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Should I get a refund for code that wasn’t finished or delivered?

My former CTO hired his friend to do the programming for our start up (no formal contract). We didn’t have enough money to finish the build but paid about 3/4 of the $50,000 fee.  I never saw a line of code or even a report on what was done.

Now we are rolling up (many reasons, including never finishing the build of the product) and I want to know if I should get my money back since none of the code was ever shipped, delivered or even shown to me.

The freelancer contends that I still owe him the outstanding balance- I say he owes me what I paid since I never even got the part of the work that I paid for.

What do you think?

 

  • My god… never attempt a startup again. How can you blow through 50k without seeing what is being built? What the hell were you doing as CEO for this entire time? Just pathetic really. Wasted time and money, and then you think you should get your money back. Yeah, you’ll never be a successful CEO.

    Reply

    • You know what- you are right. I totally fucked up. But besides that, should I at least get the partially done code?

      Reply

      • Yes, normally, you/the company should get the partially done code, depending on your agreement with the contractor. But since there was never any formal contract for the project, it’ll take court to get anything. Talk to a lawyer to evaluate what your rights are, how you can get the halfdone product with only oral agreement, etc.

        Something tells me the coder never even did the work that. Call his bluff (with lawyer’s help):

        state in writing (with lawyer’s office for serious effect) that you’re willing to negotiate a resolution but you need to confirm the code exists via escrow arrangement. Ie, the work will be hosted on 3rd party cloud, then a 3rd party expert coder will evaluate it for you to see whether

        It is real; make sure he didn’t just copy-paste stolen code to trick you

        there is actually 3/4 worth of work in there

        Can it actually be finished by a competent coder in reasonable amount of time?

        Reply

        • Thanks for your response- a 3rd party hosting solution and escrow arrangement might be possible.

          I hate to bring in the lawyers as it is just more bills but it might be time.

          Even if we can’t use it, I feel that if we paid for it then we should get it or get our money back. Since the money isn’t happening realistically, then I should at least try for the code we paid for.

          Reply

        • +1 from an ex-lawyer who left to found a startup, and who knows that there are many young lawyers who would take on a case like that for equity.

          Reply

  • I don’t think you’re going to get any money back. At most you’ll get the unfinished code which will be worthless. If there is no contract it becomes very ambiguous, as in he could claim that you paid him just to “explore” technical solutions.

    If you can find at least some written documentation to state what he should have delivered perhaps in an email, then you can use that as some form of informal contract since he was part of the document trail.

    My suggestion you can try your luck. Ask for 30K, tell him you’ll sue him if not. Then drop it to 10K. If he calls your bluff, chalk it up to a lessons learnt.

    Reply

  • The coder should either give you the unfinished code or give you your money back. I suggest you consider hiring a lawyer just long enough to get him or her to write a threatening letter to the coder to choose between those two options.

    I won’t reiterate the painfully obvious lessons you should have learned here but suffice it to say you might be better off working for somebody else in the future. Or at least have somebody else manage the business side.

    Reply

    • I have a lawyer, and I suppose it is time to get him involved.

      No one needs to tell me the obvious lessons I learned- including getting someone else to handle the “business” side. It was supposed to be my CTO who was far more experienced than I was but ultimately made some company killing mistakes.

      I am already onto the next start up and I am taking the lessons with me and not repeating the old mistakes. I know a lot more now, learned the hard way but learned none the less

      Reply

      • Paying someone monthly implies you’re paying for his time. Think retainer. Some lawyers get paid a monthly retainer regardless of whether you use them or not.

        This goes for companies that have software support services.

        Again without a contract it’s ambiguous.

        Reply

  • no contract = no legal grounds to sue. I recently came out of a lawsuit and it was costly both financially and in time. I spent 35k, won 50k, and laywer took about 28k. So I came out losing still. Not to mention it took 18 months for a settlement.

    Your time is better spent focusing on the business or doing well at a desk job. Save your breath, save your time, save more money and call it quits. That 50k is gone.

    Plus, considering the CTO recommended his friend, I wouldn’t be surprised if they took the 50k and split it between themselves. just saying

    Reply
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