When reviewing a contract, many people will focus on the commercial terms such as the duration of the agreement, the scope of the work and the payment, and they skip over the generic looking clauses towards the end of the agreement. Those clauses are known as “Boilerplate” clauses and they tend to deal with mechanical rather than commercial issues, such as how the contract should be interpreted. The word “Boilerplate” originates from the steel printing presses used in the 1900s and brings to mind an image of clauses which are so immoveable that they are impressed onto metal. However, it would be a mistake to assume that as they vary quite widely and could be of crucial importance when a problem with the agreement arises.
This resource goes through Boilerplate clauses that you may see in a typical commissioning agreement for illustration:
[hidden title = "Confidentiality"]
A confidentiality clause is pretty standard, but does the clause make it clear exactly what information is protected as confidential? How long does the confidentiality obligation last? Can you publicise your involvement in the project at all? As well as asking yourself these questions, you should look to see if there are any exclusions from the confidentiality obligation. You should have the right to tell your professional advisors and any employees, insofar as it is necessary for you to do so. There should also be an exclusion for disclosures required by law. You would not want to be in a position where you have a legal requirement to divulge information but to do so would breach your contract.
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[hidden title = "Assignment"]
It is quite common for illustrators not to be permitted to assign (transfer) commissioning agreements since the illustrator has been chosen for his or her individual skills, but if you are a sole trader and are thinking of moving your business into a company at some future date, you might want to include a provision allowing you to assign the agreement to a company that is controlled by you. Similarly, if you are already trading through a company you might want the right to move the agreement to an associated company.
If the other party to the agreement is allowed to assign, you might insist that they can only do so with your consent, to stop the contract being transferred to a company with no assets. If this is a concern, you could require that the original contracting party remains responsible and can only transfer the benefit of the agreement (i.e. the right to receive and own the commissioned work), not the obligation to pay you. At the very least, you should require notice of the assignment so that you know who you are dealing with.
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[hidden title = "Waiver"]
If a party delays in exercising its rights under an agreement then that delay will be deemed to constitute a waiver of the right. It is therefore important to have a clause which says expressly that failure or delay by a party to exercise its rights or remedies under the agreement does not constitute a waiver of that right or remedy. However, that could in theory mean that something you did wrong is dragged up at a much later date as grounds to terminate the contract. Therefore, if possible you should include a provision which requires the other party to exercise their terminate rights within a reasonable period of them becoming aware of any grounds for termination.
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[hidden title = "Force Majeure"]
“Force Majeure” literally means “superior force” and is used to explain what will happen if a party is prevented from carrying out its obligations due to reasons beyond its control. The clause should list out the unforeseen events that are covered (for example, fire, flood, war, terrorism) and clarify the effect of the event. Is the agreement merely suspended, or is there a right to terminate the agreement completely? It should also include an obligation for one party to notify the other. You could consider excluding payment obligations from the obligations which may be suspended without liability in the case of a force majeure event.
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[hidden title = "Entire Agreement Clause"]
This clause says, in effect, that if something is not set out in the final contract, it is not part of the deal. That means that it is very important to ensure that all of the commercial issues which may have been discussed prior to signing the contract are expressly written in. An “Entire Agreement” clause will usually mean that you cannot at a later date complain that something which was agreed previously (perhaps by exchange of email) is not in the contract. In fact it usually goes further and says that not only is that term not included, but you cannot claim that the other party’s misrepresentation induced you to enter into the agreement, unless such representations were fraudulently made.
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[hidden title = "Further Assurance"]
This clause usually requires the illustrator to undertake further acts at the request of the other party in order to give effect to the agreement (for example if a further document is required to transfer intellectual property rights). The clause should set out who bears the cost of complying (usually the party making the request) and it is worth considering whether the obligations are too broad. Will the clause require you to sign any document they put in front of you? Does it cover everything that they might ask for, or is it limited to that which is “necessary” to give effect to the agreement? These clauses sometimes contain a Power of Attorney under which one party can execute documents in the name of the other. You should strongly resist this in most cases, as you will not want someone signing things in your name without being able to exercise control over what’s being signed.
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[hidden title = "Variation"]
The purpose of this clause is to ensure that once completed the contract cannot be changed unless a proper procedure is followed, for example requiring that the change is set out in writing and signed by the parties. However, in a recent case Globe Motors Inc & Others – v – TRW Lucas Varity Electric Steering Limited [2016] the Court ruled that despite what it says in the variation clause, the parties are able to “unmake what they have made”, however they see fit. This means that you must be very careful not to informally agree to a change to the contract unless you are comfortable with the consequences of that.
Despite the fact that enforcement of a “Variation Clause” has been undermined somewhat by the Globe Motors case, it is still recommended that the clause be included. At the least it reminds parties that proper procedures should be followed for the sake of clarity and certainty.
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[hidden title = "Notices"]
This clause will set out the rules for serving a formal notice on the other party (if for instance, you need to terminate the agreement). In contrast to variation clauses, the case law on notice clauses indicates that they should be strictly observed. It is important therefore that you look at how notices are to be served. Would an email be OK or does it have to be by post or some other means? When it comes to serving a notice you must ensure that you meet all the requirements of the notices clause, otherwise your notice may not be effective. To paraphrase the Judge in the case of Mannai Investment; Eagle Star Life Assurance Limited [1997], if a clause requires a notice to be given on pink paper it is not validly served by giving it on blue paper, no matter how clear the intention might be.
Notice clauses are often litigated and a recent case illustrates how important it is for contracts to be very precise in the terms they use. In Lehman Brothers International (Europe) – v – Exxommobile Financial services BV [2016] the Court was asked to determine the meaning of the phrase “close of business”, as notices had to be served by “close of business” on a specific day. In that case a notice was received by fax at 6.02pm and Exxommobile argued that this was after “close of business”. The court said that the phrase could be interpreted differently depending on the context. They determined that “close of business” for international banks was around 7pm. It remains to be seen how the court would treat “close of business” for an illustrator, particularly when many illustrators work from home outside of traditional office hours!
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[hidden title = "Right of third parties"]
Traditionally, only the parties to a contract could enforce the contract. That was changed with the introduction of the Contracts (Rights of Third Parties) Act 1999. Nowadays contracts which confer a benefit on a non-party are enforceable by that non-party. In other words if you enter into a contract with one party and the contract purports to confer a benefit on a third party, the third party could take you to court for breach of contract even if the first party decides not to. The 1999 Act will apply unless it is expressly excluded, if a third party is given a benefit under the agreement. This could happen if work is commissioned for the benefit of a third party, such as the ultimate client of an advertising agency. It is usually advisable therefore to include a clause which says that the 1999 Act shall not apply.
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[hidden title = "Governing Law and Jurisdiction"]
Contracts have to been interpreted in accordance with the law. When business is done internationally, which country’s law should apply? Illustrators based in England and Wales would usually prefer to have the contract expressly state that it is governed by the law of England and Wales. If not, you should take advice from a lawyer qualified in the applicable country prior to entering into the agreement as that country’s law might imply terms into the contract which are not apparent from reading it.
This boilerplate clause will often deal with jurisdiction as well as governing law. That refers to the competency of a court to resolve a dispute. It is possible, for instance, for the contract to say that English law applies but the courts of France have exclusive jurisdiction, so that any claim would have to be brought in France under English law. You should check that the “Governing Law” clause includes non-contractual claims (such as a claim for negligence) as well as breach of contract claims and consider whether it should provide for exclusive or non-exclusive jurisdiction. Exclusive jurisdiction of the English courts is usually helpful for an illustrator based in England but the downside is that it would prevent the illustrator from being able to start proceedings in the defendant’s local court; if for example an urgent injunction (court order) was needed abroad to prevent a breach of contract.
Finally, you may also find alternative dispute resolution provisions which provide for compulsory mediation or arbitration. These are included to avoid the need to go to court to resolve a dispute, but do bear in mind that it may in fact be quicker and cheaper for you to start a court action than having to go through a lengthy arbitration procedure. This is especially true if you have a straightforward debt claim, where you are due money under the contract have not been paid. You might therefore consider removing alternative dispute resolution clauses altogether.
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This information is provided for information purposes only and has been prepared by Howard Kennedy LLP. It does not, and is not intended to, amount to legal advice. You must obtain advice from a lawyer on the specific circumstances of your matter rather than rely on the information contained above. Neither The AOI nor Howard Kennedy LLP accepts any responsibility for your reliance or use of the information in this article. Dated: 17 July 2017.