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Comment by frognumber | Hacker News Reader

Here's what I suspect happened:

Any contract requires consideration. Without it, it's not a valid contract. It doesn't require fair consideration, so a clause giving e.g. $1 is typical for many contracts. They were nice and bumped it up to $20.

I suspect your work DID belong to the company already, under work-for-hire doctrine, but an explicit contract avoids that ambiguity. Ambiguity can be bad and super-expensive, whether during litigation or even something like an audit. If someone is buying a company, investing, making a major loan, that's the kind thing which comes up in due diligence and can be annoying.

So I don't think they were paying you for the code, so much as trying to come into compliance. Very likely, this was triggered by some similar audit for some deal they were trying to make.

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Interesting. I worked for a company that got bought by another company. Pretty much everyone was a salaried employee with a standard employment contract. There was no formal rehire process, but at some point the new company did the same thing as OP's company, saying that anything we produce at work or with work resources belongs to the company. But with an added "no moonlighting" clause.

We did not get any consideration, cash, or gift cards. Instead we were told that if we didn't sign the new company's mandatory agreements, our employment status could be up for review.

That's exactly it. The $20 is not an assessed value of the code; it's to establish consideration. $1 would have been legal. It's legal to make asymmetric contracts that benefit one party more than the other, just not contracts that are completely one-sided. They probably did $20 just so it wouldn't seem quite as insulting.

Anytime you see stories of "[insert name of rich CEO or politician] takes salary of only $1", that's why. They can't work literally for free, or the rest of the contract becomes nonbinding.

Watch out for "work-for-hire doctrine" erm... assumptions.

Last time I looked work-for-hire law only takes effect if there is explicit mention of the term "work-for-hire" in the contract, otherwise it's not "work-for-hire". And I have never seen a contract actually mention "work-for-hire".

Do current employment contracts state "work-for-hire"?

Ohhh, I was wrong. Seems there are two categories where work made for hire applies. One is specifically for work made by an employee (with some constraints / definitions on that) for work made within their scope of employment. The other category requires explicit mention of "work for hire".

So that a conventional employee is covered, but a contractor / consultant with a separate business probably isn't.

"Any contract requires consideration"

I am not a lawyer and I don't understand this phrase. But many legal systems require that a contract is at arm's length.

If you are assigning me some rights or an entire piece of IP, I must provide you with some consideration (monetary compensation) for that to be a valid contract. You cannot simply “gift” it to me.

So I would, as part of the contract, hand over $1 or $20 to establish that I have skin in the game and have paid for this contract be valid. The consideration could be stock and other things, but it can’t be null.

At arm's length mean, it must be an adequate amount. For example, I can sell a 10 Million dollar home in most jurisdictions to you for 1 USD. While this contract may be valid, it may create tax liabilities because the tax authorities will say this was not a sale, this was a gift.

As a counter example: In many jurisdictions, a work contract that specifically request lots of overtime or forbids working for a competitor in the future would require a significant extra payment and not 1 USD. 1 USD would not be considered at arm's length.

Sure, agreed. That is not the case that is being referred to here, where someone was assigning over IP that they had built while employed by the company but without an explicit agreement about who owns that IP. In this case, $1 or $20 would have been completely fine, as it was consideration for past IP. The work had already been paid for (salary, benefits, etc).

You're confusing domains of law.

* Contract law does not require arm's length. A contract for $1 is okay.

* Tax law may require arms length.

* I've never heard of arm's length in employment law, but there are laws which lead to what you describe (e.g. mandatory overtime pay, minimum wage, etc.). In some jurisdictions, there are limitations on how much an employer can change the terms of employment. If you hire me for $100k, and after I quit my old job a week into the new one, you give a pay cut to $80k and otherwise change the terms of the deal, that might not be okay.

Consideration is generally money (but more generally and dangerously something actually received in exchange for giving away something else in the contract.) It can't be a binding contract if there is no exchange such as merely signing away the code.

https://en.wikipedia.org/wiki/Peppercorn_(law)

The comment was US-specific. Similar doctrines are found though in Canadian, British, and continental European (though not so much in Scandinavian systems which often do allow totally one-sided contracts in the idea that promises are binding but with other limiting factors).

The idea in systems which have this rule is that contracts are exchanges of promises and there must be an exchange in order to be valid.

This is also why companies will reward employees filing a patent application with a silver dollar. It's a nice token of appreciation but also fulfills the contract aspect of assigning rights.

Salary in this case would serve as the consideration for the work they perform, but lawyers love making things as explicit as possible (understandably).

You already get salary though. They can't just keep adding contracts and terms and say it's covered by previous payments.

They already paid you for the code, so it's already theirs, they are just making it explicitly stated. If you don't sign it, they end your employment. And the odds of them willing to lose employment over this and trying to claim the company's code as their own and that getting to court is near non-existent. But again as I said, lawyers like to make it explicit.

I agree with all of this, just my objections was to claiming the consideration being "the salary you already agreed to in order to sign your employee agreement" would not work therefore the token $20 amount.

Honestly if a contract only offers 1$ as compensation for many hours worth of work then that's pretty much admitting the consideration is inadequate.

You think the $20 was consideration, and yet you think they were not paying for the code? Aren't these the same thing?

> Ambiguity can be bad and super-expensive

If the corporation had some ambiguity in their favor, I expect they would call it "value" and ask for as much as they could get to remove it. But if the ambiguity is in favor of an employee or client, let's remove it for a token $20. Ugly society this one is.

$20 consideration for reducing legal ambiguity around code they already own. Even if it's almost guaranteed to roll in favor of the employer, simply having to litigate it is enormously expensive. Such litigation would be detrimental to everyone but the lawyers, but that won't stop people from thinking they have a case.

I'm with you, companies will always look out for their own interests, but when clarification minimizes logistical waste, it's possible to benefit everyone.

"Bulls do not win bullfights. People do. People do not win people fights. Lawyers do." -- Norman Augustine, "Augustine's Laws" 1985.

The ambiguity is not in the favor of anyone except lawyers. As an employee, you can:

1) Spend $100k in litigation to discover your boss owns the code

2) Get $20

Fights don't benefit anyone. Some companies would act like dicks and "ask for as much as they could get to remove it," but in most cases, that's not what happens either. A company like that would never get repeat business. Coincidentally, some employees do the same, with similar consequences. And there are employers everyone knows not to work for.

Resolving this sort of thing for a buck -- in the way a court would rule -- is really standard common-sense practice.

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