This article is written by Prince Gahlawat, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com. Here he discusses “What kind of agreement should you enter with freelance Graphic Designers?”.

Graphic Designing is widely understood to be an art of visual communication using images, texts, shapes, forms, texture and/or a combination of these. The visual communication in most cases is intended to convey an idea, message, warnings, directions, signages et al; popular uses therefore can vary from creating; corporate designs, flyers for advertising, designing of logos for digital marketing, web designs, wedding cards, visiting cards, cautionary warning signs, environment designs, road signages, etc. 

From handmade sketches and calligraphy to the use of softwares like Adobe Photoshop, Adobe Illustrator, Adobe InDesign, Canva, Pixlr, Inkscape, GIMP and others; a Graphic designer can possess diverse set of skills to execute a task at hand. These skills can either be self-learned, practiced and mastered over a period of time; or they can be acquired through institutional training and certification. 

As there is considerable diversity in the field of Graphic design and skillsets involved, any employer is recommended to include the following in an agreement for assigning a task to a freelance Graphic designer.

1. Establishing identity, skill and experience level

For any legal relationship formalized by an agreement, it is of utmost importance, first and foremost, to have a clear identification of parties, so as to keep a check on the possibility of impersonation or any other misrepresentation. For this purpose, the employer may either prefer to select the freelancer from platforms like https://www.freelancer.com/ which ensure credible KYC norms[1]; or the employer may go for Aadhar based offline e-KYC wherein, the QR code on Aadhar can be scanned to confirm the stated identity of the freelancer[2]. 

Skillset and experience possessed by a freelancer invariably affect the quality of work. Therefore, it is prudent to include in such an agreement; a set of representations by the freelancer wherein, all claims with regards to any software proficiency, certifications, previous works executed can be asserted. All such purported claims can then be supplanted with addendums – like third-party verifiable copies of works executed, certifications etc. – in the agreement.  Furthermore, there can be room for self-asserted claims in such representations; although, with much lesser credence value.

2. Guidelines and Scope of work  

As an employer of a freelance Graphic designer, it’s important to understand what idea is being sought to be visually communicated by the Graphic designer. For instance, a corporate house seeking some form of web designing for digital marketing, may provide broad guidelines regarding the nature of its business, company ethos, its products/services, nature of its clienteles etc. Likewise, other employers may come up with different set of guidelines depending on the idea sought to be so manifested by them.  

A precise scope of work – like the number of flyers, cards, color contours to be used, design guidelines – executed within the parameters of these guidelines along with mandated deliverables like the presentation of work done – in specified file formats like .html, .xml, .jpeg, sketch, drawing – before subsequent approval of final design by the employer, could very well provide cogent clarity for execution of the agreement. For the sake of equity, a release of nominal advance payment by the employer can be made conditional on such presentations by the freelancer. To protect employers’ rights herein, a provision conferring the right to withdraw the offer for convenience, without incurring any liabilities – in case presentation isn’t deemed satisfactory – would seem prudent, especially where previous work samples have not been shared or don’t match the quality of work presented by the freelancer.  

A mechanism of delivery could also be stipulated within this section so that there is no ambiguity and delivery obligations aren’t found wanting. Like in cases of printable flyers, cards, the physical delivery could be mandated by a pre-specified courier company along with the receipt of dispatch, as proof, being shared through the email. In other cases, the delivery can be made in stipulated file formats via email attachment.

3. Duration, consideration, termination and consequences thereof 

In an agreement where “time is of the essence” one or more parties to the agreement could be impacted negatively if terms of the agreement are not fulfilled by a specific deadline. The breach of deadline in such cases is termed as material breach and has the consequence of the agreement being terminated. 

The employer herein would be well advised to set such specific deadline for delivery of works by the freelancer; a breach of which would terminate the agreement with immediate effect – without any notice. Thus, the consequence of such termination could be forfeiture of performance guarantee in lieu of any advances, while the employer retaining the right to claim any damages by initiating arbitration proceedings. 

Besides untimely delivery, the agreement usually terminates on successful execution of mutual and respective obligations by both the parties. In such a case, the consequence is that both parties stand discharged from their obligations; upon such satisfactory execution, a provision for providing an acknowledgement receipt – by the employer of freelancer – could be made.  

Duration of the agreement will thus include the defect liability period running even after the final performance of scheduled deliveries. 

Consideration for the work executed could be made payable on timely delivery, along with a provision of advance payments as discussed under the ‘Guidelines’ section. Furthermore, a clear payment mechanism must also be identified/specified in the agreement; wherein, payment modes like RTGS, NEFT, cheque, demand draft are mentioned and the requisite details from the freelancer are sought.

4. Performance Guarantee and Defect liability 

It is possible in agreements of such nature that the quality of service isn’t satisfactory, or the quality of products delivered – in case of flyers, cards, posters etc. – isn’t up to the mark. To protect the employer’s interests herein a defect liability period could be contemplated for such agreements, pending which, it shall be obligated on the freelancer to rectify the defect. Such a defect liability period could run co-terminus and beyond the duration of the agreement – for a certain period. 

To ensure proper delivery and rectification of defects as and when such rectification is sought by the employer – within the defect liability period – a portion of the consideration amount could be set aside as a performance guarantee. The performance guarantee can either be in the form of a bank guarantee or be kept with a trusted third-party surety. The release of advance upon approval of work samples at the time of signing or at the time of presentation of work done should be made conditional on freelancer furnishing such guarantee with the bank or third-party surety.

5. Warranties, Indemnities and Limited liabilities  

Terms of warranties are usually regarded as collateral conditions; the breach of which is mostly remedied by a claim of damages and not by terminating the agreement. Keeping this in the mind, the agreement may provide for warranties like; a) the freelancer warrants that all works executed under this agreement shall abide by highest standards of public policy, public law and morality; b) the freelancer warrants that the software technology utilized for completing works under this agreement is done so under valid licenses; so on and so forth. 

Indemnities, on the other hand, secure one party from a loss/liability by obligating the other party to provide protection in certain cases – as espoused under the agreement. The employer herein must include a clause whereby, he and his employees are indemnified by the freelancer from any and all third-party intellectual property infringement claims made on the works executed under the agreement.

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Limiting liabilities in an agreement can inspire confidence in parties to the agreement to fully concentrate on performing their respective and mutual obligations; whereas, it might, in certain cases, also bring a callousness towards such obligations. Thus, a well-balanced limited liability clause wherein, liabilities arising out of certain non-performances like untimely delivery, no delivery, breach etc., can be restricted to the consideration amount or a portion thereof. However, liabilities arising out of a breach in confidentiality or revealing of a trade secret, may not be made subject to such limitations.

6. Assignment of Intellectual property 

For complete utilization, it is recommended for the employer to have an assignment clause wherein, the works produced by the freelancer are assigned to the employer with full title guarantee and absolute entitlement to register copyright – pursuant to the assignment – of the works produced in employer’s name; other rights to exploit and use being specifically mentioned, like; the right to sell, license, commercially use in any way possible etc.  

A few undertakings by the freelancer; that the works produced are original and have not been licensed to or from, sold or otherwise assigned, to any other entity; that any licensed use of a software for producing the works under this agreement has no bearing on this assignment, could also form a part of this clause.

7. Arbitration and Jurisdiction 

Setting forth an Arbitration mechanism for any probable disagreements and disputes have become a must in agreements of commercial nature. Therefore, an arbitration clause wherein, a sole-arbitrator is sought to be appointed based on a pre-specified criteria like; 1) The sole-arbitrator shall have a minimum 10 years’ experience in the field of legal practice in any court in India 2) The sole-arbitrator shall have no criminal record and must be a man of integrity etc.; and the freelancer by signing the agreement acquiesces to the the fast-track procedure of arbitration – Section 29b, Arbitration and conciliation act, 1996 – incorporated in the agreement for final adjudication, determination of all disputes and disagreements, would be recommended in case the agreement is subject to Indian laws; otherwise, arbitration clauses of similar nature could be considered. 

It’s important here to note that amendments to Arbitration and conciliation act 1996; in 2015 and 2019, have added schedule 7th and 8th respectively, wherein certain conditions like relationship with a party, make a person ineligible for appointment as an arbitrator. The earlier practice of appointing company employees as sole-arbitrators in such agreements now stands against this provision. Schedule 8, on the other hand, specifies certain categories of persons eligible to be appointed as arbitrators. Although this provision is speculated to be for newly established Arbitration council under the amendment act 2019. Still, it would seem prudent to pay heed to these new developments in the arbitration law, while drafting the arbitration clause.    

The seat of the arbitration under this clause shall also be specified, preferably at a place of convenience to the employer. Also, the arbitration clause, inter-alia, may stipulate the fees payable to the arbitrator, language of pleadings etc.    

Jurisdiction under Indian laws can’t be ousted absolutely from courts which would otherwise have jurisdiction.[3] Although, Indian courts have upheld conferring of exclusive jurisdiction – through contractual terms – to any of such courts having jurisdiction[4] 

Therefore, it should be suggested that the employer includes a Jurisdiction clause wherein, all disputes and disagreement are made subject to courts at a particular geographical location which is perhaps of convenience to the employer; such jurisdiction clause may further specify that all disagreements/disputes shall be subject of a determination under Indian laws only.  In other jurisdictions outside India, a similar approach may be followed.

8. Confidentiality, non-compete, non-solicitation, Notices and Non-waiver 

It is possible that the employer may share some information with the freelancer – pursuant to the agreement or while negotiating one – which isn’t in public domain and the employer remains desirous of keeping such information confidential. In such cases, a general confidentiality clause like; all information which isn’t in public domain and is shared with the freelancer herein, shall be so kept in confidence, till perpetuity. On the other hand, specific confidentiality clauses might provide for, either pre-defined nature of confidential information; or specific marking of ‘Confidential’ on documents/files as and when shared. 

In case negotiations don’t yield into the agreement being signed. The employer may demand the signing of a non-disclosure agreement before negotiating the agreement, so as to protect any and all confidential information which may be revealed/shared.

Non-compete and non-solicit clauses besides being a guard against the proliferation of confidential information and protection of propriety rights, also serve as a mechanism to ensure an employees’ complete dedication on the job. Thus, a reasonable clause wherein, the freelancer is restricted from taking up any new assignments of similar nature – during the subsistence of the agreement – may be contemplated and included in the agreement.

Non-waiver clauses to ensure that no waiver of performance by either party is presumed in cases where such performance isn’t specifically demanded have become essential in all agreements of commercial nature.            

Notices serve as a mechanism for communication between parties during the subsistence of the agreement. A proper mechanism establishing; timelines, notice periods (for arbitration, termination, delivery etc.), points of communication, means (email, courier, FAX) is essential to keep both parties abreast of the progress made at any given point in time.

Note: – The term “employer” herein, is used as a general term of reference and shall not be construed to signify an employer-employee relationship. 

Disclaimer: – The contents of this write-up are not meant to be a complete and finite understanding of freelancer Graphic designer agreements since contractual relations are highly subjective engagements. Therefore, nothing herein shall be understood as legal advice tendered and must only serve as a general guide on the subject.  

References

1.  https://www.freelancer.com/page.php?p=info%2Fkyc_policy
2.  https://uidai.gov.in/ecosystem/authentication-devices-documents/qr-code-reader.html
3.  Section – 28, Indian Contract Act, 1872. 
4.  Swastik Gas vs. Indian oil corporation limited., (2013) 9 SCC 32.