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.