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I have received a contract that has a two part payment. I'm not sure what to make out of the writing as it says the second part of the payment is contingent upon (i) COMPANY closing of debt or equity financing round, (ii) the sale of all or substantially all of the COMPANY's assets or majority of the COMPANY's voting power.

Does this mean they can refuse the pay me if they don't get financing? Are there any loopholes to this statement?

lzc
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    Why don't you ask the other party instead of an online forum? Nothing wrong or unprofessional to ask them to elaborate on such a clause. Also on a personal note, I would never accept such a clause unless it is some sort of bonus and the main fee already covers my intended revenue. – user3244085 Jan 19 '17 at 11:58

2 Answers2

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It means that they will pay you the next payment on the condition that they either launch the company successfully (via a finance round) or they sell the budding company to a bigger fish.

As for loopholes, that will depend on your state (some have protections against this), and tort precedent.

JohnHC
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It means you're being baited, unless you've agreed to a highly exceptional situation here.

Normally, nothing in a contract for freelance work you have to perform should make the payment contingent on how the client chooses to direct business (i.e. selling off their assets, relocating, and so forth.) Here's why - what if the client decides to never fulfill the contingency? You're screwed!

Throw this one back, it reeks of a client trying to pull a fast one.

Xavier J
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