“STANDARD” CONTRACTS

IVAN HOFFMAN, B.A., J.D.



        When an author, artist, web site designer or other creative person negotiates an agreement, whether with a publisher, web site owner or some other party, and raises a question regarding a particular provision, the reply often is: “That’s standard.”

        There are a number of meanings to that phrase.  The first is clearly: “We’re not going to change it.”  It is a tactic that is so common that it mostly just rolls off the tongue.  It is an affront to the negotiating process since it forecloses any discussion about the point and about the skills and marketing leverage of the creative person.

        Another perhaps more hidden mean is: “We don’t believe you are worthwhile enough to negotiate a better provision.”  Such a reply does not afford the creative person with any dignity.  It is a reply that says, in its essence “take it or leave it.” In truth what it says is: “You are not unique enough to warrant any such change in the boilerplate.”

        There is another and related comment often made in response to the question that goes: “No one ever asks about that.”  It can be embellished by something like: “I’ve been in this business for [fill in the number] of years and no one’s ever asked for that.”  The implication here is: “You don’t (or more commonly your lawyer doesn’t) know what you are (or he or she is) talking about.”  It is made to seem as though the creative party or that party’s lawyer is ignorant or naïve.   If it involves an attorney, it is a common and transparent attempt to create a wall between lawyer and client and to cause the client to doubt the skills of the attorney.  In truth, it usually means that the attorney knows much more about the deal and the contract and the implications of this provision than the other party does.  Either that or the other party is feigning ignorance as a negotiating ploy.  It means that because the attorney knows more, the attorney knows that the provision can present significant legal and business issues for the client and believes it is appropriate to address those issues.   If a contract does not work for both parties, it does not work for one for the one not “happy” will always be reluctant to comply, will seek to get out, renegotiate or whatever.

        There are 2 elements to making deals: one involves the skill of the negotiator—agent, lawyer etc.  But knowing what to ask for is only part of the issue.  The other part involves the marketing clout of the client—author, designer etc.  This latter part is essential for with appropriate marketing clout, be it real or imagined in the mind of the other party, the “We don’t do that for anyone” becomes “We don’t do that for anyone…else.”  I’ve seen this countless times and thus know it is true.

        These negotiating tactics, by the way, are not limited to creative agreements.  They apply in all contract negotiations.  But since in my over 27 year career I have negotiated all kinds of intellectual property agreements for both the creative and the business side, let me focus on that kind of relationship for the purposes of this article.

Capitalism and Personal Responsibility

        Let me be clear: there is nothing wrong with that other party offering those replies.  We live in and indeed thrive because of our economic system of free market capitalism.  I believe very strongly in that system and work integrally within it.  Each party in such a system is entitled and indeed mandated to protect its own legally valid economic interests. (Let’s leave aside any special situations such as fiduciary relationships that turn the model around and require one party to protect the interests of the other.)  It is up to each party in any negotiation to advance his, her or its own cause.  It is not up to that party to look out for the rights of the other party.  And yes, these responses and other forms of negotiation strategy are part of the process.  It’s just that many people are not aware of what is really going on since I am often asked about what are “standard” contracts.

        It is up to each party to be very knowledgeable about the substance of the deal or to be represented by someone who is.  Any failure of that party to either not be knowledgeable or to not be so represented is simply a failure of that party’s personal responsibility, that party’s responsibility to him, her or itself.  Foisting blame onto the other party in such a negotiation for making a good deal for themselves or a bad deal for you is simply inappropriate.  The essence of a free and indeed capitalist society—each party taking responsibility for themselves, is what makes the system work. It is the direct opposite of a paternalistic, dictator (even if benevolent)-led society, one that I am certain all of you reading this article would decry.  But when it comes to the party actually accepting that personal responsibility, well…that’s another story.  (Read “Set to Fail” and “Private Laws”.)

        So as I indicated, there is nothing wrong with these responses. What is wrong is the creative party accepting those replies, being intimidated by them and, as a result, foregoing a negotiation because of them.  What makes provisions in agreements “standard” is the failure of the artist or other creative type to negotiate them and the willingness of those artists to accept such an off-putting reply that something is “standard.”

        The other aspect of personal responsibility is that the creative party has the obligation to market his or her services and creativity in such a way as to gain the marketing clout I mentioned above.  This clout may be real, based on lots of public successes, or it may be a perception created by the creative talent that makes it appear that no one else can do the job, write the book etc. but him or her.  It is up to each creative talent to understand that he or she has this responsibility to themselves and it will not take that talent very far to blame the failure to make a good deal on the other party.

Nothing Is Standard

        In my 38 plus year career, I’ve made many, many deals for all kinds of creative and business clients and I know there is nothing that is “standard” when it comes to agreements for creative services.  There are of course many provisions that should be included in any thorough agreement even though many of those provisions and their internal components remain fully negotiable.  But at the very least, money points, royalties, advances, reserves etc. etc. should be considered as fully fair game in all deals.  The other side just doesn’t want you to believe that they are.

        Plus of course, if the agreement is about the Internet, this medium has only been around for a few years and is clearly so new that no deal in this space can be considered “standard.”

        All creativity is unique and what one artist gets is no indication of what another artist should get.  The problem seems to be that the artist does not understand his or her uniqueness.  It is the failure of the creative party to know that all money is fungible, interchangeable, and that it is creative uniqueness that is the real negotiating leverage.  But artists generally fail to believe in themselves and thus are often intimidated by the other party. Often as well, artists are often in impoverished or nearly so conditions and the Siren call of dollars causes them to lose their self-image.

        From the origins of humanity, relationships of every sort have been governed by the formula D=W3M.  When I say relationships, I mean to include not only personal relationships but all forms of business dealings as well.  And within the scope of business relationships are all forms of contract negotiations such as author-publisher agreements, web designer-client agreements and all other form of business relationships.

        The formula refers to the idea that the Deal (D) is made upon the basis of Who Wants Who (W3) More (M).

        And the best deals are made by those who can afford to say “No!”

        If you approach any deal from a place of need, in the worst case, desperation, as though you must have this deal or some disaster will befall you, then you will make a terrible deal.  You will end up in a relationship, whatever that relationship may be, with no dignity left to you.  And without your dignity, whatever you gain from the relationship will likely be unsatisfactory.  It may produce certain “rewards” such as money or what passes for love and if you are willing to settle for these “rewards” then perhaps the relationship will work for you.  But if your dignity matters, if your self-respect is part of who you are, then if you approach the deal with that focus, you will find that the deals you used to make you are no longer capable of making.

Conclusion

        Do keep in mind however, that as an attorney, I give similar advice as that contained in this article to all my clients, whether the creative or the money side of the transaction.  When representing the money side, I tell them that it is not up to them to offer or “give” anything in the contract without a negotiation.  It is up to the creative side to advance its own interests and my business side client should relinquish a point only if it is in my client’s best interest to do so.  This is my job, my professional responsibility to my client.  And the party on the opposite side should be aware of this and that my client is not there to protect that other party’s interest or to look out for those interests.  Thus, in the same spirit of personal responsibility, it is up to both my client and that other party to negotiate or find someone that can negotiate for them.  Thus the very replies that appear deprecating when representing the creative side are just good old free market capitalism when representing the business side.

        No one’s gonna take care of your interest ‘cept you.  You must approach any deals with this in mind.

© 2001 Ivan Hoffman

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This article is not legal advice and is not intended as legal advice.  This article is intended to provide only general, non-specific legal information.  This article is not intended to cover all the issues related to the topic discussed.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This article is based on United States law.  You should consult with an attorney familiar with the issues and the laws of your country.  This article does not create any attorney client relationship and is not a solicitation.
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