Read This Before You Sign That Contract, Advises an Attorney
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The Professional: Mary C. G. Kaufman, Attorney in Los Angeles, CA
The ladies over at Create & Cultivate asked if I could write a column providing some basic and general advice regarding contracts. I thought this was an excellent idea given that many otherwise accomplished creative entrepreneurs lack experience with negotiating and understanding contracts.
So first, some not necessarily legal advice: There’s always room for negotiation. Take a cue from Cher Horowitz in “Clueless”—even bad grades are negotiable. Until it’s signed, the terms of a deal are not set in stone just because someone sent you over a proposed agreement. For example, maybe there’s no wiggle room in raising your fee, but can the other side give you units of product, a discount for their goods, a special credit, or something else besides cold hard cash? There’s no harm in asking. Think about creative ways to benefit from the deal, even if you can’t get more money. As always, this is a do-your-research and know-your-audience situation.
Second, familiarize yourself with a few oft-overlooked standard legal provisions that can make a big difference. Let’s get into a few of them.
Indemnity Clauses
In short, these allow parties to seek reimbursements or damages for certain conduct or occurrences. For example, if you are creating content (i.e. an Instagram takeover) for someone else, that party may want reimbursement from you in the event that the content you created causes them to be involved in a copyright infringement lawsuit. These clauses can be mutual (going both ways) or unilateral (just going to one party).
Arbitration Provisions
These authorize a private judge to determine a dispute between the parties. Meaning, instead of going to court, the case could be mediated by a private judge instead. Arbitration has pros and cons. For example, it can be more expensive to go with a private judge, as you will be paying for the judge’s time (outside of arbitration, you are merely paying filing fees), however, it can be quicker and the dispute will not necessarily be made public (normally, all filings in a lawsuit are a matter of public record).
Forum Selection & Choice of Law Clauses
These determine where and which laws will apply to any disputes. Say, you’re in California but the company you’re working with is based in Texas, this clause would determine which state law would apply and where any disputes will be handled. Generally, you would want to have your state’s law apply and be able to handle any disputes in a place that is easily accessible to you to keep costs down. However, there may be reasons that you would want another state’s law to apply. For example, California law prohibits employers from using non-compete clauses for employees.
Integration Clauses
These make any pre-contract discussions irrelevant if the contract outlines different terms. For example, say that during negotiations, there was some discussion that you would be paid extra for any work you did on weekends. However, the contract simply states one standard rate. The integration clause would prevent those prior discussions from being considered by a judge if there was a dispute that went to court.
If you find yourself lost in legal jargon, make sure to do your research on the web, or even grab a book that introduces you to basic contract provisions. And better yet, if you can, consult a lawyer. Fees to have a professional look over a contract range, but it may be worth looking into, especially for big jobs. These are just a few types of clauses that are often overlooked by non-lawyers, but as I see every day in my work, they can have big consequences when you get into a dispute. Bottom line: Know what you’re signing, even if you think it’s not important!
Finally, if you’re not completely comfortable with the agreement, then don’t sign it. Always know what you’re getting yourself into, and never be too intimidated to ask questions (or if you are, send your question to us)! A good contract should spell out exactly what is expected of both parties (deliverables, deadlines, usage rights, etc.) and will protect both sides in the event of a dispute.
About the Author: Mary C.G. Kaufman is an attorney based in Los Angeles, CA, counseling clients in the entertainment, fashion, and financial industries, and occasionally translating Legalese for Create & Cultivate. She handles a wide range of strategic and commercial legal matters for clients including emerging companies and notable social media personalities. On her off-days, she likes to garden, find the best workout classes on Classpass, and cook Sunday suppers for friends. Get more info on Mary here.
This story was originally published on March 3, 2019, and has since been updated.