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Q: Question regarding possible cooperation of two companies ( No Answer,   1 Comment )
Subject: Question regarding possible cooperation of two companies
Category: Business and Money > Small Businesses
Asked by: alexander_the_great-ga
List Price: $20.00
Posted: 08 Sep 2006 05:55 PDT
Expires: 08 Oct 2006 05:55 PDT
Question ID: 763353
Legal advice needed. Question regarding possible cooperation of two.
	Well, initial situation is very simple.  One company (A) has a
software product and ability to sell it. Their problem they don?t have
software development staff and so any means to develop / support the
product. Here it comes software company (B) that has developers and
means to support that product. Companies A and B both agree to enter
into agreement where company A will sell the product and pay for all
sales expenses, and company B will develop and support the product  at
their own expense. Later on all expenses are deducted from revenue and
whatever is left will be split 50 / 50 as a profit.  It is preferable
that each company will stay responsible for their own financial
actions, and will not project them as responsibility onto another
company. For instance, if company A gets a loan to cover sales
expenses ? company B should not be in any way responsible for paying
it off, in case A goes bankrupt. And so on with any other legal
	So, my question is:
1.	What will be the best setup in this situation, where companies are
obligated to split the income, without being responsible for business
actions of their counterpart?  (Just a royalty agreement, partnership
2.	How company B may be sure that company A fairly reports all product sales?
There is no answer at this time.

Subject: Re: Question regarding possible cooperation of two companies
From: myoarin-ga on 08 Sep 2006 07:52 PDT
First:  as you should read in the disclaimer below, nothing here is a
substitute for informed legal advice.
This is a free comment and not an "answer" to your question.

I think the answer to your second question is that company A must
present its independent auditor's verification of the volume of sales,
AS WELL AS the related costs (which could be difficult to identify).

How will company A know that company B doesn't include costs for
development/support work relating to other projects?
Same answer,
and neither very satisfactory. 
Nor does the propoesed agreement seem satisfactory, since (from your
description*) company A will have the use of the all the funds
received from sales until the settlement with company B is made, which
will have to finance its expenses during the period.

* "Later on all expenses are deducted from revenue and
   whatever is left will be split 50 / 50 as a profit." 

There must be a better arrangement.  I hope someone suggests one.

By the way, the email notification system is not functioning, so you
will have to check to see if something is posted to your question.

Regards, Myoarin

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