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How to Get Paid When Your Client Cancels

Over the last several months, cancellations increased as a result of COVID19 social distancing and mandated closures. Now that some contracts are impossible to execute, how will you get paid? It is not enough to have a clause that excuses your performance, you need a clause that guarantees you a set payment in the event that the contract cannot be fully executed.

Cancellation Policy

It is a good idea to have a cancellation policy. The cancellation policy will depend on the nature of the art work. If it is a commission, licensing of art, or involves delivering a series of illustrations or designs by a specific date, collect a non refundable deposit that will cover your costs. If it is a contract relating to a performance, have a flat cancellation fee if your client does not provide notice of cancellation within a set amount of time prior to the event.

Kill Fee = Guaranteed Minimum Payment

It is smart to have a kill fee in addition to a cancellation policy. COVID19 is a good example why you need this clause in a contract. A cancellation policy alone may not protect you because COVID19 was the reason the contract failed. Your client had no control over the pandemic and neither did you. A clause with a kill fee coupled with alternate methods of performance adds an additional layer of protection for you. A “kill fee” is a minimum fee that covers the cost of the time you invested in the project. Think of it as a consultation fee or nonrefundable deposit. Regardless of COVID19, it is smart to have a kill fee in all of your contracts because it protects you in the event that a cancellation policy is not enough.

Offer Alternate Methods of Performance

There is one caveat, you, as the artist performing this contract have to offer multiple alternatives for performance methods and/or the ability to perform at a later date. By listing the alternatives, you are showing that you can fulfill your obligations to create a work of art under the terms specifically set forth in the contract. The client now has options that she was fully aware of at the time she signed the contract and must make a choice. If she choses to cancel when you can still complete the art per the terms of the contract, she is breaking the contract and you can collect a fee known as a “kill fee”

This information is provided for general informational purposes only. No information contained in this article should be construed as legal advice and does not establish an attorney-client relationship.

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