Get it in writing! This unit is all about how we make agreements concrete and legally enforceable. We'll start with the standards of legal agreements and then delve into contracts, best practices, negotiation, enforcement, and litigation.

Sections
Standards for Legal Agreements
Contracts in Creative Practices
The Negotiation Process
Enforcement, Breach, and Defense

Parts
The Purpose of Agreements
Legal Agreements: Our Working Definition
Elements of a Legally Binding Agreement

Legal agreements give us the ability to lock a promise into place in a format that can be readily understood, interpreted and potentially enforced by a third party. Memories are faulty and it can be dangerous to just take people at their word.

Contract law gives us a tool to clearly record the promises made in a business transaction and give us a document that we can use in our defense. On the other side of the coin, signing contracts that we do not fully understand can trap us in disadvantageous and abusive business relationships, which can be very difficult to remove ourselves from and can lead to legal troubles down the road.

A simple definition from the Oxford dictionary:

A negotiated and typically legally binding arrangement between parties as to a course of action.

For the purposes of this class, I've modified the definition to the following:

A set of promises, between two or more parties, that are enforceable under the law.

The terms "agreement" and "contract" are often used interchangeably, you'll see both words used at the top of a written agreement. But not all agreements are contractual arrangements. The key concept to understand is whether an agreement is legally enforceable or if it is just a friendly understanding between parties.

// Simply agreeing only creates an obligation between parties

• You can have an agreement, but still not be legally bound to the terms.

  Example: We agree to meet later today and discuss the terms of our project.

  • In a simple, non-binding agreement I am only obligated to meet you. If the meeting doesn't happen there are no legal repercussions for me.

// A legal agreement (recorded as a contract) creates an obligation that is enforceable under the law

• A contract is a promise or set of promises that the law will enforce.

  Example: You and I agree to meet later today and discuss the terms of our project. In a written agreement, we both agree that if one party does not appear, their role in the project is automatically voided.

  • There is now a repercussion for skipping this meeting.
  • This promise, set in writing, could be enforced in a court of law.

At minimum, we want our contracts to accomplish the following:

• Clearly define who the parties of the agreement are.
• Define the terms of the arrangement (i.e. what you are agreeing to do.)
• Create a legally binding arrangement. (i.e. something that is enforceable under US law)

In order to create an agreement that is legally binding, you have to meet a surprisingly low number of requirements.

The Four Elements of a Legal Agreement
Legal Intention	You must have the clear intention to enter into an agreement with a party and to abide by the legal consequences of that agreement.
Offer	There should be a clear, detailed offer as to what each party will provide and/or what action will be taken as part of the agreement.
Consideration	Consideration is essentially what is at stake in the contract: Money? Property? Control?
Acceptance	Both parties must clearly accept the offer for the contract to be considered fully executed (agreed to).

That's it! Doesn't necessarily need to be written either. If you have these four elements, a contract could hold up in court.

Fun fact: Legally binding contracts can be 100% verbal! This is one of the danger zones of legal agreements. Given that an enforceable agreement can be made verbally and instantaneously, we want to be very careful and very clear about what we agree to verbally.

• Verbal agreements are very hard to prove in court.
• Some kinds of contracts can only be made in writing
  • For example: Transfer of property, marriage, obtaining a particular license...
• Best Practice: Negotiate in person, then agree in writing! You can always ask to lock an agreement into writing.

Many times, for important matters, you want a third party to witness the signing of a contract. In many cases in commerce, this third party witness is required by state or federal law. Why? This helps attest to the first element of an agreement: The intention to create a legal relationship. A neutral third party can bear witness to the intention between parties.

For example:

• A real estate deal often involves a closing company—a neutral third party—that verifies all of the documents in a property sale.
• In a marriage ceremony, the officiant is witness to the union between two people and usually (depending on the state) signs the marriage license.
• When committing to a major sale, some parties will use a neutral broker to verify the elements of the sale and signing of the sales contract.

Most often, this process can be easily achieved through the use of a Notary Public

A Notary Public is an official of integrity appointed by state government —typically by the secretary of state — to serve the public as an impartial witness in performing a variety of official fraud-deterrent acts related to the signing of important documents. These official acts are called notarizations, or notarial acts. Notaries are publicly commissioned as “ministerial” officials, meaning that they are expected to follow written rules without the exercise of significant personal discretion, as would otherwise be the case with a “judicial” official. [source]

Let's say that you need to prove to a court that a contract was not made in good faith. What are your defences? There are typically three main cases for a court to declare a contract invalid:

Three Types of Invalidation
	Enticing Criminality You cannot contract someone to do something illegal.
	Lacking capacity People that are minors or have mental deficiencies cannot enter into contracts on their own.
	Agreements made under duress You cannot threaten people into signing.

We'll cover this move when we get to section four of this unit, but in general I tell students to remember five essential rules when it comes to signing contracts:

1. Never sign a contract without reading the entire document.
2. Never sign a contract if you do not comprehend the entire document.
3. Never succumb to the pressure to sign.
4. The best time to start a project is the moment the contract is signed.
5. Do not take terms on faith, take them in writing.

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Parts
Common Types of Contracts
Common Elements of Contracts
Examples of Contracts in Creative Practices
General Guidance for Contracts from Creative Practitioners

• Sales Contract
• Service Agreement
• Equipment Lease
• Mortgages
• Non-Disclosure Agreements
• Employment
• Loan agreements
• Mergers
• Business Formation
• Insurance Coverage
• License and Royalty Agreements
• Property Transfers
• Representation

Common Clauses and Terms
Parties	Who is this contract between?
Term (time)	What is the duration of this contract? When does it start? Are there key dates?
Purpose	You’ll sometimes see this in sections like “Statement of Work,” “Terms of Service,” and “Engagement” What is this contract for? What is the scope of the work?
Payment/Price	How much are you getting paid? How and when will you get paid?
Employment Status	Are you an employee? A contractor? A purchaser? A seller?
Ownership and Transfer	Is IP or property involved? Are you transferring those rights? How and under what conditions does that happen?
Indemnity and Liability	What can you be held responsible for? Are you able to be compensated for losses?
Penalties and Damages	If you break the rules of the contract, are there consequences? And are there limits to those consequences?
Assignment	Can a party assign the rights of this contract to a 3rd party? Can they do so without your permission?
Arbitration and/or Governing Law	How are disagreements settled? Which body of law will be used to interpret the agreement? (i.e. which US state, country, etc.)
Renegotiation and Renewal	Can you change parts of the agreement after you sign it? If the contract period expires, can you renew it? Is renewal automatic?
Severability and Termination	How can you get out of the contract? What can invalidate the contract? If the contract is canceled, what are you still responsible for?
"Special Provisions"	This is the dumping ground where you will find additional clauses and provisions not already covered by “standard” sections of the contract.

Before we dive into the murky waters of how contracts work, let's take a look at a few examples of how contracts have been used in creative practices. Sometimes to the benefit and sometimes to the detriment of the artists.

A Tool to Deceive and Slaughter (Caleb Larson)

[Link]

Contracts do not have to just be about money and lawsuits. A smart application of a contract can legally lock in the intention of the artist. Take for example Caleb Larson's A Tool to Deceive and Slaughter. The work, a black box that places itself up for auction on Ebay, comes with a very specific purchase agreement requiring the buyer to plug the artwork online and allow it to auction itself off to the next buyer. You can read the full purchase agreement here: A Tool to Deceive and Slaughter

Laurie Spiegal's "HARMONICES MUNDI"

"The Interstellar Contract" · The New Yorker

When composer Laurie Spiegal's work was to be included on the famous Golden Record—a collection of music and sounds put together by Carl Sagan and launched on the Voyager spacecraft—she was handed a contract from NASA regarding rights to the work. It had this interesting clause: Spiegal, a badass, crossed off "throughout the world" from the contract. NASA signed, giving the space agency the rights to her music—but only off-world.

Gary Friedrich, creator of Ghost Rider	Ghost Rider and the No Good, Very Bad Contract
	In the 1970s, Gary Friedrich created the character Ghost Rider, for Marvel comics. He was asked to sign a one-page contract handing over all rights to Marvel on the promise (not included the contract) of future work.

Anish Kapoor and Vantablack	Anish Kapoor Gets Exclusive Rights to the World’s Darkest Material
	In 2014 Surrey NanoSystems created the blackest substance ever manufactured, Vantablack. Internationally renowned artist Anish Kapoor not only intended to use the substance but claim it as his own.

Back to our friend Mike Monteiro:

Mike Monteiro "Fuck You, Pay Me"

• Contracts protect both parties
• Don’t start work without a contract
• Don’t blindly accept their terms
• Anticipate negotiation, but don’t back down on important stuff
• Lawyers talk to lawyers
• Be specific and confident about money

What I really like about this video is it ties in what we've discussed in the intellectual property chapter with common-sense advice on developing contracts. I would strongly suggest watching this video in its entirety.

Shantell Martin (and lawyer Jo-Ná A. Williams) "Artist Advice: Episode 00"

• In a nutshell, what a Work-for-hire agreement is
• Understand what rights you're signing away and make sure the compensation matches
• Not all Work-for-hire agreements are all bad
• How a company negotiates is indicative of how they will work with you
• The contract, not the people, govern the relationship
• How to seek legal advice

• Seek recommendations — Talk to your network (friends, mentors, family, etc.).
• Get a quote — Most lawyers will give you an upfront estimate of what a service costs. Some may offer to do work Pro Bono (free)
• VLA — Check local arts councils and artist support organizations for a Volunteer Lawyers for the Arts program.

• The website Law Insider offers access to millions of contracts for you to peruse. It's a great resource for looking up contractual language or for finding sample contracts in the industry.
• FindLaw.com has a really great learning center that includes a bunch of sample contracts to pull from.

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Parts
What is Negotiation?
The Negotiation Matrix
The five steps of a negotiation
Tools of persuasion
Common pitfalls

Negotiation is…

• A process for settling differences
• A method for achieving compromise and agreement
• A way to avoid argument and dispute

Negotiation is not…

• About winning at all costs

What are some negotiations you have participated in?

Good negotiators are seeking a balance between two factors:

1. Gaining as much value as possible
2. Preserving the relationship with the other party

Determining how you will fulfill your wants and needs while considering their wants and needs will define your negotiation style. This is best illustrated by the Lewicki and Hiam Negotiation Matrix.

Five Steps of Negotiation
Preparation and Planning
Setting the Stage
Clarification
Bargaining and Problem Solving
Closure and Implementation

You have to be prepared before you walk into the negotiation:

• Gather information and cement your position
• Know your WATNA, BATNA and ZOPA

...my what-now?

• W.A.T.N.A — Worst Alternative To a Negotiated Agreement
  • If you can’t come to an agreement, what’s the worst case scenario?
• B.A.T.N.A. — Best Alternative To a Negotatiated Agreement
  • If this doesn’t work out, do you have a backup plan?
• Z.O.P.A — Zone Of Potential Agreement

Understand the parameters of the negotiation:

• Who are the parties?
• Who are the negotiators?
• Where will this take place?
• What is the time limit?
• Is there anything that is off-limits?

Clarify what you’re negotiating:

• What are you negotiating?
• What’s the goal(s) of the negotiation?
• What’s the priority?
• Do you have some common ground?

Offer! Counter-offer! Propose! Deny! Argue! Haggle! Fight it out!

Once you’ve come to an agreement:

• Solidify the terms
• Make a plan of action

Negotiators’ tactics and moves to gain advantage often fall under three general tools of persuasion:

Perception and appearance
	· Using positions of authority to claim a higher ground. · Relying on the other parties' perception to gain a higher ground (Age, gender, size, appearance).
Emotion and attitude
	· Ramping up the other parties emotions using tactics like anger, guilt, condescension, pity and in many cases low-key gaslighting.
Logic and reason
	Creating a sound argument based on a strong, logical framework.

In short, if the other party resorts to tactics 1 & 2, it's because they don't have a strong 3.

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Parts
How a Contract Can End
Enforcing a Contract
Consequences of a Contract Breach
Defences

Depsite our best efforts, business releationships don't always work out. Knowing how to end a contract is just as important as knowing how to create one. This chapter, more than any prior chapter, I have to emphasize that speaking with a legal professional is the best practice.

There are three primary cases for how a contract can end:

If things goes well and/or the contract is for a set period of time:

• The contract should end automatically once the duties of both parties have been fulfilled.

If things aren’t going well and/or the contract is ongoing:

• By agreement – Both parties agree to end the contract early. This should absolutely be done in writing!
• By frustration – Something happens that prevents the contracts from being completed and is out of both parties’ control. For example, an extreme weather event.
• For convenience – A party can quit at any time by notifying the other party. This is not an automatic option, it has to be built into the contract's clauses.

• Due to breach – If one party is not following the terms of the contract, the other party may sue for damages and/or to terminate the contract.

Contracts can be tricky when it comes to enforcement. Remember that a contract is a set of promises that is easily understood by a third party. In the case of enforcing a contract, that third party is often a court of law.

Where you are based (or we're the contracted business is taking place) has a major effect on how a contract is enforced. You have to adhere to state and local laws when enforcing your contract. This is why the "governing law" clauses are so important.

A few factors to be aware of:

• State laws
• Statute of limitations — the set time period in which you are able bring legal action.
• Statutes of fraud — these are statutes that determine if a contract must be in writing or what level of evidence you need to prove the contract. Examples include things like marriage licenses, purchase of property, and execution of a will.

When someone breaches (breaks) a contract, it's important to determine to what degree the contract was breached:

• Minor breach

Also referred to as partial breach, it is a breach of contract that is less severe than a material breach and it gives the harmed party the right to sue for damages but does not usually excuse him from further performance. [source]

• Material breach

A substantial breach of contract usually excusing the harmed party from further performance and giving him the right to sue for damages. [source]

Before jumping straight into a lawsuit, there are a couple of steps in-between you can turn to. These are steps that should absolutely be handled by lawyers. Sometimes these steps are built into the contract itself as a required first course of action.

• Arbitration — This course of action involves both parties agreeing to a third party arbitor (outside of the courts). The neutral arbitor has the authority to make a decision about how the dispute should be resolved.
• Mediation — This course of action is bringing in a trained third party who will help both sides resolve the dispute. The key difference here is that a mediator does not have the authority to decide how the dispute is resolved. They are essentially just a legally trained, neutral helper.
• Settlement — A settlement is the resolution between the disputing parties. Settlements are a contractual agreement on how to proceed. Sometimes settlements involve one party paying damages to the other.

In short, taking someone to court should absolutely, 100% involve trained, licensed legal counsel. To do otherwise is to put yourself at risk.

When one party breaches a contract, under US law the other party is allowed to seek relief. Relief is also commonly referred to as a remedy. But an even better word that we will use is consequences.

There are three common types of remedy:

The most common remedy, damages refers to the type of payment one party receives as compensation for a contract breach.

There are a few primary types:

• Compensatory damages

Compensatory damages are money awarded to a plaintiff to compensate for damages, injury, or another incurred loss. Compensatory damages are awarded in civil court cases where loss has occurred as a result of the negligence or unlawful conduct of another party. To receive compensatory damages, the plaintiff has to prove that a loss occurred and that it was attributable to the defendant. The plaintiff must also be able to quantify the amount of loss in the eyes of the jury or judge. [Source]

• Punitive damages

Punitive damages are legal recompense that a defendant found guilty of committing a wrong or offense is ordered to pay on top of compensatory damages. They are awarded by a court of law when compensatory damages are deemed to be insufficient. [Source]

• Liquidated damages

A liquidated damages clause specifies a predetermined amount of money that must be paid as damages for failure to perform under a contract. The amount of the liquidated damages is supposed to be the parties’ best estimate at the time they sign the contract of the damages that would be caused by a breach. While liquidated damages provisions can have advantages, they are not always enforceable. If the predetermined amount of damages ends up grossly disproportionate to the actual harm suffered, courts will refuse to enforce the provision on the grounds that it is a penalty instead of an estimate of actual damages. [Source]

In addition (or in place of) damages, a plaintiff can also seek specific performance. This is the court ordering the breaching party to perform a specific duty that was in the original contract.

Pretty straightforward:

• Cancellation — the contract is considered void. Relieves all parties of any obligations.
• Restitution — The non-breaching party is put back in the position it was in prior to the breach.

When we find ourselves in a breach of contract, we may have to defend ourselves to the other party, to a third party arbiter, or in court. The following list comes from Free Advice: Law. Here are the common legal defenses for contract breaches:

Defenses
	Mutual or Unilateral Mistake There are two types of mistakes that can be claimed in a defense: 1. Mutual Mistake — Both parties made a major mistake that makes the contract unenforceable. 2. Unilateral Mistake — When only one party makes a mistake. Unilateral mistakes usually aren't a basis for voiding a contract. However, if the other party knew about the mistake—and did nothing to correct the other party—a court may decide that the contract is not enforceable.
	Duress or Undue Influence We covered duress when we covered the three common cases for invalidation. Essentially, a contract can be deemed unenforceable if one party was coerced into signed through extreme measures like physical threats or threats of legal action. Undue influence is similar to duress, but not as intense. This is more about when someone exercises control over you. For example: Your boss threatens to terminate your position if you do not co-sign on their personal loan application.
	Unconscionability This one is a little funky, but bascially a contract can be considered unconcionable when it is grossly unfair to one party. This is a case that would absolutely need the analysis of a trained legal counsel to make this defense.
	Misrepresentation or Fraud This is when one party grossly misrepresents a material part of a contract and the other party relied on that misrepresentation as part of the contract. For example, one party promises the intellectual property rights to an artwork in a sale, when it is later determined that party did not have the ability to sell those rights. Fraud is when misrepresentation happens on purpose.
	Impossibility or Impracticability I like to think of this as the 'Tornado Clause.' This is when something happens—not through the fault of either party—that makes the contract impossible to complete as written. For example, your recording studio is destroyed by a tornado—making it impossible to hold up your side of a recording contract.
	Frustration of Purpose This is very similar to Impossiblity or Impracticality, but this refers to a party's reason for entering the contract. Let's say that instead of a tornado, your star record producer—the main reason the band signed with your recording company—dies suddenly and unexpectedly. Now the band has no real reason to want to work with you, as they specifically wanted to work with that producer as part of the agreement. Just like the tornado, this was not the fault of either party and could not have been reasonably expected when entering into the contract.