Would a contract to pay a trillion dollars in damages be valid? Let's say you write a contract with someone, and you want to make sure they don't breach it. You could just have them covenant certain things, but then they'd only be liable for whatever damages you could actually prove in court. Let's say you instead wrote that they'd pay you one trillion dollars if they breached the contract. This would mean that they would instantly be insolvent, allowing you to seize all their assets. What's the advisable way to do this? Is there a legally valid way of stating &quot;all the money you have, and then some&quot;, other than just writing a ludicrously large sum of money? What if the value of the dollar goes down? Would this be enforceable, or would the contract risk being set aside for undue hardship? I am asking for the context of a software license.
What you're talking about is a liquidated-damages clause, where the contract explicitly spells out the damages to be awarded in the event of a breach. The law will vary some from state to state, but these clauses are generally enforceable. Some courts limit their use to cases where calculating the damages resulting from the breach would be impossible or impractical. But in the United States, along with all other common law jurisdictions, courts generally agree that if the liquidated-damages clause appears to penalize the breach instead of simply compensating for it, it is not enforceable. See, e.g., Ridgley v. Topa Thrift &amp; Loan Ass'n, 17 Cal.4th 970, 977 (Cal. 1998) (“A liquidated damages clause will generally be considered unreasonable, and hence unenforceable under section 1671(b), if it bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach.”) The trillion-dollar damages clause &quot;bears no reasonable relationship&quot; to the damages that would actually result from a breach of a software license, so you can safely expect a court to refuse to enforce it, and limit you to whatever damages you could actually prove in court. Even if you were to drastically reduce it to &quot;all the money you have, and then some,&quot; &quot;all the money you have,&quot; &quot;half the money you have,&quot; or even &quot; &quot;1 percent of all the money you have,&quot; the language still makes clear that the contract is not aimed at compensating for the breach, but rather penalizing the breaching party. In the end, what you're talking about isn't going to work, because contract law is generally less concerned with penalizing people than with making them whole.
No Let's consider a similar scenario. If you made a beverage which poisoned a number of people, would you be absolved of liability because you gave it away for free? Of course not. As there is no contract between you, they would have to bring an action against you in the tort of negligence or negligent misstatement OR under consumer protection law. To succeed at tort they would need to prove that you owed them a duty of care; from Donoghue v Stevenson "You must take reasonable care to avoid acts or omissions which you can reasonable foresee would be likely to injure ... persons who are so closely and directly affected by my act that I ought reasonably have them in contemplation ...". Most cases will founder on your inability to foresee the use to which your software may be put. Consumer law is jurisdiction specific but they generally contain warranties that what you provide (gratis or otherwise) is fit for purpose, merchantable and that you do not make false and misleading statements. There is a chance that a case brought under this sort of law could succeed as you have not limited the purpose, specifically declared that it is not of merchantable quality and have (presumable) said what it does so that, if it doesn't do what you said, you have been misleading and deceptive.
You can read about (federal) damages from the Surface Transportation, but they are at least liable for 60 cent per lb. for damages. The company has to inform you that you have the option for full-value, which you can waive. In addition, they are allowed to limit their liability for damages for items of high value such as furs and jewelry, things worth more that $100/lb (sounds like the coffee table might be such a thing). You are also required to give notice of high-value items. If you waived full coverage in exchange for a lower rate, then it would be non-productive to take them to small claims court. Also, under state law, there may be an arbitration clause which would prevent you from suing them (so, check the contract).
No. Reason: Taxes are not a contract for specific services, so even if the government did nothing for you in return for your taxes, you do not have recourse to a rebate for "breech of contract." The only recourse is political. Theoretically if the government failed to provide a service that was required by law or Constitution, there could be legal action to force the government to do that action but you still don't get your tax money back. It might be an interesting act of civil disobedience, but no not legal. That is the answer. But to address some of the other premises of your question (Note: these are irrelevant because see above answer): The U.S. government runs at a deficit anyway, meaning the amount spent each year is more than the amount of revenue collected. For example, in May, 2018 the CBO estimated that for FY2018: BUDGET PROJECTIONS FOR FY 2018 (As of May 24, 2018 ) OUTLAYS $4.1 Trillion REVENUES $3.3 Trillion DEFICIT $793 Billion DEBT HELD BY THE PUBLIC (End of Fiscal Year) $15.7 Trillion So even if in the partial shutdown, gov saved 20%, every cent of your taxes would still go to the expenditures; the deficit would just be a little less. The U.S. government is saving quite a bit of money by not paying some subset of its employees, etc. .... believe that many of those employees will not receive back-pay. Probably not true. In the past modern shutdowns, employees received the back pay, whether they worked as emergency employees or were home. A bill as already been proposed in Congress to ensure that all will be paid when this ends. Some contractors might not get paid because they get paid by their employers, not directly by the gov. So in some cases no work, no pay. There are bills proposed to get them paid also. Note- I do not at all mean to downplay the effect on people's finances and morale. Missing a paycheck today even if the money will/might come eventually is a real hardship.
Let's say you have an actual contract where you give A something of value in consideration of which B gives you something of value. That way, the exchange is legally enforceable and is not just a cancellable promise. This is all written up clearly, and you become a creditor. One thing to bear in mind is that you may have to wait in line so that others are paid first. For example, taxes have to be paid, also secured creditors have to be paid. Nearly at the end of the list, unsecured creditors such as you are paid, and finally heirs can receive shares of what is left. I don't know what you mean by &quot;recognizing&quot; a debt, but what a financial institution could do is treat a debt as an asset, for the purposes of a loan. For instance, a bank might lend you $10,000 where you pledge your home as a thing of value that they can take in case you default on repayment. You cannot force a bank to accept a particular asset as collateral, so the answer to the &quot;how&quot; question is &quot;by persuasion&quot;. Since your asset has an indefinite value between $0 and let's say $10,000, you would have to persuade the bank that there is negligible risk to them. In the case of property used as collateral, when you default the creditor can use the courts to seize your property and sell it, but they can't seize the property of a third party who owes you something, they would have to wait possibly for years for the third party to die and see what's left. Investment instruments might be used as collateral, but only if they can be liquidated reasonably promptly. The risk to the bank is extremely high, but if you are very persuasive, they might accept such a debt as collateral.
It seems that you have a valid contract and he has breached it. You could sue for the value of a year's hosting in a small claims court. Whether this is worth the effort ...
Such clauses are called "copyright assignment", "invention assignment", and/or "works for hire" clauses, partly depending on the clause's intent and wording. They're pretty common in employment contracts for software development and some creative positions. Frankly, the clauses don't actually do much, at least in the US -- copyright law already recognizes the concept of works made for hire (which belong to the employer), and claims too far beyond that are often rejected if they aren't obviously related to company business. With that said, your hypothetical programmer's painting is safe unless it depicts, say, the contents of an email from the CEO. :) Even if the clause technically entitles the employer to claim ownership, the employer has no legitimate interest in doing so. Likewise, that app created outside work is safe as long as it is created using no company resources and is unrelated to the employer's business. If the app is obviously related, that's where things get hairy.
There is no fixed rule for this. Every situation is different, and of course there is nothing specific to software in there. It is very much a matter of intent. For example, negative profits are no clear sign. Company X thinks they could make $6 million profit by developing a product and selling it, minus $4 million development cost. It turns out development cost is $10 million. Raising prices is not possible because of competition. Company X will suffer losses of $4 million, without being predatory in any way. The reality is that a judge will look at the situation, take everything into account, and make a decision based on what they see. Since this is all about competition law, the main point is the intent or effect that your pricing makes competition impossible. That's what the judge will decide. For example, if you offer your service for $500,000 while others offer a similar service for $1,000,000 you could be using some super efficient processes that allow you to make money at that price, or you might have an idiotic sales person who will drive your company into bankruptcy, or you are trying to drive your competitors out of business. That's what the judge will decide.