A Graphic Design Contract, also known as a Statement of Work Agreement or SOW is not only assurance to the client to do something, but it plays an important role in protecting the freelancer or creative agency. In a perfect world there would be no problems that could arise, right? Unfortunately, you never know what life may throw at you at any given moment, so it’s better to be safe than sorry. There isn’t a one size fits all approach to creating a legal document, but a Statement of Work Agreement or a Graphic Design Contract is often used to define the details of a project like timeline, deliverables, payment schedules, and all the information about the services the designer will be providing to the client.
I’ve outlined common elements you’d usually find in a Statement of Work Agreement or Design Contract in this article.
Overview or Introduction
The introduction of your graphic design contract should consist of information about the client and details about the project. The overview or introduction of your statement of work agreement should include things like your client’s name, company name, brief history, project name, contact information, and engagement duration. See the worksheet example below.
What is the desired benefit, outcome, or improvement of your project? Your goals should include measurable results such as increased sales or revenue by the end of the quarter or increase website traffic and engagement. Maybe your objective is to raise awareness for a good cause. Whatever the purpose of your project, it should be clearly defined – leaving less room for miscommunication or wasted time and dollars. Goals ultimately help us stay focused on the outcome of the final project.
The project scope is defines what goes into a project and outlines what determines its success. The scope involves the planning and documenting specific project goals, deliverables, tasks, costs and deadlines. Project scope ensures that all stakeholders, including project teams, sponsors and vendors have a clear understanding of their roles, responsibilities and expectations. Simply put, a project scope establishes a set of boundaries for your project.
The outcome of a project or task. Deliverables can be tangible or intangible goods or services produced as a result of a project that is intended to be delivered to a customer (either internal or external). A deliverable could be a logo, website, presentation, report, mobile app, or other software product.
Tasks and Milestones
The terms task and milestone can be seen used interchangeably, however, they are different. A task is something that you and your team need to accomplish in a particular phase of a project. A milestone is a sign or a goal that you want to accomplish for a list of tasks. A task list can be connected to a milestone and the progress of a milestone is tracked as you complete each task.
A common question heard from clients is, “How many revisions are included in the cost?” A new freelancer might not know what to do if their client keeps asking for more changes. That has got to be one of the most awkward situations to be in as a new designer when you want to keep your client happy, but you’re at a point where you’re almost giving the project away. One way to alleviate some of the awkwardness and make sure the designer gets paid a fair wage, is including how to handle how many revisions a client gets before they are charged accordingly. For example a freelancer might include 3 revisions in a project before they are billed hourly for the additional labor.
A project timeline tracks the chronological order of events. Timelines give project teams an overview of a project at just a glance, keeping everyone informed and aligned at every phase of the project. The timeline is composed of a series of tasks and milestones, each of which has a due date and duration. Timelines are useful to document any type of development, providing an easy-to-understand history and helping project managers understand past and ongoing trends. See the sample template of the timeline of a design contract below.
|Phase||Deliverable or Milestone||Due Date||Payment|
Resource availability should be established before the engagement is initiated. Things like equipment, logistics, materials, and hours allocated to manpower should be stated in the resource section of your design contract. Availability may have to have their time scheduled by a resource or project manager. Resource managers and project managers can negotiate an agreement to make sure that resources are being used appropriately and effectively.
The payment terms of a project state how and when a vendor is to be paid. It’s the expectations and miscommunication between the buyer and seller that can lead to potential misunderstandings or disagreements. It’s important that both parties clearly know what is expected and they are satisfied with the requirements of the payment terms.
The most common terms of payment for freelancers was 50 percent down and 50 percent on completion for smaller projects. For larger projects, payments are often made by completion of milestones of projects. Payment terms usually covers when payment is expected, conditions of payments, and any discounts the client or customer might receive. Below are common payment terms and payment types.
- Terms of Sale – Payments terms that the vendor and the buyer have agreed on. Terms such as cost, amount, delivery, additional expenses, payment method, and when the payment is expected or due. These are the items generally found on most invoices.
- Payment in Advance – PIA is a payment that is made ahead of schedule. It’s not uncommon for business owners to require advance payments for their products or services. For example, a freelance graphic designer may need a 50% down payment before starting a project. Advances help cover expenses required to complete the project and protect them against non-payments.
- Immediate Payment – Immediate payment means that a payment is due at the same time the product or service is delivered – often referred to as “Cash on Delivery” (COD) or “Payable on Receipt.” This term is beneficial for the business owner, but not as popular among some clients and customers that may not have the cash to cover the bill.
- Net 7, 10, 30, 60, 90 – This means the net payment is due in either 7, 10, 30, 60, or 90 days after the invoice date. For example, if the invoice was dated April 10 and you used a Net 30 term, then the payment would be expected before May 9. This term can be confusing so it’s suggested that you use a term that is clearer, such as, “Days” instead of “Net.” To alleviate unnecessary confusion, often people use shorter terms like, “Please make payment within 10 days.”
- 2/10 Net 30 – A term such as “Net 30” requires the client or customer to make a payment within 30 days. However, if they make a payment within 10 days, they’ll receive a 2% discount. These terms can be modified. For example, you can sweeten the incentive by offering a 5% discount if the invoice is paid within 5 days.
- Line of Credit – This payment option allows the customer to purchase a product or service on credit. This is more commonly used among larger organizations and not smaller sized businesses because of the risks involved and decrease to your cash flow. This option allows the client to settle their bills over a period of time — typically on a monthly or quarterly basis.
There’s usually a section or clause in a Statement of Work Agreement or Design Contract on how to handle expenses incurred to complete the project. For example:
- Reimbursements – The Client will reimburse the Freelancer for all pre-approved, reasonable, and necessary expenses incurred in performing the SOW.
- Receipts – The Supplier will provide the Client with satisfactory documentation supporting all expense requisitions.
AIGA has categorized intellectual property into four options that are listed below.
- License for Limited Usage – Establishes boundaries and limits the rights your client has for certain products. This could include the right to reproduce, where and when they share them, and rules for selling. The designer may be free to license the same deliverables to additional clients with limitations. This can be applied to a project that will be used once or only a few times, such as a brochure design or editorial illustration. However, the brand name, trademark, and patents are owned by the licensor or the client.
- Exclusive License – Means no person or business other than the named licensee can use the intellectual property. Under federal law, an exclusive license allows only one licensee to make, use, or sell an invention during a patent’s lifespan for commercial purposes.
- Assignment of Rights – An assignment of rights agreement denotes a situation where one party, known as the assignor, transfers contract rights to another party. The party taking on the rights is known as the assignee.
- Work-Made-for-Hire – In the copyright law of the United States, a work made for hire (work for hire or WFH) is a work subject to copyright that is created by an employee as part of his or her job, or some limited types of works for which all parties agree in writing to the WFH designation. Generally, the person who creates a work is considered its “author” and automatically the copyright owner of that work. However, under the work made for hire doctrine, the company that has commissioned the work, not the designer, is considered the author and automatic copyright owner of the creative work.
No-one wants to end a contract – especially after the effort that goes into securing the engagement and then drafting and crafting the design contract. Unfortunately, there are unforeseen occasions when the need might arise. Most designer contracts will stipulate that either the designer or the client can terminate the project at any time.
In most cases you will see a clause that state a contract can be terminated by either party with 15, 30, 60, or 90 day notice. Below is a sample termination clause excerpt that is used by legal professionals.
- “Buyer may, upon written notice to Supplier, terminate a SOW or WA with Cause effective thirty (30) days after such written notice or a period of time as specified in such notice, provided the Cause remains uncured on the effective date of such termination. Buyer may, upon written notice to Supplier, terminate a SOW or WA without Cause effective sixty (60) days after such written notice or a period of time as specified in such notice. In the event Buyer terminates a SOW or WA without Cause, Buyer will compensate Supplier for the actual and reasonable costs incurred by Supplier for work in process up to and including the date of termination, provided that Supplier uses reasonable efforts to mitigate Buyer’s liability under this subsection by, among other actions, accepting the return of, returning to its suppliers, selling to others, or otherwise using the canceled Products (including raw materials or works in process), and provided that such expenses do not exceed the Prices. Upon termination, in accordance with Buyer’s written direction, Supplier will immediately: (i) cease work; (ii) prepare and submit to Buyer an itemization of all completed and partially completed Products and Services; (iii) deliver to Buyer Products satisfactorily completed up to the date of termination at the agreed upon Prices in the relevant SOW and/or WA; and (iv) deliver upon Buyer’s request any work in process.”
The last part of your design contract is where the client and vender provide their signatures to solidify the engagement. It often looks like this:
Acknowledgement of Agreement:
The parties have indicated their acceptance of this Agreement by signing below.
Party A Party B
Name: ________________________________ Name: _________________________________
Company: _____________________________ Company: ______________________________
Title: __________________________________ Title: __________________________________
Signature: ______________________________ Signature: ______________________________
Date: __________________________________ Date: __________________________________
Related Documents and Contracts
Most business owners are familiar with the many legal documents that comes along with entrepreneurship. Often a Statement of Work Agreement will come along with other legal documents. I’ve listed some common documents you’ll come across when working with designers below.
- Creative/Design Brief – A creative brief is similar to a design brief and is used by creative and marketing professionals as a guide for creative deliverables like photographs, copy, videos, websites, advertising, etc. A creative brief serves act as an outline that tells a story of what your project is about and is usually developed by the people who use them most – designers, writers, and the rest of the creative team.
- Proposals – A proposal is a written document between a buyer and a seller to enter into an agreement by both parties to buy each other’s goods or services. This is also considered the preliminary phase of a binding contract.
- Marketing Plan – Marketing plans outline your overall marketing objectives, strategies and actions to be taken for the desired results. The 7 Ps formula helps identify, evaluate, and achieve your goals and consists product, price, promotion, place, packaging, positioning and people.
- NDAs (Non-Disclosure Agreements) – A non-disclosure agreement is a confidentiality agreement where the parties agree not to disclose non-public business information such as proprietary information and trade secrets. An NDA acts as a legal contract that is a secrecy agreement between parties not to disclose any information they deem to be confidential.
- Style Guide – Style guides help ensure a consistent and continuous brand experience across the board for your users. A style guide is also known as a manual of style that sets the tone, standards, and design guidelines across all customer touch points.
- Project Charter – A high-level document that outlines preliminary roles, responsibilities, guidelines, and objectives for a project. It designates a project manager and the main stakeholders, and authorizes a project to begin. The project charter is often created after the SOW is agreed upon.
The following table can be used as a starting point or template for creating your Statement of Work Agreement or Design Contract.
|Tasks / Milestones|
We don’t live in a perfect world. If we did, we’d all be a bunch of robots. Life happens and legal contracts are useful for when unexpected situations arise. There is not going to be a one-size-fits-all approach when creating legal business contracts and documents. Statement of Work Agreement or a Graphic Design Contract is often used to clearly define the details of a project like timeline, deliverables, payment schedules, and all the information about the services the designer will be providing to the client – leaving less room for miscommunication or wasted time and dollars.
Annette C. Sage / CEO at Sage Design Group
Marketing Executive / Creative Director / Business Development.
Creative and reliable team player with personal and professional goals to excel. I’m good at branding, growth hacking, getting startups off the ground, and growing businesses. I’ve also got some design skills and earned an MBA in International Marketing.