According to the (admittadly biased) article, Entropic ate all of the cost overruns:
> Once a month, we billed for our work and submitted an updated estimated per badge final cost - committing as costs built to discount our work as necessary in order to hit DEFCON’s per unit cost targets.
I’m not sure of that. Entropic’s statement uses odd language: “…in order to hit DEFCON’s per unit cost targets.”
Why not just say “in order to hit DEFCON’s cost target”? Why “per unit”? It sounds like Entropic might have gone over budget on some other costs (for example, development) and only discounted hardware or manufacturing cost.
It would just be so easy for the other party to retort with "we never agreed to that" because the did not. I'm no legal type, but this just doesn't seem like it would ever hold up in any way. Even with wording of "if we do not hear back, it will be assumed as your agreement" as there's no proof it was actually ever received.
E.g. many craftspeople bull you by the hour and give you a rough estimate how long it could take beforehand. If the thing they are fixing for you has 3 more faults that you didn't mention to you, they will mention to you that it costs more and if they should proceed.
That is totally common, but the increased estimate needs to be communicated clearly and get an OK from the customer.
Yes, they ask before proceeding. The parent assumed EE proceeded without asking, which is also how I interpret the situation. That’s not the norm, right?
In a past life as a contractor, if we had a prior relationship with a company, we would absolutely sometimes start work on a new project without having all the ink dry, on the good faith assumption that they had reliably paid us before, and would, in turn, pay us again.
Jokes aside, we routinely work for clients without any contract. Contracts get finalized usually by the time a prototype (1/4 - 1/2 of the whole job) is done.
Corporate world is slow. They really like it when you come in and start delivering. Having something to show makes it easier for them to get the project green-lit.
There are obviously some reserves just in case it wouldn't pan out and I still feel quite uneasy. It works, though.
Haha, reminds me that the risk sometimes goes both ways. Like that one time we've got 100% paid for 1/2 the work and then kept working to finish the other 1/2. Can't betray that kind of trust.
(Not related to this drama. Just another data point from elsewhere. It's nice to see others to start working first and only call lawyers second.)