Contracts, Licenses & Business Forms

The process of establishing a business relationship takes a variety of formats from oral communication via meetings, phone, and casual email exchanges to simple written letters of agreement or formal contracts. A written document is testimonial to the professionalism and commitment of each party and serves as a resource to define the scope of the project and the terms and conditions of the agreement. The use of a written agreement is always advised.

Contract Basics

Most written agreements cover the basic elements of a project: scope of the work, specific art services required, deadlines, fees, payment schedules, ownership of work product, and transfer of licensing rights. Some also include additional boilerplate clauses addressing additional rights and other legal provisions. A written agreement should be established before work is initiated. A contract signed by both parties becomes proof of what was agreed upon and prevents misunderstandings later.

Determining how formal a contract should be is a decision every medical illustrator / animator needs to make relative to the project at hand. A wide variety of written agreements can be used to express the project terms and conditions including purchase orders, proposals, estimates, confirmations, letters, and contracts. Often, it is the type of client or size of project that influences the formality of the agreement. Generally, if a job involves a lot of money, time, overall complexity, or any combination thereof, it should be protected with a comprehensive contract. For many situations, however, short letters of agreement and simple forms may be sufficient. An illustrator must weigh the likelihood of disputes and the risk of nonpayment when deciding how comprehensive the written agreement should be.

Contracts versus Licenses

A contract is an exchange of obligations and is enforced under state contract law. A license is a permission to use someone else’s property (usually with particular restrictions) and is enforced under federal copyright law, not state contract law.

Most typically for medical illustrators, a contract is used to establish the obligations (e.g., scope of work, deadline, payment terms) of each party when a client engages an illustrator to create original work (commission). The contract likely will include a license as well, which grants the client usage rights of the created work under particular circumstances and with specific limitations.

A medical illustrator may issue a license (without further terms for scope of project or obligations) when he or she simply wishes to license usage rights to existing work (stock) to a client.

Contract Terms and Conditions

Agreements often consist of project-specific terms that define scope of the work as well as boilerplate clauses that protect a business in the event of a dispute or lawsuit. Boilerplate clauses can generally be reused on every contract, as they are not specific to the particular project.

Medical illustrators should understand these clauses, when to apply them, and what options are available when negotiating terms with a client. It is wise to seek professional legal guidance on any contract the illustrator considers to involve a high degree of risk. Issues at risk could be such things as amount of money, investment of time, extent of copyright licenses or transfers, or project size.

Special Copyright Issues in Contracts

When writing and negotiating a contract, issues of work-for-hire, all-rights or buyout clauses, termination rights, cancellation / rejection fees, and assigns have serious implications for ownership and use of the creative work. Additionally, when writing a usage license the wording should be clear and concise, preferably using standard definitions and PLUS terminology so that the client is clear what uses are being granted.

Full article including Sample Contracts, Licenses, and other Documents

These topics and more are discussed in detail in the complete article, which is available to AMI members as a PDF document in the Member Community Library. Additionally, members have access to sample contracts and license agreements that have been reviewed by an intellectual property attorney and can be downloaded and customized to meet your business needs.

Other Resources

Picture Licensing Universal System (PLUS)
www.useplus.com

AIGA Standard Form of Agreement for Design Services
www.aiga.org/content.cfm/standard-agreement

ASMP Business Forms
asmp.org/tutorials/business-forms-and-contracts.html

Columbia Law School
www.keepyourcopyrights.org
www.publaw.com
www.stopworkforhire.com