PAGOSA SPRINGS, Colo. — A contract is a mutual exchange of a promise. In a contract, each party promises to do or not to do something in exchange for the other party’s promise to do or not to do something. This exchange happens verbally all the time and is legally valid, except when involving the purchase of land.
However, an oral contract is very difficult to enforce because it is nearly impossible to prove that the two parties actually had an agreement. Written contracts are more binding. An exchange of letters or e-mails can create a binding contract. Service contracts that will take more than a year to complete and the sale of goods over $500 must be in writing.
Many small business owners are creative individuals: artists, writers, photographers, crafters, and contracts can protect them when working with a buyer purchasing artisan goods, or when creating a commission such as a mural or mosaic installed in a custom home.
The two most important terms in a contract are price and delivery. Other elemental terms include: Offer, acceptance, and consideration. An offer is a proposal that invites acceptance in the form of a return promise. Specific terms (subject, price, etc.) must be stated. Acceptance comes from the person to whom an offer is made.
Contracts cannot be entered into with minors, intoxicated people or people with mental disabilities who are generally considered incompetent. (The choice of trying to make a living as an artist or writer does not automatically deem the party incompetent.)
Copyright law requires that any transfer of a copyright or an exclusive right in a copyright must be in writing.
Conditions stated in the contract must be followed. Sometimes the parties perform simultaneously and sometimes one party must perform a duty before the other party is obligated. In other words, a work of art or piece of writing must be completed before the buyer will pay. The UCC covers the sale of “goods” like a painting or photograph, but it does not cover the sale of “services,” an actor or musician performing at an event. Warranties can be created orally, even if the contract must be written.
Warranties are often made during contract negotiations. An implied warranty can include an artist given the right to convey title in the artwork to a purchaser or that the artwork is fit for the particular purpose for which it is sold. An express warranty occurs when an artist asserts either facts or promises relating to a work or describes the work in such a way that the purchaser relies on the facts, promises or description as a basis for making a purchase. If a writer promises an article will be 500 words and only submits an article of 450 words then the express warranty is violated.
An as-is clause just means buyer beware. Many artists and photographers and those creating digital work claim that the inks they use are archival, but 20 years from now if that giclee print on canvas you purchased begins to fade, it may be another case of the collectors who purchased work by Julian Schnabel for millions of dollars only for them to decay and crumble. The question legally becomes what is the implied purpose of a work of art?
Breach of contract involves some detriment or loss caused by the breach before recovery of damages is allowed. Damages generally include reasonably foreseeable losses (out-of pocket costs, lost profits). The injured party must take steps to minimize damages. Substantial performance — an artist will usually be able to get paid if the requirements of a contract have been substantially performed, but not if partially performed. The difference? Well, that depends on the detailed terms of the contract. Attorney Chris Beall from Faegre & Benson in Denver recommends that every commission agreement should anticipate the buyer not liking the work, when all points of the contract agreement have been met.
Statute of Limitations — there are specific time limits within which an injured party must bring a suit to have the injury remedied. Limits for contracts falling under the UCC (sale of goods) is four years from the time of the breach under federal law. A limit for contracts for services (employment contracts) varies by state: In Colorado it is three years. Limits in many states are longer for written contracts than for contracts that are oral, partly written or implied.