11.21.2016

Inspiration:

I am fairly new at being an entrepreneur as I write this post.  Because dealing with setting up a business and being sure that contracts are in place and being used, I can't help but share what I've learned to benefit others starting out or who just need a refresh.  

Owning a DSLR camera is the latest craze and frequently, people develop their passion and want to jump into starting a business.  While this can be a source of extra income, it could also be heartbreaking if the correct legal provisions aren't in place.  So, inspired by all of that, I interviewed my sweet friend, Liz, who happens to specialize in contract law, about the most important things to be aware of in your own small business contracts.

1.  Contracts: A Must Have

Before we get into what should be included in a contract for photography services, it is so important that an entrepreneur understand the importance of a contract.  A contract is a place for you to identify the scope of the services provided and a place for both parties to agree on that scope.  Whether a friend or a new client, you don't want to damage a relationship and a contract is meant to protect both parties and protect the relationship.  A contract also, of course, provides protections from a legal perspective and you can read on for more.  

What should be included in the scope of a contract?  

Payment Terms:  You should clarify when payment is due, how and where it should be sent, the amount agreed upon, and clarity what the booking fee is as well as the balance.  This is also where you would make clear what is refundable and what is not.

It might also be helpful to provide an additional invoice that can lay out what has already been paid (booking fee, for example) and what balance remains in a very clear fashion.  

Location of the Session:  You should give an address in the contract.  Only having an address in an email or a text is not enough.  I have had emails suddenly be dropped before, even with reputable companies, and I never allow that to be the only place it is recorded.  

Date & Time: You should clarify the starting time as well as the date of the session.  I always include the date like this:  November 21, 2016 Monday @ 3:30pm.  That way, the day of the week helps avoid mixing up the actual number date.  

Length of the Session:  Clarify how long the session will be so that both parties are clear.

2.  Limitation of Liability:

A Limitation of Liability Provision identifies what a party's potential financial exposure could be in the event of a lawsuit. If your liability is not limited in the form of a cap on potential damages, it could end up being unlimited. A typical cap on damages agreed upon between the parties is  the total fees paid for the applicable services.  

Liz offered this hypothetical situation to explain:  

Let's say that you are photographing a wedding.  The groom trips on the equipment, has a heart attack, and dies.   Since he is deceased, his family could sue you.  If you haven't clarified a cap on damages, the family may be able to recover an amount of damages far exceeding the fee you would have received for the engagement.  

Further, the limitation of liability provision generally also identifies what type of damages are recoverable. For example, should the person claiming damages only be able to seek direct damages arising from that claim (in our example of the groom tripping, the medical damages)? Direct damages are defined as damages that a reasonable person would expect to arise from the other party’s breach of the agreement or behavior. Alternatively, should a party be able to recover both direct damages and indirect damages, such as the loss of wages of the groom for the next 5 years? Generally, the parties would agree that the first type of damages are acceptable, but not the second type. That's also where a Waiver of Consequential Damages comes in.  This is the short name for a provision whereby the parties agree to waive all consequential, indirect, punitive, special, and exemplary damages. The inclusion of a Waiver of Consequential Damages provision is very typical in all types of contracts for the performance of services and a photographer should make sure to include one in their contract.

How Does Insurance Fit Into This?  

Maybe you're like me and wondered if the Limitation of Liability was somehow related to the insurance limit that I have.  Liz explained that it isn't really connected.  A limitation of liability specifies the cap on damages that a claimant could recover from me. How I would choose to pay a claim; however, is up to me - whether I submitted it to insurance or paid it out of pocket.  Insurance is just an extra protection for myself.  

3.  Intellectual Property Rights Provision:

This section is important because this is to clarify who owns the images.  As a photographer, you want your contract to clarify that you own the copyright and that you grant non-exclusive rights to the clients to use the images.  As the photographer, your language should include that you reserve the right to use the images in ways that you see fit and might include, but not be limited to social media, marketing, publishing, etc. 

If you wanted to prohibit clients from using your images in a commercial way, this is where you would clarify that.  However, to prohibit their use might lead to a reduced sharing of your work and consequently reduced business growth.  

Occasionally, this section might need to be re-written on a case-by-case basis dependent on the needs of your clients as the client might have a different perspective on who should own the images versus who should just have a license to use the images.  

4.  Artistic Discretion:

While it is important for a client to clarify parameters  and give an overall picture of what is desired in a photo session, it is also important to be sure that the photographer has artistic discretion to be an artist - to have the reigns and be creative.  When clients can trust an artist in this way, they are frequently much happier with the results than if they clarified every detail of the images.  

As a photographer, you want to clarify that the ultimate resulting images are up to you.  You are the professional, after all.  It makes clear that a client can't sue you because of the style or artistic details of the images.  

5.  Exclusivity Clause:

You might want to include in the contract an Exclusivity Clause.  This would be most applicable at an event like a wedding.  You, as the photographer, would want to clarify that you are the exclusive photographer for the event, and that the client doesn't hire an additional photographer.

6.  Indemnification:

Indemnification is the obligation of a client to defend you against particular types of lawsuits from third parties.  Your contract should have an Indemnification provision included, but that provision can be structured as narrowly or as broadly as you need.  

Liz's Example:  

Let's say that at a wedding that you've been paid to photograph, the bride's Aunt Susie trips and falls on a piece of your equipment and breaks her leg.  Although the Bride and Groom may have the right to sue you if you were negligent in the placement of that equipment, Aunt Susie should not have the right to sue you based on your services because you do not have a contract with her (and thus, don’t have the protections of a contract, such as a limitation of liability).  You don't want to defend yourself against Aunt Susie.  If you include a provision in your contract that the client has to indemnify you for claims arising from your performance of services, the bride and groom will effectively have to step into your shoes and defend you from a claim from Aunt Susie. 

Remember, friends!  Its important to both parties to have a contract. It wouldn't hurt the relationship but protects it.  If you know someone who could benefit from these tips, share it with him or her!