Understanding What You Are Selling/Offering, And How To Sell It (PART 2)

Understanding What You Are Selling/Offering, And How To Sell It (PART 2)

by David Wright (dwright@artmaze.com) - Artmaze (http://www.artmaze.com)

To succeed in any professional service business, such as Architectural Rendering, you must become a successful executive sales person, develop your negotiation skills to be able to write a fair contract, produce the work, deliver and get paid. Negotiating is the starting phase, and the most important towards writing a successful contract. Logically without a successful negotiation phase, there is no contract and as a result no work. I think I have written sufficient material related to negotiating. Today, I decided to write about the actual contract. Writing a successful contract is celebrating your negotiation, putting in formal words what you and your client achieved together, and clearly is directly connected to understanding what it is that you are selling, and what you expect to get for it.

Before we proceed I simply want to clarify that even though I have experience in contract writing, I am not a lawyer by profession, and my recommendations come from pure experience. You should always consult a lawyer if you are not 100% sure or if the contract is worth a reasonable amount of money.

A Contract: what does it really mean?

In basic terms, a contract is an agreement to an exchange. You agree to work and produce material in exchange of payment. Don’t be afraid of the word; start thinking that a contract is a computer program, and that you put in writing what you agreed to during negotiation. The purpose of a contract is not to beat your client in any way; to the contrary the purpose is to document your agreement, so that all those involved know what to do, and when; and know the variables, conditions and schedules.

Everything that you define in a contract, all the variables, schedules, payments, descriptions and conditions should be agreed during negotiation, or during a bidding process (a bid is not a contract). The contract is the final step towards production, working and getting paid. It is important to understand that a bid, no matter how formal it is, should never replace an actual contract; you may ask why? Well, a bid is a formal negotiation phase; one where most of the times, the scope of work changes, and new information is given after the bid, where variables change, and thus changing the data you need for the contract.

Do contracts need to be written to be legal and enforceable? Technically no, an oral agreement could form a contract but it may be very hard to enforce if litigation is required. Writing it should be default from any person doing any business.

A contract has three parts and is formed by the following: An Offer, an acceptance and finally an acknowledgement which shows that the offering party has received the acceptance and confirms a contract now exists. But a contract must also specify the considerations that each party expects.

An Offer is really a proposal, in other words “I will do this for that”, clearly inviting an acceptance to follow. If your contract says in minimal terms: “I would like to do a 3D rendering or your new house plan”, it does not constitute an offer because no exchange of considerations exists (“Quid quo pro”). But if you say “I will render your house plan for $2000” then we have an offer. I offer something FOR something. An acceptance is what follows an offer; “I agree to pay you the $2000 you ask for rendering my new house plan”. A simple agreement from your client. Can you write contract without an acceptance? No, because without an acceptance, and your agreement to it, it is not a contract. What about a simple “yes” or just “I agree”? Is this a simple acceptance to an offer? No, because if you read carefully “I Agree…” has to followed by “to something”; something specific; even “to the contents of your offer dated..”. Only then it is agreeing to the offer; without it, there can be no contract. Consideration is the simplest to explain, it is what you are exchanging. A “Rendering” and “$2000” are the actual considerations; without them there is no contract. And finally, the accepter has no contract until he knows the offerer received the acceptance and is aware that a contract exists.

So now we know the basics of contract writing, but does it mean that any wording that has an Offer, an Acceptance and a Consideration forms a valid contract? No! In most states and countries, a contract that promises something impossible, or an action unenforceable, or promises an illegal act of any kind (legality of purpose), such “I will render your house for $2000 if you cross a red light. Also, a contract made with a minor or one certified mentally ill, is also considered to be an invalid contract.

Clearly there is far more to contracts that just the above, such as Governing Laws, Warranties, Remedies, Statues of Limitation, and so on. It may get a bit complicated when dealing with confidential information necessary with some jobs. But don’t be scared about these wordings. If you read any contract, such the type of agreement that comes with your software, read it carefully and you should understand most of it.

What should be included on an architectural rendering contract?

A method we usually use, for a single contract that describes the whole job, the schedules from both parties, and payment terms:

1- Identify the parties involved: Who is involved, names, address and how are you going to name them on the contract “Joe Doe hereinafter named Joe”. A document that says, “this is a contract” does not really qualify what follows to be a contract. A contract must contain the parts we already specified above.

This document is an agreement reached between: ABC Rendering, Inc a California corporation (herein referred to as “ABC”) and XYZ Architecture, Inc, a California corporation (herein referred to as “The Client” and/or “Client”)

2- Definitions: If specials words are use such as “anti-alias” or “radiosity” then proceed and define each of these words in the beginning. Here you can also describe what “Still” means, and so on.

Agreement on Definitions:

a- Rendering: (define rendering here)
b- Radiosity: (define it)
c- Stills(s): (define it)
d- Artistic Interpretation: (define it)
e- And so on…

3- Brief Description: Describe the offer; in a single paragraph, describe the purpose of this contract, the actual job/work to be done.

The Client will provide ABC with the floor plans and elevations for the JohnDoe Mall. ABC will produce three (3) architectural renderings (3 stills), delivered on CDROM, FTP and include 30 seconds of animation later defined to be delivered in DVD and VHS all due on January 1st 2004. For the mentioned renderings and animation work, XYW will pay ABC the estimated sum of $13400.00 due as per the payment schedule later defined.

4- Scope of Work & Schedules: Describe it using schedules for all parties involved

Contact Personal:

a- Mr John Doe from XYZ (the Client) will review all drafts supplied by ABC, no other person shall contact ABC related to this agreement unless previously agreed by Mr. Carl Smith from ABC.
b- Mr. Carl Smith from ABC will be the only contact for corrections, changes related to this agreement.

Week 1 (December 1st)

c- The Client will deliver final drawings (floor plans & elevations, 2 sections, 1 site plan, material descriptions) in AutoCAD 2000 format.
d- ABC will start cleaning AutoCAD drawings and 3D modeling process starts.
e- The Client will review first 3D modeling drafts via email (Friday 5th) and send corrections if any, via email on the same day. A sign-off/confirmation via email from XYZ is required.

Week 2 (December 8st)

f- The Client will deliver final material samples: carpet and wood selections, and final logo art for the shopping mall.
g- ABC will continue the 3D modeling process
h- ABC will render draft images for camera selection and deliver them on Friday 14th via email.
i- (And so on)

5- Acceptance: Describe the acceptance and consideration. Here is where you specify costs, payment schedules and other related data.

COSTS:

AutoCAD cleaning 07hr @ $60/hr $ 420.00
3D Modeling 48hr @ $120/hr $5760.00
Surfacing, Texturing 16hr @ $120/hr $1920.00
Camera Setup – Anim 02hr @ $120/hr $ 240.00
Rendering Farm 24hr @ $115/hr $2760.00
Printing to Tape 01hr @ $150/hr $ 150.00
Printing to SuperB 02hr @ $70/hr $ 140.00
Fedex / Mail NA $ 80.00
Photography $1000/day $1000.00
Travel/Airfares Approximate $ 690.00
(ADD IF NEEDED)

Total $13,160.00

PAYMENT SCHEDULE

In exchange for the described rendering work by ABC, The Client will emit/wire funds to ABC as per described schedule:

-December 01st The Client will wire 30% of estimated cost ($3948.00) to ABC bank account.
-January 1st The Client will wire an additional 30% of cost (3948.00) to ABC bank account.
-January 28th The Client will wire remaining amount dues including airfare and all additional dues, estimated amount is $5264.00.

Wire instructions will be written on an ABC Invoice; please refer to this invoice for further instructions.

6- Copyright Agreement / Copyright License: This example may vary, some clients will request copyright ownership; in such case then you should agree that you get a license of use for your portfolio.

Copyright Ownership: ABC will be the owner and holder of the Copyright of all the material generated by ABC. ABC will neither claim, nor claims the Copyright ownership of the client supplied drawings, designs, and materials. ABC will grant a permission/license to the client (XYZ) and their clients to use for their purposes, this material at no additional charge with the following limitations:

1 – Unlimited Reproductions of it are authorized by ABC, for an unlimited time, only if

ABC appropriate credit appears, depending on the case:

• Videotape, Digital Media such as QuickTime, AVI, CDROM, and other similar media, ABC name “ABC Rendering, Inc” should appear in the final credits.

• For Prints other than the ones used for the client presentation, including but not limited to magazine covers, magazine articles, book covers, book images, web site images, ABC appropriate and visible credit has to be given.

• Modifications such as cropping, saturation, uniform scale and rotation are authorized. All others, including but not limited to: non-uniform scale, color, hue, sharpness, grain, blur, smear, adding, erasing, negative, noise, and other digital or non-digital modifications are not authorized unless authorized by ABC with a written document, and valid signature.

2 – Images and animations delivered cannot be sold or converted in any form without authorization from ABC.
3 – Images and animations delivered cannot be sub-licensed to a third party without authorization from ABC.

7- Governing Laws: Agreeing that you are writing based on the state laws were you are located, or other if any.

8- Warranties: Describe all of what you are not responsible for and you may add more technical details.

Limited Liability, & Warranties and disclaimers: Except as expressly provided otherwise in a written agreement between the client and ABC, all materials and services offered by ABC are provided as described in this contract “the contract” without warranty of any kind, either express or implied, including, but not limited to, the implied warranties of merchantability or fitness for a particular purpose, or the warranty of non-infringement. Without limiting the foregoing, ABC makes no warranty that (i) the services and materials will meet your un-specified requirements, (ii) the services and materials will be error-free, (iii) the results that may be obtained from the use of our contracted services will be effective, accurate or reliable to the final physical development, including but no limited to construction, office building, house(s), site and other from similar nature (iv) the quality of our services, or information obtained by you from the website, brochure or demo video will meet your un-specified expectations. The expectations “specified” must be in a written form, and must be attached and included on this contract “the contract”.

In no event shall ABC be liable to the client or any third party for any special, punitive, incidental, indirect or consequential damages of any kind, or any damages whatsoever, including, without limitation, those resulting from loss of use, data or profits, whether or not ABC has been advised of the possibility of such damages, and on any theory of liability, arising out of client architectural design drawings, the client provided material, differences between the client drawings and the final development, including but not limited to construction, materials, shadows, hue, saturation, color, reflectivity, brightness, form. Some jurisdictions prohibit the exclusion or limitation of liability for consequential or incidental damages, so the above limitations may not apply to you.

(These can be longer, if you add arbitration agreements and other details)

9- Final agreement: Agreeing to all items, and signatures. Add executive names, title/position, date and most importantly, a signature. Better still, both parties shall write their initials on each page and each shall have a copy. In some countries it is a custom to notarize signatures.

Clarification and questions regarding this document: Should you require clarification or modification with regard to any of the above please do not hesitate to contact ABC.

I hereby state I/we have read the above contract, including items 1 to N, inclusive, and agree to it.

Signatures…

Final Word:

As I said earlier, it will be much better for you to consult a lawyer and hire him/she to write you a template contract. My suggestions are not to be treated as legal work, this article barely covers the basics just for you to have a better understanding on contractual writing and reading. Don’t be afraid of these documents, you will find it very easy to read with time.

David Wright is a long-time 3D user and CG artist and has succeeded in the A/E/C (Architectural / Engineering / CAD) market with “Artmaze”, becoming a leading provider of integrated 3D animated visuals and multimedia services. Comments or suggestions about this article are welcome; David can be reached via email at dwright@artmaze.com