“The Importance of Contracts”
Paul S. Vicary, Esq.
Whether you are running a multi-location restaurant business, an Internet-based business, or a retail business, a business is only as strong as the contracts and other agreements under which it operates. This is just as true for small businesses as it is for Fortune 500 companies.
Time and time again, however, I run into small business owners who don’t have the proper contracts in place – even those who have been in business for twenty or thirty years! The fact remains, as the old adage states, that it’s easier to draw up the boundaries before a mishap than afterwards. In business, it can be perilous without contracts.
When it comes to artists, this is especially true. However, I have come to learn that that some artists felt they did not have the legal experience or tools to be able to negotiate contracts, so they were going along with whatever was offered them, or doing without a contract altogether. When someone with whom an artist has negotiated a particular agreement fails to live up their word, the result can be devastating. The loss of a few thousand dollars may never even be felt by a large company. To an artist, however, it can mean the end of a dream.
A contract is a form of communication. It is the formalization of a relationship between those doing business. It is as fundamental to beginning a work for the professional artist as is a canvas or armature. And although you might be told otherwise, there is no such thing as a “standard contract”. While there are certain standard provisions in many contracts, every contract is as different as the parties negotiating them. And it is important to remember that a contract is a negotiation between two parties, each of whom has individual needs. There is no reason why both parties signing a contract shouldn’t feel that they have won. It is really important that an artist not feel that the outcome of a contract negotiation will either be that he/she has defeated the other side, or that he/she has been defeated by the other side. In fact, you’re better off if you keep your feelings out of the negotiations entirely.
Some may feel uneasy with making someone with whom one has a good relationship sign a contract. However, when others see that you are running your business professionally and legally, not only will they see you as professional, but they will be less likely to push business boundaries. All too often people have told me that the other person appeared so professional and friendly and thus did not feel the need to formalize the relationship with a contract, only to have the other person fail to live up to their end of the bargain. At that point it becomes much more difficult – and much more expensive – to remedy the situation…assuming it can be remedied.
There is no reason why contracts should be imposing or unintelligible; it is crucial, however, that they cover thoroughly all of the issues and be precise in their language. One test is to look at any provision of a contract. If one is unsure of its meaning, or if it can be interpreted in more than one way, then that provision is not precise enough. Disputes that arise between the parties that require a precise interpretation of a vague provision become much more difficult to resolve.
Precision and detail are thus key to good contracts. For example, if an artist is told that he/she will be paid up-front, then in addition to the amount of payment, the deadline for payment should clearly be stated in the contract, as well as the form of payment. If an artist wishes to license and work for a particular exhibit in a museum and no other purpose, the contract should not say that the work may be used for that exhibit “and other exhibits which the museum may later create or in which the museum later may be involved.” The process of negotiating and preparing a written contract is an opportunity for both sides to identify and address all of the business points, issues and concerns. Remember, honest people can differ vehemently over an issue which neither really considered an issue at the time they entered into an arrangement.
What types of contracts should you have? There are many kinds. Nearly everything you do in business needs to be documented for some reason or another, and contracts are just an extension of that.
It is worthwhile to consult with an attorney in preparing agreements, particularly where the artist is not experienced in writing or negotiating agreements, or is simply “new to the business”. Indeed, depending on the nature and size of the business, one may wish to consider having an attorney on permanent retainer (permanent retainers will be the subject of another article). As I always tell my prospective clients, as your business grows, so do your needs. Yet the hours in a day remain fixed. You need to be willing to delegate the growing number of tasks to those trained in those areas so that you can spend your valuable time doing what you do best – being creative!
An attorney should not have to spend a great amount of time in preparing a contract, particularly if the artist provides the attorney with a draft of what is proposed or an outline of business points to be covered by a contract. The attorney can react to the draft or the list of business points, and sometimes discussions between the attorney and the artist will uncover important issues which the artist had not thought of before, but which clearly should be addressed in the final agreement. In all instances, the attorney should be consulted before any document is signed, and before the artist makes a binding commitment of any sort to the other party. Once a contract is signed, the parties are bound by its provisions. Of little importance at that point is what the parties to the contract “thought” they were signing. Any disputes in the contract then may be left up to a judge, or even a jury!
Of course, once your contracts are in place, make sure you uphold your end of those formal agreements. If the other party fails to follow the provisions of the contract, you will be able to follow up and take legal action if necessary.
Mixing art and business is not always pleasant. But this is your dream. You need to protect it.
(Content of this post is copyright Paul S. Vicary and reproduced with permission. This article is not legal advice and is not intended as legal advice. This article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. You should consult an attorney to discuss your particular issues. This article is based on Florida and/or United States law. This article does not create any attorney client relationship and is not a solicitation.)
Paul S. Vicary, Esq. The Vicary Law Firm, P.A. 701 Brickell Avenue Suite 1550 Miami, Florida 33137 Tel: (305) 728-5133 Fax: (305) 397-1741 Email: email@example.com
Paul S. Vicary, Esq.