Pulling out of a business

[XJ75]

My friend and I had an idea for a website. The plan was that I would build the website and he would look after marketing. We setup a limited company split 50/50 but don't have any agreements in place to say who owns what.

I built about 60% of the website but have now decided that I don't think the idea is viable so I no longer want to be involved. I've told my friend that I don't want to be involved and he has asked me to send the code for the website so he can do the project with someone else.

I'm reluctant to handover the code base, because I don't think it's reasonable for me to basically hand over 60% of a working piece of software to then get nothing in return. Am I being unreasonable if I refuse to hand over the code? I have no plans to use the code myself. I would say that I've spent significantly more time on the project than my friend, as the site isn't built yet the marketing effort has been zero.

In terms of our friendship, it has deteriorated since taking on the project and I don't see us keeping in contact, he was never a very close friend anyway so I'm fine with that.

I don't have any plans to ask for money in return for the code, I would rather just not hand it over.

Any thoughts?

Thanks.

[joshcowin]

You don't want to give it to him, you don't want/plan on using it. You wont even allow him to buy it from you.

You sound pretty reasonable!

[XJ75]

Part of the reason for this is that I don't really want any potential liability if they take my code, use it and end up having problems. I'd rather just entirely remove myself from the situation.

What happens if I take money for it and they have problems and they come back to me?

[joshcowin]

XJ75 said:

Part of the reason for this is that I don't really want any potential liability if they take my code, use it and end up having problems. I'd rather just entirely remove myself from the situation.

What happens if I take money for it and they have problems and they come back to me?

Could you not write a simple agreement up? even if you give it to them?

I would imagine as soon as anyone else works on your code it would absolve you of responsibility anyway!

[MonkeyBusiness]

Hand over the code with a disclaimer.

[Mr Pointy]

Well you need to remove yourself from the company correctly anyway, presuming you are a director.

Does the code belong to you or is it a company asset?

[XJ75]

Mr Pointy said:

Well you need to remove yourself from the company correctly anyway, presuming you are a director.

Does the code belong to you or is it a company asset?

Yep we are shutting down the company anyway so that's no problem.

With regards to who owns the code, we have no agreements in place and I was never paid any money to write the code. Is there any reason why it wouldn't belong to me?

I wrote the code using my own equipment in my own spare time.

Edited by XJ75 on Monday 29th July 13:41

[Mr Pointy]

XJ75 said:

Yep we are shutting down the company anyway so that's no problem.

With regards to who owns the code, we have no agreements in place and I was never paid any money to write the code. Is there any reason why it wouldn't belong to me?

I wrote the code using my own equipment in my own spare time.

Because you wrote it while acting as a director of the company? I'm not sure why it wouldn't be seen as a company asset. You're not some outside contractor brought in to write code for money, you agreed that your part in the company was to write the website code.

If you'd finished it & gone ahead with the project who would the website & code have belonged to? Would you still say you owned it?

[Algarve]

If you think the project is a failure then a partial coding for a failed business is worth zero.

Why not hand it over and wash your hands of the project? There is no liability. The code is untested and you're going to resign as a director.

You've strung your friend along (either deliberately or a change of heart). The least you can do is let him try this alone from this point, if he feels it has legs.

[48k]

Under UK law the IP in the code rests with the developer of the code unless there is an explicit agreement that the developer is transferring the IP to the company. Even if the company has paid you for your time.

Based on what you have said I would be giving your friend the code with no warranty expressed or implied and wishing him best of luck for the future. Anything else is just spiteful / petty / pointless.

[anonymous-user]

48k said:

Under UK law the IP in the code rests with the developer of the code unless there is an explicit agreement that the developer is transferring the IP to the company. Even if the company has paid you for your time.

Based on what you have said I would be giving your friend the code with no warranty expressed or implied and wishing him best of luck for the future. Anything else is just spiteful / petty / pointless.

I don't think that's the case if the developer is an employee of the company rather than a contractor.

[48k]

desolate said:

48k said:

Under UK law the IP in the code rests with the developer of the code unless there is an explicit agreement that the developer is transferring the IP to the company. Even if the company has paid you for your time.

Based on what you have said I would be giving your friend the code with no warranty expressed or implied and wishing him best of luck for the future. Anything else is just spiteful / petty / pointless.

I don't think that's the case if the developer is an employee of the company rather than a contractor.

It is the case, which is why a contract of employment will (or should!) contain an explicit clause stating that IP of any works generated during the course of employment is assigned to the company.

As a director and 50% shareholder in a startup you tend not to have a contract of employment and by the sounds of things the OP has no written agreement at all, so the IP is his to do with as he sees fit.

[Mr Whippy]

Just for clarity, you invested time and your friend has yet to do anything?

And if your friend now teams up with a new developer, they start with your code, and your friend also does nothing until the time for marketing arrives?


Not saying he would, but you could just run around programmers with ‘ideas’ and get them to make stuff, with the logic being you’ll market it later as your share of the input into the business.

You could build a mighty empire where you do nothing, because you wind it up before you ever do ‘your bit’ in the deal.


I’m not making any judgements. Just saying.


Out of interest, is the idea not viable and the entire code base now scrap for any other intended purpose?

Or could it fit a new idea that someone else might market, to give a return on time spent?

[anonymous-user]

48k said:

It is the case, which is why a contract of employment will (or should!) contain an explicit clause stating that IP of any works generated during the course of employment is assigned to the company.

Best delete this then in case the employee who tried it on with me a couple of years ago reads this!

[XJ75]

Mr Whippy said:

Just for clarity, you invested time and your friend has yet to do anything?

And if your friend now teams up with a new developer, they start with your code, and your friend also does nothing until the time for marketing arrives?


Not saying he would, but you could just run around programmers with ‘ideas’ and get them to make stuff, with the logic being you’ll market it later as your share of the input into the business.

You could build a mighty empire where you do nothing, because you wind it up before you ever do ‘your bit’ in the deal.


I’m not making any judgements. Just saying.


Out of interest, is the idea not viable and the entire code base now scrap for any other intended purpose?

Or could it fit a new idea that someone else might market, to give a return on time spent?

My use of the word viable was poor. It's entirely viable, but I pulled out as I don't think the idea will make enough of a return to justify the time spent on it.

So if I hand over the code, my friend will find a developer to finish what I had started and then proceed to try and make it profitable. This is the part that doesn't sit well with me. I have no problem if he goes ahead with the business idea and makes millions, but I don't know how I feel about him using my code to do so.

I think it's more of a moral dilemma than a legal one.

Edited by XJ75 on Monday 29th July 15:30

[PMacanGTS]

This could get messy. I'd ask to retain a share of the business in return for the code. You get a share of the profits should the business turn into a success, and he gets the code without any capital outlay.

[anonymous-user]

XJ75 said:

Mr Whippy said:

Just for clarity, you invested time and your friend has yet to do anything?

And if your friend now teams up with a new developer, they start with your code, and your friend also does nothing until the time for marketing arrives?


Not saying he would, but you could just run around programmers with ‘ideas’ and get them to make stuff, with the logic being you’ll market it later as your share of the input into the business.

You could build a mighty empire where you do nothing, because you wind it up before you ever do ‘your bit’ in the deal.


I’m not making any judgements. Just saying.


Out of interest, is the idea not viable and the entire code base now scrap for any other intended purpose?

Or could it fit a new idea that someone else might market, to give a return on time spent?

My use of the word viable was poor. It's entirely viable, but I pulled out as I don't think the idea will make enough of a return to justify the time spent on it.

So if I hand over the code, my friend will find a developer to finish what I had started and then proceed to try and make it profitable. This is the part that doesn't sit well with me. I have no problem if he goes ahead with the business idea and makes millions, but I don't know how I feel about him using my code to do so.

I think it's more of a moral dilemma than a legal one.

Edited by anonymous-user on Monday 29th July 15:30

Yep the moral dilemma is if you want to be a git or not.

He went into a joint venture with you in good faith, now you want to pull out and tell him to get stuffed you're keeping what you did.


Way to go.

[XJ75]

keirik said:

Yep the moral dilemma is if you want to be a git or not.

He went into a joint venture with you in good faith, now you want to pull out and tell him to get stuffed you're keeping what you did.


Way to go.

The alternative is to hand it over and he's got 60% of a fully functioning web application without lifting a finger?

ETA: I spent about 3-months on this full time (in between jobs), so it's not something I whipped up one evening.

[Muzzer79]

XJ75 said:

keirik said:

Yep the moral dilemma is if you want to be a git or not.

He went into a joint venture with you in good faith, now you want to pull out and tell him to get stuffed you're keeping what you did.


Way to go.

The alternative is to hand it over and he's got 60% of a fully functioning web application without lifting a finger?

ETA: I spent about 3-months on this full time (in between jobs), so it's not something I whipped up one evening.

So.........sell it to him?

Simple agreement, he buys you out of your share of the business for £x. Your liability ends there and then, as does your responsibility for the code you created.

You get something for your effort, he gets to keep something which is partially-built so he doesn't have to start from scratch.

By keeping 'your' code, you just come across as obstructive.

[khushy]

Everyone who codes does it differently - giving him 60% of what you have done so he can simply get someone else to finish it is utter nonsense.

Whoever tries to make sense of what you have done and then complete whatever is being built will probably have to start again anyway to make it work

You are backing out - leave him the code - move on - job done.