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.