Forms, Contracts & Agreements

Why have them? What’s their function? Who do they serve?
At first glance, contracts may inspire dread, yet they can make business much easier. When the basic components are understood, contracts can protect both the artist and the client.
Contracts provide the common working language by which a job will proceed.

Why Have Contracts?

To avoid confusion and misunderstanding, a well-written contract defines:
• the working relationship of the client and artist
• the use of the finished work
• how changes in the scope of the project will be handled
How do contracts protect?
• Once signed and agreed upon by both parties, it is legally binding.

Seven Basic Types of Contracts

1. Oral Agreement
• often based on based on a simple handshake
• be weary of contradicting memories
• know who you are dealing with
• who will be accountable in the case of a dispute
2. Letter of Agreement or Engagement
• provides more legal protection
• simple with some standard elements
• project description, what is due, when it’s due, usage and ownership, kill fees and so on.
3. Purchase Orders
• now often include assignment of rights
• often require the designers signature
• problematic in their general nature
• likely not sufficient for contracting creative work
4. Working Contract
• comes complete with legal terminology
• can be lengthly or brief
• can be clear and concise or convoluted and confusing
• traditionally for more complex projects
5. Post-Project Contract
• presented at the bottom or back of the artist’s invoice
• presented on purchase order after receiving the artist’s invoice
• do not require two signatures
• not smart business
6. Invoices
• terms are usually pre-printed and non-specific
• minimize intimidation to client
• provide little legal proteciton
• no signatures required
7. Checks
• the “payment in full” trick
• verify that the check was not sent in lieu of full payment

Boilerplate Contracts

• build upon generic or standardized terms
• used for a wide range of project types
• elements may be altered to fit each instance
• also know as “multiple-use” contracts
• works well in accordance with “studio policies”

Retainer Agreements

Graphic artist’s agrees to work for a said client for a specified period of time, on a particular project, for a fee to be paid according to an agreed upon schedule.
• Annual Retainers
• Project-Based Retainers
• Service Retainers

What A Contract Should Include

Contracts in the visual communication industry usually cover four issues: copyright use, payment, legal, and working relationship.
copyright use issues clauses shall be written and value established based upon:
• type of medium or product: where will it appear? (magazine)
• category of use: what is the intent of the use? (advertising)
• geographic area of use: how widely will it be used? (regional)
• duration of use: how long will work be used? (one year)
• all-rights terms : unlimited use or buyouts
• ownership of original art : who will retain original artwork?
• licensing to third parties : right to resell or transfer rights?
• exclusivity: who has the rights? (client only / limited time)
• work for hire: assigns authorship to the client
payment issues
• fee / estimate : monetary value of job when complete
• additional expenses : outside vendor costs
• kill / cancellation fees : 25-50% recovery costs
• payment schedule : when payments are due
• late-payment fees : when will payment be “late”
• client alterations / changes : client revisions
• taxes : sales taxes
• default / legal fees : when client doesn’t pay
legal issues
• warranty : guarantees originality : guarantees rights : etc
• indemnity : protection from damages or liability from 3rd party
• remedies: agreed courses of action for resolve
working relationship issues
• project descriptions
• work stages and scheduling
• approval processes
• final artwork and return of originals / deliverables

Using Contracts

Create a Boilerplate Contract
• draft a basic studio contract template to work from
• draft a letter of agreement template (for less complex projects)
Establish a Studio Policy
• use these to depersonalize the negotiation process
• sample: do not ever work on projects w/o signed agreement
• sample: do not accept “work-for-hire” terms
• sample: do not accept all-rights terms or buyouts
• sample: do not work on spec
• sample: do not quote estimates on the spot
working with clients’ contracts
• get acquainted with their contract
• isolate problem areas
• compare notes
• start the re-write process
• alter the original
• send to the client
• prepare for reaction

When to Call a Lawyer

When writing or negotiating a contract, there are times when you should consult a lawyer:
• for large and or complex projects
• complex royalty or licensing issues
• projects requiring lengthly schedules
• licensing work in multi-national markets

AIGA Standards for Terms and Conditions

In either it’s long (AIGA Standard Form of Agreement for Graphic Design Services)or short form (AIGA Standard Terms and Conditions for Designer Client Relationships), either document can serve as a basis for designers’ contractual arrangements with their clients.

AIGA Standard Form of Agreement

Cover Page
• Summary Statement
• Agreement Date
• Client Info
• Designer Info
• Project Name
1. The Project
1.1 Description of Project
• describe the project carefully
• research
• consultation
• fabricated work or pieces
• services related to each component
• project or work phases
• when and what each presentation entails

short sample: A four-page, one or two color, 8.5 by 11- inch brochure, consisting of text only, describing your company’s services.

2. Services
2.1 Basic Services
• define clearly what services “we” offer
• define our expertise and knowledge as a professional service
2.2 Supplementary Services
• services beyond expertise / consultation
• writing, illustration, photography, etc.
• clearly define what services you are and are NOT providing
2.3 Implementation
• printing
• fabrication
• installation
• if included, could classify you as a vendor rather than consultant
3. Compenasation
3.1 Fees
• clearly state fees

sample:
• For the fixed sum of $0,000.00
• Hourly, at the rates stated in this contract, not to exceed $0,000.00.
• See Appendix A, “Schedule of Fees”, attached.

3.2 Hourly Rates
• hourly rates for the calculation of any additional services
(i.e. dollar amounts for various staff)
3.3 Initial Payment
• for confirmation of client’s good faith
• non-refundable
• compensation or financing for start-up costs

sample:
• 10 to 50 percent of total job cost
• most common 25 or 30 percent

3.4 Payment Schedule
• disbursement of fees

sample:
• In three equal payments: one-third upon signing the contract, on-third upon approval of the completed design, one-third upon completion of the project.
• Monthly, based upon time expended, within the agreed totals.
OR
Initiating fee: $0,000.00
Completion of Preliminary Design: $0,000.00
Completion of Design Development: $0,000.00
Completion of Drawings and Mechanicals: $0,000.00
Completion of Project: $0,000.00

3.5 Revisions and Additions
• enforceable only if original description is clear and accurate
3.6 Rush Work
• compensation for having to work unusual hours
• figure is dependent on designer
3.7 Reimbursable Expenses
• handling charges (mark-ups)
3.8 Reimbursable and Implementation Budgets
• protection against implementation estimates vs. actual costs
3.9 Records
3.10 Late Payment
• service charge for overdue accounts
• 1.5% per month past due
• typically acted upon only if litigation becomes necessary
4. Client’s Obligations
4.1 Client’s Representative
• prevent conflicting instruction to the designer
• identifies a liaison for getting documents approved
4.2 Materials to be Provided by Client
• what the client’s responsible for providing
• raw materials, documents, etc.
4.3 Liability of Designer
4.4 Approval of Typesetting and Final Artwork
4.5 Instructions to Third Parties
5. Rights and Ownership
5.1 Rights

Reminder: by maintaining as many rights as possible “we” are by law, consultants and not vendors. Thus we are selling a service and not a product.

5.2 Ownership
5.3 Third Party Contracts
• obtaining services of other creative people
• equal, unless otherwise noted, to the designer’s rights
6. Miscellaneous
6.1 Code of Ethics
• voluntary adherence to AIGA Code of Ethics
6.2 Credit
6.3 Samples and Photographs
6.4 Confidentiality
6.5 Sales Tax
• to assist in collecting sales taxes, retroactively assessed
6.6 Applicable Law
6.7 Assignment
6.8 Termination
• notice for termination of project or designer
6.9 Arbitration
• should reflect the maximum amount allowed for small claims court
6.10 Entire Agreement
6.11 Representations
7. Time Schedule
8. Continuations and Other Conditions
• area to define any special circumstances relative to project
9. Defined Terms
10. Signatures
• be sure client’s signing party is authorized to do so

The AIGA Standard Terms and Conditions for Designer/Client Relationships

Newer and shorter than the previous. This agreement is to be attached to a designers project estimate and/or proposal, and can be used as a written confirmation of terms and conditions between designer and client.

NOTE: In order for this agreement to work effectively, the following information will be included in the estimate/proposal.

The AIGA Standard Terms and Conditions for Designer/Client Relationships is an optional short form agreement that may be attached to estimate/proposal document in lieu of longer more extensive contractual agreements. (see pgs. 55-58 in AIGA Professional Practices in Graphic Design Text.)

What Goes Into An Estimate or Proposal

Client’s Name and Address
• name of client representative
• date
• designer’s name and address
• name of project
Project Description and Specifications such as:
• project goals
• number of components
• size
• page count
• colors
• artwork requirements
Third Party Relationships
• editorial services
Client Responsibilities
• list or description of materials/services client will provide
Project Stages, Responsibilities, and Presentations
The most important part of the estimate/proposal.
• project stages
• number of samples, concepts
• type of presentations
• number and complexity of revisions included
• electronic vs. camera-ready mechanicals
• production responsibilities (estimating, press proofs, and checks)
Usage Rights
• indication of any limitations on uses
Project Schedule
• delivery dates
• approval stages
• project benchmarks
• duration of project
Project Fees
• includes all cost for all project stages in estimate/proposal
• may involve or include day rates for photo supervision, press checks, etc.
Out of Pocket Expenses
• expenses not included in fees
Payment Schedule
• amounts due and when
Additional Recommendations for Estimate Proposals
• submit and negotiate estimate/proposal prior to attaching to terms
• NOT recommended that AIGA Standard Terms and Conditions be used for complex or lengthy projects.

Useful Resouces

AIGA Standard Form of Agreement

AIGA Standard Terms and Conditions

Contracts & Form Samples

Reading Assignment (RECAP)

• TEXT: GAG Handbook for Pricing and Ethical Guidelines; chapter 13; pgs 238-246
• TEXT: AIGA Professional Practices in Graphic Design; chapter 4; pgs 29-50
• TEXT: AIGA Professional Practices in Graphic Design; chapter 5; pgs 51-58

Reading Assignment (PREP)

• TEXT: AIGA Professional Practices in Graphic Design; chapter 9; pgs 87-92