“You get what you paid for,”
“there’s no free lunch,”
“free advice is worth exactly what you paid for it.”

At some point, some friend or family member has said each of these things to you, or you have said it to them. And, there are times and situations when each of the statements above are true. At no time is the concept that “you don’t get something for nothing” more true than when putting together a contract.

If you are the producer, director, project manager or organizer of a creative project with a limited budget, I’m sure you feel there is nothing better than working out a deal where someone will work on your project for free. The offer of free editing, or props, or space, or set design work is music to your ears when you’re trying to find enough in the budget to get everything done. So, when someone volunteers to do something for free, you jump at the chance and write an agreement that goes something like this: “Mary will edit Joe’s Fabulous Project. Mary will provide 25 hours of editing using her own editing equipment (the “Services”). The Services will be complete and a finished master will be delivered to Joe no later than April 15, 2012. The fee for the Services will be $0.”

Unfortunately this doesn’t work.

The idea of a contract is that everyone gets something. If Mary edits for Joe, Mary needs to get something in return. This is called consideration. When disputes arise down the line, contracts can be invalidated because there is no consideration. Someone got something for nothing.

That’s why in many contracts you see the “lawyer-speak” phrase of “For ten dollars ($10.00) and other valuable consideration,” the sufficiency of which is hereby acknowledged.” This is an attempt to make sure Joe, as a owner of the project is paying something for something.

What you give as consideration has to be of value, but it doesn’t have to have the same retail value as the service or product. And, it is possible for many things (in addition to money) to be considered valuable consideration under the law. So, if Joe doesn’t have enough in the budget to make a monetary payment, he should find other consideration to exchange. Joe can “pay” Mary by providing a credit on film, tickets to all industry screenings for Mary and her family and/or the right for Mary to use excerpts of the film for her promotional reel.

At a later point, we will talk about deferred compensation, but for today, just remember you get what you pay for. So if you create a contract where you pay nothing for something, at the end of the day that’s just might be what you get —- nothing.

Take aways.

  • Use a contract when hiring folks even if you are not
    going to pay them a monetary fee.
  • Agree to, and acknowledge the non-monetary
    consideration in the contract.