Contract Advice Please - Deferred Payment.
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Hi.
Looking to get some advice on a contract that I may be about to enter into. I'll keep this as hypothetical as possible for obvious reasons.
Short version: I have been asked by a company to provide some design work for a project which is not yet funded. The hope is that my work, in addition to work produced by this company will be enough to secure development funding from an investor/government agency. At which point, I will be payed for the work done.
I have been asked to sign an agreement, part of which states "The consultancy payment and the production of any work is on a deferred basis. Payment will be made based on investment value of development funding."
At this point in time we have not agreed on the ammount of work required, or any hourly/total fees. The nature of the project means that this is likely to be quite open-ended and hard to define.
So, before I sign (this is a really interesting project, and one that I'd like to accept), any advice on the best way to proceed? I have always been a stong believer in 'no design work for free' - but this one has me stumped. As a final point, I'll be working under a non-disclosure agreement, which means that I will not be able to use the work produced for my own promotional/portfolio purposes. So the only tangible benefit for me would be the financial reward (if any!)All thoughts and advice greatly appreciated.
Andy.
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Sounds a bit suspect to me, although you never know.
If your really keen on doing the project, id say negotiate a definite hourly rate (or rates, if the work is very varied i.e. one rate for design work, one for construction documents etc.) so you can define how much they will pay you if they get the project.
Get rid of the "Payment will be made based on investment value of development funding" bit as well. Your work costs as much as it does, it doesnt depend on how much money theyve got.
Overall i think it sounds like quite a risky job, but if you want to go for it, do it.
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Dear Andy,
I don't like the wording, "Payment will be made based on investment value of development funding." This suggests that they have the last word on payment, even if the proposal is successful.
The project sounds rather open ended, and could involve you in many hours/days/months of work. I am assuming that you have other work that will pay the bills. If not, I would make an hourly charge at a rate that pays the bills, and defer the profit margin to the successful outcome, or otherwise, of the project. You could set the profit margin quite high as you are taking a risk working on the project, so your remuneration should reflect that. Also, the additional amount to be paid on a successful outcome would be profit margin x hours worked, and so you then have total control over the final amount paid.
I have worked on a project that deferred payment, and the outcome was very unsatisfactory.
Regards,
Bob -
Thanks Guys.
Agree completely with what you've said. It's what I was already thinking - but it's reassuring to have it confirmed.
A.
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It is really difficult one. Sometimes you need to speculate to accumulate.
However you need to beef up the contract and spell out your fees in % terms based on the value of the construction cost. As you are speculating you will certainly want to have full fees. You should also limit the time and spell out when the payment will kick in. Most imprtantly you need to make sure that once they get funds that your position is sicure. Do not forget tight copyright clause as I have seen situations where one does all this work and than big boys move in and kick you sideways.
I have done one or two of these in the past and none of them materialized. I personally do not do them anymore. -
In my experience 'deferred' means everyone gets paid before you do. This is obviously a personal choice, however, the fact that you cannot benefit by using the work in your portfolio would make it a 'no go' for me. If you decide to do it, I suggest you put a contract together that includes very specific details with regard to a tiered payment structure, a per diem of some kind to at least cover your out of pocket expenses and a claus that allows you to use the designs you create for personal promotion only.
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I have a job, that, too, had an element of "we can't pay you until we get funding, but we really need your design stuff to attract funding."
As I am immediately suspicious of anything like this, I wrote my contract with the following stipulations.
Firstly, there is a definite hourly rate. I asked to be paid 55% now and the remaining 45% "as soon as possible". haha.
I also asked for a small retainer fee, just to make sure they were serious, really.
I also withheld all rights to anything I produce until I have been paid in full.
Lastly, I put a cap on the total sum that I would not be owed more than. I stop working when you owe me X amount.
As this is a pretty small job, and could be fun, and I am slower than normal these days, I figured that I didn't have too much to lose, even if I did get cornholed for some of the money. Since it is a local project and I withheld rights to the designs, I figured I was at least protected against the old get product and don't finish paying deal.
I would no way in hell work for free up front. If these guys are talking about a project big enough to need outside funding, then they sure as heck should be able to afford up front marketing/design services. If they have nothing and can't afford anything without future funds, then I would be very very leery of working with them at all.
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Seems we're all in agreement. I think I'm going to respond to this potential client with some terms of my own, and see how it goes. Ultimately, whilst I'd like to do the work, it won't be the end of the world if I decide to walk away from it.
Once again, thanks for all the insightful and helpful responses.
A.
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