Need help with contracts

[stayinwonderland]

I never use contracts which is kinda risky I think. At the end of each project there's always a little delay in payment and I realise that I'd be pretty much screwed if they decided not to pay.

 

As I'm new to arch vis, I only have a couple of clients but only one is regular. We live close by and he seems like a reasonable person. He's an architect and offers visualisation, via me, to his clients but he refuses to pay me deposits and really only pays me once I've given him what the client needs.

 

Just recently, I completed a project, working day and night for a week, handed him over the goods along with an invoice and he said the client has put the project on hold. A lot of these fine points are covered over the phone too. He said that he'd pay me himself and, quote, "hopefully" get some payment off the client.

 

So should I ask to be put in touch directly with his clients and make them sign something? Or make him sign something?

 

If so, is there any resource for helping me get started on drafting up a contract for archi viz clients?

 

Thanks

[CliveG]

He said that he'd pay me himself

 

Of course he'll pay you himself.... he's your &^%*# client! Most of us have probably heard similar and it irks beyond belief. Just insults the intelligence. As you say, ask to be put in touch with his client directly then. That may galvanize him into action, as it'd reflect very badly on him if you did ever make contact directly.

 

Of course everyone will say about watermarks etc. and contracts and all of the other safeguards but generally these are all well and good for larger companies who have a more formal "arms length" relationship with clients. But with lone freelancers, certainly in the early days, it simply doesn't wash to meet up with a potential client and be trying to strike up a pretty friendly relationship, then slap down a contract like the yellow pages on the table and say "sign this and by the way your images will be watermarked until I see the colour of your money hit my bank account". You may as well say "I don't trust you as far as I can spit - you snake" which sort of sends the wrong message to potential clients.

 

Legally the best contract in the world may not actually provide you any sort of legal surety either unless you've the financial clout to pay enormous legal fee's - were it ever to be tested in court, I've seen people sue past the biggest signed indemnities. So it may be a slightly false trust that everyone places in these things or ignore the realities of the legal system. (oh I'm sure I'll get taken to task for that view!)

 

However I do believe that it would be in the freelancers interest to define a framework in a more subtle manner perhaps. Maybe upon delivery of the images having something along the lines "acceptance of these images indicates acceptance of the following terms.... " in the document transmittal (form / email whatever) This can be a lot less offensive to the client because it's sort of happening behind the scenes and may just give you enough leverage if required at a later date.

 

No matter how much we like it, as a freelancer an awful lot still comes down to trust, especially if you can eyeball the person, it's a particular kind of client who can look you in the eye and still not pay. Put yourself in front of him or her and say, look I did the work for you in good faith, not for Barratt Homes or whoever their client may be.

 

Perhaps with the scenario you've described watermarks could work, but I know that they are not appropriate in all circumstances.

[stayinwonderland]

Thanks for the useful info. You're very right about coming across as untrusting, it's just not nice when trying to build relationships.

 

To that I have one question that's been bubbling in my mind for a while now (inspired by watching Judge Judy, lol). Could you not take someone to small claims, if the job was for a few hundred pounds/dollars and just take prints of the email exchanges? I would have thought that enough proof that they owe you X, no?

 

I have thought about putting offensive watermarks that no one could show another professional, such as 'TOSSER'. Watermark it with your logo and an architect could still make perfect use of a visualisation by showing it to colleagues etc. Lol, kidding, but something along those lines might work

[vangutendog]

Hi Andy

 

Don't contact his clients. It will create a bad business relationship between them and him and a possible one between you and he. Also you are not a dept collector.

 

I too am new to visualization, however I have run enough businesses to know that you should never go on trust alone. Always set up contracts clients and demand a deposite upfront. Your client, likewise, should have demanded a deposit up front before passing work on to others.

 

The idea of the deposit is basically for this reason. Whatever costs a service provider incurs are covered until the work is done. You are not a bank so don't treat your time as a loan. I've seen, too often, close relationships go south because of trust alone. I've also seen individuals go bankrupt because they placed "trust" in a client.

 

If he pays you himself then that is very good. If this doesn't work out then count your loses and use this as a lesson for the future.

 

When I started my first business, I trusted everyone and was "skrewed" by a very close friend. Since then I've learned, "because I trust everyone, I trust no one."

 

Hope this helps.

 

EDIT:

 

 

Legally the best contract in the world may not actually provide you any sort of legal surety either unless you've the financial clout to pay enormous legal fee's - were it ever to be tested in court, I've seen people sue past the biggest signed indemnities. So it may be a slightly false trust that everyone places in these things or ignore the realities of the legal system. (oh I'm sure I'll get taken to task for that view!)

 

 

This is completely accurate. Some large firms get to a stage that they consider themselves untouchable. The will often completely ignore contract because they feel the other party does not have the means to sue. If sued, its a simple matter of throwing up their arms and saying "sorry, here's your money" or worse, counter suing.

Edited November 16, 2013 by vangutendog

[CliveG]

Small claims works... no question. I (eventually) took a non-payer to Australian small claims and ended up getting paid more than the last invoice!

 

Beauty!

 

That said there's things to be learnt about that process too, if you ever get into the situation I'll pass on some of what I learnt as it's too long and boring for now. (probably similar to UK small claims as they're probably all from a similar basis)

 

The upshot is though that keeping good relations is far easier than picking any sort of a fight (if you've met my wife.....) Really in business terms it's money in the bank if you can just do what you do best and not be distracted by wasting time learning about the legal system. (Because it really ain't pretty!!!!!!)

 

I would take whatever steps I could to safeguard this without offending and really as unscientific as it may seem - sort of trust your gut as to who to do business with and who is perhaps going to spoil your day one day!

 

VG... I'm not sure of how it is in SA since I was last there, but really I've worked in UK and Australia and have contacts large and small in both places and I've never seen anyone take deposits. Staged payments at best.

Edited November 16, 2013 by CliveG

[vangutendog]

What is small claim's like in Oz? Here there is a cap so it you can only get paid out a certain amount. That's fine for smaller projects, but not so much for the bigger ones.

[CliveG]

What is small claim's like in Oz? Here there is a cap so it you can only get paid out a certain amount. That's fine for smaller projects, but not so much for the bigger ones.

 

From memory it's $10k here. But there are usually ways and means of squeezing into SCC if you're owed more. For a start I believe it is always legally expedient to " make an offer " which put's you on the high ground as it were (legally & morally) so in our case that would be something like $11k outstanding ( and who would ever let it get that far out of hand?) but send an invoice " offer " of $10k for early settlement, then bingo.... Slap a form into SCC and you're away. Like all of these things, generally they'll be settled in the " mediation " phase so it's quite informal. It's no fun and I can't emphasise enough that life is so much better if you don't have to acquaint yourself with the legal system, because no matter what you believe about the legal system, it really only benefits one group of people and the old idiom of " the law is an ass " is unfortunately actually a very flattering description!

[stayinwonderland]

Well, the only reason why I mention to contact his clients directly is because that's something he has offered in the past and I did do with one client who actually paid me in full before the project even begun! so it might be worth trying that in the future.

 

Thanks for all the advice!

[vangutendog]

Well, the only reason why I mention to contact his clients directly is because that's something he has offered in the past and I did do with one client who actually paid me in full before the project even begun! so it might be worth trying that in the future.

 

Thanks for all the advice!

 

Np, hope it helped. Just remember, he is your client not them. Its not your job to run after them.

[Justin Hunt]

Just because you are small of a freelancer does not mean that you dont need a contract or you will insult new clients, quite the opposite in fact, they tend to treat you with a bit more respect if you have a well worded and simple to understand contract. Same with a deposit.

 

One client I had refused to pay a deposit but I did the job anyway. In the end he didn't want to pay anyone (including the architect) because the project didn't get planning approval. I told him that my payment was in no way conditional to any planning outcome and no where in the contract does it say otherwise. I still had to wait 6 months to get the money. Funny thing was he came back to me after they did a redesign. I told him that in no uncertain terms that any work was going to be started until I got a 50% deposit or that any highres, unwatermaked images would be issued until full and final payment was made. Guess what I got the deposit and the final payment no hassle. Sad thing was the architect never saw a cent.

 

The other thing to keep in mind, with the deposit they client now feels they have a vested interest in working with you and you with them. You now have a commitment to the client, they have giving you money upfront, they have to trust you that you will deliver and not just run off with their money.

 

The clients that refuse to sign or pay a deposit are the ones to be careful of, and are usually the first ones to screw you.

 

jhv

[CliveG]

Just because you are small of a freelancer does not mean that you dont need a contract or you will insult new clients, quite the opposite in fact, they tend to treat you with a bit more respect if you have a well worded and simple to understand contract.

 

I don't disagree with you Justin and you make some good points, I think it's entirely true that the more professional your behaviour - the more respect clients will treat you with. I think you're also correct that a deposit may give a client a vested interest in working with you, which may be a bit of a novelty! I'm just not sure however that all of us enjoy the same luxuries as you. for example: What is the average time you get to work on a project, from initial enquiry to delivery of visuals? Me - I'm lucky if I'm on a week turnaround - to the other side of the world - so with the time difference, if I start messing around with deposits and signatures, that probably leaves me 3 days to produce my work... then if I watermark, well that cost's another day. My clients have presentations booked and these don't move. I know if I held out for a deposit my work would go elsewhere. So in my world I hit the ground running and am usually working 16 hours a day to hit deadline anyway. Perhaps that's why I get work, but I do also get paid. That said I've freelanced off and on for nearly 30 years and so I've invariably seen my share of dodgy clients, which is what my opinions are based on.

 

And of the nationalities I've done work in guess which are the worst non-payers.... Us and the US! No problems with Europe, Scandinavia or even South America, but my own fairly wealthy country and apparently the richest country are sadly the one's I've personally had problems with.

 

Anyway I guess the thing Andy was asking about originally and I'm pretty curious about now is the actual wording of that well worded contract, can you suggest anything?

[vangutendog]

I don't disagree with you Justin and you make some good points, I think it's entirely true that the more professional your behaviour - the more respect clients will treat you with. I think you're also correct that a deposit may give a client a vested interest in working with you, which may be a bit of a novelty! I'm just not sure however that all of us enjoy the same luxuries as you. for example: What is the average time you get to work on a project, from initial enquiry to delivery of visuals? Me - I'm lucky if I'm on a week turnaround - to the other side of the world - so with the time difference, if I start messing around with deposits and signatures, that probably leaves me 3 days to produce my work... then if I watermark, well that cost's another day. My clients have presentations booked and these don't move. I know if I held out for a deposit my work would go elsewhere. So in my world I hit the ground running and am usually working 16 hours a day to hit deadline anyway. Perhaps that's why I get work, but I do also get paid. That said I've freelanced off and on for nearly 30 years and so I've invariably seen my share of dodgy clients, which is what my opinions are based on.

 

And of the nationalities I've done work in guess which are the worst non-payers.... Us and the US! No problems with Europe, Scandinavia or even South America, but my own fairly wealthy country and apparently the richest country are sadly the one's I've personally had problems with.

 

Anyway I guess the thing Andy was asking about originally and I'm pretty curious about now is the actual wording of that well worded contract, can you suggest anything?

 

I think if you've been in business as long as you have, you're able to read who the client is and how to handle them. But If you think about it from a point of view of starting up, its best to set rules and stick to them. The problem with not setting these rules is that its harder to do so later if you see the need but easier to grant leniency in the cases you've mentioned above.

[RyderSK]

I created my from the template by 3DAS quite some time ago, the very popular one on this forum :- ). I originally stripped it a bit and toned down the language as the template is mostly archaic for current day, but over the time, working with some big companies, it started bloating, and it is almost grotesque in current form, over 12pages on average big project. It gets used only for that, everything else is trust based.

 

With that said, I find watermarks to be bit pushing it and awkward thing to do. While I am not happy when I am on net30 with big companies once I provided finished result and invoice, it's simply standard. With smaller clients, this can be easily negotiated.

 

I still had to wait 6 months to get the money. Funny thing was he came back to me after they did a redesign. I told him that in no uncertain terms that any work was going to be started until I got a 50% deposit or that any highres, unwatermaked images would be issued until full and final payment was made. Guess what I got the deposit and the final payment no hassle. Sad thing was the architect never saw a cent.

 

I am bit baffled by this. He proved disttrustful, unethical, yet you worked again with him ? Clients like this should not only go to "spam" folder, they should also be blacklisted wherever possible.

[CliveG]

.... 12pages on average big project. It gets used only for that, everything else is trust based.

 

 

At last.... someone else said it - trust.

 

Anyway Juraj, do you take deposits before commencement? If so is that for big and small companies alike.

 

My guess is those net30 companies won't pay deposits as a matter of policy. If these companies take 30 days to pay an invoice for work we've actually completed (more like 40 - 45 because we - "missed their invoice cycle", yeah right it's called cashflow!) I doubt they'd be prepared to give a contractor money for work that may or may not actually be delivered?

 

Also I'm curious have you encountered anyone in our industry that has ever had to actually use their contracts in court to get payment due to them?

[Scott Schroeder]

My car loan through the bank trusts me enough not to have me sign any sort of contract. When I walked into the bank to get the money for my house all I had to say was, "Heeeeeeeeeeeeey guy, come on buddy. You can trust me to pay you in time. We don't need to meddle this fine and dandy relationship with any sort of icky mistrust and no darn good contracts." When I lived in an apartment, the owners also trusted me enough that I wouldn't trash the place and I would oh so totally pay them on time because I just look like a stand up guy so we didn't need any sort of lease. Me cell phone company absolutely trusts me not to switch carriers and pay my bill on time, so we don't need no stinkin' contracts. If any of these sound stupid, then why doesn't it sound stupid when applied to freelancing? Maybe it's because I'm from the US and we generally are a mistrustful bunch of goons on this side of the ocean and I can't even get a cup of coffee from McD's without a contract on the cup stating that if I'm a klutz and spill it all over me I can't sue them for scalding hot coffee.

 

My contracts are now simple. They are 2-3 pages and include terms of payment, terms of changes and scope creep, milestones and deadlines, and a few lines stating that in breech of contract the client will be responsible for all costs in the contract plus costs incurred in getting payment (ie court costs). The only time I ever had to run after a client to get paid I sent a simple email telling them to "please review the section on terms of payment in the signed contract." By the next day I had payment in full and a pretty sweet apology for being late.

 

Once again, posting this for everyone to see....

 

Some talking points that Mike mentions,

On the subject of trust vs contract; "When you do business you don't want to trust them to pay you, you want to make sure you get paid."

 

On the subject of getting a lawyer to review your contract; "You are at the point when you need a lawyer when you decide to stop being a design amateur and become a design professional"

 

On the subject of starting work without a contract; "Starting work without a contract is like putting on a condom after you've taken a home pregnancy test."

 

[notamondayfan]

Trust is ok, but something written down over is better.

 

I have a simple contract. For me a contract isn't just about deposits and payments, but also a brief, time scales, expectations, etc. It also lists things the client needs to do, such as send drawings and approve drafts.

 

For very small jobs (less than 1 day), an email with a reply from the client is sufficient. Even if th client phoned up and discussed everything over the phone, I will still email with a run down of what we talked about.

 

By the way Huds Digitals, a meetup group are doing a talk on contracts for freelancers. I'll be going, so hopefully I should learn a thing or two.

 

Dean

[Tommy L]

 

Of course everyone will say about watermarks etc. and contracts and all of the other safeguards but generally these are all well and good for larger companies who have a more formal "arms length" relationship with clients. But with lone freelancers, certainly in the early days, it simply doesn't wash to meet up with a potential client and be trying to strike up a pretty friendly relationship, then slap down a contract like the yellow pages on the table and say "sign this and by the way your images will be watermarked until I see the colour of your money hit my bank account". You may as well say "I don't trust you as far as I can spit - you snake" which sort of sends the wrong message to potential clients.

 

Legally the best contract in the world may not actually provide you any sort of legal surety either unless you've the financial clout to pay enormous legal fee's - were it ever to be tested in court, I've seen people sue past the biggest signed indemnities. So it may be a slightly false trust that everyone places in these things or ignore the realities of the legal system. (oh I'm sure I'll get taken to task for that view!)

 

 

 

Yes, you will get taken to task for that view. A contract is nothing to be ashamed of. Its not something you slap down, its some thing you email and its a precursor to starting work. You dont need a deposit unless its a large job for an unknown client, or if you have out of pocket expenses, but the contract is a must.

The contract makes you appear more professional anyway, so Im not sure the reasoning behind not doing it.

[RyderSK]

At last.... someone else said it - trust.

 

Anyway Juraj, do you take deposits before commencement? If so is that for big and small companies alike.

 

My guess is those net30 companies won't pay deposits as a matter of policy. If these companies take 30 days to pay an invoice for work we've actually completed (more like 40 - 45 because we - "missed their invoice cycle", yeah right it's called cashflow!) I doubt they'd be prepared to give a contractor money for work that may or may not actually be delivered?

 

Also I'm curious have you encountered anyone in our industry that has ever had to actually use their contracts in court to get payment due to them?

 

My terms are always the same, 30perc. deposit and 70perc. upon completment. 50perc. is something bit extreme, though I wish I could get away with that. 30perc. is something everyone agreed to. With small clients, both these payments are before start/deposit and right upon completment. With big companies (biggest american furniture maker for example) it is net30, for both :- ). Not that I am happy with that but you won't change the payment policies of companyies after certain size. I really dislike british net30 though and almost always mention very clearly how it upsets me.

 

I still stand that the necessity of clear-cut contract for every sort of job, no matter what client it is, is bit american trait. Lot of people try to portray it very black-and-white here,i.e "no contract=amateur,fool,etc.." "contrast=big nice professional". I would like to mention really odd example (the diamond market..done purely with handshake, everyone knows which one).

 

I choose my clients extremely tediously now and had for some time and build very close relationship, with that, both parties know very well what to expect. After that point, we don't need to send paperwork for each case, emails and invoices are all necessary. Even the contract is just formality, every client I have is international, I would have zero chance to take to court and get something. Small claims courts like in UK/US are local thing. I am not making millions so I could go to international arbitrage (and still get nothing even if I won ! just good feeling)

[Justin Hunt]

I am bit baffled by this. He proved disttrustful, unethical, yet you worked again with him ? Clients like this should not only go to "spam" folder, they should also be blacklisted wherever possible.

 

Believe me I first told him to take a hike, he still wanted the work done and because I already had the model done he didn't want to start from scratch. Which is when I layed down the terms. I added a bit to the rate to make up for the crap.

 

Since then I have never started work with out a deposit, only my real long term clients whom I been working with for over ten years I dont, but I still issue a quote and contract. They like this because every one starts on the same page. I also write a return brief after the first briefing, listing the views, locations and what will or will not be included. I learnt this the hard way, and has paid off a few times as sometimes there is a bit of miss-interpretation or the scope changes.

 

Most of my projects are around a week or two. I have learnt to listen to my gut. If I feel that it good then I will start pre-liminary works before I get paid. But if I dont receive payment by the first draft then work stops until we have discussed the matter, often its a quick call. If deadlines are tight, then they are also under obligation not to delay them as much as you are.

 

My 50% is only for large projects, for smaller ones 25%. Anything less it just not worth it.

 

jhv

[RyderSK]

I already had the model done he didn't want to start from scratch. Which is when I layed down the terms. I added a bit to the rate to make up for the crap.

 

I see, thank you for explaining. Sometimes it's indeed worth to be practical, but I still have bad feeling about such things.

[CliveG]

Your property mortgage, your car loan and your rental apartment contract are all pertaining to tangibles, they exist when you sign the contract, their exact condition can be examined and documented, their dimensions, the colour, whatever, it's there, you can touch it. However when we ask a client to sign the contract we're asking them to sign for an intangible, something they've not seen.... something that doesn't actually exist - a promise to deliver something that meets some subjective and legally indistinct criteria.

 

OK a good way to examine the position is to transpose it... so how about "@$#% you give me the image I wanted". - now how are you legally going to define that image in a contract so that you could stand up in court and prove that it has been delivered EXACTLY as agreed. "Well it's of a building, it's real pretty...it's got some glass, some steel", Heck there are a million variables as to his expectations of an acceptable image and thus a million reasons that you have actually broken that contract when you deliver an image. That's just a field day for a lawyer and as you say you're in the home of litigation.

 

So I'm certainly not suggesting that you shouldn't have a contract - what I am suggesting is that you don't rely on it. A contract is NOT a surefire way of getting a faintly dubious customer to pay. My underlying point and really my only point is that if you think the client is faintly dubious - don't get involved in the first place.

 

Because a contract is a threat only, it's a stick that may or may not intimidate your errant client into paying. It's not much use for anything else. No freelancer here seems to have put their hand up and said I've taken someone to court with my contract and come out of it better off, because you will only come out of the experience worse off. Companies may have, but that's what companies do. Never mix up the legal advise applicable to a company to that for a freelancer. It's chalk and cheese.

 

Once you've been there, you'll understand ...

 

The upshot is though that keeping good relations is far easier than picking any sort of a fight. Really in business terms it's money in the bank if you can just do what you do best and not be distracted by wasting time learning about the legal system. (Because it really ain't pretty!!!!!!)

 

 

and I can't emphasise enough that life is so much better if you don't have to acquaint yourself with the legal system, because no matter what you believe about the legal system, it really only benefits one group of people and the old idiom of " the law is an ass " is unfortunately actually a very flattering description!

[Justin Hunt]

For me the only time a client refused to sign a contract was the one that ended up disappearing halfway through the project, never to be heard from again. I lost out on $3000. I blame myself for accepting the job and was the start of me listening to my gut feeling. I had a bad feeling to start with.

 

I agree that most contracts would never stand up in court, I know mine wont, but I disagree that they are a threat. Quite the opposite I feel. They should be used as a guide to spell out what work will or will not be included, terms of payment etc. That is why I keep them simple. I more than likely miss out on a few very important points, and I know that they are no guarantee to payment.

 

This is where watermarks come in.

I dont put them in to peeve the clients off, I put them in to stop them using them with out final payment. Also a few times a Work In Progress image has gotten out to the public and they have been taken as the finished product. Caused a few head aches. I keep them fairly discreet and dont obscure the main subject.

[CliveG]

You're a God Justin... how do you do it?

 

You're projects are one to two weeks - same as mine - yet you get a contract signed and a really clear record of the brief written and included then still watermark images and have final payment in your bank before that one or two weeks are up!

 

Hell, I'd never get any work done!

 

This is all very sane though, even if this sort of thing does look a bit difficult for me to achieve, with my clients abroad.

 

Watermarking is the key I think...

Edited November 19, 2013 by CliveG

[Justin Hunt]

Oh I wouldn't say it always works out that way. One thing I do, do is, I tell them up front, at the first meeting that I will quote and I expect a deposit. This way they expect it before I quote. The return brief is short, and should only take a couple of minutes.

 

It is also amazing how quickly the money appears once they realize that they have nothing until then. Before they had no incentive to pay, after all they have everything they need already. I dont send the invoice to the architects, rather direct to the end client. This saves the hassle waiting two pay periods to get your money, the clients and the architects. For some clients the pay period is set so I dont have control over that, but it is noted in the contract as such.

 

I tried progress payments but found they took too much to administer.

 

Most of my clients are local (if you call interstate local). International clients would be very difficult for me to cope with.

[CliveG]

It's still impressively organised though...

 

Part of my problem is that I was originally a designer, evolving to a designer that visualizes my own designs to - for some strange reason only recently - to occasionally just straight visualizing.

 

With design, I've already given away most of my value to the client at their first sight of the first draft 2D... so there is no point in my holding back and watermarking and contracts. Hell I had one of the F1 teams outright, steal my design many years ago.... what am I going to do, they just have to move a wall and my IP is dust! (+ I'd had to sign all sorts of confidentiality agreements etc that I'd have been in breach of immediately) No contract could protect me, there is no point in trying, you just have to be philosophical about it.

 

So this is a bit of a novelty now, especially as some of the clients using me for visualizing also use me for design / visualizing.

 

I need to get my head around how to organise treating them one way for one thing and another for straight visualizing.