Beware of Long-Term Graphics Contracts

An often over­looked topic in the graphics business is contracts. Not all long-term (3–5 years) graphics contracts are bad; in some cases, they can be an important document, but any business entering a graphics contract should take caution and research the terms before signing. Although long-term contracts are not the SOP (standard operating procedure) for TKO Graphix, we have used them when it was to our AND the customer’s advantage. Graphics provider contracts are no different from any other contract. They can be used to protect all inter­ested parties, or used to take advantage of some.

When Are Long-Term Contracts Advantageous?

They may be advan­ta­geous when the customer and the graphics provider have made invest­ments in time and money. For example, devel­op­ing a ful­fill­ment program with online ordering may mean an invest­ment in time and/or money from both parties. In cases such as this, a long-term contract may be wise.

When Can Long-Term Contracts Be a Disadvantage?

If a business is committed to a long-term contract, what options are available if the product or service is unsat­is­fac­tory? What if colors are off, delivery is late, and instal­la­tion is sloppy? Many contracts have some type of escape clause, but is there an inventory clause attached? Even if the contract can be broken, you may be obligated to purchase 10’s of thousands of dollars worth of inventory. This has happened to several of our customers before they came to us.

What Are the Alternatives?

Instead of a long-term contract, you might consider a purchase agreement detailing the expec­ta­tions of your order. Ehow.com states, “Use a purchase agreement when you engage in a business trans­ac­tion that cul­mi­nates in the transfer of tangible goods or com­modi­ties. The agreement functions as a legal spec­i­fi­ca­tion of the money paid by the buyer and it enu­mer­ates the goods trans­ferred by the seller.”

Other options may include online ordering, and the use of PO’s. About.com defines a purchase order as, “A written sales contract between buyer and seller detailing the exact mer­chan­dise or services to be rendered from a single vendor. It will specify payment terms, delivery dates, item iden­ti­fi­ca­tion, quan­ti­ties, shipping terms and all other oblig­a­tions and conditions.”

Who Should You Ask For Help?

I am not a lawyer. I can’t tell you if a contract is good for your business or exposes you to the pos­si­bil­ity of poor product and greed, but your attorney may be able to protect you from the latter. Before entering any contract — graphics or otherwise — do your due diligence, ask questions, and have an attorney examine all documents.