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I contracted a website development company (Company X) to design a brand new website for me from scratch. After an email conversation, we agreed on a price and that included a year's worth of free maintenance and support on demand. The website was created but within 2 weeks of creating the website, the owner of Company X and sole website designer suddenly died. All the clients were migrated to a new company (Company Y) which is a company that Company X sometimes outsourced work to - their owner has said to continue providing the same website service, he will charge (an extortionate amount). My questions are:

  1. I don't have a formal contract with Company X, just agreements in writing on emails - does this count?
  2. If so, does Company Y have to honour my agreement with Company X?
  3. If we have to pay him and it is more viable to switch company rather than continue with Company Y, does he have any grounds to block the transfer? Many thanks
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  • Thank you all for your comments. So I'm based in the UK, Company X were also based in UK but company Y are based in India. It is unclear how they acquired my website files but now they are holding them ransom and saying I need to pay a £1,000 "exit fee" to have all my files and databases back! Do I have any legal powers? Company X have been liquidated this morning so can't even contact them
    – atj786
    Aug 24 '20 at 11:01
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This is more practical than legal. The company in India are unlikely to have any right to make the demands they have, but you have no immediately practical way of enforcing any rights you may have. The costs of an action might easily exceed the values involved. You have no reason to trust the people who are asking you for this money. Talk to somebody you can trust about restarting the whole effort. If another takes over the completion of the task the additional costs will sometimes be more than the cost of restarting entirely. I can have no way of making the actual assessment, because we cannot know the complexity and degree of progress on the existing project. You must take a very objective look at this in the light of your knowledge. A basic lesson. Your data is your responsibility. Do not give control of it to others without very clear arrangements.

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First of all you are not indicating a country, don't take this as face value and always check if it's applicable for your jurisdiction.

I don't have a formal contract with Company X, just agreements in writing on emails - does this count?

Yes, this would be roughly equivalent to a contract, and Company X would have had to abide to that.

the owner of Company X and sole website designer suddenly died (...)

It may depend on the type of Company it was, if you were contracting with the person, or with a company with identity by itself. I see a few options. If Company X itself survived (and was perhaps bought by Company Y), they should fulfill Company X obligations. It would also be possible that they are offering to provide the same support as Company X as a way to their clients. If Company X was itself not bought, you may have a case for requesting from Company X / the heirs of their owner the requested service / cost of the service non-provided (but how to measure which amount was for the initial design -obviously taking much more effort- and which for the maintenance?). I would consider the "free maintenance for 1 year" to be lost.

If we have to pay him and it is more viable to switch company rather than continue with Company Y, does he have any grounds to block the transfer?

No. It would have been preferable that there was a clear contract between Company X and you, but as I understand it, you would be the owner of the new website.

Please note there are probably two parts on this:

  • The domain name
  • The actual web page

The domain name should have been registered at your name (with Company X as the technical contact). That shows clearly that you own the domain name, and they have no grounds tob lock you from moving it elsewhere or pointing it to any other website (it's not always one "correctly", which then gives headaches when developer and website owner parts ways, but anyway IMHO it's very clear that domain atj786.com was intended to be owned by atj786, not Company X...).

Regarding the web page contents, that could be argued if Company X was to create the page for you (so you own the page, code, etc.) or just provide the service. Also, Company X could have programmed the website (or part of) for you, could have used a general CMS (like WordPress), an internal library it shares on all their websites. Worst case, you would only have the "design".

Still, this is a recently created site, and you can create it again with someone reputable, based on the work Company X did for you. And yes, I recommend you to avoid Company Y.

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  1. I don't have a formal contract with Company X, just agreements in writing on emails - does this count?

You do have a contract with company X which is documented in the emails.

The death of a shareholder/director/employee of X does not change this. Company X is a seperate legal entity and it must continue to fulfil its obligations.

As a practical matter, the death may make it impossible for X to do this. If so, the executor or administrator of the estate should put the company into liquidation. If your contract is worth something (it probably isn’t) it can be sold to a new person who will have to fulfil the obligations. If not, the contract will die with the company and as an unsecured creditor you will be entitled to a dividend of approximately 0c in the dollar (typically).

  1. If so, does Company Y have to honour my agreement with Company X?

No more than I do.

Unless Y has had the contract novated as described above, they have no obligations under it.

  1. If we have to pay him and it is more viable to switch company rather than continue with Company Y, does he have any grounds to block the transfer?

No.

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  • Thank you all for your comments. So I'm based in the UK, Company X were also based in UK but company Y are based in India. It is unclear how they acquired my website files but now they are holding them ransom and saying I need to pay a £1,000 "exit fee" to have all my files and databases back! Do I have any legal powers? Company X have been liquidated this morning so can't even contact them
    – atj786
    Aug 24 '20 at 11:00
  • Just to add - company Y are also registered to trade in Australia
    – atj786
    Aug 24 '20 at 11:09

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