Quotations and contracts

[Greg Ball]

Hi Daniel,

Yes ABSOLUTELY. Work up a proposal that includes what you’re doing, what the scope of work is, and what you’ll be providing. We normally provide an overview of the project, a description of what will be shot and what will be included in the edit, a timeline (if necessary). The we have a legal contract attached that spells out payments. We always require a deposit up front, and we require full payment of all balances due BEFORE delivery of the final video to the client.

We have the client initial each page of the proposal and sign the contract. Terms and conditions are always part of any good contract. We usually keep our quote valid for 6 months.

[Mark Suszko]

A quote should always stipulate that any change orders invalidate the total amount to be billed, and a fresh re-quote should state that it replaces and supercedes the previous quote.

[Daniel Peterson]

Thanks for the insight Greg and Mark,

So I’d be really interested to know… how do you go about writing up a contract? Did you write it up or did a lawyer write a template up for you?

[Greg Ball]

Your best best is to have an Attorney write up the Agreement for you. But you of course write up the proposal and scope of work.

[Richard Herd]

[Mark Suszko] “A quote should always stipulate that any change orders invalidate the total amount to be billed”

This point cannot be stressed enough.

[Richard Herd]

[Daniel Peterson] “range anywhere between $3000 – $30,000”

That’s a drastic range. For $3,000 I don’t write a contract or spend much time negotiating. I’ll send an email with a series of deliverables and their fees.

I am not a bank, so the moment I start incurring hard costs, my risk goes up. Those hard costs are always required upfront — especially payroll, worker’s comp, equip rental, and equipment insurance.

[Daniel Peterson] “Here’s some questions that I have asked myself that may get the ball rolling…
Do you include details about the number of hours/days you intend to work or just a description with the total cost?
Do you make a client sign a quote (or contract) to accept it?
Do you require payments upfront? Or a percentage upfront before beginning the job?
Do you have any other ‘terms and conditions’? (Late payment fees? Additional charges?)
How long is the quote valid for?”

Details? Yeah be detailed. I include parking at the airport in the budget. I’ve found that when dealing with corporate business managers, they always try to beat the contract and nickel and dime as much as they can. I guess so in their reports to their superiors, they can show what a great job they did saving the corporation money. I really don’t know why they try to beat the contract. It’s annoying as hell.

No I don’t make a client sign a quote to accept it because what if they don’t sign it? Am I gonna get all pedantic on them? The reason to sign the quote is so you have proof that they received it. An email is pretty good for that, followed up by a phone call to discuss the terms and a follow up email noting the phone call discussion and attaching the new quote is a nice piece of documentation. (Then that will sit on the clients/corporate-contact’s desk for two weeks until their work flow cycles back to the production, after they’ve had 2 dozen meetings, the script has change, and other details.)

Upfront payment? Yes. 50% plus hard costs. This is a deal breaker. I am not a bank. If they cannot cover my hard costs, then I cannot make their shoot. You need to be paid after principal photography too. 25? 10%? I don’t know. But you can’t be expected to sit on your footage and make no profit while your contact/client puts out other fires that may pop up. It’s also really important to make sure your service agreement/contract has a clear termination clause. Here’s a dirty secret in big corporations: your contact doesn’t pay the bills. You’ll send an invoice to a completely separate department in a different city who will check the Purchase Order against the Service Agreement against the Receiving Department and will then verify with your contact’s boss (and or purchasing control manager) whether or not the stuff was actually delivered. This little piece of internal control can be a nightmare for video folks because when you deliver a download the Receiving Dept does not enter the PO number in the database to inform Purchasing of delivery. Yes, that really happened.

Late payment? Huh? That means you delivered your video before you were paid. DO NOT DO THAT! Burn timecode into every single deliverable so that the video is not really useable and also there is an easy way to discuss changes. You will have to decide in advance when the scope of work goes outside the contract and becomes a change order. Let me tell you: that conversation is not a pretty one, when you have to say “Well, that change is substantial and outside the scope, so I’ll need a change order for that.”

For me, quotes are valid until the PO arrives, or I’m too busy. Reality is, if they like your price, they’ll send you a PO (which is easier to receive than a contract, btw).

Let me talk about the art for second: I got burned really bad once because I shot some footage and assembled it for the Creative Director who then forwarded it to the client, a bean counter with no imagination. The client fired us both. That was $10k down the toilet. The lesson I learned was do not show unfinished stuff. Whatever you deliver IS your brand. So only deliver excellent material. I don’t like playback on set either. And I prefer to have the footage timed before I show folks in an edit session.

[Greg Ball]

I send an agreement for $3,000 too. What does it hurt? If your client is serious about paying for this they’ll have no issue signing it.

[Bill Davis]

For decades, I used all the mentioned tools.
Now I find myself doing so less and less.

Essentially, I’m more comfortable working with people I trust – rather than basing my business on a steam of customers I don’t know, and written agreements are far more important with the latter than the former.

But I acknowledge it takes a lot of years to get to this point.

About 20 years ago I paid an attorney to write a boilerplate contract with my protection in mind. Today, if a client requests a formal structure, I haul that out and adapt it to the specific situation and sent it out for client review. All it does is signal them that I’ve done contracts before and know how they function. When my prospective clients receive them, I expect them to significantly change things. I LOVE this since it gives me an opportunity to agree to virtually EVERYTHING they change. (Even if it’s not particularly in my interest to do so.) I do this because I’m not actually ever trying to gain a contract advantage, but rather I’m interested in demonstrating that I’ll be working to meet THEIR needs, not exclusively to meet mine.

For me, a contract is largely a way to explore whether or not I can work with these people. Are they a client that wants to control everything? Are they flexible at all? What are their hot button issues that they require in the contract? That stuff is more important to me than the contract itself.

So the game is to avoid contract squabbles at all costs. Unless there’s something truly toxic involved (way, way beyond they “own” the work or something trivial like that) I see my contracts as formalities.

Treatments and scripts, IMO deserve FAR more time than contracts, because they control how much work I’ll actually have to do.

And I’ve never had a single problem with anything a contract could protect me from. My deposits policy protects me from financial disaster. My relationships with crew and others in my market would likely protect me if something weird screwed up a shoot for me (e.g. if my vehicle blew up with all my gear on the way to a shoot), I could make a few calls and am pretty sure I could get someone to cover for me – just like I would for them.

Contracts are useful and cool. But they can’t replace my reputation nor help me do a good job making someone’s video.

So in that sense they’re of limited direct use to me.

Weird thinking I know. But it’s how I see things.

“Before speaking out ask yourself whether your words are true, whether they are respectful and whether they are needed in our civil discussions.”-Justice O’Connor

[Greg Ball]

Although I agree with Bill on clients you can trust, I don’t see any harm in having a signed agreement.
Clients change all the time. I’ve had great clients that I trusted that left their company in the middle of a project. What would happen without an agreement? We all hope to never need an agreement as proof in a court of law, but strange things can happen.

Yes deposits are also important, as is your reputation. I’ve had 3 instances where we didn’t work for someone because they wouldn’t sign our agreement. That’s fine. It’s all part of doing business.

Watch People’s Court a few times and see how many cases involve not having a contract. Even my lawn guys had an agreement that we needed to sign.

[Richard Herd]

[Greg Ball] “What would happen without an agreement?”

That’s a good question actually. It depends the exact situation. The beauty of contracts is they are good paper trails for preventing disputes (like the lawn guy) but pretty shoddy at resolving them.

Contracts in and of themselves do not guarantee that the signers will live up to their end of the contract; and also it means, if you don’t get paid, then you still have to start the legal action, which is very detailed and is not straight forward at all. If the trust between parties breaks down legal action drastically complicates the situation.

Here’s a brain teaser: When you order food at a restaurant is that a contract, a promise to pay COD at the end of the meal?