Join Terry Lee Stone for an in-depth discussion in this video Anatomy of a contract: Part two, part of Running a Design Business: Designer-Client Agreements.
There are two categories of numbers that should appear on every Designer-Client Agreement. First, your design fee, which is the compensation for your labor, expertise and the value you bring to the project. You can think of that as time. Secondly are the estimated expenses. These are your out-of-pocket costs for items purchased specifically for this project; you can think of this as materials. All expenses should include a standard markup or agency commission, typically a 15 to 25% service charge is tacked onto the actual cost of the item.
Why do designers do this? Because purchasing items involves a certain amount of risk; you are guaranteeing the workmanship, quality and delivery of the item, plus you're acting as the bank by fronting the money for the purchase, which is the convenience to the client. Primarily it is because this procedure is an industry standard in our profession. The Terms and Conditions copy in a Designer-Client Agreement is set forth in paragraphs called Clauses that describe in formal legal language the working relationship and obligations that you and your client will share.
Although it may seem like a bunch of legal gobbledygook, don't neglect to include terms and conditions copy in your agreements, because it protects you and clarifies important business issues. This is your contract and it's all about setting up a deal that benefits you. A client's signature is legal proof that they have approved the Project Description, Compensation and Terms as you have outlined them in your agreement. Maybe the most important line in your contract is the one saying, "The signee below acknowledges the above and agrees to abide by it." Followed by a line for the client to sign and date it.
Go ahead and type out the individual's name and the company name, since many signatures are illegible. You may also find some clients will require that you also sign the document, so do that before you submit it to the client. Digital signatures on a PDF will work, but in a lawsuit, courts prefer dated signatures that are literally ink on paper. More and more, courts are accepting scans and email stating approval, however, nothing beats a signed original. That's it! That's a contract! Those five components, no need to be intimidated by them, but don't rush through them either.
A clear well executed contract will save you a lot of hassle, trust me.
- Understanding the anatomy of a contract
- Scoping the project
- Estimating your costs
- Subcontracting work
- Heading off problems