Contract War Stories from the Trenches

Yes, indeed, oral business contracts are enforceable… but written contracts are preferable.

If I offer to sell you my product for a specific dollar amount, you pay the amount asked, and I deliver to you my product… voila, we have completed our contract! Would that they were all so smooth (hint: they aren't).

• Party A is a graphic designer and Party B is a marketing consultant who needs graphic design services as part of her marketing contract with her client. [This is just an example, so please, my graphic designer friends, refrain from sending me hate e-mails or clogging my voicemail with angry diatribes!]

• Parties A and B have several telephone conversations, each of which is followed up with a few e-mails. Both parties work with each other on a fairly regular basis and believe that they have communicated and understood the parameters of this particular project.

• Party A completes and delivers to Party B a word and logo design for an event announcement, with accompanying collateral materials.

• Payment. Party A expected to be paid upon delivery of the design; Party B expected to pay upon receipt of payment from her client.

• Ownership. Parties A and B have worked together in the past, however they have never gotten around to discussing — let alone, signing — a "work for hire" contract. Party A, as the designer, therefore, currently owns the rights to the design upon which Party B's client is building a multimillion dollar marketing campaign.
  
  

Yes, it's true. The creator of the work (i.e., Party A, the graphic designer) is its legal owner (assuming that Party A is an independent contractor and not an employee), unless and until she transfers that ownership via an agreement with Party B or Party B's client.

This is a particularly sensitive issue since Party B has a signed, written contract with the client which promises to vest the ownership in the client of the new logo at the conclusion of the project.

• Confidentiality. Party A is frustrated and vents her ire at a local pub. In the process, she names Party B's client (who required absolute confidentiality in their written contract with their marketing consultant!).

The result? You've already figured that out. A written contract upfront would have prevented angst and heartburn, saved time and probably money on both sides, and eliminated the need to get the lawyers involved. [Yes, we lawyers frequently advise our clients against litigation as a problem-solving tool. Few of us enjoy hurling that legal cliché... "See you in Court!"]