As Kickstarter Failures Continue, New Legal Terms Are Outlined

Creators now have clear stipulations to meet in event of project cancellation.

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Crowdfunding platform Kickstarter has issued new guidelines for creators in the event that a funded project fails to be completed.

The new rules list the stipulations that a creator must meet in order to fail the delivery of a project without being subject to legal action. They are:

  • Creators must 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 must "work diligently and in good faith to bring the project to the best possible conclusion in a timeframe that’s communicated to backers."
  • They must be able to demonstrate appropriate use of funds and have "made every reasonable effort to complete the project as promised."
  • They must have acted honestly, and have made no material misrepresentations in their communication to backers.
  • Finally, creators must 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.
Neal Stephenson's Clang is the latest Kickstarter game project to be axed despite its full funding in 2012
Neal Stephenson's Clang is the latest Kickstarter game project to be axed despite its full funding in 2012

If a fully funded Kickstarter project fails, and these stipulations are not met, Kickstarter says a creator "may be subject to legal action by backers." However, as with any project, completing these actions would not make the creator immune from legal action either.

The new terms come just days after it was revealed that Clang, a swordfighting game headed up by author Neal Stephenson, has been cancelled two years into the project, and after raising some $526,000 from more than 9,000 people.

Weeks prior to this, the popular YouTube channel Yogscast announced that its Yogventures project had been scrapped.

In a post on its official website, Kickstarter said that "creators owe their backers a high standard of effort, honest communication, and a dedication to bringing the project to life."

"At the same time, backers must understand that when they back a project, they’re helping to create something new--not ordering something that already exists. There may be changes or delays, and there’s a chance something could happen that prevents the creator from being able to finish the project as promised."

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