Terms and Conditions for Design Contracts

By Shel Perkins

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Inexperienced designers often provide services to clients without having a signed contract in place. As a result, they tend to encounter legal problems that could have been avoided. It's important for designers to become better informed about contract issues and more comfortable in discussing them with clients. There's a great deal of flexibility in many aspects of your career. You can organize your design practice in whatever way seems most appropriate, and you can structure individual projects in whatever way allows you to produce your best creative work. When it comes to the fine print on contracts, however, you need to understand intellectual property law and the basics of contract law. These are not open to re-invention.

Designers who are a bit further along in their careers and working on larger projects tend to understand more clearly the importance of having formal agreements in place with clients. A good contract prevents confusion and protects everyone's interests. You realize how important this is after you've been burned a few times. Good contracts address a wide range of legal issues, but graphic designers must pay special attention to the ownership and control of intellectual property, as well as warranties and indemnification.

Intellectual Property
There are several different categories of intellectual property. The most important for graphic designers are copyrights and trademarks. We've already discussed these in detail in a series of earlier articles:

• Cutting Through Copyright Confusion - Part 1
• Cutting Through Copyright Confusion - Part 2
• Trademark Basics for Designers - Part 1
• Trademark Basics for Designers - Part 2

Warranties and Indemnification
A warranty is a promise in a contract. It's a written guarantee that the subject of the agreement is as represented. As a designer, you might be asked to warrant that your work is free from defective workmanship or that it's original and does not infringe the intellectual property of others. In the event that you breach any warranty that you've given, an indemnification means that you agree to provide security against any hurt, loss, or damage that might occur. You would have to make the client "whole" by giving them something equal to what they have lost or protecting them from any judgments or damages that might have to be paid to third parties, along with attorney's fees. For example, you might be asked to provide indemnity against third-party infringement claims. Indemnification is a very important issue for designers. Depending on the specific nature of each project, the scope of potential liability for intellectual property infringement could be considerable.

Where to Find More Information
To bring yourself up to speed on these and other issues, spend some time looking at sample contracts. Start with simple ones, and then work your way up. Easy terms and conditions for a range of design and illustration projects are available in the Graphic Artists Guild Handbook: Pricing and Ethical Guidelines.

Basic examples can also be found in the paperback Business and Legal Forms for Graphic Designers from Allworth Press.

More complete and comprehensive contract language is available from AIGA, the professional association for design. The AIGA Standard Form of Agreement for Design Services includes recommended terms and conditions for print design, interaction design, and environmental graphics/three-dimensional design projects. (I helped to prepare the latest version with national board member Jim Faris and three intellectual property attorneys.) It's available as booklet number nine in the series Design Business and Ethics. A free PDF can be downloaded at www.aiga.org/content.cfm/designbusinessandethics

Reference information for additional creative disciplines is available from other professional groups. For example, industrial designers should look at the Terms and Conditions Reference for Product Design Consultants published by APDF and IDSA.

Photographers should pick up the paperback ASMP Professional Business Practices in Photography.

Final Thoughts
When you look at sample contract language, particularly the comprehensive documents from AIGA and APDF, you may be tempted to say, "that's too detailed." Be strong—resist the temptation to make it shorter by eliminating everything that's new to you! In many ways, the work that we do as designers has become more complex, yet everyone is still hoping for a shorter contract. This reminds me of a great quote from H.L. Mencken, "For every complex problem there is a simple solution...and it is wrong."

To cover all of the essential issues, the document that you sign is not going to be particularly short. However, you do have the option of negotiating a complete set of terms and conditions just once at the beginning of each new client relationship. Then, future projects can just refer back to it.

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Shel Perkins is a designer, educator and consultant to creative firms. His book Talent Is Not Enough: Business Secrets For Designers (New Riders/Peachpit Press) can be ordered from the TalentIsNotEnough.com site. To contact Shel with questions and comments, please e-mail us at dfm@dynamicgraphics.com.

The general information in this column is not a substitute for personalized advice from an attorney, an insurance agent or an accountant. If you have questions regarding legal, financial or risk management issues, you should seek the services of an appropriate professional.