CONTRACTS Kuliah Etika Profesi dan Bisnis Oleh Coky Fauzi Alfi cokyfauzialfi.wordpress.com CONTRACTS

Topics Define: Contract Standard Graphic Design Terms and Conditions Commitment Negotiation and Bargaining

“The greatest contract in the world can’t take the place of the trust necessary in any successful relationship.”

Define: Contract

A contract is one of the basic social and legal institutions in modern society. A contract frames and coordinates human interactions. It is an agreement that creates, assigns, delegates, and transfers rights and obligations, tangible and intangible goods, services, and entitlements between the contracting parties.

What is a Contract? A contract is an agreement between two parties that creates an obligation to perform (or not perform) a particular duty. A legally enforceable contract requires: An Offer (I’ll mow your lawn this weekend, if you pay me $30) An Acceptance (You’ve got a deal) Consideration (The value received and given – the money and the lawn mowed)

The Kind of Contract Person to Person Person to Organization Organization to Organization Person to Society Person to State State to State

Contracts can be either written or spoken (oral). Bad memories of oral contract terms have probably led to more avoidable business disputes than any other cause. Avoid oral agreements in business. They are generally worthless in any subsequent dispute.

Major Areas within Every Contract Parties Effective Date and Terms Statement of Service (SOS) Pricing Performance Standards Warranties Remedies Risk Allocation Boilerplate Signatures

Common Contractual Terms Three commonly negotiated/contentious provision: Warranties Indemnification [protection against loss or liability from 3rd party claims] Liability & Damages [legal responsibilities]

Standard Graphic Design Terms and Conditions

Project details A Definitions section Length of the proposal Fees and other charges Changes and “after–contract” additions Client / Designer Responsibilities The right to promote your work Confidential information Termination policy

Five Reasons Protect Yourself Establish Expectations Establish a Time Line of Events Establish a Payment Schedule Establish Ownership of Work and Usage Rights

Commitment

Understanding the Commitment The Principle Issue: Ensure there is a clear understanding of the two parties’ commitment. Ensuring Enforceability: Establish objective measures of performance (did you get what you wanted?) Create methods to resolve disputes without affecting progress. Determine means of recourse and remedies, if all else fails. It is important to keep in mind hat a primary element of an enforceable contract is the presence of mutuality of assent, or “a meeting of the minds. The meeting of the minds cannot occur unless the obligations of the parties are clear and unambiguous. When a conflict occurs in a contract he conflict is generally not related to ‘legal terms. Contractual conflict typically occurs because of differing interpretations of contractual requirements. Consequently, the most important aspect of contract development is ensuring that there is a clear understanding of the two parties’ commitments. Although traditional ‘legal terms’ are undoubtedly significant, an unambiguous and enforceable contract must always begin with a clear description of services.

Negotiation and Bargaining

Negotiation is the process of conferring with others to reach an agreement. Bargaining occurs when there is a dispute over the terms involved.

Types of Negotiation Positional Negotiation With the positional style of negotiation, each party starts with an extreme (usually unjustified) position. The basis for this approach stems from the belief that the ultimate solution will be favorable only if the initial offer is extreme. It is seen as a zero-sum game. One party will win and one will lose. An extreme position increases the chances of a "win.“ Common tactics include foot-dragging, threatening to walk out, and stonewalling.

Types of Negotiation Principled or Interest-based Negotiation Principled negotiation seeks a winning outcome for parties by bargaining over the interests of both parties, not on the positions. It is based on complete and early sharing of information in the belief that "the pie" of options being divided is made larger by understanding what is most important to the other party.

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