There is an excellent thread in the Search Engine Marketing forum at Search Engine Watch Forums named Are we obligated to tell the client. The thread creator tells a story that I am sure most Web design/development/etc companies have been faced with. To sum it up....
Prospect A comes to you with his dream idea, to build the next eBay. :) You listen to his idea and feel that it would be a waste of his money and time, since ultimately it will fail. Are you obligated to tell the prospect your feelings? If so, and you do, should you take on the job? That is the discussion taking place in that thread.
I added my two cents by comparing it to starting any business. Don't most new business fail within the first year? I forgot the percentages. But it is pretty similar, but in this case, you are the main contractor for the job.
Forum discussion at Search Engine Watch Forums.
