The Business of

Graphic Design
Week 7

Contracts

The Business of Graphic Design – GD351

 The Importance of Contracts

• Defines the project or assignments

• Defines limitations on the use of work
• Defines the working relationship
• Defines the use of finished work
• Defines how changes in the scope of the project are to handled
• Identifies professional issues such as payment and artists credit
• Provides protection in the event of a dispute
The Business of Graphic Design – GD351
 What makes it a contact?
1. Must be "offer" by one party and an
"acceptance" by the other.

2. Must be "mutual agreement" in which both parties agree exactly

to the terms of the contract.

3. Must be an exchange of consideration, i.e. something of value in

exchange for
something else of value.

The Business of Graphic Design – GD351

 Agreement
of terms
One party
makes an offer

Legally
binding
contract

Negotiation
of terms Second party
considers the offer

The Business of Graphic Design – GD351

 Seven Basic Types of Contracts

1. Oral Agreement
2. Letter of agreement or engagement
3. Purchase order
4. Working contract
5. Post project contract
6. Boilerplate contract
7. Retainer agreement
The Business of Graphic Design – GD351
 1. Oral Agreement

• Not recommended if it can be avoided

• Legally binding
• If a dispute arises over terms – difficult to prove
• Things to consider when using this type of agreement
• Are you dealing with the owner of the business or a representative of
the owner
• Who will be accountable if there is a dispute in the agreement?
• Are you willing to take a chance on this person?

The Business of Graphic Design – GD351

 2. Letter of agreement/
engagement

• One page document defining the terms of the oral agreement

• Gives the artist more protection

The Business of Graphic Design – GD351

 3. Purchase order

• Also known as POs

• Resemble invoice forms
• Often do not clearly state the expectations and obligations of both parties for
a specific assignment.

The Business of Graphic Design – GD351

 4. Standard working contract

• Universally recognized
• Must be properly reviewed before signing
• Understand the meaning of each clause in a contract before signing it
• Advised to create your own working contract – customized for specific
projects

The Business of Graphic Design – GD351

 5. Post-project contract

• Terms in small type at the bottom or on the back of the invoice

• Not encouraged
• Other types
• Invoices (often not specific to the job at hand)
• Checks

The Business of Graphic Design – GD351

 6. Boilerplate Contract

• Generic or formulaic language.

• Can be used as a multiple-use contract – covering a wide variety of project
with no customization

The Business of Graphic Design – GD351

 7. Retainer Agreement

• Agreement to work for a client for a specific amount of time.

• Payment guarantees availability for the duration of the project.
• Annual Retainer
• Project based retainer
• Service retainer

The Business of Graphic Design – GD351

 Copyright use issues.

The Business of Graphic Design – GD351

 Make sure you’re protected
when it comes to. . .

• Where the finished product will appear

• Duration of use
• All rights terms
• Ownership of original art
• Licensing third parties
• Exclusivity

The Business of Graphic Design – GD351

 Payment issues.

The Business of Graphic Design – GD351

 Make sure you’re protected
when it comes to. . .
• Fees/estimate
• Additional expenses
• Kill/cancellation fees (what are they and what defines a cancelled project?)
• Payment schedule
• Late-payment fees
• Client alterations
• Taxes
• Default/legal fees

The Business of Graphic Design – GD351

 Legal issues.

The Business of Graphic Design – GD351

 Make sure you’re protected
when it comes to. . .
• Warranty
• Indemnity
• Remedies
• Types of remedies
• Geographic area
• Legal expenses
• Cure provision

The Business of Graphic Design – GD351

 Working Relationship Issues.

The Business of Graphic Design – GD351

 Make sure you’re protected
when it comes to. . .
• Product description/project scope
• Working stages and scheduling
• Approval process
• Final artwork and return of originals

The Business of Graphic Design – GD351

 Best practices.

• Create a boilerplate contract.

• Establish a studio policy. Here are some examples.
1.Do not work on projects without a signed 1.Refuse contracts that deny the artists
agreement. opportunity to negotiate terms.
2.Do not accept work for hire terms 2.Establish a studio minimum for work
3.Do not accept all-rights terms. 3.Do not quote estimates on the spot
4.Do not do work on speculations. 4.Delay before signing a contract.

The Business of Graphic Design – GD351

 Working with Clients' Contracts

• Get acquainted with the contract: Make a copy of the contract

• Isolate problem areas: Read it more than once; write notes where applicable
• Compare notes
• Edit where necessary
• Alter the original
• Sent it the client
• Prepare for a reaction

The Business of Graphic Design – GD351

 Class activity.

The Business of Graphic Design – GD351

 Lawyers. Contracts.

The Business of Graphic Design – GD351

 Less expensive ways to get help.

• Network – Call other graphic designers and talk openly with them about your
issue.
• Find a coach or mentor
• Read and grow – Be resourceful.

The Business of Graphic Design – GD351

 When to call a lawyer.

• For large and/or complicated projects involving complex royalty or licensing

issues.
• For projects requiring lengthy schedules and or/penalties
• For licensing work in multi-national markets.

The Business of Graphic Design – GD351

 When Things Go Wrong.

• Keep copies of all letters sent to the client.

• Reflect on your memory for key conversations – write notes for future
reference.
• Record all telephone calls including the date and people in the conversation
• Set up specific dates when you expect an agreed-upon action to be taken
• Keep a folder with receipts, notes and papers regarding the problem

The Business of Graphic Design – GD351

 When Things Go Wrong.

• Write to the offending client.

• Negotiate one on one.
• Mediation
• Arbitration
• Consider small claims court
• Call arts organizations for referrals
• Join a professional organization

The Business of Graphic Design – GD351