Things to Review in a Work for Hire Agreement or Work for Hire Contract
Work for hire sounds like a general term, but it’s actually a specific type of agreement. Work for hire is any work that is done by one person or business at the sole discretion for another person or business. This kind of work product is called intellectual property, something of value that has no tangible form.
Here are some examples of work for hire:
- Work on inventing a patent by a scientist or engineer.
- Work on something that can be copyrighted, like a book, article, website content, or social media.
- A trademark created by a designer for a customer or as an employee.
The ownership of a work for hire depends on the type of creative work:
- For copyright ownership, the U.S. Copyright Office says the author is, “The employer or another person for whom the work was prepared.” They go on to state that this person or employer “owns all of the rights comprised in the copyright,” unless there is a written agreement signed by both parties.
- For patent ownership, according to the U.S. Patent and Trademark Office (USPTO), the inventor holds the ownership. But in most businesses, employees who work on patents must assign the ownership of the patent to the company that they work for.
- Trademark ownership is established by use. If your company uses a trademark after it’s created, it still needs a work for hire agreement with the person who created it.
When something of value is created, things can get messy. Who owns this thing of value? Who can make money from it? A patent, for example, can make a substantial amount of money for its owner over a lifetime. The main reason for having a work for hire agreement is to make the ownership of the creative work explicit.
The sections often included in a work for hire agreement are listed below. Work for hire agreements are complicated.
Parties & Duties
Your business and the worker should clearly identified. Designate the status of the worker (employee or contract worker). Define the scope of work of the contract worker. In addition, include a section to set the length of the project or anticipated need for the contract worker. Provide details on the work itself. What is the format? What are the requirements? When must it be delivered? Are there due dates along the way?
Ownership of Work Product
This is the important part. Include language that shows the understanding of the two parties that this is work for hire and that ownership of the work lies with your business, not with the worker.
If the worker is a contractor, there may be requirements for this person, like getting insurance. A confidentiality agreement may be part of this contract, restricting what the worker can discuss of the contracting company’s business.
Also, describe in detail what happens (penalties) if either party fails to fulfill its responsibilities under the contract. This section might have an agreement in which each party agrees to settle disputes by arbitration.
Advantages. Most people are under the assumption that they own the rights to any work they have paid for. Without a written Work for Hire Agreement in place, you may not necessarily own the rights to the work. Having an independent contractor enter into an agreement will ensure that you obtain the rights to the work. For independent contractors, signing a Work for Hire Agreement will put your client’s mind at ease and assure them that they own the work they have paid for.
U.S. Copyright Law
You can review directly via Wikipedia here but it “is intended to encourage the creation of art and culture by rewarding authors and artists with a set of exclusive rights. Copyright law grants authors and artists the exclusive right to make and sell copies of their works, the right to create derivative works, and the right to perform or display their works publicly. These exclusive rights are subject to a time limit, and generally expire 70 years after the author’s death. In the United States, any music composed before January 1, 1924, is generally considered public domain.“ The Copyright Act of 1976 was the last notable adjustment to general copyright laws in the U.S.
Before completing this agreement we recommend you seek official legal advice from an actual law firm before completing any collective or supplementary work for third parties to ensure you have a proper legal document in place that fully suits your needs and protects both parties adequately (both freelancer and organization). This will ensure there’s clarity on intellectual property rights from the start.
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Work for Hire Agreement
This Work for Hire Agreement (the “Contract”) is entered into ____________________ (the “Effective Date”), by and between ________________________, with an address of _____________________________ (the “Client”) and _________________, with an address of _______________________________, (the “Service Provider”), collectively “the Parties.”
1. Services. Client requests and Service Provider agrees to perform the following specific Services (the “Services”):
2. Compensation. The Parties agree Service Provider will be compensated as follows:
3. Ownership of Work Product. As a result of this Agreement, Service Provider will create Work Product, including, but not limited to, documents, presentations, reports and the like, physical and/or electronic. All Work Product shall be owned by Client. Service Provider does not maintain any rights to this Work Product and shall turn over all Work Product upon the termination of this Agreement.
4. Term. This Agreement shall commence upon the Effective Date, as stated above, and will continue until ____________________________________________________________.
5. Service Provider Relationship. The Parties agree that Service Provider is providing the Services under this Agreement and acting as an independent contractor and not as an employee. This Agreement does not create a partnership, joint venture, or any other fiduciary relationship between Client and Service Provider.
6. Confidentiality. During the course of this Agreement, it may be necessary for Client to share proprietary information, including trade secrets, industry knowledge, and other confidential information, to Service Provider in order for Service Provider to complete the Services. Service Provider will not share any of this proprietary information at any time. Service Provider also will not use any of this proprietary information for his/her personal benefit at any time. This section remains in full force and effect even after termination of the Agreement by it’s natural termination or the early termination by either party.
7. Termination. This Agreement may be terminated at any time by either Party upon written notice to the other party. Client will be responsible for payment of all Services performed up to the date of termination, except for in the case of Service Provider’s breach of this Agreement, where Service Provider fails to cure such breach upon reasonable notice. Upon termination, Service Provider shall return all Client content, materials, and all Work Product to Client at its earliest convenience, but in no event beyond thirty (30) days after the date of termination.
8. Representations and Warranties. Both Parties represent that they are fully authorized to enter into this Agreement. The performance and obligations of either Party will not violate or infringe upon the rights of any third-party or violate any other agreement between the Parties, individually, and any other person, organization, or business or any law or governmental regulation.
9. Indemnity. The Parties each agree to indemnify and hold harmless the other Party, its respective affiliates, officers, agents, employees, and permitted successors and assigns against any and all claims, losses, damages, liabilities, penalties, punitive damages, expenses, reasonable legal fees and costs of any kind or amount whatsoever, which result from the negligence of or breach of this Agreement by the indemnifying party, its respective successors and assigns that occurs in connection with this Agreement. This section remains in full force and effect even after termination of the Agreement by its natural termination or the early termination by either party.
10. Limitation of Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY FOR ANY DAMAGES RESULTING FROM ANY PART OF THIS AGREEMENT SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFIT OR LOST BUSINESS, COSTS OF DELAY OR FAILURE OF DELIVERY, WHICH ARE NOT RELATED TO OR THE DIRECT RESULT OF A PARTY’S NEGLIGENCE OR BREACH.
11. Disclaimer of Warranties. Service Provider shall complete the Services for Client’s purposes and to Client’s specifications. SERVICE PROVIDER DOES NOT REPRESENT OR WARRANT THAT SUCH SERVICES WILL CREATE ANY ADDITIONAL PROFITS, SALES, EXPOSURE, BRAND RECOGNITION, OR THE LIKE. SERVICE PROVIDER HAS NO RESPONSIBILITY TO CLIENT IF THE DELIVERABLES DO NOT LEAD TO CLIENT’S DESIRED RESULT(S).
12. Severability. In the event any provision of this Agreement is deemed invalid or unenforceable, in whole or in part, that part shall be severed from the remainder of the Agreement and all other provisions should continue in full force and effect as valid and enforceable.
13. Waiver. The failure by either party to exercise any right, power or privilege under the terms of this Agreement will not be construed as a waiver of any subsequent or further exercise of that right, power or privilege or the exercise of any other right, power or privilege.
14. Legal Fees. In the event of a dispute resulting in legal action, the successful party will be entitled to its legal fees, including, but not limited to its attorneys’ fees.
15. Legal and Binding Agreement. This Agreement is legal and binding between the Parties as stated above. This Agreement may be entered into and is legal and binding both in the United States and throughout Europe. The Parties each represent that they have the authority to enter into this Agreement.
16. Governing Law and Jurisdiction. The Parties agree that this Agreement shall be governed by the State and/or Country in which both Parties do business. In the event that the Parties do business in different States and/or Countries, this Agreement shall be governed by _________ law.
17. Entire Agreement. The Parties acknowledge and agree that this Agreement represents the entire agreement between the Parties. In the event that the Parties desire to change, add, or otherwise modify any terms, they shall do so in writing to be signed by both parties.
The Parties agree to the terms and conditions set forth above as demonstrated by their signatures as follows:
[Signature] SERVICE PROVIDER:
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Frequently Asked Questions and Resources
What is a contract?
Contracts are defined as written or spoken agreements which are enforceable by law. They can cover any topic or industry, whether sales, tenancy, employment, or otherwise (source).
What are the different types of contracts?
There are many different types of contracts, as defined by upcounsell, those for fixed prices, employment, lump sums, time and materials, unilateral or bilateral contracts, simple contracts and more. Each has its own specific terms, and can either be oral or written and some are non-negotiable (like adhesion contracts) while others have room to be adjusted or amended.
What makes a contract different from an estimate, quote, bid, or proposal?
Mainly contracts are set and finite and legally binding, whereas estimates, quotes, bids, and proposals are possibilities which can be accepted, rejected, negotiated, or ignored altogether. The key difference is that often a bid or proposal will contain terms and conditions that can be signed by the requestor and turned into a contract (source).
What should I include in my contract?
Every contract is comprised of no less than two core components: clearly outlined terms and signed agreement between two separate parties. For more information, read our 12 clauses you should include in every contract.
How should I write an effective business contract?
Contract creation can be challenging, in most cases getting legal counsel is advised to ensure it will be legally enforceable should you require that. Essentially you need basic terms which should be abided by, and an agreement on what product or service is to be provided, to whom, by whom, and what will be tendered with specific terms (such as deadlines, or how the delivery will be completed). For more tips, read our beginners guide to contract writing.
What is the difference between a contract and an agreement?
An agreement is any understanding or arrangement reached between two or more parties. A contract is a specific type of agreement that, by its terms and elements, is legally binding and enforceable in a court of law, according to Diffen.com.
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