When I first started my former agency, I was adverse to contracts. I thought they symbolized distrust and a poor way to start a relationship. I was 100% wrong in that thinking. Since then, I’m constantly reminded of how important contracts are for ESTABLISHING TRUST right out of the gate.
Contracts play a crucial role in the graphic design and agency process, serving as the foundation for clear communication, setting expectations, and ensuring both parties—agency and client—are protected and understand their obligations. They make for stronger relationships that last beyond a singular project. However, there are multiple types of contracts and you should know which to use in what scenarios.
Before I continue, I have to disclaimer this. This is NOT legal advice. You should consult your attorney or lawyer to ensure your contracts are airtight. Every contract boilerplate should be reviewed before using and every edited contract should be reviewed by your legal counsel before signing!
These agreements range from simple scopes of work with letters of agreement to more complex master service agreements combined with statements of work. Here’s an overview of the importance of contracts in these processes and examples of different setups.
Importance of Contracts
- Clarity and Expectation Setting: Contracts clearly outline what is expected from both the design agency and the client. This includes deliverables, timelines, payment schedules, and the scope of the project, helping to avoid misunderstandings and disputes.
- Legal Protection: Contracts provide a legal framework that protects both parties. For the agency, it ensures payment for services rendered. For the client, it guarantees the work will be completed as agreed. Should any party fail to meet their obligations, the contract offers a legal recourse.
- Scope Management: A well-defined contract helps manage project scope by clearly outlining what is included. This is crucial for avoiding “scope creep,” where the amount of work exceeds what was originally agreed upon without corresponding adjustments in budget or timeline.
Contract Setups
Simple Scope of Work with Letter of Agreement
- Description: This is a straightforward agreement often used for smaller projects. It outlines the project’s scope, deliverables, timelines, and payment terms. The letter of agreement serves as a simple contract signed by both parties, confirming their acceptance of the terms.
- Use Case: Ideal for smaller, less complex projects, like a logo design or a small marketing campaign, where the deliverables are clear, and the project duration is short.
Master Service Agreement (MSA) with Statement of Work (SOW)
- Master Service Agreement (MSA): This is a comprehensive contract that establishes the general terms and conditions of the working relationship between the agency and the client. It covers aspects like confidentiality, intellectual property rights, dispute resolution mechanisms, and payment terms. An MSA is typically used when the agency and client anticipate multiple projects together.
- Statement of Work (SOW): For each specific project under an MSA, a Statement of Work is created. It details the project-specific scope, deliverables, timeline, payment schedule, and any unique requirements not covered in the MSA. The SOW operates under the umbrella of the MSA’s terms and conditions.
- Use Case: MSAs with SOWs are suited for long-term relationships between an agency and a client where multiple projects or ongoing work is expected. This setup allows for flexibility and efficiency, as the overarching legal terms do not need to be renegotiated for each project.
