Kickstarter Outline Contract Between Creator & Backer

While the gold rush is long over, it seems clear that Kickstarter is here to stay. That’s a good thing: the crowdfunding platform is a useful avenue for game projects that would otherwise have no means of production. Yet, after many quiet successes and a few noisy failures, it’s also clear that there are risks involved for both creator and backer. Kickstarter themselves stay out of that relationship as much as possible, but last week updated their Terms of Use with a section designed to establish the contract and best behaviour guidelines between both parties.

If you’re ever going to back a Kickstarter project – and we post about a lot of projects here – you should read this to know what you’re getting into.

As outlined at the top of the section:

Most of our Terms of Use explain your relationship with Kickstarter. This section is different — it explains the relationship between creators and backers of Kickstarter projects, and who’s responsible for what. This is what you’re agreeing to when you create or back a Kickstarter project.

It then takes a moment to note that, while creator and backer are forming a contract, “Kickstarter is not a part of this contract — the contract is a direct legal agreement between creators and their backers.” Everything that follows is common sense and plain English: creators must finish their project in order to fulfill their obligation to their backers; backers must understand that delays and unexpected events may happen.

Most interesting is the guidelines laid out for how creator’s should act if a project does go awry and can’t be completed:

A creator in this position has only remedied the situation and met their obligations to backers if:

  • they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
  • they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe that’s communicated to backers;
  • they’re able to demonstrate that they’ve used funds appropriately and made every reasonable effort to complete the project as promised;
  • they’ve been honest, and have made no material misrepresentations in their communication to backers; and
  • they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.

The section ends with the most important part: “If [the creator is] unable to satisfy the terms of this agreement, they may be subject to legal action by backers.” I’m not aware of any videogame backers currently pursuing legal action against a failed project, but this might give people a stronger leg to stand upon should they choose to.

Kickstarter is great, but as John pointed out, backing a project is not the same thing as buying a game. It’s a risky investment, and while individual pledges tend to be in low enough amounts that no single person is accepting much risk, failures are inevitable. I’m glad therefore that Kickstarter have written something that backers can point to when developers occasionally fail to deliver or fall silent for protracted periods of time.

46 Comments

  1. essentialatom says:

    “Creators must think really, really hard in future before selling everything to Facebook”

    • jasta85 says:

      Facebook: We want to buy the Oculus Rift
      Palmer Luckey: Hmm, The Kickstarter terms of use says I have to think hard about that…
      Facebook: We’ll pay you $2 billion
      Palmer Luckey: Thinking over and sold!

      • Gap Gen says:

        Yeah basically any company is immune to legal action from people with orders of magnitude less money than them.

  2. Baines says:

    Meanwhile, Valve remains silent on misuse and outright abuse of Steam Early Access.

    • Artist says:

      Giggling maniacly isnt ‘staying silent’….

    • drinniol says:

      Yeah, what with their warning one click away on the ‘What is Early Access?’ page that states quite clearly;

      “When will these games release?
      Its up to the developer to determine when they are ready to ‘release’. Some developers have a concrete deadline in mind, while others will get a better sense as the development of the game progresses. You should be aware that some teams will be unable to ‘finish’ their game. So you should only buy an Early Access game if you are excited about playing it in its current state.”

      And that explanation below some common-sense guidelines, like “What is the game like to play right now?” and “How often is this game getting updated?”.

      Outrage! Where is the hard-hitting RPS feature on Valve’s ‘easily accessed and not hidden in the TOS like Kickstarter I mean seriously the link is right on the Early Access page for Pete’s sake’ shady policies?

      • SkittleDiddler says:

        Weird how the fact that Valve plastering little notes all over Early Access pages hasn’t stopped a few developers from blatantly ripping off their customers. “Turning a blind eye” and all that.

        • Asami says:

          Well, when half the early access games are voted in by Greenlight can you really blame them? At that point it’s not only the customers’ fault it got there in the first place, but the customers’ decision to buy it too…

          Caveat emptor.

          • SkittleDiddler says:

            It’s not like the devs that have actually been ripping off their customers have been honest about their intentions — “caveat emptor” only goes so far. Valve seriously need to take this into consideration when they drop greenlit EA games into the Steam Store.

        • gwathdring says:

          Kickstarter is going out of their way to make it clear that they have no part in the contract between backers and creators … so I don’t see how Kickstarter is being particularly more responsible here. One could argue that Steam has a greater obligation to yet greater responsibility on account of being a storefront (I’m not sure whether I agree, but the argument could be made to make sense at least), but I don’t think you can point to this as a proof-by-counterexample of Valve’s negligence. Kickstarter isn’t doing what you want Valve to be doing. They’re explicitly telling us they won’t, as an organization, involve themselves.

      • Baines says:

        Early Access being risky is separate from “misuse and outright abuse”.

        The first is knowing that a one-man studio game won’t see release if that one man dies in a tragic waffle iron accident. Bad things happen, and sometimes projects just don’t work out.

        The latter is more nefarious.

    • h_ashman says:

      The problem with the Valve approach to early access is the very hands off approach they’re taking with the steam storefront as a whole. Any publisher can put an old game out as a ‘brand new’ game, early access pages can get completely astro-turfed by the devs etc.

      Whilst it would be nice for Valve to offer some consumer protection for early access, or even just stricter guidelines/ expectations like Kickstarter have done, it’s not in their interest to do so as that’ll cost money to enforce, and they lose out on their cut from the bad early access projects.

      If I was setting the guidelines though, I’d look at how the the Prison Architect & Rust devs go about it, I enjoy the videos/blogs outlining the work they’ve done and explaining the new features. Transparency on this stuff is the main difference between a good dev and a bad one to my eye.

    • sinister agent says:

      Valve are never silent about anything, but you often can’t hear them through their solid gold walls.

  3. Wulfram says:

    The notional ability to sue if backer rewards weren’t delivered already existed I believe.

    The requirement to complete the project is new, I believe, but it doesn’t really change the situation for gaming projects all that much, because the rewards usually included the completed product.

    If anything, I think this offers a bit more protection to creators, since it means that, so long as you fulfill the reasonable requirements above, you don’t have to offer refunds beyond the kickstarter funds remaining.

    • drinniol says:

      Anyone can sue anyone for anything. Whether a judge or magistrate agrees is another thing.

      • Gap Gen says:

        Yeah, I suspect that as Kickstarter doesn’t really have a horse in the race of whether the backer or creator is at fault, its terms and conditions are mainly guidelines, and any genuine legal issues will be settled in courts, which could potentially get messy if the backers and creators are in different countries. One major thing about the Terms and Conditions could largely be Kickstarter attempting to absolve themselves of responsibility, rather than policing the community.

    • Baines says:

      Yes, there wasn’t a requirement that a project actually be completed. But such a requirement was largely redundant when most Kickstarters promised completed copies of the project as a reward, and starting a Kickstarter required agreeing to deliver promised rewards.

    • malkav11 says:

      To me this mostly just clarifies what backers can expect of creators. It’s not really any more binding than the previous version, but it’s a lot more descriptive of minimum standards.

  4. sirdavies says:

    I know this is off topic but as an adblock user I have to say that I am absolutely outraged at the new formatting of the site. This outlandish discrimination towards people who believe in the freedom from ads and paywalls is quite disheartening.

    • Adamustache says:

      “discrimination towards people who believe in the freedom from ads and paywalls”

      Hmm, that’s a new one.

      • sirdavies says:

        It was sarcasm. I am kind of annoyed by it but I know I don’t deserve anything.

    • SominiTheCommenter says:

      Search for “Rock, Paper, Centered” and “Rock, Paper, Terminal” on Userstyles.

      • sirdavies says:

        It’s still looks pretty broken, but it’s better than the regular one I guess. Thanks.

    • Aquifel says:

      I was really confused as to why the formatting was so messed up with the new layout. I guess i kind of forgot ads existed? My adblock button dissapeared with one of the firefox updates a few months ago, and although its still active, i have no clue how to get it back so i can turn things on/off even if i wanted to.

      • sirdavies says:

        If you click on the drop-down menu on the upper right corner. there should be an option called “customize”. Click there, and it takes you to a menu where you can reorder firefox features and extensions. The adblock logo should be there, you just have to drag it wherever you want it to be.

  5. sirdavies says:

    I also want to request the removal of these annoying articles, they keep obstructing this gorgeous Endless Legend advert.

  6. Premium User Badge

    DuncUK says:

    The obligation to provide a refund for unfulfilled rewards has always seemed to me like an odd requirement on project creators and a false sense of security for backers. While I understand in principle that backers will want a refund if their rewards are not provided, in practise there’s no way a project could ever guarantee to give all backers a refund unless they don’t spend any backer money in the creation of their product. If they could do that, they wouldn’t need kickstarter in the first place.

    • Wulfram says:

      There’s no way for me to guarantee I will be able to repay my loan unless I don’t spend it, but that obligation still exists.

      • SanguineAngel says:

        unless your loan fails to save you and you become bankrupt.

      • HadToLogin says:

        Well,, nobody (except family/friends, maybe) will give you loan if there’s no “I’ll give you my house in return and become homeless if I won’t repay it” point.

        • Tekrunner says:

          Maybe in the US, where a lot of loans are backed by the borrower’s house. It’s fairly different in most other countries though, and being unable to repay a loan won’t necessarily mean you’ll have to give your house to the lender. That may be up to a judge to decide.

    • Ginger Yellow says:

      That’s not strictly true – for some Kickstarters, the rewards themselves don’t include a finished product (ie the real point of the Kickstarter) and so the obligation to fulfil the rewards is entirely distinct from the completion of the project. This is very common with podcast Kickstarters, for instance, though it seems most are now moving to other platforms for listener funding. I’ve long argued that the one thing you have a real right to be pissed off about in a failed Kickstarter (assuming good faith etc) is failure to deliver rewards.

    • Martel says:

      I think it’s slightly confusing until you read this part closely

      they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.

  7. draglikepull says:

    If you look at the list of Kickstarters that have succeeded and those that have failed, it seems like you can usually tell ahead of time whether a Kickstarter is likely to meet its target. Most of the ones that fail seem to have red flags from the beginning. For example, a novelist trying to develop a hugely ambitious game as his first ever project just *sounds* like it’s got a pretty good chance of failure.

    Then you look at the ones that succeed, like The Banner Saga (my favourite game of 2014 so far), and they looked like good projects from the start. Banner Saga had an knowledgeable team making a style of game they had experience developing, so they were able to plan accordingly.

    I think it’s good for Kickstarter to set strong standards for projects, but I also think there’s an element of “buyer beware” too. Don’t just evaluate whether an idea sounds cool, evaluate whether you think the developers can actually finish what they’re setting out to do. I do that, and all of the Kickstarters I’ve backed have completed successfully or are well on track to doing so.

  8. 88GJS88 says:

    I wonder how these terms relate to the stretch goals on successful projects?

    – If a dev is looking for $100,000 and ends up with $200,000, it’s pretty likely that in order to inspire funding for that extra portion, they will have suggested stretch goal features. So under these new T&C’s, how far does their obligation stretch to provide those extra features?

    – What would happen if they tried to simply provide the original game for the original cost, then walk away with $100,000 profit before a retail copy is sold, instead of investing it into the extra promised features?

    – Given that the original Kickstarter campaign is probably better-thought-out than any cobbled-together stretch goals, what if they try but the extra $100,000 genuinely isn’t enough to create the extra features? Have they met their obligations by delivering the base game, and the stretch goals are simply a write-off?

    – What if they haven’t actually provided stretch goals and still manage to finish the game with money left over thanks to over-enthusiastic pledging? Is that just money in the bank, effectively from “pre-orders”?

    • Baines says:

      One would assume that Stretch Goals are part of the project. They aren’t optional, they are additional tiers to the project that activate as additional money is raised. The first tier is the base project itself.

      If you have a $200,000 stretch goal, raise the money for that stretch goal, and then fail to deliver on that stretch goal then you have failed to deliver on your project even if you still produce the base game. You promised that you would deliver on that stretch goal, that it would be part of your project, if you raised that amount of money.

      Of course some of the people running Kickstarters don’t see it that way. They see themselves as promising only the base game, and that stretch goals are optional. Or that stretch goals mean they can add a year or more of development time to their promised in writing deliver date. Or whatever. Mind, there are people running Kickstarters who don’t see themselves as holding any responsibility at all. Or any money management or project management sense.

    • malkav11 says:

      Stretch goals are a completely user-created concept that Kickstarter has never implemented or supported.

      • 88GJS88 says:

        That’s what I’m getting at really. So there’s nothing to stop a dev. doing whatever they like with respect to extra money, even if it’s stated in the project text?

  9. Geebs says:

    Speaking of which, Defence Grid 2 bucked the Kickstarter trend by actually finally getting released. It’s pretty Defence-Griddy. I’m quite enjoying it.

  10. namad says:

    Dear Graham Smith, you’ve slightly misread the kickstarter section.

    this part at the end that you mention is important:

    “The section ends with the most important part: “If [the creator is] unable to satisfy the terms of this agreement, they may be subject to legal action by backers.” I’m not aware of any videogame backers currently pursuing legal action against a failed project, but this might give people a stronger leg to stand upon should they choose to.”

    that section has always been on kickstarter from the very start. it’s all the rest of it that is new. which if anything means backers have less legal ground to stand on. before the creator was liable for legal action for any failure. now they’re only liable for bad faith failures. although realistically that doesn’t sound especially legal, furthermore for any projects backed before the terms were rewritten.