Michael, thanks for the link, if only so I could learn I actually have an Elance account. I'm going to close it posthaste to prevent any possibility of it being merged with my Upwork account.
Anyway, the article you cited states, "When we upgrade users to the upwork.com service, we will sunset elance.com and Elance, Inc. will assign its rights and obligations under the Agreement to Upwork" and that seems to soundly quash my notion.
Well, John, many are adhering to your notion, including a number of lawyers.
We know what Elance's/Upwork's position is. Whether they are right, and whether it matters, remains to be seen. As one commenter pointed out, Elance seems to be wanting to transfer its rights without transfering its obligations.
Since many of you do not have access to the Water Cooler, I am going to quote Garnor's post that Michael was referring to here. You will be able to find answers to your questions in it
First, an update: we will not be updating the Elance User Agreement to address the exclusivity question. The Elance User Agreement (see Sec. 5 Non-Circumvention) permits Elance, Inc. to assign its rights and obligations under the Agreement. When we upgrade users to the upwork.com service, we will sunset elance.com and Elance, Inc. will assign its rights and obligations under the Agreement to Upwork. As you may know, Upwork is under common ownership with Elance and will offer substantially similar services in addition to advanced technology.
As part of the Elance User Agreement, clients and freelancers have agreed that for 24 months after identifying each other through the elance.com service, they will exclusively use the Site, which expressly includes Elance Escrow Corporation, for payments to and from each other. Upwork.com does provide support for Elance Escrow Corporation. So, after sunsetting, these clients and freelancers will still be obligated to use Elance Escrow Corporation for payments, and we are making it available for them to do so through the upwork.com service. We truly hope that you will copy your Elance reputation to Upwork in order to honor your obligations to make and receive payments through Elance Escrow Corporation during the 24-month period. If you and your client choose not to make and receive payments through Elance Escrow Corporation via upwork.com, but continue to work together during the 24-month period, then you will be obligated to pay the buy-out fee under the terms of the Agreement assigned to Upwork.
In addition, we’ve paraphrased a few of your questions/comments to directly respond to them below:
Don’t terms changes require consent from both parties? How can you enforce new rules and regulations and require users to sign up on a new site?
We are not changing Elance Terms of Service at this time. The Terms of Service already provide that when Elance exercises its right to assign the Terms of Service to Upwork, the agreement will continue to be binding on Upwork and on you. However, to answer the question, we do have the right to change terms by posting those changes. You have the right to accept them by continuing to work on the platform or decline them by ceasing all work on the platform and paying the buyout fee for continuing to work with clients or freelancers you identified on Elance.
What if my client chooses NOT to migrate to Upwork and wants to continue working with me outside of the platform? Am I going to be punished for a choice made by my client and forced to give up a paying engagement because of the disintermediation rules?
We connect clients and freelancers and we would not ask you to give up an engagement with your client. However, you and your client agreed to the disintermediation rules in the Elance User Agreement. This Agreement will be assigned to Upwork. And Upwork will offer substantially similar functionality to support payments through Elance Escrow Corporation. This means that you need to decide whether to copy your Elance reputation to Upwork.com to continue to make and receive payments through Elance Escrow Corporation for clients or freelancers you identified on Elance, or else pay the buy-out fee and work together off of the platorm.
I didn't start any job on Upwork, I started on Elance. Since the company with whom the contract was first initiated is closing - no contract is enforceable after the date of closure. According to the laws in my state this is not legally enforceable. My friend/colleague/lawyer/representative says this is not legal. When the services are no longer available on a given platform, when the services for that stated fee are no longer available due to closure or dissolution - contracts are no longer valid and since no transference clause exists in the TOS - you cannot retroactively write it in now with the pending closure of Elance.
We are happy to discuss this with your legal advisors if that would help. But we are not doing anything that is not provided in our Agreement, or that is illegal or that hasn’t already been done. The right to assign an agreement is explicit in our Agreement and is standard practice in service provider contracts. And we will continue to support the required Elance Escrow Corporation payment system through Upwork.com with substantially similar functionality. A good example is when AT&T acquired Cingular. Cingular customers became AT&T customers if they wanted to continue using their phones. If they chose not to become AT&T customers, they had to pay any applicable termination fees.
Do the actual ToS have a clause that reserves Elance the right to change the ToS without consent of the other party? Otherwise I do not know any kind of contract law that allows one party to change the terms and conditions one-sided.
We are not proposing changes to the Elance User Agreement at this time. But yes, the User Agreement states that Elance can change the Terms of Service by posting the new agreements on the website. You consent by continuing to use the Site. You are free to decline by no longer using the Site and by paying the buy-out fee if you continue to work with clients or freelancers you identified on Elance.
You previously stated that you would be updating your terms of service. Now you say that you are not changing the Terms of Service at this time. Why? What does this mean?
Upon reviewing our Terms of Service, in light of your questions and comments over the past week, we have determined they are clear on this topic and do not require an update.
Thank you Valeria, none of us would have dared to copy/paste out of fear of being edited because of the community guidelines ....
As I have also written on Elance, I am not 100% convinced, but still, IMHO some people who say Elance could not keep the freelancers and clients to the disintermediation clause miss one point: the contract is not with the site. The contract is with the company, and the company is not dissolved, but, as far as I know, acquired oDesk and only decided to discontinue the website, instead installing UW. At this point, I am quite sure that contractual obligations stay in place.
But: the question is if the freelancers wold be forced to silently agree to all the changes which, for some, are rather disadvantageous. I am just wondering what would happen if a freelancer says, okay, you want to hold me to the disintermediation clause, and I want to hold you to ... whatever clause of the original contract was more beneficual. And when I see that the company made people copy or merge their profiles promising superiour services ... well, that is something that gives an ex-lawyer some ideas. Obligations run in both directions, as far as I remember.
Actually the Terms of Service contract is with the site.
Fergus: party of a contract has to be an individual or a legal entity like a company. A website - unless US Law is way different from all I know - is no legal entity, but the property of a legal entity. So, no matter how it reads, the party of the contract would be the owner of the website.
This is true, but the contract itself very explicitly states that the exclusivity period applies to "the Site", which is defined as Elance.com. Arguing that it now applies to Upwork.com is a change, and Upwork can't change the contract unilaterally. They can offer a change, but that doesn't constitute a new contract until the offer is accepted.
Michael wrote earlier, and Susanne expressed the same point, that "Elance seems to be wanting to transfer its rights without transfering its obligations." The buy-out fee would be one such right, and the 8.75% fee one such obligation. As Garnor put it, the Upwork justification for the apparent inconsistency is that "the User Agreement states that Elance can change the Terms of Service by posting the new agreements on the website. You consent by continuing to use the Site." This is of purely academic interest to me, but it seems a stretch to apply new terms retroactively to contracts that predate the new terms. In Garnor's example of "when AT&T acquired Cingular. Cingular customers became AT&T customers", if the Cingular customers had a multi-year contract with Cingular, I presume AT&T honored the terms of those contracts.
"if the Cingular customers had a multi-year contract with Cingular, I presume AT&T honored the terms of those contracts."
AT&T certainly tried to carry the early termination fee over. The resulting class action cost them $20 million. It might be interesting if anyone disintermediates and Elance tries to get the buy-out fee from them.
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