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Contracts That Work For You and Your Business: Part II

Posted By TNNA HQ, Wednesday, August 23, 2017
Updated: Thursday, August 24, 2017

Contracts That Work For You and Your Business: Part II

 By Danielle Chalson

In my previous article, I touched on the collaborative nature of the needlearts industry and concluded that, when two parties want to work together, even a basic contract is a good idea. So how do you draft contract language if you’ve never done it before?

Chances are, you have done it before, simply by exchanging a series of emails with another person in which you both agree to complete a project together. But even if you haven’t done that before, or if you’re interested in a more structured approach, then you can start by answering The Five Ws and One H: Who? What? When? Where? Why? How? I’ve provided some simple examples below. 

 

1. WHO are the parties to the contract?

A designer creating a design for a publisher?  A craft company selling a product to a craft store?  A teacher teaching a class at a TNNA or Stitches show?

This question tends to be more relevant when the contract is more complex or the financial stakes are higher (e.g., as part of a book contract).

2. WHAT is the contract for?

A design?  A series of classes?  A new book or magazine?  A new product? 

Always double-check this answer!  In my experience, a boilerplate contract can be sent with the wrong details for a design if it isn’t updated from one project to the next.

The answer to this question also may include WHAT happens if any of the terms of the contract are violated: if a deadline is missed, if one party fails to hold up its end of the bargain, or if a warranty term (e.g., the designer warrants to the publisher that the design does not infringe another designer’s intellectual property) is breached.  

3. WHEN is the contract in effect?

When is payment due?  When is the class?  When is the sample due?  When will the product hit the market?  What is the publication date?  When will the collaboration between the parties end?

The answer to this question is more complicated when license (e.g., copyright) terms are introduced.

4. WHERE is the contract in effect?

The United States?  Worldwide?  At a specific store, venue, or trade show?

The answer to this question is more complicated when license and venue terms are introduced.  The answers to WHEN and WHERE can be related, especially when license terms are included.

5. WHY make a contract?
Contracts can be useful for many reasons:

 - The parties may have many obligations to each other and a contract may make it easier to keep track of everyone’s responsibilities.

- The details can get confusing—or even be forgotten—if they have to be pieced together from various emails or letters over time.

- Contracts can force the parties to consider forgotten or overlooked details regarding timing and what happens in the event of a breach.

- The answer to this question may overlap with the WHAT question: what is the reason that the two parties want to collaborate?

6. HOW will the contract be fulfilled?

The answer to this question often involves spelling out each party’s responsibilities.  Who will complete the design?  Who will teach the class?  Who will provide the photography for the product?  Who is paying for the project?  How and when will payment be made?

The answers that you generate to these questions (a) should be included in your next contract, whether that “contract” is one paragraph or dozens of pages; and (b) may lead to further questions that the parties need to answer before they begin working together.  Clarifying each party’s expectations and roles up front is one of the greatest benefits to making a contract in the first place! 

In future articles, we will begin to explore terms that can complicate the contract-drafting process.  


About Danielle Chalson

Danielle Chalson is a patent attorney. She’s also an independent knitwear designer who designs for established publications and self-publishes under her own brand, Makewise Designs. You can find her on Ravelry (makewise) and on Instagram (@makewisedesigns). She and her family live in Long Island, New York.

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