Imagine if you are booked for surgery to remove your appendix(a totally useless organ – if you must know). The operating room, clean white sheets, warm glow of bright lights, loads of weird metal devices, an anaesthetist, a nurse and an expensive surgeon.
All looking down at you with their false smiles, ready to cut you open. And then suddenly. You have this urge. An urge to stop it right there. Abort. Abort. Terminate this mission. You’ve suddenly developed a liking to your appendix. And you want to keep it, just in case. Do you think the surgeon shakes your hand with a smile and says ‘maybe next time’. Well perhaps not. And the same will apply to design contracts.
What is a Design Contract
A design contract is an ‘agreement’ you have with a designer. And this can be written or verbal. Now we all know how words can get twisted or conveniently forgotten. Especially when things get nas-tee.
So lets just say, your design contract has to be in de written form. The terms of the contract, we won’t get into here. I’m assuming you watch enough TV to know what to check for in a contract. (if not, then please email me) Today, we are focusing on a specific part of the contract called early termination.
What is Early Termination
In simple terms, an abrupt end. The reason can be anything or nothing. The cat ran away, wife ran away, you’ve decided to become a monk, whatever. A genuine reason is not even necessary. I call this the Appendix Clause.
The Appendix Clause
In contract terminology this clause could be written as a full chapter. Or as simple as this:
‘…should the contract under this agreement be terminated(for any reason whatsoever), the Designer shall advise the Client accordingly and forward a final account for the work completed. This may include additional fees for early termination. Please note a physical output may not always be available.’
So what does this mean in plain engliesh?
It means two things
One – Final Account. Ok even if you are confused, this means MONEY to be paid
Two – Output may not be available. Hmm, now this is harsh. Pay money but no output. Buy an ice-cream but just get the cone? Surely this can’t be legal. But of course.
What happens when you jump off the operating table?
The surgeon prepares a final account for early termination. It might not be for the full amount. But it is still a substantial chunk of it. And nobody had even lifted a scalpel.
Damn they hadn’t even sanitised their hands. And as for output, well he would’ve given you back your appendix, but in this case there is nothing to give.
So why is it that you pay?
You see it, don’t you? Even if I must spell it out.
-the surgeon could’ve been operating on someone else
-the anaesthetist could’ve been drugging someone else
-the nurses could’ve been stitching someone else
In simple terms you have wasted everyone’s time.
And time is money
Here, this money has a special name. It is called Loss of Income. The surgery team could’ve been earning some buckaroos had you not exited the building. This income is now lost, and it wasn’t even their fault. You decided to quit, not them.
So to stitch this up
-check for the Appendix Clause in any contract
-be aware you could be charged a hefty sum for loss of income
-this can be charged even if no real work is performed
Review any work underway
Are there termination fees applicable? Are you comfortable with what this means? If you decide to terminate the contract for any reason, be sure to pay the early termination fee if its charged. Or the next time the scalpel might slip and you could lose your liver… instead of the appendix. 🙂