Is it normal to share UTR to business in order to setup a contract or partnership agreement?

[DamienRoche]

I have a subscription software service and I have been in discussions with a business in the USA. They want to buy a license whereby they can offer x number of memberships to their own users.

They are about to draft a partnership agreement and have asked for details such as business name, location and taxation number (I assume UTR for UK).

However, I thought this number was confidential? Is it safe or even necessary to share?

 

[fisicx]

Why are they drafting the partnership agreement? It’s your business so your solicitors should be driving this.

They don’t need any financial details until it comes time to sort out payments.

 

[WaveJumper]

As above you should be drafting the contract, If you pull this off at some point you will have to file some paper work with US over your tax status I trade US stocks and have to file W-8BEN to prove I do not trade, give advice etc in the US so I ma not required to pay taxes within the US. The latter you may want to start looking into and getting advice from your accountant.

 

[DamienRoche]

Why are they drafting the partnership agreement? It’s your business so your solicitors should be driving this.

They don’t need any financial details until it comes time to sort out payments.

This is the first partnership agreement I have handled, it's a small, early business and has only recently started trading. It's a team of one. The other party is an entrepreneur with their own audience and platform.

One of their emails said they needed such business information to "set up the legal agreement". My intention was to review the document and contract out a solicitor if need be. I'm happy with the overall terms we've discussed and for them to draft and I can make amendments as necessary.

My rationale is I should at least be able to understand a legal document before I sign it. I will of course have many questions, and I will take those to a solicitor before I finalise anything.

I should have probably posted in a small business forum, I'm sure this would be easy to delegate later.

 

[Chris Ashdown]

Also need to consider under what court of law is covered by the agreement, maybe they prefer the US courts whilst you could be better protected by UK courts

 

[Ozzy]

This is the first partnership agreement I have handled, it's a small, early business and has only recently started trading. It's a team of one. The other party is an entrepreneur with their own audience and platform.

There's not criticism intended in the comments above, just advice that you should be leading this. Even as you say you are a team of one that's absolutely fine, the reason you should lead on this is that it is your product and your business. You need to, and should, remain in control of the relationships you enter into. This "entrepreneur" may be genuine and nice, but they may also not be and there are those here (myself included) who have had the advantage taken of us in situations similar to yours now.

So yes, I'd echo the advice above that you should lead on the contractuals being drafted. You set the terms and then they negotiate from there, not the other way round.

I should have probably posted in a small business forum, I'm sure this would be easy to delegate later.

You did

 

[DamienRoche]

There's not criticism intended in the comments above, just advice that you should be leading this. Even as you say you are a team of one that's absolutely fine, the reason you should lead on this is that it is your product and your business. You need to, and should, remain in control of the relationships you enter into. This "entrepreneur" may be genuine and nice, but they may also not be and there are those here (myself included) who have had the advantage taken of us in situations similar to yours now.

So yes, I'd echo the advice above that you should lead on the contractuals being drafted. You set the terms and then they negotiate from there, not the other way round.


You did

I didn't take it as criticism, just perhaps an assumption of the current size or operation of the business. Point taken it doesn't necessarily matter. This agreement has kind of come out of nowhere (networking) so I've not been prepared.

I have considered how someone could take advantage. The agreement does mean a hefty 90% discount on standard paid plans for my software, but involves no ownership, and the payment terms include quarterly upfront. If you can see any potential risks there I'd much appreciate the input!

We have both proposed overall terms through email for a couple of weeks. And now they are interested to move forward with a formal agreement.

I'll try to find a solicitor to help me draft my own licensing agreement.

 

[fisicx]

Why 90% discount? Have you agreed this or is it still up for negotiation? Are they limited to licensing in the USA or could they go international? What’s stopping them replicating your product and reselling under a different name?

 

[DamienRoche]

Why 90% discount? Have you agreed this or is it still up for negotiation? Are they limited to licensing in the USA or could they go international? What’s stopping them replicating your product and reselling under a different name?

It's all still up for negotiation. I am OK with this as the agreement itself would allow me to go full-time. It will take me from 2 customers to 500+. The way I want to structure it is they are given an allocation of members for their single subscription.

It's a hosted software service, they don't have access to the code and there is currently no self-hosted option so they can't do much.. if it falls apart I can easily restrict the service for associated users.

 

[Paul Kelly ICHYB]

It will take me from 2 customers to 500+

Will it?

It will take you from 2 to 3 clients. What does this contract say about the third clients reselling? Ownership of the relationship & data?

As mentioned, you need to control your contracts - surely this should be your standard T&C's/contract with a side agreement?

 

[DamienRoche]

Will it?

It will take you from 2 to 3 clients. What does this contract say about the third clients reselling? Ownership of the relationship & data?

As mentioned, you need to control your contracts - surely this should be your standard T&C's/contract with a side agreement?

I should have said users, not customers. Though they will be treated the same. My point was I'm willing to sacrifice heavy discounts because of the potential user growth. This will give me an incredible amount of exposure and feedback in order to further improve the service.

No ownership of any kind has been requested or discussed. I will be sure this is explicitly covered in any agreement. I don't know if it will be covered under any standard T&Cs as it may not be treated as a typical subscription.

 

[NickGrogan]

500+ customers to support with the revenue of 50 customers? That doesn't seem like a very good deal from your view.

 

[2020Lawyer2020]

Some countries require that kind of detail - tax number etc. I am a sole trader. Some UK local authorities even will not pay me a few hundred pounds until they have my tax number and other details - it is not particularly confidential anyway what reference number people have at the tax office. Even a cleaner we used via an app a few years ago had to get a UK UTR before she could get on the books of the company that contracted her services.

 

[The Resolver]

Offering to their 500+ users does not mens that 500+ will sign up to your services . With a whopping 90% discount, I would suggest that such should be subject to performance levels with a lower discount to begin with and increasing as their users sign up.. Alwasy think the worst of their plans, Maybe they have been developing a competing product and are just trying to control your advances. - so there must be a solid non-compete clause. You also need an effective dispute resolution clause to ensure disputes are more easily (quickly and inexpensiv;ey) resolved I can provide that clause at no cost.

On the point about who draft first I agree with Ozzy that as its your product/service you should give them what is best in your interests and leave them to list amendments, If you work for their first draft you may overlook clauses you need that are simply not addressed. I have done many licence agreemenst for tech services/apps etc and able to cover the ground for you, Book yourself into a free call on the link in my sig, Happy togive you a heads up on key clauses to include .