David Canton

Guest David Canton

Business lawyer and trademark agent with a practice focusing on tech issues.


Season 06 Episode 2 – Dec 20, 2022  
33:00  Show Notes

Website Contract Advice From an Actual Lawyer


We talk with David Canton about the ins and outs of contracts for creative professionals.

Show Notes

  • Follow up episode to Contract Opinions from not a Lawyer
  • This is not legal advice
  • What is legally binding? Verbal contracts
  • Plain language contracts vs legalese
  • 3 reasons to enter a written contract
  • Non-competition clauses
  • Combine contracts and compromise
  • What is "Work for Hire"?
  • Software license
  • How often should a contract be updated and/or reviewed?
  • Wet signatures vs digital signatures

Show Links

Accuracy of transcript is dependant on AI technology.

Hey, Amanda. Hey, Sean. Do you like to waste time on YouTube? I do. Hey, did you know about the new website one on one podcast channel on YouTube? Yeah, Sean. I know about it. What do you think I've been working on?

Haven't you been clicking the links I've been sending you? You can just go to YouTube and you can search for the one website one on one podcast. Today on the website one on one podcast, we talked to business lawyer David

Kenton about contracts. We'll discuss non-competitive clauses, the concept of work for hire. And David gives us his three main reasons why you should have a contract. It's the website 101 podcast. We are back for another episode. This is the podcast for

people who want to learn more about building and managing websites. I am one of your hosts, Mike Mella, and with me as always are Sean Smith. Hi, Sean. How you doing? Hey, Mike. How's it going? It's going well and Amanda Lutz, Amanda. How are you? I'm fantastic today.

Thanks. How are you? Good. I'm very good looking forward to this episode. We have a great guest on today. We have David Canton. He's a business lawyer and trademark agent with a practice focusing on tech issues.

and he's going to help us understand contracts, which is one of the oft-requested topics on the podcast here, so we're gonna get advice from an expert. David, welcome to the show. Thank you. Well done, before David keeps going

and shares all of his knowledge with us, I just want to remind everyone that this is a follow-up to last season's episodes of Contract Opinions from Not a Lawyer. Right, we'll put that in the show notes.

So now this is like the flip side, the opposite. Contract Opinions from A Lawyer. From a real lawyer. Yeah, David, thanks for being on the show. Really appreciate it. You're quite welcome, thanks.

And I should start off with the usual notion that what I say today is not legal advice. You know, your mileage may vary. If you need specific real advice, it's all tied to the facts. Every situation's different.

And I'm a Canadian lawyer, so if you're in another country, that it may or may not be the same. So just, you know, everything I say, take it with that in mind. And just a quick pitch, go to hptechlaw.com,

and you can find I do a weekly blog post. And I also publish a weekly newsletter. With issues at the intersection of tech and law that you can subscribe to if you like so that's the end of my pitch so

Let's get started with the questions lawyers covering their butts right from the first second. I love it Okay, so let's start with the first question we've got planned for you What is legally bind in our verbal contracts legal and how can you prove a verbal contract?

Doesn't it like he said she said? Yeah, you're exactly right. So verbal contracts are legal, but that is the, you know, so if I phone one of you, if I phone up Amanda and I say Amanda, can you revise my website?

And she says, great, that'll cost you $x. And I said, good, can you start tomorrow? And she said, yes, that's contra. So the problem is proving it, right? And you know, the bad joke is an oral contract isn't worth the paper, it's printed on. And you know, it is

very much a he said she said. And it's, you know, So, yeah, they are contracts, they're binding, but they're kind of useless. But also, if I email Amanda and I say, Amanda, can you revise my website?

She says, responded to, yes, what would you like me to do? And I say, oh, it's just old. I need a modernized sheet. Oh, yeah, okay. How much is going to cost? We have this email exchange. It goes back and forth.

And in the end, we get to an email that I say, yep, okay, go ahead. That email exchange is a contract. And to the extent that things are specific, price and what you're going to do and everything,

that's great. But the problem is all the stuff that's unsaid. So you have a contract. Sometimes even if you think you don't have one, but the issues are what does it mean and how you approve it? I have a follow-up question to that.

Let's say you're having a conversation on the phone and you get this verbal agreement. And everything's good. We're copicada. Command is going to do work on my website because I lazy and want her to do it.

And then I send a follow-up email and say, hey, Amanda, this is what we talked about and agreed in bullet form ABCD. I'll start tomorrow. Does that count as a contract, even if she does not respond and say yes, I agree to what

we talked about? That gets kind of tricky. There's a couple of legal issues in there. The first one is, you know, when is the contract formed? So, you know, in contracts 101, you have sort of an invitation to treat where you ask

someone to do something and then you have an offer and then you have an acceptance. So you can get in this once an offer of contract is formed, then stuck, you say afterwards, may or may not be amending the contract.

That's kind of the issue around that. It depends a lot, right? It depends a lot, unfortunately. It depends a lot. So it sounds like for everybody's best interest, you want to get things in writing so that

everyone has a copy and everyone has agreed. So I guess the big question to that is like how legalese does this need to be? Like can it just be like a couple of like point forms, things written out that everyone

is like sort of replied, I approve? Or does it need to be like? contract language and printed out and signatures from all parties involved. Oh, good question. Yeah, so you see a lot of contracts and have a lot of legal ease,

and terms of legal ease and boilerplate and all that kind of stuff. And some of them are really hard to read, but by no means does it have to be like that. There's been a move over the last few years to go to more plain language contracts,

and not all lawyers subscribe to that. I do subscribe to that. I try and make mine as short and simple and to the point as possible. Is it more risky to have a plain language call? that your layman can read and understand?

No, it's not. And it's all about clarity. I mean, that's what it's all about. So, you know, there are certain sections of a contract that tend to be run legally's indemnities, limitations, liabilities, all that kind of stuff,

but they're hard to kind of draft without sounding legal. But for the most part, you know, I'd rather have language that anybody can understand than legal language that sounds impressive, but... You know, not sure what it means.

And a bit of an aside, but at Harrison and so we do a contract drafting competition at the law school at Western. And in previous years I've had something to do with that. And what I tell these students who are learning contract law, but have never drafted a contract

before, I always say to them, when you're done your first draft of your contract, hand it to someone without telling them what the subject is, you know, it could be your roommate that's not in law school, it could be your mother, like whatever, ask them to read it.

And if they can't tell you the gist of what that contract is about, you've failed in the drowning. Wow, I like that. I like that. Yeah, that's really good news because there was a... Years ago, I mentioned this before on the show, but years ago there was a famous web developer in the UK

and we'll get into the international thing in a second, but he had released what he considered a template for a contract that he said, web developers just use this. And it was basically like a two-page thing and it was very casual language.

It said things like, I'm sure we all want to be friends, so we will pay on time and stuff like that. And I always wondered, the international thing notwithstanding, if he was from Canada, would that have been a legally binding thing for me to use?

Use that template, change it to my clients, my name, and forget about all the clients shall blah, blah, blah, and all that legalese stuff. Would it still have covered me? And it sounds like it would have been half decent maybe?

Is that right? Yeah, it's perfectly binding. And you don't see contracts that have that language in it very often, but you do see it occasionally. it all comes down to is it clear and does it cover off the issues that you need to.

And I can think of three reasons why you want to enter a written contract. And most people think it's well, if something goes wrong, I've got proof and I can sue on it. And that is a reason, but that's not the main reason because that's face it for most contracts.

You don't get there, you hope you don't get there. The first reason is to make sure that both parties are on the same page. And you both understand what's being done, what the price is, who owns it, you know,

all that stuff. That's crucially important because, you know, as lawyers we see lots of problems when somebody's in the middle of something, you know, it might be a contract for a website or it might be

just two people working together on a joint venture, whatever. One of the parties will get upset. Well, you know, the other party isn't doing what they're supposed to do. They were supposed to do this and they're not doing this and they're not paying attention

or whatever. But when you talk to the other guy they'll say, oh, I didn't know you wanted me to do that. So, you want the comment that, oh, well, that's not how I figured the deal. You want that comment to happen before you start, not in the middle.

So don't underestimate the value of a contract just for getting both parties at law, we call it ad edem, but on the same page and agreeing that what all the business terms are, that is worth its weight in gold, making sure everybody's like upfront.

Another one is if you're working for a large company. let's say I'm a promotions guy in some massive company and I engage you to do this and then I leave or I get hit by a bus. If you don't have a written contract, how does my counterpart

know what the deal is? So there's a real serious element of that there as well. So those are kind of the three reasons at least in my head as to why written contracts are a good thing. Yeah, I guess that makes sense that they're a good way to keep you out of litigation, right?

because if you, if everyone agrees with what the work is, then you're less likely to get into that kind of a confrontation where, oh, you didn't give me, you know, what you promised or whatever, that makes sense.

So I mentioned earlier about this international thing. As web developers, and we have listeners from all over the world, I have worked with clients from other countries, I'm sure, Amanda and Sean have as well.

How does that work? If we have any kind of contract, is there any point? And having a contract for a legal, from a legal sense, obviously that understanding the agreement is a big, like you just mentioned, is important,

but in terms of enforcing it, if someone's in the States and I'm in Canada, how does that work? Yeah, so the starting position is that you will always be doing business to business contracts. And the good news is that most jurisdictions

will enforce choice of law clauses in contracts for business to business. So if you're in Ontario, you want to have a choice of law clause that says, A, Ontario law governs, and B, if there's a lawsuit,

it has to be handled in Ontario. So you often get into that battle though, with the parties. Each one wants the jurisdiction to be there. So you sometimes get into that battle. But yeah, so that's the good news.

Now enforcing it. I mean, that's where it becomes a problem. So if you're doing work for someone in England and they don't pay you, even though we say it's a nateria law, you're basically going to have to somehow go after them in England.

And how practical and cost effective is that? That's the big problem. The laws can vary from country to country in ways that you might surprise you because we often usually should have limitation of liability clauses in your country.

It says, hey, if something was wrong, I'm not liable for any more than what you paid me. But those clauses in England are necessarily enforceable. So there's all kinds of weird things. You're not being employed, but there's weird differences in employment law and there's

differences in privacy laws. There's all kinds of differences. But if you can try and make your contract, Ontario law applies, if you're not in Ontario, or wherever your jurisdiction is, that's really helpful to you.

Hi, this is Sean. Thank you for listening. We love getting feedback and topic or guest suggestions from listeners like you. To do so, please visit website 101podcast.com slash contact. I have a question, getting away from the international stuff.

You obviously right now are talking to three contract developers, freelance contract developers. Would you be giving different advice or information if we were the small business owners that were coming to you?

Or is the same advice applicable to everyone? To some extent it's different. If I'm drafting a standard contract for you. versus drafting a standard contract for the company that's engaging people like you.

It's not going to be the same. It's going to have the same sort of flow, but it's not going to be exactly the same because your interests are a bit different. Well, we'd go with your client, your client,

whoever you're making the contract with. Yeah, exactly. So now as a contract developer, what are some of the things that would be different from a company perspective that maybe I should be keeping my eyes open for?

Not that they're going to try to sneak anything past me or be shady, but just things to be aware of. Maybe a clause that we should fight tooth and nail to not remove. or some negotiation going on.

I think Sean has some experience with that one as well. No, I don't actually. I'm just kind of guessing. All right. First of all, it depends how reasonable one part of versus the other is. And I'm not doing you any favors if I

draft this kind of contract for you that is so much slanted in your favor that the other part is going to immediately look at it and go, what, you nuts? And the same thing, if I'm drafting for the buyer,

I shouldn't be drafting it so far in their favor that you go like, are you crazy? I'm not going to sign this. So you would hope that there are little closer. Now you don't always get that. I've got a situation right now and this isn't web development.

It's tech related, but not web development. But my client is a fairly small business and they're providing what should be a fairly straightforward service. The buyer has thrown a 60-some odd page contract at them

that might be good if they were, you know, it's drafted from the perspective of buying goods that are... high risk, you know, and that are being installed in a high risk environment and all that kind of stuff.

And, you know, read through the agreement and you go like, this is crazy. Like, 90% of this doesn't apply. So you do get that sometimes. The things that, you know, I could go on for hours about the things to look out for,

but, you know, it's around ownership of what you create broad and dannities. Sometimes buyers don't understand open source. So you get some really weird open source stuff, non competition stuff that says you can't, you know.

you can't do a similar website for somebody else. Actually turned down a client because of something like that. Their definition of the field that they belong to was way too broad. Yes. And it was like a five year,

and I said, no, I haven't worked in that industry since, but it doesn't matter. I just didn't want to restrict myself. Yeah. Yeah. And I get from the buyer's perspective, if they pay you a lot of money to create a website

that's truly unique. in their industry and offers them a leg up. They don't want you to, two weeks from now and go out and recreate that for the competition. And I get that. But there are better ways to handle it

than saying you can't do anything for my competitors for five years. Like five years is kind of ridiculous. And courts don't like these non-competition clauses. No, they will enforce them in a business-to-business aspect.

But one of the ways to deal with these things, you have the direct conversation with them and say, OK, what are you trying to protect? OK. really don't you want me to do here? And then you can narrow down the definition

and maybe you can get it to a place where you can say, where it gives them the protection they're looking for. But at the same time, you're willing to say, you know what, I'm fine with saying I won't do a similar website a short period of time.

Right. Yeah, I often have, when I give a contract to a new client, if it's like a large nonprofit or something, I often get them. to like they end up sending me back their contract. And we kind of like have to,

oh, will you sign my contract, if I sign your, or like we kind of blend them into one contract. And is that fairly standard for that to happen when they have their own and I have my own and we have to work it out?

Yeah, you can get into the battle of the forms thing pretty quick, right? So, you know, you have your contract they have theirs. And it's like, your hope is that you send them your contract and it's reasonable enough they look at,

well, okay, this is close enough. Right. And they sign it, depends how savvy they are on websites and tech in general and software. Sometimes they just don't understand it. It's not unusual to pick and choose bits.

One advantage actually for someone like web developer to have their own standard contract. You know if you're dealing with a large company, the odds that they're going to accept your contract are great.

But at least if they won't accept your contract, at least it gives you something to compare your provisions to theirs. So you can get an idea of, wait a minute. I see this. They say that. That sets off red flags because.

I don't like that. Got it. Yeah. I'm guessing that there's going to be some smaller businesses also that are going to be not trying to bully people into using their contracts instead of hours, but I'm sure that

they just think that maybe they're more important than they really are. And so you should be accepting, you know, we've paid the lawyers and we know we've got the all the fancy legalese and so use ours.

And it's like, all right. Yeah, and you do get that. Because it's, you know, they feel... comfort or attached to a form or somebody in that company will say this is the contract for we have to use in an attempt to standardize things.

But it doesn't do anybody any good if the contract doesn't get the situation. So if it's for the supply and installation of HVAC equipment, it's got nothing to do with what you're doing on web development.

So sometimes you've got to get people over that ego thing. Sometimes that's the initial conversation. is rather than try and make the contract work, sometimes the initial conversation is look, I've read your contract,

I get where you're coming from, but I'm not installing your HVAC system, I'm providing a website. So this doesn't really work. Why don't you take a look at our contract because I think it works a lot better.

Yeah, I think what happens a lot of the time too is that in my experience anyway, I might be dealing with the marketing department of an organization and I'm on great terms and we've all agreed to this and that,

but then when it comes to contract time, they just get there. legal department, I guess, involved. And the legal department was like, well, this is how we do it at this organization. I don't know what you guys talked about,

but this is the contract you get a, you know, so that gets a little weird there, right? That can happen. A good lawyer won't do that, but that can happen. I mean, sometimes what you see is there's a disconnect

between the marketing side and the house lawyers, because they're not really explaining to each other what's happening. Sure. Right, so it's not unusual when I'm in that situation to talk to the lawyer and you go, oh, well.

This is what the deal was like where and they go oh, you know and they go back and talk to their internal client And then it changes things. So you have to sort of it's not always easy to read the room

But you have to kind of do that a bit. Okay So I'd like to pivot a little bit. There's a term that I hear a lot Work for hire. What exactly is this is it good? Is it bad? I really don't understand it very well at all

So, work for hire is an American term that comes from an American copyright statute. You know, I'm not sort of qualified or applying on US law, but basically it's an overused term. I don't like it in contracts.

I don't like to see it. It basically, it's the same as the Canadian copyright law. It's about the employer-employee relationship. So if an employee creates something for their employer. So if you were employed.

by my company and you're creating a website, the work for higher concept and the Canadian law that's in the copyright act says that if an employee creates some creative works that's related to their job,

then the employer owns what you create. That's all that it means. Now, that's how it works in the employee situation, but as an independent contractor, if the contract is silent, I'm ownership. Copyright law says you as the creator are the owner of what you create.

So if I hire you to create my website and we say nothing about ownership technically you own my website, now if I'm providing you with text and content obviously that's still mine. But putting that aside you own it and I have an implied license to use that.

The question becomes what is the extent of that implied license. So it's clear that I haven't applied license to use it as a website but does that license extend to allowing me to hire someone else to change it?

Does it extend to being able to take? some of that content on the website and turn it into a paper-based advertising campaign or a LinkedIn advertising campaign. Those are the things that get kind of hard to know.

And a photograph or a classic example of that. So if you take, someone takes a photograph and they use it for advertising in one venue, do they also have the right to use it in other venues? So where you want to get to in your contract, you don't want to use terms like work for

hire because it's legal meaning maybe different than what people think it means. You want to settle really clearly who owns this. So it may be I have the right to do whatever I want to do within my organization, but I

can't resell at the third parties. And when you're creating websites, when you're creating software, obviously you're using bits and pieces that you've created before, or that other pieces people have used before.

You're using open source. So if you create me a website and your context says, I own it, you're going, well, wait a minute. I still need to use elements. So you have to, if you do that, and your thing says, I own it,

you want to have, deal with the bits and pieces. So you want to have language in there that says, you own this as a whole, but you understand that I've created this using bits and pieces that I've done before.

And I still have the right to reuse those. And if I've created new bits and pieces, well, I'm creating your site, I get to use those too. Yeah. And well, that's getting into like intellectual property, isn't it?

Mm-hmm. Yeah, absolutely. Yeah. It's you want your license to be really clearly drafted and, and, you know, there's a bunch of barely typical language that comes from the software license world around that stuff that gets kind

of reused for IP and software related stuff. Yeah. Yeah. All right. I'm going to jump in here and just say it's a bunch of questions. Obviously we haven't. addressed yet, Amanda Sean, how do you want to tackle this?

You want to just pick a few and sort of. The last question in the document I added this morning, and I actually really want to ask that. How often should I have my contract updated and or reviewed?

And by that, I mean my boilerplate, as well as contracts with long-term clients. Like I've got a client I've been working with for five years. Should I review the contract that we agreed to five years ago?

You know, Amanda? Yeah, I'm sorry, I was just rambling. I wasn't asking it. I was just like, you got David to answer that question right now. Sure. Because you just asked it. David, go ahead. Like in the web development world, as far as on the contract,

sorry, things don't change that fast. So I wouldn't say annually is necessary. You know, every few years, there tends to be sort of like slow creep in issues that, you know, people may do a little bit differently.

But then you can also get the sort of rapid whack where, you know, privacy laws change like tomorrow or, you know, there's artificial intelligence law kicks in. Like you can have those sort of distinct things can happen.

I would almost think that if you, when you have a long term contract, oftentimes the invented sin. we'll start relying on you to do more things. At first it's just the website and then it's also the marketing and then it's also the social media. So I would think that it's like as those new tasks

are added maybe just make sure that your contract covers that and if not update them. Yeah that's really good advice because it's hard in the middle of a contractual relationship even if it's few years in and say oh I've changed my standard contract I want to sign it and that

other sides going well okay if you want me to sign that it must be bad for me so I'm not sure I want to do that so if you can sort of tie it in to something new that's always a good way to do it. Is it fair to say that for the most part

If I have like a standard contract that I use for most clients, I could sort of like just pull it out every time I get into clients, change some details here and there, but it generally use the same contract across projects.

Would that be for me to do that? The way I like to do them, if I was drafting a contract for web developer, I draft the contract so it's more of a, you might call it a general services agreement or MSA or

master services agreement or something. And it sets out the default positions for everything. And then. You have a schedule tool or a statement of work or whatever, and it's set up so you refer to those.

So if you're doing something for me for the first time, we sign the Master Agreement with the schedule or statement of work, however it is you do it. And then if down the road I ask you to do something else, you don't have to resign the contract.

You just do a new schedule, a new statement of work, but it's crucial that it refers back. So the new one has to say, oh yeah, this statement of work we're signing today is done pursuant to the terms of the Master Services Agreement that we signed on DataX.

That's a really good way to do it. Cool. And then everybody, would they sign that amended portion or that's how it's finalized? Yeah. Yeah. Okay. Since we're talking about signing stuff, do we still have to print stuff off and sign

it with pen and scan it into email at back? Or is it an email that's like, I agree, is that enough? You don't have to have wet signatures. You can print it, sign it, and fax it. That happens a lot.

Things like DocuSign are really good. As far as I'm concerned, DocuSign from an evidentiary basis is better than a wet signature. It's that's really good. So if you can use those it's good the email exchange. It has to be clear

email has to say Refer to the paper contract or attach it or you know, I agree it has to be Really dead clear That you're agreeing to it on those terms What about what about like embedding a scan of an image that's a scan of a signature like

In the PDF or the word doc like is that is that probably better between yeah? That's essentially how docuSign works the advantage of using something like docuSign Is that like it knows that it's me because I had to either log in or I came from my email or something

So and it provides you with that proof But it was signed by somebody by day when come who came at there from decantanet heresandpensa.com So that's kind of the the gold standard and it it just comes down to

Proof proof we accepted this right? Mm-hmm today. I learned what a wet signature is We use that term with our clients now to sound like we're extra knowledgeable. I know, like we know it's up. Anyway, thank you David so much for spending time talking to us today.

We have gotten a lot of valuable information. Yeah, this is really, really great and I know our listeners are going to love this information. They've been asking for it for quite a while. Thank you so much.

Are you quite welcome? The website 101 podcast is hosted by me, Amanda Lutz. You can also find me online at amandalutz.com. Recording from my secret lair while plotting world domination, I'm Sean Smith, your co-host.

One of your hosts today was me, Mike Mela. Find me online at belikewater.ca or on socials at Mike Mela. Okay, now that's an outtake we can choose. Yeah, man, pretty amateur hour here. We couldn't even get the counting, right?

Okay, here we go. Should we have a swearing role at the end of each season each time somebody? Just not even the first words. I think that would be awesome. At the end of the last episode, we have outtakes of like,

**** and ****. I'll censor everyone.

Have a question for Sean, Mike, and Amanda? Send us an email.