Overview: AMERICAN MANAGEMENT ASSOCIATION When is a contract not a contract? American Management Association (AMA) is a not-for-profit New York educational corporation.

When we notified AMA of our intention to review their contract, AMA sent us a response. In the interest of fairness, we include (in Updated News, below) all relevant parts of their response.

Contract Highlights:

First, the good news:

=> PAYMENT SCHEDULE -- AMA, unlike many of the companies we've seen, pays the artist upon acceptance of the artwork. This is a good thing!

Now, the bad news:

=> REVISIONS -- The contract states that "AMA may demand changes in the preliminary sketches, and the Artist shall make such changes."

Comment: It's reasonable for a client to expect the artist to make certain types of revisions for no additional fee. However, if the revisions are significant enough that the artwork no longer conforms to the terms of the original agreement, the artist should be paid for the extra work. One illustrator we know handles the issue by including this provision in his contracts: "Client shall be responsible for making additional payments for changes requested by Client in the original assignment. No additional payment shall be made for changes required to conform to the original assignment description."

=> THIRD-PARTY LICENSING -- The contract also states that the artist transfers to AMA the right to "license the Work...to third parties, " but the contract does not stipulate that any additional fee will be paid to the artist.

Comment: We feel that the artist should always receive additional compensation when artwork is licensed for a third-party publication, and when artwork is reused in other publications owned by the same client.

=> MODIFICATIONS TO THE ARTWORK -- Under the terms of this contract, the artist specifically "waives his rights to object to any distortion or alteration of the Work..."

Comment: By accepting this waiver, the artist accepts a diminished role in the creation of the final product, and runs the risk of losing any input into the look of the finished work. We don't believe that the artist and the client are adversaries, and we suggest a different approach: give the artist the right to be consulted regarding the changes, and let the artist have the first shot at making them. That type of working relationship protects the interests of both parties. One solution is to insert a phrase that gives the artist the right to make suggested modifications, or to approve modifications made by the client. Another possibility is to give the client the right to make changes of "cropping and sizing only."

=> WARRANTY -- The contract states that the artist warrants that the work is original, not previously published, will not infringe or violate the copyright of any person or party whatsoever, and that the work is not defamatory or otherwise unlawful in any respect. This clause also calls for the artist to indemnify AMA and its licensees against any damages that might arise if the warranty was breached.

Comment: We appreciate that AMA wants to be certain the artwork is original. We also believe that an artist cannot have complete control over whether artwork is later deemed to be defamatory or otherwise unlawful. We recommend the insertion of a simple phrase--"To the best of the artist's knowledge"--to protect the artist. The new wording might read: "Artist warrants that to the best of his/her knowledge, the work is not defamatory..." etc.

=> KILL FEE -- None. The contract can be "terminated by AMA at its sole discretion" without payment of any fee.

Comment: We feel that if the artist does any work on a project, a reasonable kill fee should be paid.

Updated News:

AMA, PART 2: RESPONSE FROM AMA

This response was sent by Seval Newton (Director, Art & Production, AMA Periodicals) to Paul Basista, President of GAG.

"I have looked at the points you raised regarding our contract for services with artists. Obviously this contract was passed on to your offices, by an artist who has not worked with us. I am quite confident that any artist who has been working with us and never faced the unfair situations you describe would have trouble sending it to you. And the reason for that is that none of the situations you are concerned about are accurate.

Here are my answers: We rarely make any 'extensive' changes to the artwork. If the changes are our fault (either we did not relay the information properly, or asked a bar chart, but it should be a graph chart, etc.) we pay extra money. There has never been a time when an artist felt that he made too many revisions and got nothing for it. If we do major revisions, we pay extra even if it is no fault of AMA's. The agreed upon price covers all the mentioned additional usages, which is fully explained to the artists, and the art always stays with the article, no matter in which form it is published. If we want to use the art with another article, that is a re-use that we pay for, after agreeing on a price with the artist. If I am going to do any color or other alterations, the artist is contacted and given the chance to do it himself. Usually we agree upon having us do the minor revisions (such as deletion of bkg color, or an unimportant element, or changing a business suit from yellow to a more businesslike color, etc.) in Photoshop to save time. Other changes that may occur happen during the printing; overinking or underinking can change the original colors to some degree, and that is unavoidable in web printing.

This paragraph [Editor's note: we assume that this is a reference to our comments on the Warranty Clause] is bad news ONLY if the artist is using someone else's work and presenting it to AMA as his own. Then, he definitely should bear the cost of the consequences. It is silly to suggest a "frivolous suit" at this point.

We do have a kill fee. This is another contract. All the artists who work for me, work with the understanding that they'll do a good job, and nobody asks for this information. But if they did, I would say yes, we do have a kill fee of 50% of the sketch fee or if the art went into finish, then 50% of the contracted amount. This is very rare, usually both I and the artist can tell when a concept is not working well at the sketch stage. In all my 9 years with the Management Review magazine, we only had one instance where the sketches were fine (this was a new artist), and the final he brought in looked so different than both his samples, and the sketch he did, that I could not publish the work. The artist's execution was poor. However, due to the fact that he had finished the work, he was paid the full fee, and another artist was assigned to do the job over.

The reason you are asking these questions is because you have not talked with an artist who works with us. Otherwise you would know that these are not our issues at all. Our issues are usually how to do the best job, how to meet the deadlines. I am also an artist and I am quite comfortable that we are FAIR to our artists. I can give you as many names as you like, you can call them ask them how they like working for AMA." [End of quote from letter]

AMA, PART 3: THE GUILD AND THE MONITOR RESPOND TO AMA

Paul Basista wrote back to AMA as follows:

"Dear Ms. Newton: Thanks for your email message of June 23 in response to our letter concerning the AMA's contract for services with artists. Contrary to your assumption, the contract was forwarded to us by one of our members who received it from you. In fact it is the policy of Contract Monitor only to review contracts that have been brought to our attention by members who have actually received them from clients. Our subscribers will be pleased to learn that your actual practices are more equitable than your contract indicates. However, we question why the realities of doing business with the AMA are not spelled out in your contract. We look forward to hearing from you again, and we're sure our Contract Monitor subscribers will be interested in your response.

Sincerely, Paul Basista, CAE Executive Director" [End of Paul Basista's letter]

To Paul's excellent response, we at the Monitor would only add this: When you sign a contract, the terms of that contract are the terms under which you have agreed to work. The more clear and comprehensive the contract, the less chance for problems to develop later on. Most of AMA's response to us focuses on claimed differences between the stated terms of the contract, and the way AMA actually deals with artists. There is nothing preventing AMA from changing its contract so that it reflects the type of artist/client relationship spelled out in Seval Newton's letter. We encourage AMA to do so.