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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 118175
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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Please review my 10 page contract. I will send it to you.

Customer Question

Please review my 10 page contract.
I will send it to you.How is every part of the contract? Anything I should change?Please let me know if the contract will hold up in court and will win if the client chargeback his credit card statement yet signed the contract.It's ok that I make itnon- cancelable by the Reseller for the term I state (ie: 1 or 2 years)? So that they will always be liable to pay each month. Is there any outs I have to give?I can state that I can turn off their website and back on when they pay what is due, yet still take partial payments until they have paid what is due in full, right?In the agreement I mention "You" as well as "Reseller". Is this mixing the 2nd person and 3rd person tenses? Do I need to pick one or is it ok?If the total amount they have to pay is tens of thousands of dollars but the contract is mentioning that they are agreeing to a payment plan where they are paying a monthly installments of it and must pay the total amount as soon as the contract is signed and we start the service, then it would be ok to make it 5, 10, or 20 year agreement with no out, no?Are there any requirements I need to do for this if it is considered a "business opportunity"? Is it enough that I have mentioned in the contract that this is not a business opportunity. And any opportunity to make money is provided as a free bonus (even though I am pitching the opportunity to have their own social media management business.) And by doing this do I not have to worry about complying with FTC or any other government business opportunity law or requirements like: https://www.ftc.gov/news-events/press-releases/2006/04/ftc-proposes-new-business-opportunity-ruleAre you certain about your responses. If you end up being incorrect, how do you guarantee your answers so we don't follow it and later find out we violated the law?
Submitted: 9 months ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 9 months ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
We do not provide legal representation, so if you want someone to provide you guaranteed legal advice, you need to please go to a local attorney and visit their office for that service. We provide general information to customers to answer their general questions about their situations, if you want more than that you will need to go to a local attorney.
Customer: replied 9 months ago.
Will you please answer my questions and review the contract?
Expert:  Law Educator, Esq. replied 9 months ago.
I was answering the important question first, you asked, "Are you certain about your responses. If you end up being incorrect, how do you guarantee your answers so we don't follow it and later find out we violated the law?"
So before we proceed you need to understand that we are NOT able to represent you nor are we your attorney if you agree to the site terms, then we will be pleased to answer your questions and review the contract for you.
Customer: replied 9 months ago.
Do all of the other attorneys on this site have this same stipulation about not guaranteeing their responses/as educational purposes only?Also I understand that for $59 you are not trying to hold yourself accountable for what you say, but are you a practicing lawyer that holds yourself accountable when you are receiving higher fees?
Expert:  Law Educator, Esq. replied 9 months ago.
all attorneys on this site are bound by those terms and if you read the terms carefully they tell you we do not and cannot represent you and if you believe you can get an attorney to represent you for only $59 when our office rates are about $250 per hour, then you are mistaken. Sorry for any misunderstanding you had regarding the terms of this site you agreed upon.
Customer: replied 9 months ago.
I understand, thanks for clarifying :). Can you proceed with helping me? I appreciate your help and look forward to working with you.
Expert:  Law Educator, Esq. replied 9 months ago.
Thank you for your reply and your understanding of our terms.
Paragraph 3.2 you need to specify somewhere that you own the website as well and the partner/reseller is only renting use of the website and your company may deny access to the website for any default or breach in the contract.
Paragraph 12.2, needs to be 2 years, that is generally the most time the court considers reasonable.
You can make the contract have no cancellation provision if you choose to do so and you have to make it for a specific time period, so the contract can be 1 year-2 years or whatever. You can even include in there that they must give 30 day written notice if they do not wish to renew the contract and if they do not give such notice the contract will automatically renew for another year.
You are arguably not selling a business opportunity, you are selling rights to use your site for them to conduct their business. You tell them the business is their business and they are simply renting the site and server space from you, so legally you should be fine with the terms without worrying about business opportunity sales, as they are paying you monthly for the actual service.
Please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page , as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.
Customer: replied 9 months ago.
Regarding your response about paragraph 3.2
-We don't own their domain. They buy that from a site like godaddy. They follow directions to change their DNS settings so that they have our template website up and a login to their white label software that we give them. So instead of saying we own their website, should we say we own their website template and the white label software? That is what we take away when they don't pay.
-Also since we say we can take off the template from their site if they don't pay but the full amount is still due and we will put the site back up once they pay, that's ok for us to still demand payment after we've taken down their site for their failure to pay, right?---Regarding your mention about paragraph 12.2 needs to be 2 years
-Could I say it is a contract for 5, 10 or even 20 years, however if a court deems this to be too long it will revert to being only 2 years? This will at least get clients to see their responsibility to commit to us longer and it will only become 2 years if a court says it has to be which often it would never even come to.
-Especially since I'm saying this is a payment plan financed over a period of time it could be ok to say 5, 10 or even 20 years right? In this case do I need to specify the actual total dollar amount due when adding up the months or just say it's the Monthly Fee amount mentioned in the Payment Section times 12 months times the number of years that the agreement last for (without mentioning the total amount it adds up to)?---Do you know any other lawyers that specialize in business opportunity law that I can speak with?---There were also some other questions I had asked above that I wasn't clear from you on--
-Please let me know if the contract will hold up in court and will win if the client chargeback his credit card statement yet signed the contract.-I can state that I can turn off their website and back on when they pay what is due, yet still take partial payments until they have paid what is due in full, right?-In the agreement I mention "You" as well as "Reseller". Is this mixing the 2nd person and 3rd person tenses? Do I need to pick one or is it ok?Thank you!
Expert:  Law Educator, Esq. replied 9 months ago.
Thank you for your clarification.
Yes, since you say you can deny access to the template for non-payment, you can do so legally. You cannot turn off their website if you do not own their website, you can deny the use of your template on their site by making that template unavailable based on terms written into the contract.
You can say the contract is for 100 years, my comment was about the non-compete part being only 2 years, which is the maximum the court will allow a non-compete to exist for.
You can hire a local attorney to review and rewrite the contract for you at the same sites used by other attorneys, http://www.hg.org or http://www.lexmundi.com
You can win if a client tries to do a charge back, as that part of your contract and payments and terms of service was very clear in your contract, which is why I did not see any need to comment on. I only commented on areas of potential trouble in the contract. The parts of the contract I did not comment on were fine and would be legally binding and enforceable in court.
The use of "you" and "reseller" both in the contract is fine and would not create any issues, which again is why I did not comment on it.
Customer: replied 9 months ago.
I carefully did searches on http://www.hg.org or http://www.lexmundi.com but I couldn't find any lawyers who specialize in business opportunity law. It doesn't seem to be a choice on these sites or anything that comes up in the keywords. Advice?Regarding your message
"You can say the contract is for 100 years, my comment was about the non-compete part being only 2 years, which is the maximum the court will allow a non-compete to exist for.",
I'm not concerned with them competing. I'm concerned with how long I can require that they can be required under contract to continue paying my company monthly fees.
I've heard that over 2 years could be considered unconscionable from a court and the contract could be thrown out. Do you agree? If not how many years can I make it say that the payment is due for under the contract?
Could I say it is a contract for 5, 10 or even 20 years, however if a court deems this to be too long it will revert to being only 2 years? This will at least get clients to see their responsibility to commit to us longer and it will only become 2 years if a court says it has to be which often it would never even come to.
-Especially since I'm saying this is a payment plan financed over a period of time it could be ok to say 5, 10 or even 20 years right? In this case do I need to specify the actual total dollar amount due when adding up the months or just say it's the Monthly Fee amount mentioned in the Payment Section times 12 months times the number of years that the agreement last for (without mentioning the total amount it adds up to)?
Please provide specific answers for each question.If the FTC or a state found that I was violating requirements in their business opportunity law what would be the worse case punishments?- fines? jail time? etcThank you
Expert:  Law Educator, Esq. replied 9 months ago.

Thank you for your reply.

First of all your search was incorrect there is no such specialty as "business opportunity law" it is corporate law.

As far as the time considerations, your contract can state they have to pay you for the duration of the loan, you cannot go beyond the duration of the loan to make them pay you a fee. Once the loan is paid off the fee must end.

There is no jail time for any FTC violation, which this is not anyhow, only fines.

Customer: replied 9 months ago.
If I am talking about it in terms of a loan isn't there other legal aspects to I need to deal with? Shouldn't I just call it a total payment due paid in installments?
For my long paragraph above please go line by line and provide specific detailed answer please.
Expert:  Law Educator, Esq. replied 9 months ago.

Thank you for your reply.

Actually, no there is nothing else you need to deal with. It is not a loan it is a monthly payment plan. So you need to say the payments are monthly fee payments, not a loan. As long as they are monthly fees it is no loan and it does not have to be treated like a loan. It is not an installment plan because that insinuates there is a finite number of payments and not just an ongoing monthly fee for service, which is what this is.

Customer: replied 9 months ago.
Thanks. We'll wrap this up very soon. Still unsure of answers for this that I asked:I've heard that over 2 years could be considered unconscionable from a court and the contract could be thrown out. Do you agree? If not how many years can I make it say that the payment is due for under the contract?
Could I say it is a contract for 5, 10 or even 20 years, however if a court deems this to be too long it will revert to being only 2 years? This will at least get clients to see their responsibility to commit to us longer and it will only become 2 years if a court says it has to be which often it would never even come to.
-Especially since I'm saying this is a payment plan financed over a period of time it could be ok to say 5, 10 or even 20 years right? In this case do I need to specify the actual total dollar amount due when adding up the months or just say it's the Monthly Fee amount mentioned in the Payment Section times 12 months times the number of years that the agreement last for (without mentioning the total amount it adds up to)?
PLEASE PROVIDE SPECIFIC ANSWERS for each question.Also I just admended section 18. Please let me know if this is ok and binding:
"18.Use
18.1 This is a twenty year agreement payment plan where payment is due by Reseller each month of the “Monthly Fee” stated in Section 4. If Section 4 mentions a first 15 days, this agreement extended by an additional 15 days. Only after this term will Reseller have the option to continue paying the monthly fee each month or to cancel with 15 days notice before the next monthly billing date. The “Minimum Required Cost” amount due is the Monthly Fee amount x 12 (months) x 20 (years) plus the cost of the 15 first days if mentioned. Instead of paying the Minimum Required Cost amount upfront, Monthly Fee payments may be made once a month as a courtesy option only when payments are made on-time once a month. If payment is not made on-time in any month when due, SocialXpand may in it’s sole discretion require Minimum Required Cost immediately due of the remainder of what is owed (instead of just the next Monthly Fee), and if it is not paid within a week of request, there is a late fee of 35% of the total Minimum Required Cost (or highest rate that is allowed by law). Also if Monthly Fee is not on-time SocialXpand reserves the right to deactivate the Resellers site; however the Reseller will still have access to the training and marketing materials which is the main benefits and be responsible for the Minimum Required Cost amount and the site will be reactivated upon correct payment. SocialXpand reserves the right to lessen the timeframe that the Reseller needs to be responsible for (for example for one or two years) which could make the Minimum Required Payment less, however such action would not wave SocialXpand of it’s right to later enforce the payment of all or part of the actual Minimum Required Cost."-Got it- no jail time for FTC violations, but how about for state violations of business opportunity law?Much Thanks
Expert:  Law Educator, Esq. replied 9 months ago.

Thank you for your reply.

No, there are contracts up to 5 years that are not unconscionable. Furthermore, you could have a 1 or 2 year contract with a clause that says it is automatically renewed for another 1-2 years if the parties do not cancel in writing within 60 days of the termination of the contract. The fee can be a fee for one or two years divided into 12-24 payments as well.

The new clause is just fine and it is enforceable.

No jail time for state business opportunities law either, that is only civil penalties. Quite honestly, I see what you are doing as a monthly service contract and not really a business opportunity the way you keep describing it.

Customer: replied 9 months ago.
How about contracts up to 20 years as per my new section 18 - not unconciousable?
Would it help if I added: If this is deemed by a court to be too long then it will become a shorter amount of time as required?
I have something saying the contract has to be canceled within 15 days of the 20 year term or will be renewed for another 20 years. That's ok, right?Do I need to specify the actual total dollar amount due when adding up the months or just say it's the Monthly Fee amount mentioned in the Payment Section times 12 months times the number of years that the agreement last for (without mentioning the total amount it adds up to)?
Expert:  Law Educator, Esq. replied 9 months ago.

Thank you for your reply. No you need to change the 20 years, I misread that and thought it said 2, to 2 years and add in that the contract will be automatically renewed ever 2 years unless 60 day written notice of non-renewal is given. You need to specify the monthly payments in the contract.

Customer: replied 9 months ago.
Oy I mentioned 20 years many times above. So it can't be 20 years?
How about 5 years? What is the maximum amount of years?
Does it have to be 60 days notice- can't be 15? Notice before or after the end of the term?Even if I have it for 20 years, it will probably never go to court anyway but they will still see the need to keep it for this long. Which is why I'm asking if I can say something like "20 years, but if a court deems that this is too long it will revert to 5 years or the maximum length allowed by a court"Last you said this was fine but let me know now...
I had admended section 18. Please let me know if this is ok and binding:
"18.Use
18.1 This is a twenty year agreement payment plan where payment is due by Reseller each month of the “Monthly Fee” stated in Section 4. If Section 4 mentions a first 15 days, this agreement extended by an additional 15 days. Only after this term will Reseller have the option to continue paying the monthly fee each month or to cancel with 15 days notice before the next monthly billing date. The “Minimum Required Cost” amount due is the Monthly Fee amount x 12 (months) x 20 (years) plus the cost of the 15 first days if mentioned. Instead of paying the Minimum Required Cost amount upfront, Monthly Fee payments may be made once a month as a courtesy option only when payments are made on-time once a month. If payment is not made on-time in any month when due, SocialXpand may in it’s sole discretion require Minimum Required Cost immediately due of the remainder of what is owed (instead of just the next Monthly Fee), and if it is not paid within a week of request, there is a late fee of 35% of the total Minimum Required Cost (or highest rate that is allowed by law). Also if Monthly Fee is not on-time SocialXpand reserves the right to deactivate the Resellers site; however the Reseller will still have access to the training and marketing materials which is the main benefits and be responsible for the Minimum Required Cost amount and the site will be reactivated upon correct payment. SocialXpand reserves the right to lessen the timeframe that the Reseller needs to be responsible for (for example for one or two years) which could make the Minimum Required Payment less, however such action would not wave SocialXpand of it’s right to later enforce the payment of all or part of the actual Minimum Required Cost."
Expert:  Law Educator, Esq. replied 9 months ago.

Thank you for your reply.

You can make it 30 day notice for cancellation, but 15 is not reasonable time.

Again, 2 years max would be what you would use for terms with automatic renewal every 2 years up to 20 years total and then you would say the contract may be renegotiated at that time. 20 years is TOO LONG A TIME, 2 years with automatic renewal every 2 years up to a total of 20 years is okay.

Customer: replied 9 months ago.
does saying
"2 years max would be what you would use for terms with automatic renewal every 2 years up to 20 years total"
mean that they have an out every 2 years? Or only after the 20 years? If it still means an out after 20 years and if it renews without anyway of stopping it, what does it really mean differently than saying the contract is good for 20 years? Thank you
Expert:  Law Educator, Esq. replied 9 months ago.

Thank you for your reply.

I would use the term 2 year contract with automatic renewal for up to a total of 20 years.

Customer: replied 9 months ago.
I get that I should use it but I'm asking what it means...Does mean that they have an out every 2 years? Or only after the 20 years? If it still means an out after 20 years and if it renews without anyway of stopping it, what does it really mean differently than saying the contract is good for 20 years?
With this term would I be able to collect on 2 years or 20 years if they stopped paying/ and would I have to collect every 2 years or can I make all 20 years due at once since it's a courtesy to allow monthly payments.
Thank you
Expert:  Law Educator, Esq. replied 9 months ago.

Thank you for your reply.

No, it means they have an out every 2 years. You cannot bond them forever to be your customer that is not going to work in any court. A 20 year deal like this would be if they were buying something and if you are selling them something and giving a 20 year loan and then you need to get into loan and lending laws and making this way more complicated on yourself than you need to because then you will need to hire a local attorney to write this as a loan agreement for you and that is beyond what we can do for you.

Customer: replied 9 months ago.
Thanks for your patience. I should be ready to wrap this up- just need clear and specific answers on these:
- Am I able to have it say I'm charging "$0 upfront but $499 a month after 15 days" and payment would be required to be do after the 15 days?-You mentioned I should change it to terminated within 30 days, however only requiring the user to provide 15 days is better for them so is that not good in the agreement? Although if it says either party providing 15 days right before the end of the term?- is that ok? And I later say the term is 2 years, so that will be clear right about right before the end of the 2 years?In 18.1 I say it's a 2 year agreement payment plan. You mentioned some issue with "payment plan". Is it ok to say payment plan?I get that you are saying that a court would not allow an agreement longer than 2 years for something like this, however...
-is that the longest I could say: what is the longest without being unconsiousable? if not how many years is?
-could I say it's a "20 year agreement but if a court found this to be too long it will revert to 2 years and we can choose to only enforce 2 years if we wish however not give up our right to the full 20 year length." (The purpose would be to remind the customer later that they agreed to stay longer but that if it ever went to court then at least the 2 years would be valid. Also because of the Severability clause I have, so if 20 years was found unenforceable at least 2 years would be enforced.)
Expert:  Law Educator, Esq. replied 9 months ago.
Thank you for your reply.
Yes, you can say there is no charge up front and $499 a month due after the first 15 days to continue with the program.
If only giving them 15 days is better for the consumer, fine, but usually 15 days is too short a time to try something out. Later you say the contract term will be 2 years automatically renewable without 60 (or 30 if you insist) day notice of termination.
It is not a "payment plan" it needs to be contract term payments or contract monthly payments.
You can say the term of the contract is 2 years automatically renewable up to 20 years (but quite honestly if you keep it at 2 years with the termination clause, if you want to increase the price or change terms in the contract you do not have to wait 20 years to do it).
Please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page , as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.
Customer: replied 9 months ago.
What do you mean by 15 days being short to try something out. It's about notice to cancel before the end of the 2 year term-- not about canceling right after they start.
It's ok to not allow them to cancel right after they start, right?What were you stating was the issue when you said just now that:
"Later you say the contract term will be 2 years automatically renewable without 60 (or 30 if you insist) day notice of termination."You are saying instead of "payment plan" I should be sure to use the wording "contract term payments" or "contract monthly payments" correct?Can I say 2 year agreement, but that keeps renewing automatically for an INFINITE amount of time if you don't provide XX amount of time notice before the 2 years is up each time, with an out each 2 years?Also can XX above be 15? Or needs to be 30?This is still not answered:
I get that you are saying that a court would not allow an agreement longer than 2 years for something like this, however...
-is that the longest I could say: what is the longest without being unconsiousable? if not how many years is?
-could I say it's a "20 year agreement but if a court found this to be too long it will revert to 2 years and we can choose to only enforce 2 years if we wish however not give up our right to the full 20 year length." (The purpose would be to remind the customer later that they agreed to stay longer but that if it ever went to court then at least the 2 years would be valid. Also because of the Severability clause I have, so if 20 years was found unenforceable at least 2 years would be enforced.)Thank you!
Expert:  Law Educator, Esq. replied 9 months ago.
thank you for your reply.
Sorry for the confusion about the 15 days, 15 day notice to cancel for the renewal is great for the consumer, it is short notice for you to have a consumer cancel on you with 15 day notice, but if you are happy dealing with the 15 day notice, this would be no issue in court.
Yes, I am saying to use contract term payments or contract monthly payments.
Sure, if you want to state contract will continue to renew every 2 years until cancelled by either party.
Your last statement is NOT how contracts are written. You cannot say the contract is 20 years but if a court finds it is too long then 2 years, that is improper and not going to work and it is just not appropriate. However, with the severability clause, if the term provision is invalid, the remainder of the contract still does remain valid.
However, you have asked for our opinion on your contract and we keep trying to tell you 20 years is unorthodox and generally not used for what you are seeking to do and if you want to say anything say as I said above the contract continues to renew every 2 years until cancelled by either party. The court is not going to go for the 20 year contact that without cancellation provisions.