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Ask Delta-Lawyer Your Own Question
Delta-Lawyer, Attorney
Category: Legal
Satisfied Customers: 3546
Experience:  10 years practicing IP law and general litigation
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I'm a video production business owner. I sent a proposal to

Customer Question

I'm a video production business owner. I sent a proposal to a client and they asked me to break down the cost into 3 different sections, identifying how much of the total would go to each component. We broke down how much would go to actors, how much would go to general video production and how much would go to animation. From the time we did the initial estimate till now when they are ready to execute the agreement at the original proposed cost, I negotiated with my animation subcontractors to reduce the cost of one of animation significantly... by half in fact. Provided I'm still providing my client a quality video, can I keep that savings as profit? It seems simple but I'm nervous because it's a large amount of money and the job is with a government contractor. Is there any way they can demand to see how much I paid the animators?
Submitted: 1 year ago.
Category: Legal
Expert:  Delta-Lawyer replied 1 year ago.

I hope this message finds you well. I am a licensed attorney with over a decade of experience dealing with contractual negotiations relative to issues just like this one. Moreover, I am also a licensed IP attorney and deal with issues that are similar in contractual processes as well. It is a pleasure to assist you today.

The short answer is that as long as you are not misrepresenting the costs to the buyer (i.e., telling them they are paying for one thing when it actuality they are paying something different), then you are fine. You cannot defraud someone into believing the raw cost is something that it is not. However, you are bundling a service and can charge a single amount for that service and be fine.

They can demand to see what was paid to the animators only through subpoena. They can only subpoena you if they file a law suit against you.

Your negotiation skills reduced the cost of the animation. You certainly do not want a cost breakdown to reflect anything more than what the animators are charging for their service in an itemized breakdown. However, if you are giving them a single cost for production that includes all services in one, then you are not committing fraud and will be fine.

Let me know if you have any other questions or comments. Please also rate my answer positively (three or more stars) so I can receive credit for my work.

Best wishes going forward!

Expert:  Delta-Lawyer replied 1 year ago.

Just checking to see if you had any additional questions or comments. I want to make sure you are as comfortable as possible moving forward. Thanks