Contracts 101 - Resource Guide for Artists

[aeshnidae]

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In another thread (about pricing), I offered to put together a little contract primer for those of you who are taking commissions or doing freelance work. I tried to post this as a PDF but the site told me that my .PNG was in the wrong format. I'll try again later. In the meantime, here's a Contracts 101 that I put together based on my experience as a contracts lawyer who does pro bono work for artists. Moderators - If this is too long, or in the wrong place, or shouldn't be here at all, please move, delete, or tell me to move/delete as you see fit.

CONTRACTS 101

This information is provided for informational purposes only and does not constitute legal advice. (Sorry, gotta put that in for professional licensing reasons). Also, this post may not be useful outside the United States (or in Louisiana, you guys insist on your French continental law system). The laws of your particularly state may provide you with additional protections. California, for example, has laws designed to protect artists.

GENERAL INFO ABOUT CONTRACTS
It’s a good idea to have a contract, but a poorly drafted contract is useless (or worse than useless). A contract should clearly lay out the rights and responsibilities of each party. There should be no ambiguity, no kicking the can down the road. Write in plain English. Use section numbers and headings (called captions) so that you and others are literally on the same page when reviewing the contract. Define any industry-specific terms.

Keep the contract as concise as possible (says the lawyer who just wrote 7 pages of this stuff for my post). If you are being commissioned for commercial purposes, especially if the other party is a company, your contract should include more terms than if you’re drawing a map for someone’s personal D&D game.

If your contract is with a company, the company will probably tell you it’s non-negotiable. This is not true. In contracts between private parties, hardly anything is non-negotiable. If you think the company might be trying to screw you, they probably are, so get some money upfront. If a company’s contract is confusing or the company has breached the contract, consider getting in touch with attorneys who provide free or greatly reduced legal services to artists. The Washington, DC area has one (https://waladc.org/legal-services); I assume other areas do, too.

If your contract is more than 1 page, consider including a line on each page for the client to initial (usually this is bottom right or bottom left, in the footer). This way you can prove that the client has seen each page.

If you have a large blank spot on your page, perhaps because you’ve used a page break to move on to a different section or insert an image, include the following statement directly above the blank space: Remainder of page intentionally left blank. This will keep unscrupulous people from sneaking in extra terms.

Words that have a special meaning should be defined at their first use. For instance, you want to define your client so that you can refer to them as “Client” throughout the contract. You define a term by including it in quotation marks in parentheses. For example: This agreement (the “Contract”) is entered into by John Doe ( “Cartographer”) and Jane Roe ( “Client”). Cartographer agrees to provide, and Client agrees to pay for, one (1) commissioned color map printable at 11x17 inches (the “Deliverable”). Once you’ve defined a word, be consistent about using it.

DEFINITIONS OF COMMON CONTRACT TERMS

Arbitration: An out-of-court procedure for resolving disputes in which a neutral third party (the arbitrator) hears evidence and makes a decision. Arbitration is an alternative to a court trial and is supposed to be less formal and less expensive, but in practice it’s almost the same as a court trial but you have fewer rights. In binding arbitration, the arbitrator’s decision is the end of the line; you cannot appeal it.

Assign: To transfer all rights and responsibilities to another party. Basically, a complete sale of an item (in the case, a map) and all rights relating to it (copyright).

Choice of Law (aka Governing Law): The body of law that will apply to your contract. Typically you want this to be the laws of wherever you live (e.g., “this Contract shall be interpreted according to the laws of the State of California without reference to its conflicts of laws principles”). This term is often lumped together with Jurisdiction and Venue.

Contract: A legally binding agreement involving two or more people or businesses (called parties) that sets forth what the parties will or will not do. If your contract is for more than $500, you need to have it in writing in order to enforce it. Keep in mind that contracts have many different names – Memorandum of Understanding, Letter of Agreement, Task Order, etc. – but they are still contracts.

Copyright: A collection of rights granted to the author of a creative work, including the right to make copies of the work, authorize others to make copies, make derivative works, sell and market the work, and perform the work. Copyright springs into existence the moment you create your work (in legal terms, when the work leaves your brain and becomes “fixed in a tangible medium of expression”). You do not have to register your copyright with the US Copyright Office, but if you want you can do that here: https://www.copyright.gov/registration/.

Effective Date: The day a contract begins and can be enforced. Usually this is the date of the last signature but it can be whatever you’d like – 7 calendar days after the last signature, upon receipt of the first payment, whatever.

Force Majeure: A contract provision that excuses one or both parties from performing the contract if performance rendered impractical or impossible by some unforeseen event such as illness, fire, flood, “Acts of God,” etc. (As a side note, lawyers use “Acts of God” as an umbrella term for unforeseen natural occurrences, like earthquakes. It’s a way to encompass everything that could go wrong on account of nature.)

Indemnification: A guarantee against a loss or damage that another might suffer. In practice, indemnification is an agreement to step into the shoes of the other party if they are sued. If you indemnify John for a certain purpose, and Susan sues John for that purpose, in practice Susan is suing you, and you must pay for an attorney and pay any judgment.

Intellectual Property (“IP”): Property created by the human mind, such as written works, art, inventions, trade secrets, and trademarks. Intellectual property is typically protected by patent, copyright, trademark, and trade secret laws. IP is distinct from personal property (cars, TVs, chairs, etc.) and real property (land and buildings).

Intellectual Property Indemnity: A guarantee that if your work violates the IP rights of another person, you will (1) fix the problem (typically by altering your work so that it does not infringe, purchasing the right for your client to use the infringing work, or cancelling the contract and returning the client’s money); and (2) indemnify the client if the client gets sued for infringement. You can also split this in two – agree not to infringe but do not agree to indemnify if your work does wind up infringing on someone else’s IP. This would mean you would have to fix the problem, but you would not step into your client’s shoes if he/she is sued.

Hold Harmless: Often lumped in with indemnification, this is actually a promise by one party not to sue the other party. It’s a party-to-the-contract thing, whereas indemnification involves some third party unrelated to the contract.

Jurisdiction: The authority of a court to hear a case. In a contract, you can agree to the jurisdiction and venue of a particular court. If you live in California, you probably don’t want to agree to New York jurisdiction and venue, because you’ll have to travel to New York to enforce or defend the contract.

License: A contract (or contract clause) giving written permission, for some period of time, to someone to exploit your intellectual property (here, your maps and related creative works). The party who owns the work and is granting the license is the licensor; the party licensing the work so they can use it is the licensee. A license can be exclusive (right to use the work is limited to a single licensee) or non-exclusive (you can license your map to multiple licensees). A license can be for commercial purposes (the licensee intends to make money from your map) or non-commercial purposes (the licensee is using your map for their personal D&D game or to hang on their wall, etc.). A license can also include the ability to sublicense, which means your client can further license your work downstream without your prior permission and without paying you anything extra (e.g., you license to ABC Company, which then sublicenses to Wizards of the Coast).

Mediation: Like arbitration, but less formal and not legally binding.

Termination for Cause: A clause that allows a party to terminate the Contract if the other party breached it. Usually there is a cure period built in, where the non-breaching party gives the breaching party 30 days to “cure” the breach.

Termination for Convenience: One or both of the parties wants to terminate but not because the other party has breached the agreement. They just don’t feel like having the contract anymore.

Venue: The appropriation location for a trial. This is linked to jurisdiction and can be used to narrow jurisdiction. Perhaps you agree to New York law, but you live in NYC so you don’t want to travel to Buffalo if you have to sue, or you get sued. You can limit venue to courts in NYC.

Warranty: A promise or assurance. Warranties usually require that you correct any defects in your work and cover the cost of doing so. These are tricky because warranties can be express (you’ve included them in the body of your contract), implied by the circumstances, or implied by law. An Implied Warranty of Merchantability is a warranty implied by law that your map is fit for the ordinary purpose for which it is used. You can specifically exclude this by stating in the contract that you disclaim warranties of merchantability and fitness for a particular purpose. An Implied Warranty of Non-Infringement is another warranty implied by law and promises that your map does not infringe on the intellectual property of another party (e.g., you didn’t just steal that map from someone else and sell it to your client). You can disclaim this warranty, too (you can infringe on someone’s IP unintentionally, so it’s not considered sketchy to disclaim this warranty).