When is a Contract a Contract?
At what point does a contract become an obligation by the parties involved?
I have 3 ways of recording the stages of an inquiry for my services:
- Light Pencil
- Dark Pencil
- Pen & Ink
A simple phone call, email, fax or other inquiry as to price, availability and what services are provided are considerd “light pencil” requests. Any lightly penciled-in inquiry is not an obligation upon any party; rather, it is simply an inquiry, as when a person walks into a store and asks about the price or availability of anything in the store.
This inquiry is serious and I keep this client informed as to the progression of my tour, or if I have another inquiry for the same dates for which this client might want the right of first acceptance.
Dark Pencil notes or inquiries can still be erased, but this is a more concrete place in the negotiation process, while still not a firm obligation. Dark Pencil is a broad gray area between a simple inquiry and a request for a formal contract.
Pen & Ink
This is the third definition I use. “Pen & Ink” means that a contract has been formally requested. This means to me that once a contract is requested, a deal is 99% agreed upon and both parties should sign the contract and fulfill the requirements of the contract.
Of course, all contracts are negotiable and may go back-and-forth a few times as changes are made. An addendum can be attached to any contract by either party. An addendum explains and translates the laws unique to state, county, agency, etc., which must be explained in detail.
An addendum attached by an Service Provider may define why something in the contract can not be fulfilled (i.e., a request for employee compensation insurance when an independent contractor is a sole proprietor or uses family members only).
When a contract is executed there should never be surprises.
All items that can or will cost the purchaser money need to be discussed in detail before the contract is written. Entertainers need to be clear and up-front regarding: lodging, meals, transportation supplements or costs, sound equipment, lighting and stage requirements, actual payment, and how and when payment should be made.
Clarification must be made regarding mandated state withholdings, or items a purchaser knows he cannot fulfill as part of any obligation. For example, Wyoming State Fair does not provide hotel rooms, while both North and South Carolina have a state income tax withholding from all independent contractors not incorporated or holding a business license in NC or SC. Requests for insurance, a timeline of how long it will take to sign and return an agreement by either party, etc; these requirements must be made part of the contract.
Before a contract is requested, either a light or dark penciled inquiry or agreement represents no obligation by either party to fulfill any side of an agreement. A definitive “Please send me a contract” needs to be requested and confirmed either by email, fax, phone call, in person, text message, or some other clear communication.
It is a good and proper procedure for either party to reiterate all conditions agreed upon in writing before the contract is fully executed. This can eliminate undue rewriting of the contract and make all agreed upon conditions part of the contract, thereby eliminating the need for an addendum.
Surprises or changes in an agreement by either party at any time need to be discussed unless undue delays in the full execution of the contract are the goal.
If there are ever conditions that cannot be met by both parties, quick and timely communication is polite and necessary to eliminate bad feelings and ill-fated rumors which harm reputations and create ill will.
Contract Horror Story #2
FAIR MANAGER: (Standing at IAFE booth in December) “Send me a contract for that act.”
AGENT: “You want me to send you a contract? It’s a done deal for ten days?”
FAIR MANAGER: “Yes. Send me a contract.”
AGENT: (Assuming the contract is a done deal, he mails a contract for artist’s services for a 10-day fair in December).
AGENT: (in February) Calls Fair to ask for contract back. Leaves message and gets no reply.
AGENT: (calls back again in March. Doesn't want to be rude, so awaits to hear reply; leaves another message): “Hi. Awaiting the return of that contract for ARTIST. Please let me know when I can receive it.”
AGENT: (leaves another message two weeks later) “Still have not heard from you. I have left two messages. Please let me know when I will get the contract back and if everything is okay.”
AGENT: (It is now late April, going into May. He begins leaving messages every day since he has not heard back from Fair Manager): “I need to know if everything is okay. I have reserved this ARTIST's time and I feel responsible for him getting the work. Please, call me back.”
FAIR MANAGER: (Finally calls back in the middle of May) “Sorry, can't use the act.”
Result: The artist lost the contract, the agent didn’t get paid for all his work, and it was much to late in the game to fill the dates. In this case, the Fair Manager was at fault, not having communicated clearly at all. The end result is very bitter feelings, a lost contract, and the artist is financially strapped.
Lesson: COMMUNICATE CLEARLY.
No matter what you THINK the other party is doing, NEVER ASSUME ANYTHING.
In this case, the agent believed that if the Fair Manager asked for a contract, the event was happening (“a done deal”). Respect Agents and Artists. If a fair asks for a contract, both the AGENT and ARTIST assume the event is happening. Please do not let this happen.
Contract Horror Story #3
This is the worst story, because the artist was already on the road, about 1,500 miles from home, when the manager unexpectedly broke the contract with the artist.
At IAFE, an artist is approached by a Fair Manager and the Fair Manager proposes that if he can get 5 fairs in a southern state to all agree to hire this act, will he break his price and come in for $XXX.00.
The artist agrees, and about 30 days are contracted at 5 fairs. The contract is written simply, “If the following 5 fairs agree to use Artist, Artist will perform for all 5 fairs, for all 30 days, at $XXX.00 per day.”
The artist travels and performs at the first 3 fairs. At the third fair he meets the manager from the fifth fair who informs him that she is breaking the contract if he works in the next (fourth) fair because it is too close to her fair.
Upon careful examination of the contract, one fair location is found to be listed incorrectly, as being much further away.
The artist doesn’t know what to do. He has agreed to do 5 fairs for a much lower price if he gets all these dates, and now he finds himself in a very awkward position. Does he skip out on the fourth fair and sit for over a week not working and lose four days of this one contract? Or, does he do these four days at this next fair, then lose the last fair that is now backing out on him?
Artist decides it is not the fourth fair’s fault, so he goes and plays this four day fair. He then proceeds to the fifth fair, parks on the fairgrounds and is awakened late at night by police and the Manager and rudely escorted off the fairgrounds.
In this case, the fault was that of everyone who signed this six-person agreement. Not one of them caught the error of the one fair listed incorrectly on the contract, and the artist had to eat it again, while also getting rudely escorted off a fairgrounds by police!
If you have horror stories of your own, let me know what they were. I’d love to publish them so people know. The more we are educated, the better decisions we can make in the future.
Contract Horror Story #1
FAIR MANAGER: (sends fax) The contract you sent asks for “backline” for the band. What's a backline?
AGENT: (agent explains what “backline” is, i.e. gear or equipment)
FAIR MANAGER: “Not sure if I can do it. I will see what I can do, and you can also talk to my sound company.”
AGENT: “Great! We will see what I can do on our end as well.”
FAIR MANAGER: ”Okay.”
AGENT: (calls back six weeks prior to show) “Found backline at local music store in your town.”
FAIR MANAGER: “I left you a message a few weeks ago. I used my cell phone, but I’m sure it went through. Although you sent a contract and we agreed on the deal, you didn’t call back. And even though I sent a fax the last time I had a question, I didn’t bother to do that this time. But since you didn’t call back, I booked another band.”
AGENT: “The band did what they agreed: They found backline, they bought airfares, and they have arranged to come up. They will even pay for the backline. You made a deal, and they are honoring it.”
FAIR MANAGER: “Sorry, too bad.”
Result: The band lost a contract late in the game and they could not fill the dates. In this case, the fair was at fault if they did not communicate clearly that they were looking for an alternate band and were going to break the contract. The agent also might not have communicated clearly what his intentions were. The end result is bitter feelings, a lost contract, and no one is happy.
Lesson: COMMUNICATE CLEARLY.
No matter what you THINK the other party is doing, always COMMUNICATE CLEARLY.
Please do not let this happen. Being TOUGH can hurt people. In this case, the band lost an unrecoverable date in a route.