A modern Designer-Client Agreement. Its loosely based off the AIGA form, but closes some loopholes and trims the fat. Some provisions adapted from DC Toedt's wonderful OnContracts Blog and Common Draft annotated contract form book (www.commondraft.com)
Statement of Work
This Statement of Work (the “SOW”), along with the Terms and Conditions, make up the service agreement (the “Agreement”).
Offer Availability. The terms and prices offered in the Statement of Work will be available to you for 30 days.
[Scope of Work inserted here, including work to be performed, deliverables, and payment schedule]
Terms & Conditions
Designer (“Designer” or “We”)
Designer Email for Notice: [email protected]
"Email for Notice" is important. Legal notices will be sent to and from these emails. Make sure to whitelist the other guy's email.
Client Company (“Client” or “You”)
Client Email for Notice: [email protected]
Professional Standard. Designer will provide the services identified in the Statement of Work. Designer will provide these services in a professional and workmanlike manner, and in accordance with applicable professional standards.
Deliverables. Designer will provide its Deliverables to the Client in professional design formats. These formats may include Adobe Creative Suite files such as Photoshop (.psd) and Indesign (.indd). The Client understands that it may need particular software and expertise to utilize the deliverables. If the Client would like its deliverables in a specific file format, the Client must request to have the format included in the Statement of Work.
A "Change Request" is any request for work outside the scope of the Statement of Work.
If such a request is made, the Designer will notify the Client that it is a Change Request. If the Client still wants to proceed with the Change Request, the Designer will bill the work on a time and materials basis, at the Designer’s standard hourly rate of $100/hr. The Designer may also extend its delivery schedule.
If the Change Request alters the scope of the project by more than 20%, the Designer may submit a new proposal to the Client.
Invoice. The Designer will invoice the Client according to the Statement of Work. Client shall pay all invoices within 15 days of receipt.
Expenses. In addition to Designer’s fees, the Client will be invoiced for Designer’s expenses.
Designer’s travel and lodging expenses will be invoiced to the Client without markup.
Meal expenses will not be invoiced to the Client at all.
Other Expenses incurred by the Designer in performing services to the Client will be invoiced to Client at Designer’s standard mark-up of 20%. Other Expenses include, without limitation, postage, shipping, models, presentation materials, photocopies, equipment rental, photographer’s costs and fees, photography and/or artwork licenses, prototype production costs, talent fees, music licenses, software licenses, online access, Software as a Service, and hosting fees.
Taxes. Client is responsible for paying all applicable taxes, including sales, use and value added taxes.
Late Payment. Overdue balances may be charged a monthly service fee of 1.5% (or the greatest amount allowed by law). The Designer may also charge any attorneys fees and collection costs caused by an overdue balance to the Client.
Timeframe. The Designer will use commercially reasonable efforts to perform the Services within the schedule outlined in the Statement of Work. Designer’s delivery timeframe depends upon the Client’s prompt response to any questions or requests for Client materials.
Designer Agents. The Designer may use third party designers or service providers (“Design Agents”) as independent contractors to provide portions of the Services. The Designer is responsible for Design Agents’ compliance with this Agreement.
Testing & Acceptance. The Designer shall use commercially reasonable efforts to test Deliverables before providing them to the Client.
If the project includes XHTML or HTML markup and CSS templates, the Designer will use HTML5 markup and CSS3 for styling. The Designer will test the markup and CSS in current versions of Safari, Chrome, Firefox, and Internet Explorer. The Designer will not test websites in older browsers, unless specifically identified in the Statement of Work.
The Client shall promptly review all deliverables, and must notify the Designer of any failure to conform to the Statement of Work within 5 business days of receipt. If Designer does not receive a timely notification, the Deliverable will be deemed accepted. The Client’s notification must clearly identify the problems with the Deliverable.
Client Responsibilities. Client must promptly: (a) coordinate any decision-making activities with 3rd parties; (b) provide Client Content in a form suitable for reproduction or incorporation into the Deliverables; and (c) proofread deliverables.
Client Rights in Deliverables.
IP Assignment. Upon completion of the Services and full payment of all invoices, the Designer shall assign IP rights to the Client. These IP rights include all ownership rights, including any copyrights, in any artwork, designs and software created by the Designer and incorporated into a Final Deliverable, except as otherwise noted in this Agreement.
Designer Rights in Deliverables.
Preliminary Works. Designer retains the rights to all Preliminary Works that are not incorporated into a Final Deliverable.
Designer Portfolio. Designer may display the Deliverables in the Designer’s portfolios and websites, and in galleries, design periodicals and other exhibits for the purposes of professional recognition. Likewise, the Designer may publicly describe its role in the Project.
Credit. If the Designer incorporates credits into the Deliverables, any use of the Deliverables shall continue to bear the credits in the same form, size and location. Designer credits will not be incorporated into any logo designed for the Client.
Designer Tools. The Designer may incorporate certain Designer Tools into the Deliverables.
“Designer Tools” means all design tools developed or utilized by Designer in performing the Services, including without limitation: pre-existing and newly developed software, Web authoring tools, type fonts, and application tools.
In the event Designer Tools are incorporated into any Final Deliverable, then Designer grants Client a royalty-free, perpetual, worldwide, non-exclusive license to use the Designer Tools to the extent necessary to use the Final Deliverables. Designer retains all other rights in the Designer Tools.
What it means: Do you have any snippets of code or fonts that you incorporate into multiple projects? These are your Design Tools. Just because they are in some client's project doesn't mean that client owns the tools. Instead, you are just giving the client permission to continue using the tools.
Designer and Client Relationship
Non-Exclusive. This Agreement does not create an exclusive relationship, and is not intended to create a fiduciary relationship.
Deliverables are not a work for hire under Copyright Law. All rights granted to Client are contractual in nature and wholly defned by this Agreement.
No Assignment. Neither party may assign or encumber its rights or obligations under this Agreement or permit the rights or obligations to be transferred, assigned or encumbered by operation of law or otherwise, without the prior written consent of the other party. Any such attempted assignment will be void ab initio. Consent is not required for a disposition of substantially all assets of the assigning party’s business.
What it Means: You are doing work for this particular client. They can’t replace themselves with a different client. But, if some Big Fish buys the client's entire company, you have to continue the project for the Big Fish.
If Negotiated: The “all assets” exception should make it neutral enough for most lawyers.
"Void Ab Initio" is just legal BS meaning "void from the start." Its stupid, but some judges still require this magic language.
Confidential Information. The parties may receive Confidential Information from each other. Confidential Information includes proprietary technical and business information, Preliminary Works, and any other information marked “Confidential.”
Use. Each party shall maintain Confidential Information in strict confidence, and shall not use Confidential Information except (a) as necessary to perform its obligations under the Agreement, or (b) as required by a court or governmental authority.
Exception. Confidential Information does not include (a) any information that is in the public domain, (b) becomes publicly known through no fault of the receiving party, or (c) is otherwise known by the receiving party before obtaining access to it under this Agreement or properly received from a third party without an obligation of confidentiality.
Six-Month Non-Solicit. During the term of this Agreement, and for a period of 6 months after its expiration, Client shall not Solicit any of Designer’s employees or Design Agents (collectively, “Designer Employee”). “Solicit” is defined to include: solicit, recruit, engage, or otherwise employ or retain, on a full-time, part-time, consulting, work-for-hire, or any other basis.
Agency Commission. In the event of such Solicitation, Client shall pay Designer an agency commission of 25% of the Designer Employee’s starting salary with Client, or if hired as a contractor, 25% of the total contract fees paid to Designer Employee during the first year following the Solicitation. The agency commission is due within 30 days of the Designer Employee’s start date with Client.
Discretionary Termination, Upon Notice. Either party may terminate this agreement in its business discretion upon sufficient advance notice. The amount of notice required is ¼ of the estimated project duration. For example, if the Statement of Work estimates the services will take 80 days from kick-off to final delivery, advance notice of at least 20 days will be sufficient for discretionary termination.
Discretionary Termination by Client. IF: Client uses this discretionary termination provision, THEN: Designer will retain all payments already made as of the notification date, and Client shall pay Designer (a) for all expenses incurred as of the date of notification of termination, (b) an early termination fee equal to 25% of the total project fee, and (c) No IP rights will be transferred.
What it Means: If Client ends the project, he has to pay a 25% termination fee. The Designer keeps the IP rights.
If Negotiated: You can change this at your business discretion. But think about how you would react if a client took your half-finished product and used another designer to finish it.
Discretionary Termination by Designer. IF: Designer uses this discretionary termination provision, THEN: (a) Designer will retain a prorated portion of the fees and costs for services performed up to the termination date, (b) Designer will assist Client in transferring the project to a new designer, and (c) Designer will assign sufficient IP rights to Client to allow Client to continue the project.
Termination for Bankruptcy. Subject to any restrictions imposed by law, either party may immediately terminate this Agreement, if the other party either: (1) ceases to do business in the normal course; (2) becomes insolvent; (3) admits in writing its inability to meet its debts or other obligations as they become due; (4) makes a general assignment for the benefit of creditors; (5) has a receiver appointed for its business or assets; (6) files a voluntary petition for protection under the bankruptcy laws; (7) becomes the subject of an involuntary petition under the bankruptcy laws that is not dismissed within 60 days.
Termination for Breach. If a material breach of this Agreement is not cured within 10 business days after a party’s receiving notice of the breach, then the non-breaching party may terminate this Agreement immediately upon notice.
Termination Procedure. Upon expiration or termination of this Agreement: (a) each party shall return (or, at the disclosing party’s request, destroy) the Confidential Information of the other party, and (b) other than as expressly provided in this Agreement, all rights and obligations of each party under this Agreement, exclusive of the Services, shall survive.
Client represents and warrants to Designer that:
- Client owns sufficient right, title, and interest in the Client Content to permit Designer’s use of the Client Content in performing the Services,
- To the best of Client’s knowledge, Designer’s use of the Client Content will not infringe the rights of any third party,
- Client shall comply with the terms and conditions of any licensing agreements which govern the use of Third Party Materials, and
- Client shall comply with all laws and regulations governing the Services and Deliverables.
Designer represents and warrants to Client that:
- The Final Deliverables will be the Designer’s original creative work, except that Designer may incorporate Client Content, work from its Designer Agents and third party material (for example, stock photos, or Software as a Service).
- For any Final Deliverable that includes the work of independent contractors or third party material, Designer shall secure sufficient rights for Client to use the Final Deliverables for their intended purpose.
- To the best of Designer’s knowledge, the final Deliverables will not infringe upon the IP rights of any third party. However, Designer will not be conducting any type of IP clearance search (for example, Designer will not be conducting a copyright, trademark, patent or design patent clearance search).
LIMITATION OF LIABILITY
The services and the work product of the Designer are sold “as is.” In all circumstances, the Designer’s maximum liability to Client for damages for any and all causes whatsoever, and Client’s maximum remedy, regardless of the form of action, whether in contract, tort or otherwise, shall be limited to Designer’s net profit.
In no event shall Designer be liable for any lost data or content, lost profits, business interruption or for any indirect, incidental, special, consequential, exemplary or punitive damages arising out of or relating to the materials or the services provided by Designer, even if Designer has been advised of the possibility of such damages, and notwithstanding the failure of essential purpose of any limited remedy.
Except for the express representations and warranties stated in this agreement, Designer makes no warranties whatsoever. Designer explicitly disclaims any other warranties of any kind, either express or implied, including but not limited to warranties of merchantability or fitness for a particular purpose or compliance with laws or government rules or regulations applicable to the project.
What it Means: If Client sues you, the most he can win is the amount of your net profits (with a few exceptions).
If Negotiated: A good compromise may be “net revenue” instead of “net profits.” If they want to remove the limit entirely, tell them: “Objective Subject is a design agency, not an insurance company.”
Either party may invoke Force Majeure to excuse the failure of its timely performance, if such failure was caused by: fire; flood; hurricane, tornado, or other severe storm; earthquake; act of war; sabotage; terrorism; riot; interruption or failure of electrical or telecommunications service (for example, Internet failures); or failure of suppliers, subcontractors, and carriers to substantially meet their performance obligations.
Failure to make a payment may only be considered a Force Majeure event if caused by an interruption in a third-party payment systems that otherwise qualifies as a force-majeure event.
What it Means: Since Client is the only person who has to pay anything, this is directed at the Client. It limits their Force Majeure options.
If Negotiated: Probably not a big deal to remove this clause, but it would give Client more wiggle room to delay your payment due to one of the listed reasons.
A party invoking force majeure to excuse its failure of timely performance must show that the force-majeure event(s) and their relevant effects (i) were beyond the invoking party’s reasonable control and (ii) could not have been avoided through the exercise of due care by the invoking party.
What it Means: If a 3rd party sues your Client because of something YOU did (like, you used some stock photos without permission), you will have to pay for their defense lawyers and any money the client loses in the lawsuit (and vice versa). The indemnification clause goes on to provide a set of instructions for common litigation scenarios. If Negotiated: The instructions should be helpful and non-controversial. You can remove them, but without instructions in the contract, you may have to argue about the proper procedure in Court ($$$).
Applicability. This indemnification clause governs all obligations arising under this Agreement (if any) that require a party (the “Indemnifying Party”) to defend an individual or organization (a “Protected Person”) against a claim, for example, a claim made by a third party.
Indemnification. IF: A third party makes a claim that, if finally successful, would establish a breach of a representation or warranty of this Agreement; THEN: The party who made the representation or warranty will: (i) defend the Protected Person against the claim (as defined below), and (ii) indemnify each Protected Person against any monetary award entered on the claim (as defined below).
Indemnification Against Damage Awards. (a) The Indemnifying Party will indemnify the Protected Person against all monetary awards resulting from a final judgment or award from which no further appeal is taken or possible. (b) Such monetary awards include, for example, damages, penalties, interest, and attorneys-fee awards.
Defense Obligation. (a) If the Protected Person requests legal defense, the Indemnifying Party will provide a competent defense against the claim. (b) IF: A Protected Person fails to timely request a defense; THEN: The Indemnifying Party will not be responsible for any harm to the Protected Person that may result from the delay. (c) If the Protected Person does not request a defense against the claim, the Indemnifying Party may elect, its business discretion, to provide a defense anyway. (d) For the avoidance of doubt, the defense obligation of this section applies, without limitation, to any claim brought in a judicial, arbitration, administrative, or other proceeding, including for example any relevant appellate proceedings in which the claim is at issue.
Control of the Defense. IF: The Indemnifying Party provides a defense against an indemnified claim; THEN: (a) The Indemnifying Party is entitled to control the defense of the claim. (b) The Protected Person must provide reasonable cooperation in the defense of the claim; the Indemnifying Party will reimburse the Protected Person for reasonable out-of-pocket expenses actually incurred in doing so. (c) The Protected Person must not make any non-factual admission concerning the claim without the Indemnifying Party’s consent. (d) The Protected Person must not waive any defense to the claim without the Indemnifying Party’s consent.
Control of Settlement. (a) The Indemnifying Party has discretion to settle the claim on behalf of the Protected Person, PROVIDED THAT the settlement terms do not (i) impose any obligation or prohibition on the Protected Person, nor (ii) include any admission by the Protected Person. (b) Any other settlement of the claim by the Indemnifying Party requires the Protected Person’s prior written consent, not to be unreasonably withheld. (c) If the Protected Person settles the claim without the Indemnifying Party’s prior written consent (not to be unreasonably withheld), then the Indemnifying Party will have no liability to the Protected Person in connection with the settlement.
Assumption of Control by Protected Person. A Protected Person may assume control of its defense. IF: A Protected Person does so; AND: The Indemnifying Party has previously tendered performance of its obligation to provide a defense; THEN: The Indemnifying Party will have no further responsibility or liability to the Protected Person (including for example defense and/or indemnity liability) in respect of the claim in question.
All notices shall be sent by email. Permissible addresses for notice include those stated in this Agreement and any other address reasonably communicated.
A notice that is sent by email but is not read by the addressee is nevertheless effective if, but only if, it has been (a) sent from an email account that has been designated for notice and (b) delivered to an email account that has been designated for notice. Email accounts designated for notice are identified at the top of this Agreement, and may be amended only by written notice.
What it Means: Legal notices can be sent by email to the address at the top of this agreement. The notice will be effective, even if you never read it, so be sure to whitelist the client’s notice email account.
If Negotiated: Some lawyers fear email. They may try to negotiate this. You can cut it. The only consequence is that you will have to send some certified letters instead of emails.
Early Neutral Evaluation. At the request of either party, the parties will submit any dispute between them, arising out of or relating to this Agreement or any transaction or relationship arising from it, to nonbinding early neutral evaluation, in NYC, in accordance with the Early Neutral Evaluation procedures of the American Arbitration Association.
What it Means: If there is some legal drama, you and the client will consult with a neutral 3rd lawyer (not your lawyer, not the clients lawyer). This lawyer will give a non-binding opinion, and (hopefully) cooler heads will prevail, saving everyone from the major headache of a lawsuit.
If Negotiated: Many lawyers are unfamiliar with Early Neutral Evaluation. Its not a big deal to remove it.
Arbitration. At the request of either party, the parties will submit any dispute between them, arising out of or relating to this Agreement or any transaction or relationship arising from it, to binding arbitration in NYC, through the American Arbitration Association. The prevailing party in any dispute resolved by arbitration or litigation will be entitled to recover its costs and attorneys’ fees.
What it Means: Instead of going to court, you will go to a private dispute resolution center (much faster and cheaper than court). The determination will still be binding.
If Negotiated: This shouldn’t be controversial.
Equitable Relief. If the Client uses the deliverables in any manner not permitted by this agreement, the Designer will be entitled to equitable relief. The Client acknowledges that the Designer will have no adequate remedy at law (that is, money damages for breach of contract will be insufficient compensation). The Client hereby agrees that the Designer shall be entitled to equitable relief by way of temporary restraining order, and preliminary and permanent injunction, and such other and further relief at law or equity as any arbitrator or court of competent jurisdiction may deem just and proper, in addition to any other remedies.
What it Means: If Client doesn’t pay, you can have a judge order the Client to stop using your website or identity system. This is a bazooka. Without it, you are limited to “contract damages” (peashooter).
If Negotiated: Sophisticated clients will want to get rid of this term. Use your own judgment. It’s important, but don’t miss out on a lucrative project with a trustworthy client just because you can’t get the equitable relief clause.
Jurisdiction. The parties irrevocably consent to the jurisdiction of the state and federal courts located in New York County. The parties hereby waive any jurisdictional or venue defenses and consent to service of process by certified mail.
Governing Law. This Agreement will governed by the laws of the state of New York without regard to its conflict or choice of law rules.
Design Terminology: Any design terminology in the Statement of Work is defined according to standard design industry usage. Any dispute as to the meaning or scope of design terminology will be determined in good faith by Designer.
What it Means: You get to interpret the meaning of design terms (like how many slides are included a standard power point presentation). Your interpretation has to be in “good faith” and according to “standard design industry usage.”
If negotiated: Sophisticated clients might want to change “determined in good faith” to “reasonably determined.” These sound similar, but in good faith is more favorable to you.
IF / THEN Construction. Use of capitalized “IF:” and “THEN:” in a sentence is intended only enhance readability. It has no special meaning apart from its lower case meaning.
What it Means: This is new ground for contracts, and makes them look a little like software code. I love it, but some lawyers will be scared and confused. If it becomes a recurring problem, I will change it back to standard language at no charge.
Modification & Waiver. Any modification of this Agreement must be in writing. Failure by either party to enforce any right or seek to remedy any breach under this Agreement shall not be construed as a waiver of such rights nor shall a waiver by either party of default in one or more instances be construed as constituting a continuing waiver or as a waiver of any other breach.
Severability. If any provision of this Agreement is held invalid or unenforceable, the remainder of this Agreement will remain in full force and effect.
What it Means: The entire contract can’t be invalidated just because one line of the contract is invalid.
Mutual Drafting. Any ambiguity or inconsistency in this Agreement is to be resolved in accordance with the most reasonable construction and not strictly for or against either party by virtue of that party’s author-ship.
What it Means: By default, ambiguous terms are interpreted against the person who drafted the contract (if a term could have two meanings, a judge would pick the meaning most favorable to the Client). The Mutual Drafting clause avoids that default.
Headings. Section headings are provided for convenience only and do not affect the meaning of any terms.
Integration. This Agreement comprises the entire understanding of the parties and supersedes all prior agreement and understandings.
What it Means: This is the entire contract. All previous discussions were just negotiations, and have no effect on anyone’s actual rights and responsibilities.
Client Content - all materials, information, photography, writings and other creative content provided by the Client for use in the preparation of and/or incorporation in the Deliverables.
Third Party Materials – works that are incorporated into the Final Deliverables, but not created by Designer or owned by Client. Third Party Materials includes, for example, stock photography or illustration.
Preliminary Works - all artwork including, but not limited to, concepts, sketches, visual presentations, or other alternate or preliminary designs and documents developed by Designer and which may or may not be shown and or delivered to Client for consideration but do not form part of the Final Art.
Deliverables - the services and work product specified in the Statement of Work to be delivered by Designer to Client, in the form and media specified in the Proposal.
Final Deliverables - the final versions of Deliverables provided by Designer and accepted by Client.
Each signatory represents that it has the full authority to enter into this Agreement and to bind her or his respective party to all of the terms and conditions of this Agreement.