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Making a resolution to get your services agreement dialed in? Or maybe just curious how your agreement stacks up? Consider a CreateLegal Report Card to see if your services agreement makes the grade.

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The portfolio clause is an important piece of any creative services contract. While straightforward, I’ve seen disputes arise out of missing or incomplete portfolio clauses.

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Retainers can be great for the studio or agency but they are prone to disputes. Longer terms lead to forgotten discussions, evolving needs, and unmet expectations.

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Tax Provisions in Services Agreements

You’ll often see service agreement provisions making a particular party responsible for taxes. This post breaks down what these provisions do and how you should handle them.

A typical provision might read something like this:

Any charges payable under this Agreement are exclusive of any applicable taxes, tariff surcharges or other like amounts assessed by any governmental entity arising as a result of the provision of the Services by the Agency to the Client under this Agreement and such shall be payable by the Client to the Agency in addition to all other charges payable hereunder.

That is more than a mouthful and could certainly be written more simply. But the upshot is pretty straight forward:

  • This says that (i) that the Agency’s fee does not include any applicable taxes and (ii) if taxes are assessed with respect to the services provided, that the Client is responsible for paying those taxes.
  • The taxes at issue here are things like sales and use taxes. For these types of taxes (if they apply to your transaction) the Agency has a duty to collect those taxes from the Client and remit them to the government.
  • Note that this IS NOT referring to income taxes imposed on the Agency’s earnings. You are still responsible for those.
  • Be sure to supplement a provision like this with a clause that allows you to invoice for taxes after the project is complete.

A simpler provision that incorporates these recommendations might read:

Client shall pay Agency the fees described in the SOW plus any applicable taxes, even if assessed after the project is complete.

See this summary for more posts examining the Anatomy of a Services Agreement.

Attorneys’ Fee Provisions in Creative Services Agreements

You’ve no doubt seen an attorney fee clause in contracts that have been presented to you. But sometimes its missing or differently worded. This post aims to clarify these provisions as applied to providers of creative services.

An attorneys’ fee clause, usually appearing toward the end of the agreement, typically provides something such as:

The prevailing party in any dispute with respect to this Agreement is entitled to recover reasonable attorneys’ fees, costs, and expenses incurred with respect to such dispute and in any appeal.

The meaning is pretty straightforward – the loser in a dispute pays the winner’s attorney fees. If this clause is missing, then each party pays their own attorneys’ fees (at least in the US). The purpose of the provision is to discourage frivolous lawsuits since the loser risks paying the winner’s fees. But let’s take a look at this provision in the context of the creative service provider:

  • As a general rule, you should probably want your contract to have an attorneys’ fee clause. In the unlikely event of a dispute, it can make a big difference if you have to sue to recover.
  • You’ll sometimes see a one-sided attorneys’ fee clause – that only your client collects in a dispute. This is onerous and overreaching. If you see a clause like this, be sure to edit make it benefit both parties. If the other side won’t edit the provision, enter the relationship with caution. (Note: some states automatically treat any attorneys’ fee clause as mutual, but not every state!)
  • When you are doing work in your wheelhouse, its generally more likely than not that you’ll be the one having to file suit (to collect payment). So, yes, this should be in the contract (or you should add it if you are presented with a draft where it is missing).
  • Note that in some cases, attorneys’ fees can be collected by statute, regardless of what the contract says. Some state small dispute statutes allow for collection of attorney fees. Similarly, enforcing a registered copyright allows for collection of attorney fees.

Learn about more common provisions in our (ongoing) series, Anatomy of a Services Agreement.

Anatomy of a Services Agreement – Table of Contents

As mentioned in this post, our posts about service agreement contract provisions will now be organized into this Anatomy of a Service Agreement. This table of contents is organized around the sections typically found in creative services agreements. We’ll update this table of contents as posts are added to the Anatomy.

Have ideas about topics you’d like covered in the Anatomy? Drop us a line at blog@createlegal.com.

Anatomy of a Services Agreement

Preamble (parties and date)

Engagement

Invoicing, Fees, and Payment

  • Invoicing
  • Fees and Payments
  • Costs
  • Retainers

Intellectual Property

Representations and Warranties

  • Representations by Agency
  • Representations by Client

Term and Termination

  • Contract Term
  • Termination
  • Effect of Termination
  • Suspension of Work

Limitation of Liability

Disclaimers

Indemnification

Portfolio Use

Restrictive Covenants

Miscellaneous

  • Attorney Fees
  • Assignment and Transfer
  • Force Majeure
  • Contractors
  • Taxes
  • Governing Law
  • Consent to Jurisdiction
  • Dispute Resolution