by Jane Cowles
Over the last several months, cancellations increased as a result of COVID-19 social distancing and mandated closures. Now that some contracts are impossible to execute, how will you get paid? It is not enough to have a clause that excuses your performance, you need a clause that guarantees you a set payment in the event that the contract cannot be fully executed.
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Cancellation Policy
It is a good idea to have a cancellation policy. The cancellation policy will depend on the nature of the art work. If it is a commission, licensing of art, or involves delivering a series of illustrations or designs by a specific date, collect a non refundable deposit that will cover your costs. If it is a contract relating to a performance, have a flat cancellation fee if your client does not provide notice of cancellation within a set amount of time prior to the event.
Kill Fee = Guaranteed Minimum Payment
It is smart to have a kill fee in addition to a cancellation policy. COVID-19 is a good example of why you need this clause in a contract. A cancellation policy alone may not protect you because COVID-19 was the reason the contract failed. Your client had no control over the pandemic and neither did you. A clause with a kill fee coupled with alternate methods of performance adds an additional layer of protection for you. A “kill fee” is a minimum fee the covers the cost of the time you invested in the project. Think of it as a consultation fee or nonrefundable deposit. Regardless of COVID-19, it is smart to have a kill fee in all of your contracts because it protects you in the event that a cancellation policy is not enough.
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Offer Alternate Methods of Performance
There is one caveat: you, as the artist performing this contract, have to offer multiple alternatives for performance methods and/or the ability to perform at a later date. By listing the alternatives, you are showing that you can fulfill your obligations to create a work of art under the terms specifically set forth in the contract. The client now has options that she was fully aware of at the time she signed the contract and must make a choice. If she chooses to cancel when you can still complete the art per the terms of the contract, she is breaking the contract and you can collect a fee known as a “kill fee”
This information is provided for general informational purposes only. No information contained in this article should be construed as legal advice and does not establish an attorney-client relationship.
Jane Cowles is an attorney focusing on contract law, business law (start-up, planning and restructuring), tax law and art law. She has over 10 years experience working with business transactions at boutique law firms and as a tax advisor for Ernst & Young. She has a solo practice in Rockland County and advises creative professionals, small businesses, and entrepreneurs. She is available to help with all the challenges individuals and business currently face with the COVID19 pandemic. For more information, visit her website www.janecowlesattorney.com or email her at jane@janecococowles.com. She is offering 30 minute FREE consultations by telephone or video conference.
