Redlining contracts is an important part of your contract management process and you should do your best to run it without a hitch. Many companies make mistakes during contract redlining and negotiation, wasting time and resources, causing misunderstandings, and damaging relationships at a time when they are most vulnerable. The following mistakes need to be avoided to ensure that your contract redlining process goes smoothly.
Misinterpreting the Scope of Work
One mistake that usually occurs during contract redlining is not understanding and/or misinterpreting the scope of work. What information needs to be included and omitted? The following points must be addressed:
What are the deliverables? Include a list of Word files, schematics, examples, or screenshots.
How many revisions were promised in the contract? Limit the number of revisions to three unless otherwise noted in your contract. In some cases, you can limit it to two if you really want to emphasize that this was a maximum revision count. It would also be smart to mention how much each revision costs as well as what happens if the client requests more revisions.
What about changing the deliverables? If the designer gave you a fixed amount of designs to choose from, how many changes/additions are allowed afterward without incurring an additional cost? You don’t want to be caught off guard by what happens when your client wants something changed after he signs the contract and makes payment. A rule of thumb is one change for free unless otherwise noted in your contract. Any changes requested thereafter will incur additional fees that must be paid by your client before continuing on with work or further revisions.
Does your designer want to own the rights to his works? Should you accept this clause, any new logos created won’t belong to you as your client.
Not Setting the Deadline
You want to make sure that you set a deadline when performing contract redlining. If you don’t know how long it takes for your designer to create what you need, add in a clause that automatically sets the deadline for 15 days after approval of final deliverables. This way both parties can plan accordingly and aren’t left wondering what is going on afterward.
Overlooking Payment Terms and Conditions
Contract redlining can be time-consuming and may cause you to overlook important details like payment terms and conditions. You want to make sure that your client is aware of how much he has to pay in order for him or her not to be surprised by high bills at the end of the project. You can mention how much is due upon signing of the contract, 30% within three days after receiving it, 50% when half the work has been completed, and the remainder once everything is done. Also, make sure to state what happens if your client doesn’t pay on time or in full – late fees should be involved here.
Not Making it Clear Who Owns Rights to Initial Artwork
Artwork created by you does not belong to you until you purchase a copyright release from the designer who made it for you. If your designer made something for you and you don’t want him to claim ownership over his creation, add a clause that disclaims copyright ownership during this process. It is possible he already added this clause to your contract, but it’s best to make sure that this is stated there.
Not Defining the Term Revision Before Signing
Define revision before you sign anything. You can include a page with revision examples – what would be considered normal and customary (e.g., the client wants logo design to be changed slightly), minor (the client wants logo design changed to his liking), and major (e.g., the client wants the whole concept of the logo changed). It should also say what happens if you’re charged for revisions that are not deemed as “minor” or “major”, i.e., whether they will count towards the three free revisions or not, or if they will be billed at a higher price.
Not Making it Clear Who Decides About Revisions
You want to make sure that your client knows that you retain the final say in what revisions are allowed and how much he will be charged for them. If he disagrees, don’t force him to pay – there’s no point in continuing if a compromise cannot be reached. Your designer should also know that this is your dealbreaker on his contract, so if you perform contract redlining on it, add this clause somewhere on the last page so both of you know where each stands on this issue.
Failing to Define Work Schedule/Deadlines
If deadlines matter to your client, a clause stating when work must be completed by should be included in the contract, along with possible consequences for late delivery. For example, if deadlines are not met, you can choose to either revise your work schedule or hire another designer at no expense to you or your client.
Not Setting Clear Terms for Redoing Work after Small Changes/Minor Revisions
You want to make sure that nothing gets lost in translation during the redlining process. Clarify what counts as minor revisions versus major ones so that both parties know how much they’ll have to pay afterward and whether or not it will count against the three free revision limits set out in your contract. Also, state what happens if small changes are requested – will this also lead to additional fees? Your client wants to know what he is getting into, and your designer wants to know whether or not he will be paid for the work that’s being requested.
Not Making it Clear Who Owns Rights When Work is Complete
It should go without saying that artwork created during the redlining process does not belong to you until the copyright has been purchased from the designer who made it. If your client does not agree with this clause, he should have the opportunity to hire a different designer before anything gets started. If you want to retain copyright ownership after finishing up contract redlining, state so in your contract, and if not, include a page that shows examples of how much it would cost for you or your client to buy out copyright – i.e., whether or not it would be considered a “minor” or “major” revision.
How Changes, Invoices, and Payments Work (and Who is Responsible for What)
A clear plan of attack should be laid out in the contract, showing how you will work together to make changes if they are requested and what happens if revisions exceed three. Add a section that shows who is responsible for sending invoices and payments – i.e., whether you send them to your client and he pays within x number of days or whether your designer sends them to you either before work is accepted or upon completion so that you can take over from there should the need arise. Once again, this information should also show what happens if deadlines aren’t met.
Keep in mind that you both should have the option to hire another designer if disagreements arise during contract redlining or after contract revisions have been made, so add a clause that makes this clear too – do you want to continue business with each other by hiring another third party (i.e., someone who has no stake in the project) to mediate? Or does your client simply need more time/money before he can start over again with a new designer because he’s not satisfied with your revisions?