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Contracts |
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Contracts often present a
multitude of confusing legal terms and in-depth scenarios. The contracts
section addresses various generalized to more specific questions that arise
regarding a contractual agreement. Contract Issues
What is a contract?
A
contract
is an agreement between two or more parties that stipulates the terms &
conditions of their business relationship. Generally speaking, a
contract
sets out the rights and responsibilities of each party, and in many cases it
also stipulates the methods and means for resolving disputes that might
arise between the parties in the course of doing business. Finally, a
contract
can be made either orally or in writing. The preferable form is to have
your contract
in writing, because oral agreements are more likely to lack clarity and
specificity thereby increasing the chances that your agreements will be
construed as unenforceable [from a legal perspective], or they will be
enforceable in ways that are dissatisfying to one or more of the parties. Back to TopWhy do I need a contract?The most important reason is to protect your interests in your work. History is replete with examples of very talented artists who have been taken advantage of by unscrupulous entrepreneurs whose only concern is THEIR making money from YOUR talents. Beyond this unsavory possibility, using contracts in your business dealings helps to establish you as a serious and knowledgeable professional. Simply put, contracts help to present you and your work as professional and worthy of serious consideration and fair treatment. Additionally, many potential markets for your work simply will not deal with you without a contract. In fact, people who prefer not to have contracts like it that way so they may keep the upper hand in their dealings with you or take advantage of you. Insisting that you have a contract is one very effective way of avoiding problems in your business affairs. Such a request may result in the loss of a sale, or an opportunity, but believe me, you will be better off in the long run. Those who shy away from legitimate and reasonable business dealings are likely to be the one’s you don’t want to do business with anyway. This being said, remember that, whoever drafts the contract is likely to slant its provisions to the benefit of their client or interests so – READ THE CONTRACT CAREFULLY BEFORE YOU SIGN IT AND IF YOU HAVE QUESTIONS DO NOT SIGN IT UNTIL THOSE QUESTIONS HAVE BEEN ADEQUATELY ANSWERED BY A COMPETENT PROFESSIONAL. Back to TopDoes everyone need a contract?This question might better be asked, “does everyone need a written contract,” because technically any time two or more parties have an offer, acceptance and consideration, in most cases even just orally, a valid and binding contract is formed. In circumstances where a written contract is not required it is probably a good idea to commit the contract to writing in order to avoid any confusion or problems with clarification and to have tangible proof of the burdens and rights of each party to the contract. By reducing all negotiations and agreements to writing, and even better by completely integrating the contract into a single written document, each party knows exactly the contract terms. Any possible dispute regarding the actual terms of the contract will not have be solved by the possibly unreliable memory of a party but rather by looking through the terminology of the contract itself and pinpointing the exact obligations as they are legally enforceable. Finally, in the event of a dispute between the parties that leads to litigation it is probably best to have the contract reduced to writing so that the court or arbitrator is in a good position to determine which party fulfilled what obligation and which obligations were neglected, without having to rely on disputable testimonial evidence. Back to TopDo I need a contract for everything I do?
The simple answer is NO. However,
whenever you are attempting to sell your work, have your work represented by
a professional such as an agent or gallery, you have been commissioned to do
some work, you are displaying your work for public viewing, you are
performing for pay, or you are consigning your work (leaving your work with
another for purposes of sale, review, display, or representation) it is best
to have a
contract to avoid future problems in your business affairs. Remember,
ART is a BUSINESS TOO. While most artists don’t like to perceive of their
professional endeavors as work, the reality is that your talents and the
products of those talents are only as valuable as you are willing to make
them. Paying attention to the business side of ART is a necessary and
crucial element in determining your long term success as an artist. Back to TopWhen is it best to have a contract?
Whenever you are attempting to sell your
work, have your work represented by a professional such as an agent or
gallery, you have been commissioned to do some work, you are displaying your
work for public viewing, you are performing for pay, or you are consigning
your work (leaving your work with another for purposes of sale, review,
display, or representation) it is best to have a
contract
to avoid future problems in your business affairs. Back to TopWhat does a contract look like?
A
contract
can be unilateral or bilateral, express or implied. A unilateral contract
is an agreement entered into by two parties where one party acts in exchange
for a promise by the other party. A bilateral contract is an agreement
where both parties make promises in exchange for the other party’s promise.
Both contracts
need valuable consideration to be binding. Oral contracts, though less
enforceable (or sometimes not even enforceable pursuant to the statute of
frauds), may be express, implied, unilateral, or bilateral. A written
contract can look like a “form” contract, which has “boiler plate”
language. (An example of this would be a Jiffy Lube contract or credit card
application contract). Contracts that are drafted between two parties for
specific acts or promises may be drafted and look quite different from
general form contracts. These contracts may vary in how they look, but most
likely there will be blank lines where the parties enter their names with
promises to do or not do something written below. Also, the terms of the
contract
must include dates, amounts, and/or the consideration necessary to bind both
parties to their agreements. Contracts that cannot be performed within one
year must be in writing pursuant to the statute of frauds. If the
contract
involves the sale of goods of over $500.00, or the conveyance of real
property, then it must also be a written
contract.
Often there will be a place at the end for witnesses or a notary public to
sign, verifying the parties’ signatures. There may also be numbered
sections so that the parties can refer to certain portions of the contract
more easily. Back to TopWhat should be included in a contract?A contract should:
Back to TopAre there different contracts?A contract is broadly defined as an agreement between two or more competent parties in which an offer is made and accepted and each party benefits. The agreement creates obligations to do or not to do the specific things that are the subject of the contract. Contracts can take on a multitude of different forms from completely written, to partially-written and partially oral, to completely oral. Arizona law requires that some contracts be completely written in order to satisfy the Statute of Frauds, while some contracts may never need to be reduced to writing, depending on the circumstances. Contracts may cover myriad topics and agreements, including employment, sales, and property transfer. In that sense there are countless different types of contracts. But on a more general level, a basic contract between two parties may have some of the following characteristics. Unilateral v. Bilateral contracts- A unilateral contract is a contract where there is a promise by one party only. In a unilateral contract, the party making the promise is only bound if the other party performs. The promise can be withdrawn by the promisor at any time prior to performance by the promisee. In a bilateral contract, on the other hand, both parties to the contract make mutual promises to do some future act. Consideration of the promise of one party is a promise on the part of the other. Bilateral contracts are preferred over unilateral contracts because both parties are given protection. Void v. Voidable contracts- A void contract is actually no contract at all and no action can be brought for breach. A voidable contract is one in which one or more of the parties have the power to avoid the legal obligations. A voidable contract is valid and binding until it is avoided by the party who is entitled to avoid it. Express v. Implied contracts- In an express contract the terms are written or orally stated by the parties; in an implied contract some or all of the terms will not be expressly stated by the parties but will be inferred from the conduct of the parties and the circumstances of the case. Both types of contracts are recognized by general contract law, but implied contracts have some limits. Regardless of these contract characteristics, for a contract to be enforceable the fundamental elements of offer, acceptance and consideration must exist. If one party makes a promise to another without consideration it may be considered a gratuitous promise and may not be enforceable. Back to TopWhat is a verbal contract?A verbal contract, known as an oral contact, is a contract that is not reduced to writing. Under general contract law an oral contract has the same validity and binding effect as a written contract except under certain circumstances where the Statute of Frauds requires the contract to be in writing (situations, among others, including a sale of goods valued at $500 or more, or an agreement that is not to be performed within 1 year). A valid oral contract still requires the formalities of a written contract, offer, acceptance and consideration, but it need not be reduced to writing. Back to TopWhat if we have a written contract, then verbally agree to something else?Under Arizona law a written agreement can be modified orally if there is mutual assent between the parties supported by consideration. To effectively modify a contract, whether it is written or oral and whether implied or express, there must be an offer to modify the contract, assent to or acceptance of that offer, and consideration. These requirements are in place to protect the parties by preventing one party from unilaterally modifying the contract at the expense of the other party. If the parties do decide to modify the contract, the consideration that is exchanged due to the modification cannot be something that a party is already obligated to do. Interestingly you can orally modify a contract even if the contract says it can only be modified in writing. Back to TopWhat if we verbally agree on something, and it is not in the written contract - or is different?
If the parties completely integrate
their contract,
that is they reduce the contract to writing so it is understood that it
embodies the complete agreement, then in the event of a dispute the writing
will control and no effect will be given to evidence of oral agreements
otherwise. The written
contract
will be presumed to be the complete integration of all negotiations,
agreements and relevant discussion between the parties. Outside evidence
that the written terms of the contract do not accurately portray the
intentions of the parties will not be admitted unless there is ambiguity or
confusion within the
contract,
and even then the outside evidence is only allowed to the extent of clearing
up any ambiguity or confusion. Under Arizona law the outside evidence will
not be allowed to vary or change the terms of a contract that is understood
to be a complete integration of the parties’ intentions. On the other hand,
if the written contract is only a partial integration of the contract,
outside evidence may be included to prove the part of the
contract
not included in the written document. Therefore, in the situation posed in
this question, if the written contract did not contain certain terms the
parties had previously discussed and agreed to and the parties did not
intend for the written contract to be a complete and unambiguous integration
of the contract, outside evidence may be admitted which proves the part of
the contract
that is not in the writing. However, if the contract excludes certain
items of the oral agreement and is considered by the parties’ to completely
include everything they have agreed to, then the outside evidence will not
be admitted to prove a different earlier oral agreement. Furthermore, if, as
the question poses, the written contract differs from the orally
agreed terms then the outside evidence will not be admitted to change the
meaning or interpretation of the written
contract
and the written contract will control. Back to TopHow do we solve a disagreement over a contract?If you can discuss with the other party the contract dispute and work it out between yourselves that is recommended; this is a primary reason to reduce the contract to writing so any differences in opinion about the terms of the contract can be confronted head-on. If the dispute can’t be easily resolved and you feel that the other party is taking advantage of you or is enforcing the terms in a way you deem inappropriate, you may want to consult an attorney. If you have a contract dispute and it leads to a breach, one party may have a cause of action against the other and can sue in court (or some other agreed upon setting) to either have the contract performed or to receive monetary damages to make up for not getting the results of the contract. This dispute may be resolved in court or arbitration or it may be settled by both parties out of court. Parties are free to breach contracts if they wish and generally will face no criminal liability for doing so. But... breaching may lead to a suit to recover monetary damages or force the breaching party to fulfill their obligations.
Overall, it is best to discuss all of
the terms of the contract and write out all agreements that result. This is
to avoid any possible confusion but also to make sure each party knows
exactly what their rights and obligations are.
Back to TopWhat do I do for proof if there is a disagreement?
Generally speaking, if there is a
disagreement, the express terms of the
contract
can be used to settle the differences. However, if the terms of the
contract are ambiguous, subject
to different yet reasonable interpretations,
or missing, a witness is often a good
tool to use to prove your version of the facts. Negotiations can also aid
in settling disagreements. The best remedy, however, is to make sure the
contract
covers all of the areas you think may result in a dispute. Looking at other
contracts that other parties have used in similar circumstances and
researching how other disputes have been resolved may help in forming your
contract. This may help you to include all necessary terms in the
contract. To prove your version of the facts and thus avoid conflicting
points of view, make sure negotiations are as clear and unambiguous as
possible. A witness that can validate the facts in the ight most favorable
to your view would also be a good thing to have at the signing of the
contract
and even during prior negotiations. Court should always be the last remedy
to prove your version of the facts, but sometimes it cannot be avoided. The
most prudent thing would be to take steps to avoid ending up having to use
court as a last remedy. Other remedies other than court also exist which
may include mediation or arbitration.
Back to TopCan anything be included in a contract?The answer is yes. However, remember that, any term or condition that is heavily weighted in favor of one party or the other may be looked upon as what most courts call “unconscionable.” In general, your terms and conditions should be as fair as is possible to all parties to the contract, equally weighted as best is possible so that no one party has an inordinate advantage in the dealings, and the terms and conditions should be clear and unambiguous. In other words, they should be stated such that the average person can understand them without having to have graduated from law school. If not, a court may determine either the specific term or condition, or the contract as a whole as unenforceable. If this happens,most of the time, it is the artist who loses most. Back to TopWho can sign for me?
If you come to an agreement with another
party and decide to commit the contract to writing, either you or an agent
you have authorized can sign your
contract.
An agency relationship is a fiduciary relationship by which one party, the
principal, confides to another, the agent, the management of some business
to be transacted in the principal’s name or on his or her account. An agent
has the power to bring about or alter business and legal relationships
between the principal and third persons and between the principal and the
agent. Generally when an agent signs for a principal, the signature will
bind the principal and not the agent if in the signature or description of
the parties to
contract the names of the principal and agent both appear and the agent
indicates the agency. The agent must be careful to indicate the he or she is
singing on behalf of the principal and that the agent is in fact an agent of
the principal in order to prevent the agent and not the principal from being
bound to the contract. Back to TopDo I need a lawyer to write the contract?
The simple answer is not necessarily
simple. The simple answer is NO. However, if you are using a standard form
contract,
or you have borrowed or been provided with a
contract
written for or by another, or you attempt to write the
contract
yourself, you should be knowledgeable concerning the basic components of a
contract
and what those components mean. If not, it is best to get competent legal
assistance in drafting or reviewing the
contract
you intend to use. The most important thing is to ASK QUESTIONS if you
don’t understand a term or a condition in a
contract
so that you don’t agree to something that will be to your detriment should
problems arise in the relationship between you and your customer, service
provider, vendor, or representative. Finally, review the important advice
in the answer to question number three; then, review it again and again
until you believe it. Back to TopDo I need a lawyer to review a contract someone sends me?If you are using a standard form contract, one that has been provided by another, or you have borrowed or been provided with a contract written for another, or you attempt to write the contract yourself, you should be knowledgeable concerning the basic components of a contract and what those components mean. If not, it is best to get competent legal assistance in drafting or reviewing the contract you intend to use. The most important thing is to ASK QUESTIONS if you don’t understand a term or a condition in a contract so that you don’t agree to something that will be to your detriment should problems arise in the relationship between you and your customer, service provider, vendor, or representative. Finally, review the important advice in the answer to question number three; then, review it again and again until you believe it. Back to TopIf I need a lawyer for a contract, who pays?
Generally speaking, you do. However, if
the other party has provided the
contract
for use in your dealings you are normally not obligated to pay for the legal
services necessary to its drafting or execution. However, READ THE CONTRACT
CAREFULLY BEFORE YOU SIGN IT AND IF YOU HAVE QUESTIONS DO NOT SIGN IT UNTIL
THOSE QUESTIONS HAVE BEEN ADEQUATELY ANSWERED BY A COMPETENT PROFESSIONAL.
The reason that this is so important is that often critical and skewed terms
and conditions are put into the “fine print” which can obligate you to all
sorts of unreasonable and costly actions. Thus, refer to the above once
again. In most cases, if you agree to it, whether you have read it or not,
you are bound by it. Remember, a
contract
is generally considered an instrument of obligation that is entered into
willingly and with full knowledge by all the parties as to its terms and
conditions. Also, it is possible to share the legal costs with the other
party if they are willing to do so. However, if this is the case, you must
include that specifically agreed upon term and condition in the
contract
itself and remember to also stipulate where, how, and when the other party
is to pay their agreed upon share of these expenses. Back to TopWhat if I break the contract accidentally?The answer to this question may depend on what you mean by accidentally and on who the other party is. If you breach the contract due to non-performance or insufficient performance, that is if you fail to uphold your end of the bargain, the failure to perform can result in the other party suing you for performance of the contract or for monetary damages to make up for not performing. If by accidentally you meant that your performance did not completely meet the requirements of the contract, but still substantially performed, you may still be able to recover the contract price minus allowances for defects or variance from the strict contract itself. A determination may have to be made regarding whether or not you substantially complied. Of course if the contract specifies that the parties will only accept strict or complete performance this does not apply and you may be liable for damages. If by accidentally you mean you are only able to partially perform and not complete the contract, the other party may retain, without paying for the partial performance, the benefits conferred until performance is completed. If by accidentally you mean you are unable to complete the contract and therefore have to breach because difficulty, hardship or financial loss, you will generally still be bound to the contract. This is so unless the contract cannot be completed due to impossibility, or something such as an act of god, which prevents you from fulfilling your obligations, in which case you may be released from your contractual obligations. This question would probably be better and more narrowly answered if the reason for the accidental breach were more specific. Back to TopCan I be charged with anything criminal because of a contract?Generally speaking, no. In most cases, any disputes that arise out of contractual dealings result in only civil ramifications. This means that the normal, and usually the only remedy offered to the party who has been harmed (according to the court’s ruling), are money damages, and in some rare cases something called “specific performance.” Specific performance is a remedy that requires the party who has violated the contractual term or condition to rectify such violation by fully and completely performing their obligations under the contract according to the specified terms and conditions so that full performance is achieved. The party who is harmed usually gets one remedy or the other, but not both.
Please note however, If
you fraudulently misrepresent yourself or your work, or you accept money
without performing to the full extent of the terms and conditions in the
contract,
it is sometimes possible that those actions may constitute a criminal
offense that is in addition to any civil matters or remedies that are
otherwise available to the party who is harmed. Whether or not you would be
charged with such a criminal offense, if one does apply, is generally up to
the State’s authorities not the party who is harmed as criminal charges are
considered offenses against the State (the people), not against any one
individual or entity. The nature, scope, and necessary elements of any
particular criminal offense would be spelled out in State or Federal
criminal statutes.
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Contact Information: Please contact K Royal (kroyal@asu.edu), Director of Pro Bono Programs and Student Life at the College of Law at Arizona State University regarding Advocacy for the Arts and/or this website. Ms. Royal will not answer specific questions regarding the arts or individual legal situations, but she can discuss this exciting new program and its merits.
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