Typical contract

[jonathan]

Hi all,
I am a young yacht designer, and have recently been asked to design a boat, which might develop into a series.
The contract type that I would like to use is one where the client pays for the design up front, probably in installments, and if more boats are built, I get a royalty fee on them.
I was just wondering if anybody had a typical contract available that I might reuse and adapt to fit this project, or if I am wrong in the type of contract I want to use, etc...
Also, any comments are more than welcome as I am a bit at a loss about what to do next...
It's my first "real" work as a self employed yacht designer and any help would be *greatly* appreciated.

Jonathan

 

[PAR]

I'll give you a quick tip on how not to get beat up by the big boys in business, especially if this is all new to you. Call a lawyer and have a contract designed for your business and this account. A plane old generic contract can be destroyed by any half way capable attorney interested in breaking it.

The only time you need a contract is when the other party isn't holding up their end of the deal and the lawyers get involved anyway. Do it right from the start, get your business on the proper footing and start living with the idea of tossing them (the attorneys) money every so often. It's one of the costs of having a business and doing business with others.

 

[jonathan]

Thanks PAR, that's what I didn't really want to hear, but I knew I would
It's also even trickier, because the person I'm dealing with is Belgian with a business in China... So which law would apply, which language is the contract to be written in, etc... I think I need some kind of internationnal law expert !
Anyway, thanks for the advice.

 

[SailDesign]

jonathan,
Since it will be your contract, it can boldly state that the ONLY applicable law to be used is for your country/state/area. That is how it works in the US, anyway.
Also, be advised that if you want royalties, you will probably have to drop your "up-front" charges a bit. Any production boat is a risk for the builder, and he will want you to share that risk a little if you are going to be reaping the rewards if it is successful (which we all hope it will be).
Good Luck, and let us know how it goes.
Steve

 

[jonathan]

jonathan,
Since it will be your contract, it can boldly state that the ONLY applicable law to be used is for your country/state/area. That is how it works in the US, anyway.

Yes, I suppose that would work. Somebody here sent me a standard contract, so it is a base for me to start writing my own, and get it checked. Reduces the lawyer fees.

Also, be advised that if you want royalties, you will probably have to drop your "up-front" charges a bit. Any production boat is a risk for the builder, and he will want you to share that risk a little if you are going to be reaping the rewards if it is successful (which we all hope it will be).
Steve

Yeah, he actually wants me to drop them completely... He seems to be in a difficult moment, but if he is not ready to invest even for design fees, I am worried about the trust he puts in his project, and it's possibilities of success... So negociations seem a bit broken at the moment. I assume you "real" NA would refuse to drop upfront fees unless the boat has a very good chance of beeing successful, or am I wrong ?

Thanks for your answers anyway.

 

[Tad]

Jonathan;

The bad news is that if the client cannot afford a design fee, the chances of him building a boat are pretty small. The chances of your collecting royalties are also really small.

The client is asking you to invest in his project, if you believe in it, then invest something. It is quite usual to discount your hourly rate if royalties are going to be forthcoming. But I would strongly advise against doing the design for free, as at that point you have invested, but the client has nothing invested in your relationship.

The design fee is not just for doing some drawings, it covers being responsible for the outcome. If you word the contract so that you are not responsible, then you can reduce the fee.

Best of luck, Tad