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Kickstarter Outline Contract Between Creator & Backer

Best practices for when projects fail

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.

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