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Party of the First Part
Or, how do contracts really work?

by Shel Perkins

Federal statutes can also override various things that you’ve nego­tiated with your client. This is often the case with copyright ownership. Your client might ask for a creative project to be clas­sified as a “work for hire” or “work made for hire.” This is a phrase from US copyright law. It refers to original work made by an employee within the scope of his or her job, in which copyright ownership automatically belongs to the employer. It can also refer to original work made by an independent contractor or design firm, but only under certain limited conditions that are explained in the law. Even if you and your client agree in writing that the project will be a work for hire, the court will override that portion of your agreement if the project doesn’t meet the legal criteria.

The second option for the client is to ask you for a full “assignment” of all rights—meaning that ownership would be transferred outright. US copyright law specifies that this cannot be done with an oral agreement. Assignment of copyright ownership must be in writing, and any assignment of rights can be terminated after thirty-five years.

The third option for copyright, of course, is for you to negotiate a license that allows the client to use the work in a more limited way. If that’s your situation, your contract should go into detail about the scope and duration of that license.

If you’ve been asked to produce certain types of deliverables, other federal requirements may come into play as well. For example, the Americans with Disabilities Act (ADA) contains accessibility require­ments for physical spaces (for example, this would be relevant if you’re working on exhibits or branded environments) and Section 508 of the Workforce Investment Act of 1998 contains accessibility standards for electronic products and services. These legal require­ments would apply whether you mention them in your contract or not.


COURT CASES
If you watch a lot of prime-time dramas on television, you might think all court cases involve forensic evidence and end with some­one going to prison. Those are depictions of criminal cases. If you become involved in a lawsuit over a design contract, it will be a civil case. There are big differences between the two categories.

A criminal case is a proceeding by the government against a party. It’s brought by a “prosecutor” (a government attorney) who files charges accusing someone of violating the law by committing a statutory crime, such as robbery or murder. The accused is the “defendant.” In a criminal case, the prosecutor is responsible for proving the charges. The burden of proof is expressed in the phrase “beyond a reasonable doubt” (which, in practice, means close to 100 percent certainty). At the end of the trial, the defendant is either found “guilty” (convicted) or “not guilty” (acquitted). Guilt brings punishment. Depending on the severity of the crime, punishment might include a fine paid to the government and/or incarceration (or, in rare instances, execution). Again, all of this makes great television, but with any luck you’ll never experience it in real life!

Civil cases are quite different. They are disputes between private parties, whether individuals or businesses. The dispute leads to a lawsuit, which is a civil action (that is to say it’s non-criminal). A “plaintiff” (the party initiating the lawsuit) files a complaint against a “defendant” (the party being sued). The complaint will include one or more claims that the defendant caused some injury or damage to the plaintiff. In designer/client disputes, a common claim is “breach of contract,” which is defined as any failure, without legal justification, to perform as promised in a contract.

In civil cases, the burden of proof is lower than in criminal cases. In most civil cases, the decision must be based on the “preponderance of the evidence” (meaning higher than 50 percent probability). The court will decide in favor of the party whose evidence is more convincing. The decision is called the “judgment”—there is no reference to guilt. Instead, the defendant is found “liable” or “not liable.” If you are found liable, it means that you’re legally responsible for the damages claimed by the plaintiff. The court will then impose a “remedy,” to solve the problem. It may require specific per­formance (such as ordering you to finish the project). It may grant an injunction (for example, to prevent your client from using your work), and/or it may impose the payment of damages, meaning an amount of money the defendant is ordered to pay to the plaintiff to cover actual losses. Punitive damages are usually not awarded in civil cases for contract disputes.

GUIDANCE FOR THE COURTS
In sorting out the issues in your case, the court will follow a clear process. It starts by determining the facts. Then it applies the relevant statutes and precedents. At that point in the process, if unresolved issues remain, the court might have to interpret the agreement for details that were not specified. If you and your client did not have a written contract, or if your contract was vague, the court might have to fill in some blanks. On design projects, those details could include things like payment terms, or change orders, or ownership of digital files. To move forward, the court can turn to these three additional forms of guidance:

1. “Course of dealing”
How did the parties deal with each other under prior agree­ments? If you had a pattern of previous conduct before entering into the current agreement, the court may require you to follow that pattern.

2. “Course of performing”
How have the parties acted in performing the current agree­ment? If there’s no history of working together on past projects, the court will focus on the current one. Was a pattern of conduct established after you entered into this contract?

3. “Usage of trade”
How do similar parties usually act? Different industries have different standard practices. The legal expression for this is “usage of trade”—common business understandings and practices that are well established and regularly observed within a particular category of companies. The court may require you to behave the way that similar firms behave.

For creative professionals, usage of trade is an important issue. Design firms and advertising agencies have different standard practices (and, in a previous column, we looked at the evolving standards for motion design) [Business, January/February 2012]. As a guide for their members, many professional organizations publish model contracts. One example is the AIGA Standard Form of Agreement for Design Services, which is available as a free PDF from www.aiga.org.

GET SMART
If you’re a designer who tries to avoid contracts, wise up! Since it’s likely that you’re already in a legally-binding agreement, why not make it a good one? Spend time studying model contracts from design organizations to come up to speed on the issues involved. You’ll see that good contracts are not adversarial or one-sided. They are structured to protect everyone’s interests and be mutually beneficial.

Next, focus in on the model contract that relates most directly to your work, and then meet with your attorney to customize it. The model may seem a bit long because it’s trying to be comprehensive. Your attorney can tailor it to your situation. The goal is for you to have a template to use as the starting point for future negotiations with clients. When you bring a good contract to the table, it strengthens your position as an experienced professional. It sets ground rules and manages expectations. It can lead to more respect from the client and a higher perceived value for your services.

Trying to avoid contracts and hoping for the best is just wishful thinking. It’s going to get you in trouble, and when you land in court you’ll find that ignorance of the law is no excuse. ca

Author’s note: This article provides information about the law to help designers safely cope with their own legal needs. However, legal infor­mation is not the same as legal advice—the application of law to an individual’s specific circumstances. Although care has been taken to make sure that this information is accurate, it is recommended that you consult a lawyer if you want professional assurance that this information, and your interpretation of it, is appropriate to your particular situation.
http://image.commarts.com/Images1/1/3/0/2/203106_54_0_MTA4ODU4ODM0LTE2MDAxMDUyMzM.jpgShel Perkins
Shel Perkins (contact@shelperkins.com) is a graphic designer, management consultant and educator. The revised and expanded second edition of his book Talent Is Not Enough: Business Secrets For Designers is published by New Riders.