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Web Design Contracts: Why Bother : Comments

By Nick Gould

January 22, 2007

Comments

Tony Crockford

January 23, 2007 3:30 AM

“In the vast majority of cases, the copyright for all design work is owned by the client who has commissioned the work.”

That’s not right, surely.

Copyright belongs to the creator unless otherwise assigned. (As I understand it). Granted the commissioner would expect to have copyright, but it has to be granted by the creator as part of the contract between commissioner and creator.

Can you point to a reference where it says otherwise?

Seth Blackberg

January 23, 2007 6:09 AM

In my experience, before you get to the contract, its best to get everything out in the proposal. I just wrote a brief description on “The Art Of The Proposal”... probably something I’ll expand on over time – check it out – here

Jonathan Snook

January 23, 2007 7:02 AM

Tony: laws are going to be different from country to country. A quick search revealed that in the States, the commissioner of the work holds the copyright, likewise the creator who would retain copyright.

Documenting this in a contract would be important if dealing with clients in another country. It’s also a good idea to detail at which point the copyright gets transferred to the client so that you don’t lose copyright if a client doesn’t pay.

Nick Gould

January 23, 2007 9:17 AM

Tony, you are absolutely correct. I was a bit unclear on this point. Unless the contract states otherwise, the assumption will be that the creator owns the copyright. That said, any experienced client will (as you have noted) expect – nay, demand – that these rights be transferred to them as part of the agreement. This is typically accomplished with “Work for Hire” provisions. Jonathan, the reference you have provided discusses this approach. So, from the designer’s perspective, my advice is to worry more about the aspects of the work that you might inadvertantly transfer. I gave the example of document templates. Another good example is the underlying code (i.e. files in Visio or similar) for wireframes. As a rule, we do not provide these files so it’s important that we make it clear in the contract that the client’s copyright ownership does not extend that far. Tony, I hope this clarifies. Sorry for the ambiguity.

Mark Wyner

January 23, 2007 9:21 AM

Absolutely a vital component in our line of work. Since day one I have been using an estimate that is a working contract. It is to be signed by both my client and myself prior to beginning production on a product.

Nearly every client pays their invoice and if clear expectations are made at the onset of a project, rarely is there room for catastrophes. However, I had my first client who changed his mind about wanting a website after it was completed, and thus didn’t want to pay his bill. But because he signed my estimate, my lawyer was able to make my case and I was awarded the fees in my project plus my legal expenses. The latter being the responsibility of my client per my estimate.

So I applaud this important article as invaluable advice. And heed the warning: you will inevitably encounter a client who fails to pay.

Johan

January 23, 2007 12:45 PM

I conducted an interview with Shel Perkins, author of the book Talent Is Not Enough: Business Secrets For Designers. A good read that deals with the professional side of design agencies.

Sophie Dennis

January 24, 2007 3:36 AM

Very good article and one I shall point to whenever someone bobs up with their “contracts aren’t worth the paper they are written on” line. The opening points about the strong psychological effect of a contract are so important. It clearly states why having a contract is a good idea even if it is highly unlikely either party could or would ever resort to the law to enforce it.

One tiny criticism is that I think the point should have been made much more explicit that laws and the default position with things like copyright varies from country to country. Particularly with the model contracts you can buy online, it’s important people realise you can’t just take a bog-standard US contract if you’re in the UK or wherever. The same applies when asking legal questions on mailing lists – the ‘right’ answer can depend on which country you’re in.

Brad

January 24, 2007 11:59 AM

At my last employment, I was asked to sign a contract that basically stated that I wouldn’t ever be able to work for another company in the same SEO Industry. I refused to sign the contract and of course was let go. Fortunately, I was offered a job in the same industry working for a better company. SO I say no thanks to that type of contract.

Nick Gould

January 24, 2007 2:53 PM

Thanks Sophie… I couldn’t agree more with your point about the variations of local law. Here in the US, there can even be important variations from state to state. This is why I (gently) advocate hiring a lawyer, if only for a short initial engagement to help make sure that the important legal areas are covered in the “boilerplate.” I appreciate the close read.

Alix Vale

January 24, 2007 7:56 PM

From bitter experience I have realised how important a contract can be – not just from the legal standpoint but it also from setting professional expectations on both sides.

I’ve recently done some work for clients who are also friends and am now struggling with getting paid. I think a contract would have also helped separate the business relationship from our personal one.

Nathan

January 25, 2007 2:38 AM

Top article, I’ve only ever had about 3 clients where I thought a contract was necessary due to the amount of money involved.

I personally can’t justify a full blown contract for small jobs because the legal costs involved in recouping my losses would usually outweigh the value of the project itself, but in any case I do make sure a signed agreement is in place before work commences no matter how much a project is worth.

I think you’ve offered some sound advice in this article and with a little research into local law many people stand to benefit form this. Good work!

Cheers!

Jake Rutter

January 25, 2007 1:04 PM

Great article! I have been doing more freelance on the side and the first time I wrote up that contract was pretty tough. I have learned through various projects what is important and whats not. I learned the hard way by not covering all the touchpoints between the client and I, and ended up having to raise the price the first few times around.

Its definitely a good idea to get at least something down on paper. In which case, if it ever comes back to that, you can always bring out the paper contract to prove the work you have done and therefore the compensation you have agreed on.

Mary Deaton

January 25, 2007 2:06 PM

I do not have a contract per-se with clients, but I do have a work-for-hire agreement. I an nearly always the person who initiates the discussion about a written agreement; only rarely does the client hand me something they have done and expect me to sign it.

I find a work-for-hire gives me the protection and leverage I need. I try to be very detailed in spelling out the scope of work, terms, and rights. I always have an intellectual property statement listing what I may bring into the work that is my IP and does not become something the client owns.

I was recently presented with a contract which clearly had been copied word for word from an employment agreement. It had a non-compete clause that went out five years after the end of a one month project. I just went through and red-lined all the bullshit and they changed it. It is amazing how ignorant clients are about employment law at times.

Russ Brooks

January 28, 2007 11:31 AM

I did freelance web design and development for 4 years, and worked for a “custom solutions” firm for 5 years. I’ve sold / designed / build / managed just about every sized website imaginable, from little online brochures, to half-million-dollar NFL team websites and large international corporate sites. The larger clients always seemed to be far less troublesome when it came to contracts and getting paid for your hard work. It’s the medium to small clients that you have to worry about – the client to whom $20,000 is a lot of money. With larger clients, the financial person you may be working with is far more removed from the money. It’s someone else’s money, so they don’t even feel the pain of spending it. Plus, to end up in the positions they are in, these folks have been active in the business world for quite a while, and they usually understand the principals of contract labor. In the smaller firms, your financial discussions may be with the owner himself. This is HIS business and HIS money, and he will fight you tooth and nail to “get his money’s worth”, like he does to all his other vendors.

Here’s the problem I wrestled with for so many years with these smallish clients. You’ve got a perfectly polished contract, revised over several years. You’ve plugged all the holes, after learning the hard way, and you’ve go your a55 completely covered. The inevitable “but you didn’t tell me I wouldn’t be getting X” discussion arises, while you gently refer them to the job specs that are clearly outlined in the agreement. Regardless of how tacful and professional you are about breaking this “news” to them, they are offended that you are now toting an agreement. They feel backed into a corner. If you budge, even an inch from that agreement, that sends the message to the client that it is now open season for them to start the mass influx of requests for gratis work – completely offended if you deny any of them at all. So, if you stick to your guns and don’t budge, they threaten to sue you [maybe 2 to 3 out of 5 of these smaller clients]. You can call the bluff and say, “I am [we are] prepared for that if you decide to go that route.” or you can break down and do the gratis work they are demanding. If you do that, you get yourself into the downward spiral of unprofitability while you try to meet their repeated requests. So often, the choice came down to “get sued” or “honor their ad-hoc requests until you put yourself out of business”. Which do you chose? It’s a conundrum. The contract didn’t matter at all to these people. They didn’t read it, but they signed it. None of that matters to them anyway. They know you are a one-person operation or a small firm, and the last thing you want or can afford is a law suit [even if you stand a 100% chance of winning]. So, you probably end up doing the gratis work, in good faith, and negotiating out of as many of them as you can. Sure, you try to make then understand that this task is gratis work, but you are doing it because you feel bad about the “misunderstanding”. You need your money, right, and you need it fast. You slog through as fast as you can, working your 16-hour days, and hope they don’t demand any creative new requirements.

This is one of the reasons I now have a position where I no longer have to deal with clients. I am a Project Manager, designer and programmer, but only to internal software projects. No more selling what I do to angry, litigious clients – and I will never look back. I will never do that again! It was far too stressful for my taste. It was a never-ending dance of figuring out how not to get sued. That threat hanging over your head at all times was horrifying. Too much lost sleep. I couldn’t take it anymore. Now, I’m a software engineer / PM, safely isolated from clients, and I make more now than I ever made building half-million-dollar websites. :-)

JasonM

January 28, 2007 3:49 PM

Thanks for a great article Nick.

I always sign a SOW with clients but as a designer I always feel the need to get on with the job. This is one article that I am keeping in my favourites.

Living in Australia I am guessing we will follow the UK, it is the creator who would retain copyright. This is something I am doing some research on.

Andy James

January 30, 2007 1:13 AM

I think this issue concern

Deborah

January 30, 2007 5:48 AM

Nick, yet one more thanks for a great article. Certainly timely for me as I find myself reviewing several opportunities.

Mary, I think I have topped your non-compete clause for five years. A recent non-compete I received had a clause for ten years.

Robert Foerster

January 31, 2007 12:18 PM

Oh goodness, never hand over passwords or control until the payment is made. If they don’t pay within three months…down comes the site…cradle and all.

Jonathan Nicol

February 4, 2007 5:14 PM

JasonM: Yes, that is correct. In Australia copyright is automatically assigned to the creator, and must be specifically transferred to the client.

I quote from the Copyright Commission informational publication for graphic designers:

“In general terms, if a graphic artist is commissioned to create an artistic work, the graphic artist will own copyright, unless there is an agreement to the contrary. In these cases, the client will have the right (

Larry

February 9, 2007 7:32 PM

Good article. I’m just getting started in the biz, and I’ll take your pointers. Thanks.

Jill Garland

February 22, 2007 11:16 PM

I have a client that asked for comps with stock royalty free images and now has asked to launch and does not want to pay for the stock images.

Not only do I not want to be liable for breeching copyright law, but I do not want to sacrifice my integrity and reputation by knowingly publishing images that were not paid for.

Any tips on how to deal with the client. Should I just back out and hope that they pay for work done to date?

elsa

February 27, 2007 3:45 PM

I don’t understand why these legal forms and contracts have different pricing at different websites on the internet if they are virtually the same product?! websites such as www.legalmessenger.com or www.legalzoom.com and others offer the same products by the price variation is substantial!

Nick Gould

February 28, 2007 9:55 AM

Jill, do you have a contract with the client? If so, do you make any representations about the copyright in the assets you used in your design? The reason I ask is that you could (depending on the contract terms, if any) actually end up being liable to the client if they are sued. You don’t want this to happen. If I were in your situation, I would pay the royalty and bill the client. If they refuse to pay, then you’ll have to decide how much effort and expense you are willing to undertake to collect your money — but at least you won’t have a liability hanging over your head. If you back out (which I take to mean that you don’t release the assets and / or refuse to put the site live), then they have a good argument for not paying you. So that’s not a course I would recommend.

Hope this is helpful!

AxelF

March 26, 2007 11:57 PM

After developing a lot of sites for a lot of clients I have to say: every new client or web design is a new adventure. There is now way to standardize the contracts.

pp

April 23, 2007 3:28 AM

FYI, in the Netherlands, copyright is automatically transferred to the commissioner, unless specified otherwise. this assumes all work created in the “commissioner’s time”.
though it wouldn’t surprise me if there are some specific rules concerning this when it comes to freelance work (as opposed to employed work)

Dustin Brewer

May 6, 2007 2:06 AM

Contracts are an essential part of the field, without them it is impossible to ensure that you are going to be treated fairly by your clients.

steve

July 1, 2007 5:11 AM

I always sign SOW with client too.
It’s only way to make deals.

Kevin Gallagher

July 21, 2007 9:05 AM

i always use contracts you should get someone who knows about contracts to look this over it may cost you but can save you a lot of money in the long run i think

abie

July 23, 2007 12:31 PM

After working at an agency for a few years, I decided to do freelance web and graphic design a couple of years ago. I have always created contracts for each and every one of the projects I take on…except for ONE...and the client still owes me $2,600 on the project that I completed 6 months ago!

They keep telling me that they are going to pay me and that they “..don’t understand why I haven’t received a check yet..” and on and on and on.

So, My question is, since I have all of our communication documented in emails (such as what was agreed on and their admittance to owing me money as well as there supposed intention to pay me), would I still have a chance in court should I decide to sue them for the unpaid balance? Or am I screwed because there was never a formal contract signed?

Nick Gould

August 10, 2007 11:15 AM

Abie – I think you would have a chance. However, your cost to pursue the lawsuit would probably outweigh the risk-adjusted benefit of going after them. You could consider a small-claims action. These are typically self-serve and low cost ways of attempting to collect on smallish debts. Very often the other party can’t be bothered to show up and might just default. But then you have to chase them to enforce the judgment, which can mean locating their bank etc… It’s not easy. If you really feel that they are deliberately not paying you, I would also suggest that you discuss a possible settlement.

Sorry, comments are closed.

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