Dissecting the Terms and Conditions Document, Part I
This insight was originally published on August 18, 2015
On a few recent projects, we have spent a lot more time than usual reviewing specific terms and going back and forth with both agencies and lawyers to come up with language that works for everyone. During these particular projects, I often felt at a bit of a disadvantage when there were lawyers involved and wishing we had one of our own to help navigate our point of view.
I figured we were not alone in this thinking so asked attorney Linda Joy Kattwinkel of Owen, Wickersham & Erickson, P.C. if she would help dissect a generic Terms and Conditions Document that we can share with our readers. People were so appreciative of the information she shared regarding Copyright, we figured they would feel the same about Terms and Conditions. For more information about copyright, review this valuable post from pikwizard.com
The documents are a bit long and dense, so we are breaking this series up in a few posts. This post addresses items #1 – #5. If you have any questions, please leave them in the comments or email us directly. We will do our best to get them answered for you.
The format we thought most helpful would be to 1) review the term 2) translate the term into layman’s language and 3) ask any relevant questions. The first 5 terms are below.
#1. ACCEPTANCE. This order is subject to all the terms and conditions stated herein. If any terms contained in supplier’s acceptance of this order or in supplier’s invoices are at variance with the terms of this order, the terms of this order shall govern. No oral agreement or other understanding shall in any way modify or change the terms of this order unless agreed to in writing and signed by Agency.
Translation: The terms stated here supersede and replace any other document, including PO, estimate, invoice or oral agreement.
Note: Sometimes the PO can supersede the Terms. You will know this because the PO will say so and this means that what is written in the PO, if contradictory to the Terms, will prevail.
• Does this mean that if my own Terms and Conditions, Invoice or Estimate state different terms, they are not honored?
• If I have Terms that I would like added or removed, how do I do that?
Cross out this paragraph, and substitute “This order is subject to the terms and conditions of supplier’s proposal [or use the same term you used on the original document in which you stated your bid, e.g., “Estimate”] as accepted by Agency on ____________ [date]. If any terms contained herein are at variance with supplier’s proposal, the terms in supplier’s proposal shall govern.”
You can explain to the Agency that they entered into a legal contract when they accepted your proposal. The Agency’s subsequent Order with different terms and conditions is an offer to change the terms of that contract, which you are not agreeing to. For example, if your proposal was for limited usage, and the Agency wants a copyright assignment per No. 4 below, then your original pricing does not match their new request for all rights. The Agency needs to accept the original scope of usage rights or agree to pay your higher fees for a complete copyright assignment (also sometimes called a “buyout”).
• What constitutes an acceptance of a proposal? Does it have to be a signed estimate? Or, can an email indicating approval count? How about a verbal approval?
The safest and best evidence that your proposal was accepted is your client’s signature on the proposal document under a recital that says “agreed and accepted.” Under contract law, an email indicating approval will also suffice, so long its clear the entire proposal is being accepted (e.g., you can say, “please confirm that you agree to the attached proposal by return email,” and then if the client says yes, you’ve got what you need.) Under contract law, oral agreements are also binding, but then the trouble is trying to prove what was said. Once you are having a dispute about it, your client will not admit that they agreed to your terms. So as a practical matter, never rely on an oral agreement.
#2. PARTIES. Agency is acting as agent for the Client. Agency will be liable for the stated payments to the Supplier only in the event that the Agency has been paid by the Client for the materials furnished hereunder. Supplier, acting as an independent contractor, warrants and that it has full power to accept and perform all terms and conditions of this PO.
Translation: The ad agency will pay the photographer only if the agency has been paid by the client. The photographer guarantees that no-one else has legal rights that could interfere with what the photographer is promising to do under these terms.
• Is there any way I can protect myself against the not being paid?
Have a term in your proposal document that says no rights (usage or assignment of copyright) are granted until you are paid; or, that if you are not timely paid, you reserve the right to rescind the contract, and all rights will revert to you.
• Can I cross out the sentence about being paid only if the agency is paid by the client?
Yes, you can cross out anything. But you will need to be prepared to negotiate with the Agency about it.
#3. DELIVERY; INVOICES. Supplier shall not be entitled to payment for the material furnished hereunder unless all releases required herein have been delivered to Agency in a timely manner. Invoices shall be due not more than thirty (30) days after the occurrence of the last of the following: (a) receipt by Agency f Supplier’s invoice for payment referencing the PO; (b) completion and delivery of all work to be performed and goods to be delivered and accepted by Agency and (c) payment to Agency as been made by the Client for the invoiced amount. If delivery of material takes place prior to Supplier’s signing of this PO, Supplier’s delivery of the material will constitute its unqualified acceptance of all the terms of this PO.
Translation: You won’t get paid until:
– you have delivered to the Agency any model/property releases that you were required to get for the shoot
– you have submitted an invoice with the Agency’s P.O. number on it
– you have completed the shoot and delivered the images to the Agency, and
– the Agency’s client has paid the Agency.
• If I crossed out the section above in #2 about being paid only if the client pays the agency, should I do that here as well?
#4. COPYRIGHT OWNERSHIP/USE. In the event that the material which is the subject of this PO is copyrightable subject matter, Supplier and Agency hereby agree that for the purposes of this PO the material shall be a work-made-for-hire and the property of Agency as agent for Client. In the event that any material which is the subject of this PO is not copyrightable subject matter, or for any reason cannot legally be a work-made-for-hire, then, and in such event, Supplier hereby assigns all right, title, and interest to said material to Agency as agent for Client and agrees to execute such documents as may be necessary to evidence such assignment(s). Any terms of ownership or use other than as provided in this paragraph must be specifically stated in writing on the front of this PO; otherwise any limitations on ownership or use shall be deemed void. Without limiting the foregoing, if Agency’s right to use any material is in any way limited in time, Supplier agrees that, during the period of use, Agency’s rights shall be exclusive and Supplier will not use, license, or permit the use of the material for any other purpose, except only as may otherwise specifically be set forth on the front of this PO.
Translation: All of the images you shoot for this job will be delivered to and owned by the Agency. The Agency will own copyright, and can use them however it wants. You can never register copyright in these images, or reuse the images in any way, including subsequent licensing through stock agencies.
If instead you are giving Agency limited usage rights, a written statement to that effect must appear on the front of this P.O.. And, unless that written statement says otherwise, you cannot re-license the images for any other purpose during the Agency’s usage time (e.g., you cannot give the same images to stock agencies until the Agency’s usage time is over).
• If the usage rights we have negotiated are different, should I cross out this entire section and refer back to the PO? Or should I indicate what the actual usage is instead?
The best way is to cross out the entire section, and refer back to your proposal which the client already approved. If you want to restate the scope of usage rights, quote the proposal exactly and refer back to it. Don’t rephrase it.
• Is this Work for Hire?
Yes. Its a work made for hire with a back-up assignment of all rights. The assignment is there to cover anything that would not legally qualify as work made for hire. The effect of work made for hire and assignment are essentially the same – you are giving up all rights to the photos.
#5. SCOPE OF RIGHTS. Without limiting the provisions of paragraph4 hereof and unless otherwise provided on the front of this PO, the rights of Agency herein include, but are not limited to: (a) the right to use the material in such manner as Agency shall determine; (b) the right to alter or rearrange such material; (c) the right to secure copyright therein; and (d) the right to sell or otherwise exploit such material.
Translation: Unless there is a limited usage statement on the front of this P.O., you have no rights to object to whatever the Agency does with your images, including any kind of alterations (cropping, digital manipulation, combining with other images, etc), and any kind of usage, for any of Agency’s clients, and Agency can resell your images without giving you any additional fees.
• Just as in the case of #4, if the usage rights we have negotiated are different, should I cross out this entire section and refer back to the PO? Or should I indicate what the actual usage is instead?
Yes, cross out the entire section, and refer back to your proposal which the client already approved. If you want to restate the scope of usage rights, quote the proposal exactly and refer back to it. Don’t rephrase it.
• Is this Work for Hire?
Paragraph 4 is the work for hire/assignment section. This paragraph is restating and elaborating on the consequences of a work made for hire/assignment provision. If you cross out Paragraph 4, you need to cross out this paragraph as well.
Please stay tuned for additional posts regarding the remaining Terms.
Linda Joy Kattwinkel is an artist (painter) and a lawyer for artists with the firm of Owen, Wickersham & Erickson, PC in San Francisco. She was an illustrator and graphic artist before she became an attorney. She helps her clients with licensing and contracts, and has successfully prosecuted and defended many infringement claims on behalf of photographers. Some of her local photographer clients include Jim Marshall’s estate, Jim Erickson, Steven Sommerstein, Charles O’Rear, Max Fallon, Dennis Anderson, Caren Alpert, and Elena Kulikova. Other prominent clients in the visual arts include Craig Frazier, Michael Schwab, Howry Design, and Hello Kitty.
Ms. Kattwinkel is the author of Legalities, an online column on legal issues for artists and designers for AIGA|SF, http://www.owe.com/resources/legalities/, and various published articles. She can be reached at firstname.lastname@example.org.
Thank you Dan Goldberg for the use of your image.