Contracts 101

[Pepper-Head]

Making your own contract to outline expectations for both parties, as well as protect yourself and your assets.​

DISCLAIMER: I'm not a lawyer and this isn't an exhaustive how-to. However, it's based off of information I've learned from someone who has made freelance illustrating their livelihood for decades. As such, this information is probably geared more towards artists, but you should be able to tweak it to fit your needs as a programmer, game owner, etc!​

Anyone who is serious about freelancing or running a game and working with artists/programmers. Contracts can be part of a NDA (Non Disclosure Agreement), or separate documents. 

The goal is to try to cover all of your bases and eliminate possible gray areas. Be very specific with what art and rights you are granting so there aren't any questions down the line, and your work doesn't get used in an additional way that you didn't intend for it to be used (and didn't get paid for!)

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▸The first thing to distinguish as artists/game owners is if this is a work for hire job. If it is, you give up all rights for the illustration(s) you do (except your right to show it for portfolio or personal promotion, unless stated otherwise.) The best example is if you did something for Disney - they'd want EVERYTHING. It could also complicate things if you later decide to copyright the work.

▸Decide what rights you want to give. Commercial, global, web, print, promotional, etc etc etc. Specifcy and make sure, if possible, you keep rights to original work for portfolio and self promotion! Specify if you need credit and how that should be displayed.

▸Most professional illustrators charged based upon the artwork, and then additional fees for the usage. So if you draw an icon that becomes a logo and is printed on merchandise, you'll want to consider charging more than the flat rate for the item. 

▸Want to protect yourself from the possibility of a client requesting a lot of edits? You can offer a few free changes to bring your art up to the project standards, but it helps for clients to be clear and precise in the original project description. You lose money and time by constantly editing. Consider charging an hourly rate for edits past #x of changes.

▸If you're working on a larger project, consider including a kill fee. If working on a map/script, and halfway through the client decides to cancel or completely change the direction of the image/script, you should be compensated up to the stage that you're at (from sketch to final! It's even possible to have a smaller percentage kill fee once the project is first initiated, as that still took up your time to discuss the project and finalize the contract)

▸ This may also be a good place to confirm payments, deadlines, assignment descriptions, and other related details for easy record keeping. (It's easier than sifting through emails or private messages if you need to check something a few months later!)

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The Graphic Artist's Guild is a fantastic resource for more information! I have modified their "All Purpose Illustrators Letter of Agreement" for myself. https://graphicartistsguild.org/dpegs-contract-downloads 
You can find a lot more resources as well as advice on their website. They also publish an ethics and pricing handbook yearly that every artist should own. (Unless there are huge changes, the last year's edition should be really affordable on Amazon)

Whenever you are buying or selling services, from friends to a new or continuing client.

Artists/Programmers can have their own contracts even if a game sends their own. 
All contracts are negotiable. Be sure you communicate with your client/artist/programmer before locking into an agreement to negotiate fair terms if you have questions or something doesn't work for you!

A professional contract is typically sent as a PDF. If you can get fancy with Word, go ahead and then export as PDF! Photoshop, InDesign, and Acrobat are also good tools to create and modify documents.

You can also make a signature and save it separately, so you always have a file to easily apply to contracts.

Contracts can be as clear cut as you need them to be, but having a little bit of visual hierarchy will help all parties involved in reviewing the important areas (assignment description, cost, rights, etc). Typically you don't want a contract to be too long, 1-2 pages is a good length for an artist's. But a game owner's contract may look differently since it may need to cover more details. Google around and see what looks fit you best!

A possible outline could be:
Your Info
Clients Info
Assignment Description
Rights Granted
Terms of Service
Signatures

This is an area you may also want to cover in your contract, depending on the project. Did you only grant web usage, and found out that your art was printed in a zine? Did you program something and found that credit was removed, against your terms? Specify in the contract what should happen (usually compensation). Depending on the situation and willingness of the violating party, you may have to seek legal action.

Artists: As far as I'm aware, if you're a US based artist, there are usually state based art guilds that have a small yearly fee of ~$30-50, but provide a couple hundred dollars of free legal advice. It's worth looking into if you're in a pinch, or even want help making/refining a contract!

Keep tidy records of everything.
Paypal invoices, contracts, PSD files, emails .... try to keep everything saved somewhere reliable if you ever need to look back on something for proof or reference later on down the line!

Keep financial records.
This is especially important for when tax time rolls around for income taxes and deductions. Also keep up to date on laws, since internet sales taxes can change, and if you make under a certain amount for a certain time, the government may view your work as a hobby.

Pre-Contract Checklist

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And that's it for your quick(ish) lesson!​

Feel free to drop any questions, but I hope this served as a good intro and helped you get some ideas rolling to create or even update your own contract.​

 

[Syntax]

Well done, contracts are usually murky territories for anyone not in the legal world. If you don't mind I have two additional bits that might be useful  Just some bits form personal experience!

• When someone is in violation of your copyrighted work, code or art, typically you can reach out to the website host or publisher with a copy of the contract. Most of the time publishers or hosts will simply pull the content as long as they believe you have a reasonable claim and you don't need to get a lawyer involved unless you're looking for damages or compensation.
  

• Do not make your contracts too burdensome! Even perfectly legal and agreed upon contracts can be thrown out for a single line being determined to be too burdensome. What does that mean? It means you're asking for too much from the other individual(millions of dollars for cancelling a five hundred dollar project, demanding their first born or 7 years of servitude). This kind of thing is done to prevent people from accidentally signing themselves into slavery. But if the contract is reasonable most small claims courts will happily hold both parties to them. 
  

I once had an employer include a non-compete clause that basically said I wasn't allowed to work anywhere else in the country in my industry for 2 years if I left because any company in the country could be a potential client. There's no way they'd be able to get that to hold up in court because while you can prevent someone from stealing your trade secrets and acting as a corporate spy, you can't completely deny them from working in their field of expertise. 

 

[Pepper-Head]

Thank you so much for reading and even dropping off some of your own advice @Syntax !  

It's so important to remain fair while protecting yourself and your assets. Perhaps one can gradually get a little more strict on some terms as their experience, skillset, and demand increases, but it's generally best to keep it professional and work around standards, within reason, for a client and project of its type. 

I've also heard of a non-compete clause like that! It's bewildering to think how someone could include that in their contract without fully thinking of what they're asking from someone! Do you mind if I ask if you were able to negotiate the clause?

 

[Syntax]

I've also heard of a non-compete clause like that! It's bewildering to think how someone could include that in their contract without fully thinking of what they're asking from someone! Do you mind if I ask if you were able to negotiate the clause?

I did not actually even try to negotiate it. I was way too unsure of myself at the time and it was one of my first jobs but I knew it would never fly in court if they tried to push it. It was also a tiny company that barely had the resources to hire me much less push anything legally. Im NOT recommending anyone do that ever, you can still screw yourself over it was just a calculated risk for me I suppose. But I've learned a lot since then and I wouldn't do it again. 

But yeah, even if you don't know all the law you should be able to navigate the stuff that applies to your business at least! Knowing these contracts is just as important as knowing how copyright works. 

 

[FearZero]

@Syntax I looked over those contracts you linked to and they're pretty weak from an enforce-ability standpoint. Some of them have conditions that become invalid in some places, for example one that stated a limitation of liability in bold. Depending on where arbitration happens, it could invalidate the contract as a whole.

Due to how contract law varies from place to place, you want a lawyer to navigate the rules. These days there are tons of low cost contract services provided by big law firms that can handle simple stuff. However, in very specific situations or for something you want control over, just having one good lawyer writing you a contract once is worth the time.

If you ever want some good contract examples, reading various terms of services in full helps. Like this one for example: https://www.linode.com/tos

Two really useful and powerful portions to consider are:

15. Choice of Law and Forum

16. Waiver and Severability of Terms

Some considerations are that non-disclosures and non-compete agreements have limitations from place to place as well. Some states in the United States prevent non-compete conditions all together, such as having to wait a period of time to leave one company and work for a competitor.

Lastly. as a fellow Programmer, I feel that it should be touched on if pursuing a legal avenue after a breach is worth it. Seeking justice for a broken contract isn't always worth it after considering how much it will cost you to take legal action versus how much you're making in return. This is especially true with some mom and pop shops. This is why I personally find ways to jail access to some form of demo to require payment before delivery. For some things that I've not been able to do this with (desktop applications in binary form), I flat out placed customized DRM that would prevent usage of the application. 

 

[Design1online]

Honestly, if you're talking contracts your best bet is to go to an actual contract lawyer. It was the best $500 I ever spent and now you have a much better and enforceable contract to stand on rather than what you've just pulled down from off the internet (I mean we all know how reliable sources are on the internet right??). I did this with both my Terms of Service and the contract I used to use when I was creating custom games and hiring third party programmers. I never had a problem upholding my contracts with anyone even when they were in violation of it and I had to revoke their rights to programming work or their access to hosting services or a game. I've also never had a legal issues come up from my Terms of Service in the18 years I've been running my games.

 

[Pepper-Head]

I definitely agree that a contract lawyer will be your best bet in getting a really tidy and firm contract, especially when you are running a business!

However, I know many who are just freelance artists - maybe just as a hobby or for income on the side - that can't/don't see the value in spending that much money on a lawyer for a well reviewed and (hopefully) totally legally sound contract, but shouldn't let that deter them from trying to have something to protect their rights and assets and it can still have legal standing!

My post is definitely not exhaustive, and leans more towards artists (as that's how I've learned) - but it's hopefully an informative introduction, and is helpful enough for people to start thinking about contracts and getting one of their own made up!  

Lastly. as a fellow Programmer, I feel that it should be touched on if pursuing a legal avenue after a breach is worth it. Seeking justice for a broken contract isn't always worth it after considering how much it will cost you to take legal action versus how much you're making in return. This is especially true with some mom and pop shops. This is why I personally find ways to jail access to some form of demo to require payment before delivery. For some things that I've not been able to do this with (desktop applications in binary form), I flat out placed customized DRM that would prevent usage of the application. 

@FearZero - Thank you for sharing some more information! What I quoted above is especially important in our little niche industry and commissions from smaller businesses or individuals - and really good on your part for finding ways to cut off access until the scripts/services are paid for!