.
People are way more likely to argue about what was agreed to, than about whether an agreement was made.
With verbal agreements, most people won't lie and say that no conversation took place. (The "whether" part.) But many people will misremember or distort the exact words that were exchanged. (The "what" part.) And those exact words are what count, legally.
Likewise, a person would have to be really slimy to claim that your signed, written contract is a forgery. Most people won't dispute that they signed it. (Again, the "whether" part.) And since it's in writing, and there simply is no room for disputing the "what."
To put it another way, getting a written agreement raises the moral and legal stakes for a potential welcher. They'd have to accuse you of forgery, instead of just shrugging and saying "I guess we remember the conversation differently."
I'm realizing now I misread the OP, and we are talking about a verbal contract-- for which I'll agree different rules apply. (Not legally, but practically.)
My question is more about whether there's any practical distinction between an informal email which contains a clear agreement to work and the "signed contract" spoken of in legend.
Practically, one difference would be in the level of detail. Contracts tend to go on at length about the finer points of the business relationship. Whereas, in an email, people would typically be much more brief.
The extra details can be very important.
For one, they help prevent misunderstandings. ("It's been three months, and you haven't paid me." "Oh, well it's our standard practice to pay all invoices within 12 months.")
Secondly, if the relationship becomes acrimonious, the details help limit the scope of a possible dispute. The more the parties make explicit up front, the less there is to argue about later.
Another difference concerns the Statute of Frauds. (http://www.lexisnexis.com/lawschool/study/outlines/html/cont...) Certain kinds of contracts--notably those above $500--require a signature of some kind. But, if you read § 6.03 in the statute, you'll see that this can be construed broadly. Often, merely including your name in an email is enough to satisfy the Statute of Frauds (http://www.internetlibrary.com/topics/statute_frauds.cfm). But if you're looking to hold someone to their word, it's safer not to rely on that.
It's better to be safe than sorry. If you want something to be binding, it's best to go with a solid contract, rather than just an exchange of emails. If you don't want to commit yourself just yet, don't assume that your emails are nonbonding. In other words, be pessimistic either way.
I'm delighted to see that disputes are being solved this way instead of tying up the assets of our judicial system. Remember the days when we actually tried to resolve our problems and court was a last resort? Now the sentiment seems to be that you should file in small claims court instead of writing a post on reddit.
I'm glad to see 'court of public opinion'(AKA reputation) make a comeback. The concept of reputation is, in my humblest of opinions, more important than our legal system when it comes to keeping people from behaving badly. Being publicly shamed is a deterrent for unethical behavior in a way that our courts can not be because of the ridiculously high cost of litigation.
The op has, hopefully, learned a valuable lesson: don't work without a signed contract.
That said, the comp should have just paid or, at very least, tried to negotiate the amount thought I don't think that's worth the effort either. This is such a paltry amount as to not be worth the effort to fight.
People have reneged on signed contracts. A signed contract is not a foolproof protection for your payment. You just have a better case when going to court, which will cost you money. Also a verbal agreement is a binding contract.
The thing is, this can (and sometimes does) happen with larger and better established businesses too.
A common rule of thumb in the design industry is that if the amount of fees in question isn't going to be worth going to court over, then a 50% deposit paid up-front is a reasonable request.
I've also been in the equally unenviable position of having to pay for someone who completed work according to a scope that was too vaguely defined. The guy I contracted to do the work did the work according to the broad outline I originally set out.
Being young & stupid at the time, I blamed him for thinking he took shortcuts and refused to pay him all of what he was owed at first. But it was my fault for not being more specific in the original job. I eventually apologized and paid him the rest of the money. Lesson learned.
I believe design work is especially prone to this. But none of this is an excuse. If you have a signed contract, you honor it. Period.
Seriously? Who refers someone to legal for $780? Especially considering they are YC funded. That seems absurd. (Obviously only one side of the story here, but it seems clear they wanted the work done asap)
I feel really sorry for the CEO. She's inexperienced, she didn't know to just pay the money, and in her first disagreement with a contractor, she got an internet lynch mob on her back. She did the wrong thing, of course, but the cost was much higher than this merits. Even if she does the right thing now, there are many who will consider this a black mark on the company indefinitely.
To the CEO if the report is substantially accurate:
The cost of attorneys and more importantly the distraction isn't worth the worst case invoice for three days work. It's not going to cost you your shirt, just one sleeve. Be glad it's a cheap lesson.
There's a lesson here on the other side, as well: when you're hiring any kind of contractor (designer, lawyer, etc.) you need to specify not just an hourly rate, but also an estimated number of hours. One person's idea of "getting started" on a project may be an hour or two of work, another's may be several dozen hours. Getting an invoice for many times what you thought you were agreeing to is an unpleasant shock, regardless of how it's resolved.
Pedant point: a lot of people are writing about "verbal contracts" when they mean "oral contracts". A "verbal contract" is a contract in words--whether spoken or written, as opposed to a contract that is inferred from actions or implied by law.
Both contracts in this story (the one possibly agreed to on the phone, and the one offered in writing by email) were verbal contracts--one oral and one written.
This is off-topic and I couldn't really figure out what it is that eligibleapp does, but why would they not come out with a web app first? Restricting whatever it is they're doing to the iPhone seems shortsighted.
I'm trying to figure out what additional value Eligible's supposed to add that outweighs just logging into your insurance company's website. And how they're supposed to make a profit.
Agreed. But if it's not restricted to the iPhone, there are already competitors out there such as cake health and simplee. It could be useful for physicians who are in the hospital or skilled nursing setting and want to check insurance eligibility.
But much of today's health care work is desktop related, and there's so much opportunity for disruption there that it's important not to overlook it all and head straight for mobile apps.
A lot of people have attempted to copy that UI element from Path. There's a few open source libraries for the iOS SDK that will accomplish that. Of course, it looks much better in Path in this case.
Well. Your design looks nicer at least, and you're probably getting more than $XXX exposure now (Their current one.. doesn't - but it could be worked on as a first revision - hopefully their current designer iterates hard!)
I don't get it - did he actually email legal@ and get a negative response, or are we just spawning internet lynch mobs the second we run into the slightest amount of resistance now?
This is what you don't do if things don't work out. Go to small claims court, do not post it on the internet and open yourself to getting sued for libel.
Could you please elaborate as to why you think so? I'm not trying to be a contrarian here. I'm asking because I'm a backend engineer so my opinions on design admittedly isn't very sophisticated.
Seriously? Please learn how to properly freelance before publicly flaming a bootstrapped startup. Always get your task/rate in writing before continuing..
One key point is that YC is a great brand in the tech community. If you are a YC graduate, your have the credibility of it behind you as if someone was a Harvard grad. Doing stuff like this erodes the brand for an trivial amount of money.
Work was done here, and if they weren't a YC company and some other guy, it is less likely that a designer would work for them without some kind of written agreement.
I hope the screenshot is fake data and not violating anyone's HIPPA rights, otherwise this designer is going to be in a lot of very hot water over this.
If Eligible sent confidential data to a contract designer for the purposes of a mockup then they deserve everything they get. I don't- for a second- think that they did.
This is a good point - would _you_ trust your medical data/history to someone who'd screw over a graphic designer for $780? With no other indicators of reputation - what's everybody else's opinion on what this startup might do when a medical insurance company show up and says "$10,000 to see $persons medical history"?
Maybe the designer is misleading us all, and there's a very good reason with the company are reluctant to pay $780 for some work the designer thought they'd asked for. But surely in the field they've chosen, reputation and appearance of trustworthiness have orders of magnitude more value that this spat?
Not handled professionally on the designers part. He could have turned this into a win by being their go-to-guy for future contract work or getting referrals to other YC residents instead.
I don't think it was worth resorting to public shaming for a few grand. I guess Eligible got some free press out of this now. Well done!
If what the designer saying is true, then Eligible breached contract. Verbal contracts are binding in CA. And he is within his rights to get paid for his work. It should not damage his reputation at all.
What's damaging to his reputation isn't pursuing the invoice based on an oral contract. What's damaging to his reputation is if he jumped the gun, whipping up drama about a receivable that he reasonably could have expected to get paid if he simply invoiced persistently.
I suspect this thread might be a bit of a litmus test for people who have done a lot of freelancing. From working with designers a bit, I can tell that this is a hot-button issue for them: a lot of clients do shirk payment, and so they tend to insist on upfront payment of some sort before they commence work. But having said that, I have to believe every freelancer is familiar with delayed payments on invoices. Your most lucrative clients might pay many months late, and then only after persistent reminders.
Just because it happens doesn't mean it's right. Yes companies drag out payment and make you jump through hoops to get paid (the you here is a hypothetical freelancer).
The reason they do this is to hold on to your money as long as possible with the outside hope that you'll just go away and they get away with theft.
It's bad enough with larger companies where the people you're working with may not actually be the people who are writing the checks, but at a small company like this it is unacceptable.
Assuming the story is true, the CEO agreed to pay then decided that she didn't want to pay anymore. To accomplish this she's doing her best to get the designer to give up and go away.
How is this acceptable behavior? Again I realize it's common, but it's flat out dishonorable.
I acknowledge that bureaucracy might be partly to blame in larger companies, but we are talking about a small company where the designer was dealing directly with the CEO.
Again: are you familiar with the concept of "payment terms"? Has anything been disclosed to suggest that this vendor hasn't had timely payment? Are we all clear on what "timely" means in the context of freelancing?
For once, I sort of agree with you. But I chalk it up to inexperience, not malice. It sounds like the OP was intimidated by the (probably meant to be tongue-in-cheek) referral to the "legal department, and genuinely doesn't know what to do.
And, it's one thing to have a client drag their heels on a bill, it's quite another for a client to say, "No, we won't pay that, talk to legal if you have a problem with that." The former is a good opportunity to persistently invoice, the later is a good opportunity to explore the small claims court system.
The problem here is that it is not actually clear they had a contract. The timeline, as reported in the original post, appears to be this:
1. They email each other for a while.
2. They talk on the phone, and agree that he will do the work for $65/hour, and can start right away.
3. He emails them a contract, and they mail back that they will run it by their lawyers.
4. They contact him to say they have hired someone else.
We are told that #4 occurs after 3 days of work, which puts it 3 days after #2.
The key question, I think, is when did #3 happen? If #3 happened very soon after #2, then depending on exactly what was said in the emails and on the phone, it might be interpreted that #2 was just the negotiation, and the contract he emailed was his offer of terms and the work would not actually start until they accepted it.
To put it another way, I can easily imagine plausible fact situations where he is clearly in the right and they owe him for his work, and I can easily imagine plausible fact situations where they had no deal and he jumped the gun by starting work and they owe him nothing--and all of these fact situations would be consistent with the information we've been given.
I I edited to say "public shaming" instead. You're right. His reputation I can't predict, but it might creep up somewhere on Google and potential hires may consider it a liability.
Don't scare away the future prospects by making yourself untouchable.
Why would someone want to be the "go-to-guy" for a client that's refusing to pay an invoice of $780? I can understand the referrals just because it's YC. But, in general, I doubt designers go around asking clients that refuse to pay for referrals.
It's hard to judge any case without seeing the full information. But based on the post, the company agreed to pay him to do design work, which he then did. If they change their mind a few days later, that's their issue - they are still legally bound to pay. I would never not pay a freelancer I hired, unless they literally didn't do the work.
I wouldn't pay you for that design. It's mediocre and needs major refinement. I would tell you to redo it. Get over it and learn to hustle better, Otherwise you won't make it very long as a designer. Verbal agreements don't mean anything any more. Clients just don't care and designers are a dime a dozen these days. If we fail then our competitors pick up our mess. Again I will say, get over it and find some other work. If you are as good as you think you are then you should have no problem finding work, right?
