The Benefits of Having a Contract

Photo by: Gunnar Wrobel

Having a contract in place prior to starting a project can prevent problems down the road. Mike Monteiro, appearing on Creative Mornings on March 25, spoke about the benefits of contracts, and how to structure them so you are protected.

Monteiro, design director and co-founder of Mule Design Studio, pointed out that most clients start the business relationship with the best of intentions, but things sometimes go wrong. The market changes, or the project takes a different direction. Having a contract stipulates how and when you get paid, and what you must do in order to get paid. If a lawsuit should develop, a contract can help ensure you will not be liable for attorney fees if the ruling is in your favor.

According to Monteiro, there are six main things you need to know about contracts.

• Both parties are protected by having a contract

The negotiating process makes it fair to both parties. Definitions and expectations are explicitly stated and agreed to by both parties in the contract.

• Never start work without having a contract

If things go wrong, you need to make sure that the relationship between you and the client is set in place in a contract. If over the course of time the project becomes totally different from how it started out, the initial contract is done and you settle up. Then create a new contract to reflect the scope and new direction of the project.

• Don’t simply accept the other party’s wishes

Have your lawyer review the contract to make sure it is favorable to you. If something is included that is not favorable to you, remove it or negotiate it. As Monteiro said, when you are doing business deals, you don’t want to trust that you will get paid, you want to make sure you will get paid.

• Negotiation is fine, but don’t budge on the important stuff

Decide what points are not negotiable. For example, the work you do remains your work until the client pays you for it. Another non-negotiable point for Monteiro is that the client pays a kill fee if the client terminates the project without good reason, or if the client brings in another designer. A third non-negotiable area may involve liability if something goes wrong with the project.

• Don’t talk to their lawyer without yours being present

If you are talking to a client and they have legal counsel present or on the phone, discontinue the discussion until you have your lawyer present. This avoids you agreeing to something because you are nervous or confused.

• Be specific about money

Don’t hesitate. If you know how much something costs, stand up and state how much it will cost. If you don’t know, say you don’t know, but you will find out and get back with the client as soon as possible. Be confident about the rate you are asking.

As Monteiro said, having a good contract frees you up to do the job itself, without having to worry about legal specifics.

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    One Response to “The Benefits of Having a Contract”

    1. Ernest says:

      I am glad to read and use this article as a source for one of my discussion posts via online course.

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