[rksprst]

It doesn't matter if there's a written contract... if you are working on a venture together with some sort of verbal understanding, in California (I'm assuming in the rest of the USA too) that is just as legally binding as a written contract (At least according to the two lawyers I've talked to... you should obviously talk to your lawyer about your options as circumstances may be different).

[dkokelley]

I'm pretty sure what you say is correct, which means that the verbal agreement for equity also holds. It follows that if no equity is given, the contract is breached and the code can be taken elsewhere.

[_ecga]

Not so clear cut. You would need to be very careful if you tried to pull this. Look at the facts he explained. The investors are just coming in now, and the founders are saying that the stock agreement depends on the investors' lawyers. That's actually pretty reasonable in a situation where you have a bunch of inexperienced founders getting money from experienced investors. The investors might force the founders to agree to different terms in their own stock agreements as well. It's not at all clear that the founders have breached anything yet. If he was to take the code elsewhere, that act could actually be considered the breach.

[dkokelley]

If he was to take the code elsewhere, that act could actually be considered the breach.

And if he breached, what would he have to give back to the founders that was given to him for the code?

Also, if the code was given in return for equity (or the promise of equity), then he is an owner and should have a say in the decision to accept the investment and negotiate the terms.

I agree that the final stock agreement depends on the investor's lawyers (provided everything works out), but how the equity is divided before that is between the founder and the coder.

[_ecga]

If a court determined that he breached, there could be damages for losses to the company based on his breach, i.e. it could go beyond him just giving back what they gave him. This is really the kind of thing where you need a lawyer's guidance based on very specific facts.

[dkokelley]

My point is that they haven't given him anything, thus there is no contract. The company can try and sue him for breach of contract but the issue is whether or not a contract actually exists. Of course a lawyer should always be involved to make sure that everything is ok legally.

[lux]

Very good point. You definitely don't want to be the one who initiates a breach of the contract, any court will frown heavily on that.

[chollida1]

> It doesn't matter if there's a written contract... if you are working on a venture together with some sort of verbal understanding, in California (I'm assuming in the rest of the USA too) that is just as legally binding as a written contract

That is true, but only if you can prove there was an oral agreement. That is why written agreements are considered better, you have physical proof.

With an oral agreement you'll need to convince a judge or jury that both sides agreed to said contract, otherwise you could be SOL.