Part 1 will focus on the basic components needed to create or interpret a contract or agreement. More and more, these documents have become a required piece of an illustrator’s assignment. This is an article intended to help illustrators deal with agreements and contracts.
Monday, October 12, 2020
Illustrator's Contracts & Agreements 1: Components
An "agreement" is most often in the form of a contract, and a contract is an arrangement between two or more entities that creates a legal obligation to do or not do a particular thing or things. Although many clients have contractual agreements they present to illustrators when initiating a job, illustrators should also consider developing their own contract to address the issues that take place in the course of an assignment. Although the component explanations below may be long, in practice, each section of an actual agreement or contract may only be a sentence or two.
The agreement title can be just about anything, but it is best if it contains the project title. For those who use a job numbering system, it can contain a job number. For example: PH0012 – Parkland Hospital Pathology Brochure Illustration.
This should be a concise description of the work to be provided. For example: One full-page, full-color, cover illustration, and two full-color, interior half-page illustrations for the 2012 Eaton Corporation Annual Report to Shareholders.
Usage, as it implies, defines any limits that are to be placed on the publication or distribution of the illustrator’s work. Usage is a vital component in a contract or agreement. Although created for an individual client and a specific use, in most cases, the work is being “leased” by the client for a specific limited term. There are also non-lease situations such as “buyouts” and “work-made-for-hire”. See the Intellectual Property component below. Any conditions of the usage and usage term should be spelled out in writing. Usage limitations can be based on quantity, time, location, or any combination. Here are examples.
The Parkland Hospital Pathology Brochure Illustration usage is limited to an initial print run of 5,000 copies. So, reprinting the brochure would require a renegotiation of usage, i.e., an additional fee.
The illustrated character for Coca-Cola usage is restricted to print advertising for a period of two-years. So, migration of the character to the web or broadcast media would require a renegotiation, i.e., an additional fee.
The promotional poster illustration for Fidelity Investments usage is limited to internal display in Fidelity offices in the US. So, a distribution of the image to the public would require a renegotiation, i.e., an additional fee.
It's extremely important to spell out the time frame, i.e., schedule for the project activity. This can be done in terms of time such as days or hours, or it can be done using actual dates. Naturally, a project's timeframe will reflect the complexity of the assignment. Multiple image assignments may have multiple sketch approval and delivery dates. Here are two sample timeframes:
Start Date: 1/15/20
Input or Approval from Client: 1/22/20
Revised Sketches: 1/24/20
Approved Sketches: 1/26/20
Delivery of Finished Project: 2/03/20
The date model is used for assignments that have a finite inflexible delivery date, such as time sensitive publications for events. So it’s important to have the dates nailed down in the contract. This works well when all parties agree and sign off on the schedule. A date-based schedule helps decision makers to comply with the schedule dates. One unfortunate consequence for illustrators when using the date model is that clients who don’t abide by the schedule are often also unyielding when it comes to the delivery date. This shortens the amount of time available to produce the work.
Start Date: Notification of Approval to Begin
Sketches: 5 Working Days
Input or Approval from Client: 2 Working Days
Revised Sketches: 2 Working Days from Input
Approved Sketches: 2 Working Days
Delivery of Finished Project: 7 Working Days from Approval
The time model, which is based on the amount of time it takes to complete each stage of a project, provides some protection for the illustrator when a client decides to prolong their part of the decision process. When this happens is quite common for the final delivery of the work to be adjusted according to the amount of additional time that has been taken up with any delays. I have had far greater success using the time model because, by its very nature, it necessitates a flexible delivery date, and most clients understand this.
Be aware, some contracts for time sensitive projects specify a monetary penalty to the illustrator if the work is not completed on schedule. Fortunately this is relatively rare, and usually is tied to large multi-vendor, multifaceted projects.
All companies or persons who will receive a benefit from the services provided should be listed. It is very common for an ad agency, design firm, public relations firm, or marketing company to outsource an illustration assignment on be half of a client. Sometimes more than one company may be involved. All parties should be considered beneficiaries. For example: Creative Soup (the design firm) contracted by McCann Erickson (the ad agency) on behalf of Coca-Cola (the client).
This can be stated simply as "Illustration", or it can be written more specifically. For example: Dimensional Illustration, or Digital Illustration for the Technology Market, or Illustration and Design for Packaging, etc.
Services provided is an expansion of the project description that includes working process and description of deliverables. For example: Subject research, concept, design and layout, two proposal sketches per image subject, one round of revisions per subject, final illustrations, and delivery of digital image files.
The start date is usually when one or more of the following occur: When the contract is signed, when the job compensation is agreed upon, when project input is delivered, and/or when delivery deadline is set.
Payment for services can be in the form of a lump sum payment, a schedule of payments, a fixed wage (hourly rate), a sales commission, or a trade of goods or services, a combination of types of compensation.
Lump Sum Compensation
Lump sum compensation can be in the form of a single payment due at a specified time when the commission is completed. For example: $2250 due upon delivery of finished art. It can also be broken down into installments to occur during the course of the commission and/or after. For example: 50% payment due ($1125) when sketches are approved and 50% payment due ($1125) when the commission is delivered.
Hourly Rate Compensation
Some types of commissions call for all, or part of the compensation to be in the form of an hourly rate. For example: $20 per hour (20 hour maximum) for development and completion of Fidelity Mortgage Illustrated Pie Chart. Service type work and the non-creative portions of a project can also be billed by the hour in addition to a lump sum for the create work and finished art. For example: $20 per hour (5 hour maximum) for digitizing traditionally produced artwork, digital file preparation for reproduction, and file or image duplication, etc.
Taking payment for work in the form of a sales commission is an option, albeit a risky one. Commissions are usually a low percent in comparison to the value of the commodity being sold. In essence a fair wage becomes dependent on high volume sales, and high volume sales in some cases are hard to predict.
Compensation may also be arranged in the form of an exchange of services or goods. For example: One set of Cartier Trinity Platinum (Item CTP 3414) pens and pencils in exchange for the cover illustration for the Fall Colorado Pen Company Catalog.
A kill fee is a specified amount to be paid to the illustrator in the event that an assignment is discontinued after the illustrator has been given the go ahead and begun work. This happens more often than any of us would like, so it’s important to have the kill fee spelled out. For example: An assignment discontinued during the sketch stage would incur a fee of 50% total payment. An assignment discontinued during the final art stage would incur a fee of 100% total payment.
A clear statement of when you should be paid. It is best not to leave this aspect of compensation undefined. And, although it now seems fashionable for clients to delay payment much longer than they should, a payment schedule can be very effective at keeping receivables on schedule. For example: Payment due 2/28/2013. The same due date should be reflected on the job invoice.
The intellectual property right refers to the ownership of the copyright of an illustration. Simply put, the right to control the usage of an illustration. The illustrator is the copyright owner, which should be plainly stated in the agreement or contract -- unless the copyright was sold in a buyout, assigned over to another party, or the work was produced under a work-made-for-hire agreement. For more information on intellectual property see “Copyright Intellectual Property” posted 11/6/12. For more information on work-made-for-hire see “10 Digital Art Copyright Definitions” posted 9/11/12.
Material expenses can be either the responsibility of the illustrator or the client. Usually, this is factored in to the overall payment for the project, in which case the illustrator is responsible. However there are sometimes expenses that occur beyond the norm. For example: The painting of a mural might require a substantial outlay for materials such as paint, brushes and cleaning supplies.
Outsourced expenses can be either the responsibility of the illustrator or the client. An outsourced expense is one that requires the use of a service or hiring of a person or company. For example: Hiring a model to use for reference photos, or purchasing reference from a stock photo agency, or hiring a photographer to photograph the final work for digitizing.
In lieu of expenditure, many clients will provide resources in support of a project. It is advisable to make arrangements for, and list, any resources you feel the client should provide to you. Publishers will often provide reference photos, and clients in manufacturing will furnish products that need to be illustrated. I’ve had machine parts, high tech gadgets, and toys provided. I even had an actual Emmy award statue sent to me.
Company support is usually in the form of office space, company access, or company staff services.
Assignment Initiation Person
This is usually the person who is working directly with the illustrator. Most commonly it is a designer, art director, creative director, account executive, marketing person, author, editor, company executive, or the company owner.
Assignment Authorization Person
This may be the assignment initiation person or a secondary person within an organization. For example: A magazine editorial assignment is usually “initiated” by an art director, but the magazine’s editor is the “authorization” person. It’s usually the editor that grants final approval of an illustrator’s work.
Financial Contact Person
It is extremely important to have all contact information for the person the invoice is sent to. It may be the person that is the assignment initiation person, i.e., an art director, or it may be an entirely different person within the company. And, it might even be a person at an entirely different company. For example: When an illustrator is hired by the agency or design studio on behalf of a client, but must bill the end client directly. It is my recommendation that this kind of situation be avoided at all costs. He agency or studio should be responsible for compensation, and most are.
The agreement end date should be stated in advance. It may be when the project has been delivered and payment has been received or it may not. It is altogether possible for an end date to extend beyond the point of completion. For example: The restricted nature of some types of assignments may be subject to a confidentiality restriction that extends far beyond the completion of the work. A situation may also occur where an illustrator may be bound by a limited non-compete restriction. For example: In producing a character illustration for Coca-Cola, the illustrator agrees not to produce a character illustration for any other soft drink company for the period of two years. As an option, agreement end dates can also be made renewable. For example: Coca-Cola may wish to extend usage of an illustration for an additional period of time. For a negotiated fee, the extension might also include lengthening the non-compete restriction.
Last but not least, a statement approving the project and the terms specified in the contract with a start date. Lines for authorization signatures and signature dates should be included for both the client and the illustrator.