Contracts are things that are supposed to make sense. Seriously!
There is a method to the madness and once you figure it out, reading contracts and understanding them gets a whole lot easier. Here is an introductory overview of the anatomy of a contract.
I had a great time at Stumptown Comics Fest this year! There were tons of cool people, a bunch of great comics and I tricked George Rohac into doing a panel with me.
On the off chance you aren’t familiar with Mr. Rohac, George is the Operations Director at Oni Press & one of the hardest working men in comics. George has the comics business in his very marrow and he’s ridiculously good at what he does.
We discussed four skills we think are absolutely essential if you want to succeed in the publishing world; they’re also important and helpful if you’re a freelancer. If you read the blog regularly, you might find them a tad familiar.
It’s all nice and good to be able to negotiate when there is a contract, a fancy piece of paper that an attorney’s been paid to stick “wheretofors” and “hereafters” all over. But what happens when you don’t have a written contract? What happens when it’s a conversation over coffee and a handshake?
- Is there a contract even if it’s not written? Maybe. A contract requires three things: an offer, an acceptance of that offer and consideration. No, not “pleases” or “thank yous.” In this context consideration means that one party is giving the other party something of value in exchange for their promise. When you buy a car, you offer to buy the car for a particular price, the seller accepts your offer and promises to sell the car to you for that price, and the money you give the seller is the consideration. If you’ve got those three things, you’ve got a contract.
- How do you negotiate something that’s not written out? You negotiate unwritten agreements all the time, you likely just don’t think of them that way. Last night choosing where to go to dinner with friends? That was a negotiation. You stated the things that were most important to you, time, type of food and area of town, and then used those parameters to figure out where to go. Do the same thing when hashing out an oral agreement with a business partner: explicitly state the things that are most important to you, rate, deadlines and payment terms, perhaps, and then use those things to help define the conversation.
- Resist the urge to take positions and tick off decisions along the way. An interest is “I want to eat” a position is “I want to eat dinner at 7pm.” Resist the urge to take positions when negotiating orally. Define your parameters of the negotiation with your interests, not your positions. This gives you more room to be creative when putting the deal together (it is easier to fulfill an interest than it is to meet a position). You also don’t want to agree to smaller things along the way during a negotiation. Everything you agree to during a negotiation is one more thing you cannot use creatively to make the deal better later on. For instance, if I agree early on that the due date for the project is the end of the month, that decision becomes a pivot point that everything else in the negotiation now revolves around. That might be OK if that thing is really really really really important to me, but otherwise it’s too restrictive to be helpful.
- After the handshake, and before you start working, say “thank you.” My friend Kohel Haver has an excellent suggestion for artists who regularly engage in handshake deals: send Thank You notes. And in that Thank You note summarize what you’ve agreed to. The whole reason we write out contracts is so we have some sense of what the parties were thinking when they made their agreement. A quick note summarizing what you’re going to do with one another is a fantastic way of recording what you were thinking at the time. Plus, if the other person notices something in the note that they didn’t think was part of your deal, they can talk to you now, before the work starts, rather than later when things are messy.
Speaking of Kohel, we’ll be teaching a workshop on contract law & negotiation for artists this Saturday at the Stumptown Comics Fest. The workshop starts at noon in the Idaho room and will last about two hours; the first hour is all about the joys of contracts, the second is focused on negotiation. If you are at all serious about making art your career, it promises to be two hours well spent.
Congratulations! You just got a good paying gig that’s going to get you through the next couple months. It’s a company that pays on time and work that’s creatively interesting. A badly needed signing bonus is yours as soon as you return the contract.
Because you read this blog, you’re reading through the contract. You find a section that seems to be written in a foreign language: “Indemnification.” You don’t really understand what it means, but it looks intense.
You wouldn’t be the first person to skim it over, hope it never, ever applies to you, and sign the contract anyway. But, since you’re not just anyone, here’s a bit more information about what that section means. Hopefully you can use this info to have better conversations with your clients about your contracts.
What is “Indemnification”?
Indemnification is the pinky swear of contracts. It is the promise that the promises you’ve made are true.
Let’s say I hire you to draw Daffy Duck. Central to our agreement that you will draw Daffy Duck is the promise that you can draw Daffy Duck. If I am concerned that I might lose money or be sued if you cannot draw Daffy Duck, I might ask that you indemnify me from that harm.
What does that mean?
It means if someone sues me, you’ll step in and be sued instead.
It means if someone fines me, you’ll step in and pay the fee instead.
It means if I lose money that is related to your inability to draw Daffy Duck, you’ll pay me for whatever loss I incur.
Why have indemnification in contracts?
Indemnification is a way of sharing the risk in a contract.
For the person being indemnified, it is a way for them to be protected against a risk they might not be aware of.
For the person doing the indemnifying, it is a way of saying, I can promise these things for certain, but nothing more.
In freelance art contracts, you’ll often see indemnification regarding the artist’s promise that the work they’ll produce is original and that they have the right to sell the rights to that work. This is extremely important for the buyer of the work because they likely want to use the work they’re buying.
Take the situation of you and me & that image of Daffy Duck. I want to use what you make for me in my business. I think you are the original creator of that image and part of our contract will be that you are selling or licensing me the right to use that image. Part of the contract I give you says that you’ll indemnify me for any intellectual property violations I incur from using that image.
But you copied that image and you can’t sell me the right to use it; only Warner Brothers could do that. If you were to sign the contract without reading it, as soon as the Brothers Warner come knocking on my door for violating their copyright, I’m going to send them your way and you’ll be the one responsible for paying any fines.
Now let’s say I later use that image of Daffy Duck on a huge poorly constructed plywood sign outside of my business. Not shockingly, the sign comes loose and harms someone coming into my business. They sue me for their medical costs. I cannot come after you for indemnification of that harm. The sign falling on the individual has nothing to do with intellectual property; you are not responsible for it under our contract.
How should you deal with indemnification in a contract?
The most important thing to do is to understand what promises you are making. The second most important? Only promise what you can.
Understanding what you’re promising means that you can identify what situations or events might call the indemnification clause into play. Are you promising that the work you’re producing is original or that it can be used for a particular purpose? Is there a time limit to your promise? If you cannot easily identify what you are indemnifying, don’t sign the contract. Point out the issue to your client and ask, “What are you trying to protect against? It’s not clear to me and I want to make sure I can back this up if you need me to.”
Which leads to the second issue: only promise what you can. Frankly, as the artist, you are in the best position to know if the work you are providing is original or copied from someone else. It’s fair that you be responsible for that promise. But it’s not fair to ask you to promise that no matter how the client decides to use the work, they’ll be home free.
Tips, Tricks & other Ideas
• Instead of “Indemnification” you might see a section entitled “Warranties.” Though slightly different from a legal perspective, it’s aiming toward the same end: protection if promises are broken.
• Make it easy to figure out what you’re indemnifying the client for by listing those promises in the same section; then limit the indemnification only to those promises. Here’s an example I particularly like:
“Artist represents and warrants that (a) the Work is original work created by Artist that has not been published elsewhere, (b) Artist has full right and authority to grant all Rights granted to [Client] in this Agreement , and (c) the Work does not infringe the copyrights, trademarks or other rights of another person or entity. Artist will indemnify and hold harmless [Client] against any damages sustained or expenses incurred (including reasonable attorneys’ fees) in connection with any claim, action or proceeding based on an actual or alleged violation of these representations and warranties.”
• Beware the “now or in the future” language. It’s not always bad, but it can be. If it implies that you can stand by your promise “now and in the future,” that’s aces. If it implies that you’ll protect against something that no one knows exists right now, it’s not so great.
Indemnity is pretty awesome, when you think about it: an oath that my promises are true. To me, it’s a very honorable-Three-Musketeers-ish portion of a contract. You might not always have the luxury of negotiating it in every contract you sign, but that doesn’t mean you can’t at least understand the promises you’re making & risks you’re agreeing to.