Developers · Engineering

How do you get out of a contract with a developer who has not delivered the product on time?

Erica Muller real estate tech, sharing economy.

Last updated on January 29th, 2018

I am currently in contract with a developer who I entered into contract with a year ago and he promised me he would have an entire team working on my product and would have it delivered last summer. It's now winter of 2018 and it's not even done yet. Instead of assigning an entire team to work on it, he assigned one of his developers part time to deal with this on the side. No U/X person, no project manager. Just a guy coding on the side taking direction from me, and me giving it the best I could. We have finally, almost a year later, reached about 60% completion and the developer let me know he is leaving the company as of Feb 16 and will no longer be on this project. I immediately emailed the guy I contracted with and asked him if he had a plan in place for when his dev leaves and he simply stated that he does not. He also does not intend to. It would appear he plans on just abandoning this project as he won't respond to any of my emails following that saying that I wish to be released from the contract due to not meeting any of the deadlines and not having a plan to bring it to completion. I would like to retain my 10% equity he was promised for completing the product as well as the rights to the product designs, code and database thus far. He was paid a lump sum up front, which I did not ask for back, and he also is owed another lump sum upon completion which I do not feel I have to pay since I now have to retain a whole new team to finish the product that he could not. I have also lost market opportunity and time.

How do I move forward if he won't respond to ANY of my emails where I am requesting to cancel the contract.

David M

January 29th, 2018

A lot of answers here with limited scope and personal bias in play. Not one person in this forum including me, can properly answer your question because none of us know the details of your contract.

Look to the details of your contract in writing and go by this. If the individual or party is in breach of contract, you can take legal action. However, the question you must ask is will you spend more on legal fees than the cost of walking away from the situation. Only you have that information. However, there is the issue of equity, and you are wise to be concerned about this. You do not want a situation where your company has financial success and this developer comes out of the woodwork claiming 10%. You also need to have this issue finalized because it can affect future rounds of investment.

Investors will do due diligence, and by law you must disclose the financial standing of your company. If you do not know where this contract and 10% is that will affect how an investor views an investment. And, if the investor has their investment diluted by 10% post investment, they could sue you for not disclosing.

You did the correct thing in seeking out a contract. There are FAR more lawsuits that arise when people do not take the professional approach you took of having “it” in writing.

With regard to your 10% equity. Again, depending on how your contract is worded, you will find your starting answer. If the developer did not deliver, you should be fine, but if I were you I would want acknowledgement in writing.

The best thing you can do is consult a lawyer to review your contract. Let him know your concerns. If you do not go after monetary compensation which likely wont be worth it (again depending on how much you paid), your lawyer will likely draw up a document to be sent to this developer stating that the contract has been breached, and in this breach, the developer forfeits any and all rights/claims..etc herein forthwith…you know..lot of legaleze…that essentially says he has no stake in the company.

geilt Insurtech. Programmer, Entrepreneur. Academic, Philosopher. Gamer, VR/AR, IoT, Biohacker.

January 29th, 2018

This happens more often than you think. Leaving a Project manager to work on what you want to build is often the result of this. The company burned through the funds to create your projects not understanding the scale and scope, or it wasn't communicated effectively on the onset. Being a technical founder helps with this. They are no longer interested in the project because it only makes money on completion, which could be any arbitrary date or when you decide "OK, it's done" and with most software projects, it is never done. My primary SaaS product has been under development for over 4 years. Active and selling for 4! But still constantly under development.

I am not sure what your project is, but depending on what it is it may never be "finished". Perhaps the dev agency realizes this. It is best for them to cut their losses now as they can't possibly finish without taking a loss. Agencies are businesses too. It would have been better however if they were upfront with the situation.

Recently I have been outsourcing work with myself (a programmer) as the lead design / project manager for our clients projects. I was able to produce low cost robust applications with this format because I know exactly what needs to be done, I just don't have the time to do it myself. Most programmers and project manager don't have both the big picture and the small picture view as to what needs to be done. By circumventing the project manager I can take on a ton more work and get it done faster than on my own, and correctly!

In terms of equity owed, unless you have some document that promises the equity without completion, you shouldn't be worried. Unless your company actually succeeds there is nothing to give anyways. Look at your contract and see what terms you put into the equity portion. You should never give equity to a dev shop for incomplete work, that should be reserved for the end and also based on some kind of metrics like performance, etc.

Also consider that once software is built you will need staff or an agency to manage updates, bugfixes, crashes, customer service, etc. The costs can be enormous if you can't do it yourself or have your own internal staff already on hand. Someone needs to drive the machine, in case the machine breaks.

If you want to have a chat regarding your project please feel free to reach out. I won't charge anything or hard pitch you to take it over since I am concerned about the reasons they dev shop dropped the project...but I can at least give you some advice or help you overcome some hurdles or look at your contracts to see if you can just make a clean break.

I had a client of mine who spent 200k+ and nearly 3 years in development, with me warning them 2 years ago they were building it wrong come to me to complete the project. It took 3 months+ to correct a core issue they implemented wrongly, and the entire system has now been being rebuilt around that. All work was lost except the layout. Again, these things happen OFTEN. You may be the visionary behind the idea or the product, but unless the dev shop is on board and understands it, custom software can quickly become a money pit.

Good luck out there!

martin webb Founder Tudodesk (Looking for a marketer, sales, content builder)

January 29th, 2018

I think the first issue you should address. Is why was the product over schedule. We all know when building tech products, they can get out of hand in terms of UI and features. Finishing these products is a never ending landslide. So, first off, what is the min viable product you need to get to market in any form, a clear list of what you need to do? Secondly who will carry out the work, can find someone, sounds like you are hands on so perhaps someone you can work closely with? Your next issue is the work that has been done, does it have a value, who owns it, is the code readable? is it quicker for a new developer to rebuild by copying - usually the time in building is design not coding. You're not even live at this stage so his claims will fall nowhere. I think your best focus is not him, he has caused you enough loss, focus on fixing the problem, find a solution to getting the product finished. Then when it's finished, you get traction circle back and see if this poor developer is breaking your door down. Don't waste time or throw money at him, use the funds you have to finish the product. No product no business, no business no legal issue with him. Write a clear letter state he is released. State he failed to deliver and that he won't receive the entitlements offered for completion. Make clear notes of any issues you have in getting back on track, IE if you don't use the code keep a journal of why, if code is poorly built keep a journal of it, any court case he unlikely brings will struggle if you show your loss, costs in recovery. Most importantly try and remain positive and move forward.

Mohammad Amin Jan Technical CoFounder | Consultant | Let's Discuss Your Startup Tech Needs

February 1st, 2018

He failed to deliver in one year. Dont waste your time with him anymore. Just let him go and make sure to take ownership of all the assets(source code, documentations, DB, designs , server access/ftp etc). I can help you take over this project right from its current state to the finish line. Let me know please if my offer suits you. Thanks

Igor Klimchenko Cofounder and CEO

January 29th, 2018

Hi Erica,

In what way have you got the contract? I mean if you've used any platform for this purpose? (e.g. Upwork) Or you had been working directly?

Davida Shensky We help small to medium size companies put together a strategy for success and hold you accountable to follow through

January 30th, 2018

send your contact person a letter and tell him you want to cancell the contract since he hasn't delivered on his promise and that you want a refund for work not delivered. Then contact your states Govenors consumer protection agency to send them a letter in your behalf to refund your money. They're only mediators but by going through them this company will be red flagged

Paul Butler Helping Businesses Take Flight : CEO, Managing Partner, COO, CTO

February 2nd, 2018

summarizing a few of the comments so far and adding a few of my thoughts;

1. review the contract with a lawyer

2. determine a negotiating position - what do you absolutely need and what are you willing to give up (in exchange for getting what you need).

3. have the lawyer draft a letter following the terms in the contract... this will officially serve notice and, hopefully, provide enough motivation for them to engage.

4. make sure you have a contract with the next developer. And have that contract reviewed by your lawyer before engaging. Not having contracts and/or having a messy cap table is not a place you want to be when engaging with investors.

5. ask the developer(s) for references and call all of them. Check the developers reviews on social and independently reach out to some of the developer(s) clients.

6. You should find a technical adviser / co-founder to help you screen developer(s), architect the overall product, and regularly review work in process.

Curt Sahakian Attorney

February 2nd, 2018

I just upvoted Paul Butler's Compilation of all the responses. I think it is very good. With one slight modification.

I think that that lawyer she confers with might decide to handle things with a little more nuance. Instead of sending a notice or demand letter, the circumstances might call for just starting negotiation of the breakup agreement.

This I suspect might be a situation where you catch more flies with honey than with vinegar. Though I don't have enough situational awareness of the details to know that is the situation for certain.

Ema Chuku Product Developer. Founder.

Last updated on February 2nd, 2018


Randall Wagoner Software Engineer, Problem Solver, System Builder

January 29th, 2018

Hi Erica

IMPO, your problem is not whether you can get out of the contract. It sounds like he wants out of it, and may be in breach anyway. You should have a professional look at it to be sure.

However, your real problem is that you do not have a working system in production. That 60% means nothing to anyone other than you and the original developer. If another developer offers to take it over, they will (should) ignore that number. They may say it's only 10% completed. Or they may say it needs to be scrapped and re-written. Most likely they will say the ladder. And it will may take them weeks (or even months), on your dime to figure that out.

He said he would assign a "team" on the project. That's the oldest line in the book. The question to ask yourself is, how much were you paying him. Was it enough to hire a "team", full-time? My guess is no. And if it were, you could have brought everything in-house, where you (or someone) could have controlled everything. Either way it is a lot of money.

Sound bad? It is. I could go on about the problems with hiring outside development shops, but my advice is to first have a pro look at the contract. Then find a good consultant (or tech partner), who can hopefully steer you clear of these pit falls. Software development is NOT cheap. Anyone who says so, is either lying, or just doesn't know the business. When shopping for software developers, look for the best, not the cheapest, just like you would shop for a doctor treating a life or death illness. Because, it is life or death, for your company...

Good luck!