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JGM
JGM, Solicitor
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Experience:  30 years experience as a solicitor.
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there, I operate as a limited company offering consultant

Resolved Question:

hello there,
I operate as a limited company offering consultant services for machinery design.
I have a current contract with a company.
The contract reads in sections and under the term section as below:-
TERM: January 15, 2013 to September 15, 2014. Subject to bi-annual renewal thereafter.Post the initial period both parties could terminate this agreement post 3 months notice.
I have designed various types of equipment which the company has patented two of which the company gave the code names of RX10 and RX11.
The contract as above that I have with the company has a section called PATENT BONUS
which reads as follows:-
PATENT BONUS: the Client will pay to the consultant company a one time fee of USD $45,000 ("payment") on the first occasion of the Client receiving a down payment for an order of an RX10 and RX11. For the sake of clarity, consultant will be entitled to a payment for the deployment of the RX10 ($45,000) and the RX11 ($45,000) only after each respective equipment order has been placed and a down payment made by the purchaser and received by the client.
Furthermore, the client will pay to the consultant company a one time fee of USD $45,000 ("payment") on the first occasion of the client receiving the final payment for an order of an RX10 ($45,000) and RX11 ($45,000). therefore, assuming the client receives and order for the RX10 and RX11 then consultant company shall receive $45,000 upon the down payment for the RX10 and $45,000 upon the down payment for the RX11. Moreover, assuming a final payment is made, and then the consulting company shall receive an additional $45,000 for the RX10, and $45,000 for the RX11.
The maximum that can be paid to the consultant company assuming and order and final payment for the RX10 and RX11 is USD $180,000 or RX10 = $45,000 (deposit) + $45,000 (final payment) and RX11 = $45,000 (deposit) + $45,000 (final payment). This Patent bonus clause supercedes and replaces any and all previous agreements between the parties.
Sorry about the details but this is exactly how it reads and it is so complicated.
I always read it as being for either RX10 and RX11.
The chances of both together are like winning the lottery as the RX11 is quite radical and hard to implement.
Please can you offer an opinion as to what the above may be interpreted.
The company are sneaky and have already reneged on a previous agreement which resulted in this agreement.
They are just in the process of securing an order for 12-off RX10 machines of very high value.
Thank you
John
Submitted: 2 years ago.
Category: Employment Law
Expert:  JGM replied 2 years ago.
The clause overall deals with the RX10 and RX11 separately.
If an order is placed for an RX10 you are entitled to a payment of $45000 when the deposit is cleared and a further $45000 when the final payment is made.
Ditto the RX11.
So what triggers the payment is a first order of one of the two, for example the RX10. As and when an RX11 is sold further payments of $45000 would be due on deposit and final payment.
One is not dependent on the other if that is your concern.
Customer: replied 2 years ago.

Thank you for that.

Please may I ask:-

If a single project is secured which uses 12-off RX10 then does that mean 12 x the bonus as stated.

I stated the contract dates in my previous email and do you think the bonus is still valid outside of the contract period, say for example if I leave then would I still be entitled to the bonus outside of the contract.

Thank you

Kind regards

Expert:  JGM replied 2 years ago.
That would be good from your point of view but I think the spirit of the agreement is that there is one bonus, not 12.
As far as the duration of the agreement is concerned, the agreement shouod specifically state that the patent bonus clause will subsist notwithstanding termination of the agreement. Your solicitor should have ensured that this was the case. In the absence of such a clause I would not be optimistic about this if the agreement is terminated before an order is placed.
JGM, Solicitor
Category: Employment Law
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Experience: 30 years experience as a solicitor.
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