4 Contract myths dispelled
We have covered what a contract is in its basest form, and now you know how to construct one. You also have become familiar with some of the terms and conditions that you should definitely include in your contracts. However, despite this knowledge, it is quite easy to be duped by some of the more prevalent myths regarding contracts.
I’m pretty sure you know what I am talking about. You visit different groups and forums around the internet and see conflicting information. This, naturally, makes you ponder “What exactly is right?” To save you some time, I have compiled a list of what I consider the top four contract myths floating around cyberspace.
Template Contracts Stink!
I have said this, somewhat, in an earlier chapter. But it is not my intention to scare you completely away from using template contracts. As mentioned earlier, often the profit margin is so low on small jobs that employing a lawyer to draft a contract is cost prohibitive. A good template contract is a great starting point, just not an end all.
A properly drafted template contract can put you worlds ahead of the game. The best plan is to have a local lawyer draft a template contract for you after you have consulted with her and clearly communicated the goals you have for your contract. But, even having an attorney construct just one contract can be more money than a small business owner has to invest.
So, the next best thing is to find a good template contract on a reputable website. Of course, I am prejudiced and would highly recommend my website, TheLawTog.com. But there are many sites offering good templates. Remember, you get what you pay for. If you pay for a good contract which you can tailor to your needs, you will potentially save thousands of dollars in potential litigation down the road.
Once again, the most inexpensive route to having a great contract is to find a template online, then tailor it to your needs and have a lawyer read over the completed contract. A good attorney can review the contract in one or two hours. Listen to the recommended changes and implement those which work for your business model. You can then repeatedly use this contract for future clients; just tailor the terms and conditions for each individual client.
There is nothing worse than having a contract that does not say what you want or intended it to say.
If you do not have the Client sign something, then no Contract exists.
False the majority of the time, but it does have a hint of truth. While some contracts MUST be in writing, it is possible to have an oral contract that can be enforceable. It is definitely harder to prove contractual terms if they are not in writing, but it is not impossible. A court will often look at the conduct of the parties, seeing which party’s actions support or disprove that a contract existed.
The source of this myth is most likely founded in the Restatement of Contracts Statute of Frauds provision; which, like most modern law, is founded upon older English Common Law. This provision expressly delineates what type of contracts MUST be in writing. Of note to the average photographer are the following:
- Any agreement made for an amount greater than $x.xx (The specific monetary threshold varies by state. Typically, it hovers around $500.00 or more.)
- Any agreement that cannot be performed within the space of one year from the making thereof (e.g. a contract to take a time lapse photo of a client each day for over the course of more than 1 year).
Those two types of contracts, which a photographer could conceivably be a party to, require that writing be utilized to memorialize the contract.
This term is a more advanced contract concept. But it is good for a small business owner to know. If you have a contract which a client is disputing the validity of, this concept may well be your life raft. Promissory Estoppel can also cure a violation of the statute of frauds, making a contract valid in the eyes of the law.
This doctrine delineates that, if one party materially changes their position, by action or inaction, and suffers a detriment, because the party relied upon the promise of another, then the reliant party can enforce the contract under Promissory Estoppel.
Example: Cherri, an aspiring model, tells Jodi that she wants to hire Jodi for a photo shoot. The pair agrees on $750.00 for the shoot. No writing is utilized to memorialize the agreement. Cherri asks that Jodi hire a hair stylist and a makeup artist to prep her for her photo shoot. Jodi and Cherri agree upon a price, and Jodi proceeds to hire both a makeup artist and hair stylist. Jodi also has to turn down a wedding photoshoot that was to take place on the same day that Cherri reserved.
Cherri then goes out and gets the photos done at another studio and no-shows for her shoot with Jodi. Jodi bills Cherri $750.00. Cherri refuses to pay because she never signed a contract. Cherri claims that state X’s Statute of Frauds says all contracts for services greater than $500.00 must be in writing, or they are invalid. Thus, Cherri claims she has no contract with Jodi and owes her nothing.
If Jodi sues Cherri, what is the result? The court will most likely rule in Jodi’s favor. Jodi materially changed her position, to her detriment based upon the promise of Cherri, when she hired a hair stylist and makeup artist for Cherri’s photoshoot. Further, Jodi turned down other clientele because of Cherri’s actions. In order to make Jodi whole and remedy the breach of contract, the court will most likely award Jodi $750.00 plus court costs (court costs do not typically include attorney’s fees).
Contracts cannot be amended
Not True! A typical contract can be reformed as much as you see fit prior to the client signing the contract. After the client signs your contract, and the contract includes clauses that allow for changes to be made in writing, any changes to the contract must be agreed to and signed by all parties to the contract.
Example: Julie wants to hire Bobby to take pictures of her for a modeling portfolio. Bobby’s contract has a model release provision in its terms and conditions. Julie does not want to sign the release because she wants to control what photographs of her are displayed. Bobby is amenable to the refusal and strikes the model release provision from the contract.
To effectuate this change, Bobby can either print a copy of the contract without the provision in it; which is best practice. Or, Bobby and Julie can strike through the provision on the contract with both parties initialing and dating the change.
Example: Julie has already signed Bobby’s contract, which she did not read in its entirety. Julie asks Bobby if she can change the contract to exclude the model release provision. Bobby is agreeable to the idea.
In order to effectuate this change the parties must look within the contract. If there is a contract modification clause, then both parties may modify the contract pursuant to the modification clause. This typically includes adding an attachment to the contract specifying the change, which is then signed and dated by both parties.
Every person photographed must sign the contract.
This is where the doctrine of Privity of Contract comes into play. We discussed this in a previous chapter. Only the parties who agree to the terms and conditions of the contract are bound by them. Agreement is shown by the party’s signature on the contract. Basically, only the person who is responsible for the contract needs to sign it.
Once again, the senior portrait is a great example of this. If the senior is under 18 years old, they do not need to sign it. The contract need only be signed by a parent or guardian. Thereby, your client is in fact the parent or guardian, not the senior who you are photographing.
Keep in mind the following: As I have stated multiple times in earlier chapters, EVERY STATE IS DIFFERENT, and contract provisions may vary by state. Always research the contract laws of the state where the parties are entering into the contract; or, better yet, seek out an attorney in that jurisdiction to proofread and/or review your contract.