Time Investment: 8 Minutes
Suggested Product: Cancellation of Contract Bundle
By now, you know that your standard contract for photographic services should include a cancellation provision within its terms and conditions.
Minus a completely separate cancellation provision, there should be language somewhere within another provision expressly outlining how the contract may be terminated by either party.
Canceling a contract is a very real process, and many small business owners are not aware of all the steps that must be taken.
Whether business is slow or booming, no one likes to see business walking out of the door.
But, inevitably it will happen.
There are some clients who are just too demanding or mean to work with; or, life happens and one party needs to be released from the contract. Hopefully, you will have heeded my advice and already outlined the cancellation process
Ideally, you would simply follow the steps outlined in your contract to effectuate the cancellation.
Below, I will list some scenarios and the steps you should take to protect yourself.
Additionally, I will provide you with the applicable legal tools you may need to get the end result you want.
NOTE: The theories provided below are for general contract purposes only. These theories will vary depending on your state law. It is highly advisable to consult with a local attorney to ensure you are following the letter of the law. Nothing is worse than having a contract backfire, resulting in a loss for the small business owner.
Scenario One: The client breaches the contract and you want out
Bob enters into a contract with Linda for one photography session.
At the outset of the contract, Bob tells Linda that he cannot pay the complete costs of the session up front.
Linda, not wanting to lose business, gets Bob to agree to and sign a payment plan.
The payment plan calls for Bob to pay four payments of $X.XX with each payment due on the first of the month, beginning on January 1, XXXX.
The contract is to be paid in full by April 1, XXXX. The photo session is to take place on April 15, XXXX.
Bob makes the first payment, which the payment plan agreement specifies shall serve as a deposit/retainer; after that, Bob only makes one more payment.
Is Bob in breach of the contract?
Yes, he has violated the signed payment plan agreement.
Since, the payment is in consideration of the services your studio will render, it is a material breach of contract.
Can you cancel the contract and keep the money?
Yes and No.
It all depends on the language contained within Linda's contract and the repayment agreement.
If the contract specified that a non-refundable retainer/deposit is required, then the client's breach of the contract would result in Linda keeping the retainer/deposit.
The second payment would probably need to be refunded to Bob.
This payment was not made as a retainer/deposit and Linda has not provided any services. If the contract specified that any money paid to Linda's studio is forfeit if the client breaches the contract, then Linda could keep the money.
However, good customer relations might dictate that the money be returned to Bob.
Unless Linda had materially changed her position in reliance on Bob's promise to pay, such as hiring a stylist or buying props, then Linda would basically be getting something for nothing.
The retainer/deposit should cover the loss of time/ability to book other clients.
Scenario Two: You and the client cannot get along and want to void the contract
Bob hires Linda's studio to take headshots for his actor resume.
Bob signs a contract for services provided by Linda, and a firm date of April 15, XXXX is set for the shoot.
Bob pays the non-refundable retainer/deposit and 50% of his remaining balance, with the remainder to be paid after the headshots are completed.
Bob and Linda exchange a series of emails in which Bob discusses his vision for the photography session.
Linda has proposed that the session make Bob look glamorous; Linda uses the example of Glamour Shots from the 1980s.
Bob does not like this idea, and Bob and Linda have irreconcilable creative differences.
Can Bob and Linda mutually agree to cancel the contract?
Yes, Linda's contract for services should contain a cancellation clause that requires a written notice of cancellation from the party seeking to terminate the contract.
Here, both parties want out of the contract due to creative differences.
The written notice of cancellation should include the fact that both parties want out of the contract and are releasing each from their respective duties and obligations.
Can Linda keep the non-refundable deposit/retainer?
Yes, only if the contract specifies that the money put down to reserve Linda's studio is in consideration of the studio not booking other clients during the time slot designated for Bob.
If the contract does not specify this, then the situation calls for more analyses.
If only Bob wanted out of the contract, meaning that Linda is willing to concede to Bob's vision for the photoshoot but Bob wants to use another photographer; then yes, Linda may keep the deposit.
However, Linda would need a written statement from Bob stating that he no longer wanted to use Linda's services.
Here, Bob is the party who is seeking cancellation and breaching the contract.
If only Linda wants out of the contract, meaning that Bob is willing to let Linda try her ideas but Linda no longer wants to work with Bob, then no, Linda may not keep the deposit.
Linda would need to notify Bob in writing of her intention not to perform the photoshoot, and she would also need to refund Bob his money.
Here, Linda is the party who is seeking to breach the contract.
Inevitably life happens.
In the scenario above, both parties wanted to cancel because of creative differences.
Mutual cancellation would also apply to a number of other scenarios.
There could be a need arising after entering into the contract for a cancellation to occur.
The groom may have been called to active military duty, the bride may have gotten cold feet and run off, a client could die from a sudden accident or terminal illness.
No matter what scenario presents itself, you and your client may ultimately be forced to cancel a contract; meaning that you both agree to release each other of responsibilities and go your separate ways.
Ideally, you would simply follow the steps outlined by your contract.
But, if you failed to put a cancellation provision in your contract, then you definitely need a cancellation of contract agreement to terminate the contract.
Even if your original agreement has language providing for cancellations/rescissions of contract, it is still best practice to put everything in writing.
This will avoid confusion among the rescinding parties and help you with any potential litigation.
When it comes to contract litigation, it often comes down to a judge weighing the testimony of two parties; a “he said, she said” trial.
A written Cancellation of Contract form is a great evidentiary document to use to prove the terms and conditions of the cancellation.
If your contract has a cancellation provision, then make sure any Cancellation of Contract form used mirrors the language contained in the original contract.
This is necessary for continuity, to remind each of the rescinding parties of the original terms of the agreement.
It makes life easier when everything is clear cut and easy to find within each document.
What do you do if you want to avoid canceling a contract or having an item returned?
Unfortunately, there are some scenarios that arise where a court may ignore the plain language of a contract provision.
This occasionally happens with the “all sales are final” term.
It is not unknown for a court to reform a contract and alter this term.
Additionally, there is the Cooling Off Rule used by the Federal Trade Commission AND some states.
There may also be state laws voiding the “all sales final” provision.
This is why the inclusion of a severability clause is important as the severability clause would save the rest of the contract from becoming null and void.
A court may also set aside an “all sales final” provision if the client claims to be dissatisfied with the end product, even if the client has signed for and accepted delivery.
You can attempt to save yourself time and money by utilizing the legal tools we have discussed.
But, the bottom line is that you never truly know what action a court will take; you can only make an educated guess.
Having EVERYTHING in writing signed by the appropriate parties goes a long way in proving your case in the eyes of the court.
Product Delivery of Digital Files
It is always best to have the client to sign a Product Delivery Acknowledgement.
This way you at least make the client stop and ponder if the order is complete and acceptable.
This strategy is especially helpful when it comes to selling digital files.
If you deliver a digital product to your client, you want the client to know that the sale is final.
You want the client to understand that they cannot “check out” the Flash Drive provided to them or download the entire gallery of photos to their hard drive then decide to “return” the digital property.
It sounds sketchy, but, believe me, there are clients out there who will do this in a heartbeat and think nothing of it.
Remember, sometimes customer service pays off
Sometimes, no matter the terms and conditions listed in the contract, good customer service may dictate your actions. It really all just depends on the situation and client.
As always, I highly recommend talking to your client before threatening litigation. A good phone call or conversation in your studio can save you a lot of headaches down the road.
It is your business, run it how you want.
If you believe that a client has made a good faith effort to fulfill her part of the bargain but ultimately cannot, you do not have to keep their deposit or subsequent payments.
What happens if client won't sign a mutual cancellation?
A good practice is to send a confirmation of cancellation to the client via a registered method or other controlling required delivery method in the jurisdiction.
Hopefully, you have a signed contract that you utilized to start the photographer/client relationship.
Thereby, it is best practice to end the relationship in writing.
You can use a document entitled “Mutual Release and Rescission of Contract” or a document simply entitled “Cancellation of Contract”.