Protecting Idea from potential partners.

Discussion in 'Legal Issues' started by Archaon, 27th Apr, 2017.

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  1. Archaon

    Archaon Well-Known Member

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    Hi all,

    Bit of a query.

    Just say you are pitching an idea to someone you hope to go into a JV with.

    How do you protect against the person you're pitching it to, just taking the deal from underneath you, is there some legal document or clause that you can get them to agree into prior to pitching your idea so any proceeds from said idea/development/business venture compensate you accordingly?

    I'm hoping to have an understanding of what to expect before thinking of suggesting to anyone.

    Hardly trust people as it is, don't need to throw profit into the mix to cloud it further :D

    Regards,
    Arc
     
  2. jprops

    jprops Well-Known Member

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    An NDA might be a good start. First question though, if you wouldnt trust this person with your idea, will they make a good business partner? (this obviously depends on how much you need them).
     
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  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A nda generally requires more than a concept.
     
  4. Ross Forrester

    Ross Forrester Well-Known Member

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    I have always referred to them as a confidentiality agreement. They are pretty standard (most lawyers have a precedent on file) but it gets hard to enforce if the concept is vague.

    It is best (after the CA) to keep the concepts at a high level and only give the kernal of what you are doing when trust is established.
     
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  5. Perthguy

    Perthguy Well-Known Member

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    I agree with @Ross Forrester. A confidentiality agreement would do the job. Noting that a CA won't stop someone stealing your idea.
     
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  6. Ross Forrester

    Ross Forrester Well-Known Member

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    Just imagine trying to enforce one....
     
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  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What exactly are you trying to protect?

    Location of a property - simply don't tell them.
    An idea about Renovating and selling - you cannot prevent someone learning it and doing it without you.

    Confidentiality agreement not appropriate for these sorts of things. They are used for keeping secrets in-house.e.g. a law firm may use one to stop staff stealing databases of clients, client names secret, documents etc but this doesn't stop a lawyer staff member from opening their own firm and using the same strategies and advice as their old employer.
     
  8. aussieB

    aussieB Well-Known Member

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    Your idea is secure, only till when it is in your head. IMHO, you simply cannot protect your idea once shared with another entity. Some of the largest IT companies are built on stolen ideas.
     
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  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    And many great ideas fail through poor execution. Some people lack planning and co-ordination skills and entrepreneurial vision and enterprise and the courage to persist when everyone else shoots it down. Maybe that other party is one of them ? Trust them...so far. Others listen and dont make the mistakes they warn about too and learn and modify the mistake.. They can have the idea and it fails when another walks along and it wins. Sometimes actually sharing with the right person makes the difference...Ray Kroc of Maccas fame is one that springs to mind. And yes he stole the works of the founders. But they didnt have his vision. Facebook another. One of the biggest fakes in business is also one often quoted as a visionary - Richard Branson. He has had more failed ventures than successes. But he doesnt quit.

    I would think choosing the right parties to work with is part of the secret to ensuring a great idea isnt hijacked, bent or broken. Many other things can go wrong. A good team may insulate that problem. When the team is built just build walls so nobody can steal or damage the magic. Wont always work....
     
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  10. Archaon

    Archaon Well-Known Member

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    Thanks all.

    So it sounds as though I would just have to take a leap and trust someone if I were to seek their help with a JV.

    Problem is not many people I know would be able to service such a thing, so I'd need to reach out to someone with deeper pockets.

    Though how can I give them just enough info to get them on board, but without telling them enough for them to just go and do it themselves, and give me a pat on the back saying "thanks for the tip", guess that's the real question I'll have to work out.

    Regards,
    Arc
     
  11. DaveyB

    DaveyB Well-Known Member

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    Why would someone bankroll the whole thing without relevant detail?
     
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  12. Archaon

    Archaon Well-Known Member

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    Thats the dilemma

     
  13. DaveyB

    DaveyB Well-Known Member

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    You're asking someone to trust you with pile of cash because you don't trust them. Think you need a new plan
     
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  14. Archaon

    Archaon Well-Known Member

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    Not exactly, I'd be after someone to invest in an idea I've put all the groundwork into.

    Is there some code of ethics in regards to business ventures/proposals and meetings, or is it just a dog eat dog world and if you don't protect your food you'll lose it?
     
  15. The Y-man

    The Y-man Moderator Staff Member

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    Pretty much.

    As with most investing, it is who you know, not what you know. You need to develop the network first, establish mutual trust, then start throwing ideas about. If it is an extended network - eg overseas - you need to use trusted intermediaries/fixers. i.e your ground work is not finished yet....

    The Y-man
     
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  16. Archaon

    Archaon Well-Known Member

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    Cheers,
    I'll need to work on doing just that.

    New to this whole business world and want to make sure I've got my bases covered, don't want to be out the game before I've had a chance to start.
     
  17. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    If it's a specific deal then a NDA (non disclosure agreement) is probably what you want.

    If you want to propose the full deal with someone to get them to join the JV then you need to give a high level summary:
    "Project X will have a total development cost of $Y, an IRR of $Z and potential gross profit of $9 in the western suburbs of Melbourne. If you would like to see the feasibility and discuss the JV then please sign this NDA."

    Then go from there.
     
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  18. Archaon

    Archaon Well-Known Member

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    So does an NDA stop them acting on the information also?
     
  19. The Y-man

    The Y-man Moderator Staff Member

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    You can put in the NDA whatever you want. Whether it is is enforceable or not comes down to how deep your pockets are if they break the conditions and you need to sue them.

    Just search "NDA template" on google.

    It sounds to me like you have what is an easily replicable (anyone could do it given money) idea.
    I assume it is a once off, otherwise anyone could copy you one the second run. Generally when going to an investor, you need to approach with NDA in one hand but an idea that only you can implement (or would take ages to recreate).

    How much are you looking for (up front and ongoing instalments)? Why a JV? Can you raise funding as a loan?

    The Y-man
     
  20. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It's like a don't walk sign. Doesn't stop all people crossing on red but some one the rules
     
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