How To Draft an Ironclad Interior Design Services Agreement
Because things can go wrong during the course of an interior design project, having even a simple writing with your client can end up saving the parties a lot of time and money (and perhaps even tears).
In this article we explore the key elements every interior designer should include in their client contracts to best protect their business, and to ensure all parties are in mutual agreement over the essential terms of the deal.
First Rule: No Handshake Agreements
The first step is to always get it in writing!
Under state laws referred to as the statute of frauds, certain contracts are generally not enforceable unless they are in writing, including contracts that can’t be performed within 1 year, and contracts for the sale of goods above $500. This is why you don’t generally want to rely on handshake agreements.
Another reason for avoiding handshake agreements is that enforcement of an oral contract can be difficult since evidence of the original understanding between the parties may be limited or may simply not exist.
Ultimately, a written agreement helps to ensure that both parties to the contract are on the same page and have negotiated, or at least contemplated, the critical aspects of the relationship.
But understanding the importance of getting your agreement in writing is just the first step. Now, let’s go over what this writing should cover.
1. Include a Detailed Description of the Scope of Work & Deliverables
Perhaps the most critical aspect of an interior design services agreement is a clear and comprehensive description of the work that the interior designer will perform. There are several ways to do this, including adding a separate schedule or scope of work document to the agreement which sets out the details, specifications, phases, and all other aspects of the work to be performed.
Some typical elements of a scope of work section may include:
Project overview: A brief summary of the project and its objectives, including the size and type of space, design style, and any special requirements.
Design concept and approach: A description of the design concept and approach, including how the design theme, color scheme, and use of materials and finishes will be decided. The number of revisions to any design drawings that will be included as part of the services should also be set out.
Merchandise Selection & Procurement Process: An explanation of how merchandise and related services will be recommended, selected and ultimately procured.
Construction documentation: Whether drawings and specifications for any required construction or renovation work, including details on structural, mechanical, and electrical systems are included in the scope.
Project management: Whether project management is included in the services and an explanation of the process, including coordination with contractors, suppliers, and other stakeholders, and the expected timeline for completion.
Design review and approval process: A description of the process for reviewing and approving design concepts, material selections, and other aspects of the project.
Additional services: A breakdown of what constitutes “additional services” and the associated fees for any out-of-scope services.
2. Set Realistic Timelines & Allowances for Delays Outside of Your Control
While exact dates are rarely possible to predict, a timeline that describes realistic start dates, end dates, milestones and deadlines can help keep both parties on track and avoid unnecessary delays.
Some common timeline descriptions to include projected dates or milestone for services such as:
Design phases
Material selection and procurement
Construction and installation
Furniture and fixture installation
Quality control and inspection
Project management and coordination
However, because an interior designer’s services can be subject to the timing of contingent requirements (such as permitting requirements or the completion of services by construction contractors), it’s important that the agreement also include allowances for delays from circumstances outside the interior designer's control.
Similarly, the contract should include language that disclaims the interior designer’s liability for delays caused by others.
3. Carefully List All Compensation & Payment Terms
It's important to be clear and transparent about compensation to avoid any misunderstandings or disputes. The compensation terms should include:
a breakdown of the interior designer's fees, methods for calculating fees, and any required deposits;
the procedure for reimbursable expenses, whether any markups will be charged, and how costs associated with materials, subcontractors, or other expenses will be processed;
how “additional fees” and other applicable costs, like any termination fees, licensing fees or change order fees, will be charged should also be clearly set out; and
finally, the agreement should include all of your payment terms, including the schedule for payment and due dates, invoicing procedures, and any applicable late fees or penalties for non-payment.
Related: Why Interior Designers Should Disclose Their Commissions: A Legal Perspective
4. Include Change Order Procedures
The process for making revisions or changes to the design or project should:
be set out in detail in writing;
require that the writing be signed by the parties; and
include a notice that the requested changes may result in a change to associated fees or time extensions.
5. Describe Intellectual Property Ownership Terms
A statement on who owns the design and any associated copyright* licensing terms should be carefully drafted. An ownership section in an interior design contract should include the following elements:
Intellectual Property Rights: a statement that the designer retains ownership of all intellectual property rights associated with their work, including any design concepts, plans, and drawings.
Scope of Use: specifications for use of the design work (i.e., the “license”), including whether the client has the right to use the design for only the specific project or whether they can use it for other purposes, such as marketing or promotions.
License Limitations: inclusion of any limitations on the client's use of the design work, such as restrictions on modifying the design or reproducing it without the designer's permission.
Transfer of Ownership: whether ownership of the design work can be transferred to the client, and if so, under what conditions and for what compensation.
Indemnification for unauthorized use: inclusion of an indemnification provision that protects the designer from any claims or damages arising from the client's unauthorized use of the design work.
*For more information on how interior designers can protect the copyright to their designers, check out our post about Copyright Protection for Interior Designers.
6. List All Client Obligations
Some of the responsibility for a successful interior design project falls on the part of the client and, therefore, every interior design contract should include a section describing the client’s obligations, such as:
explaining that clients are obligated to provide certain information and timely responses to the designer’s submittals;
requirement of access to the project site so that the interior designer can properly design and complete the project; and
if clients are also responsible for obtaining all necessary permits or for directly hiring other contractors as necessary, these responsibilities should also be included in this section.
7. Describe Procedure for Terminating the Contract
The terms and conditions for terminating the contract, including the reasons for and consequences of termination, should be clearly set out in the agreement to avoid any ambiguity when an issue arises. A typical termination clause covers the following points:
Termination by mutual agreement: This provision allows either party to terminate the contract with the written consent of the other party.
Termination for cause: This provision allows either party to terminate the contract if the other party breaches a material term of the agreement, such as failing to complete the work on time or failing to pay for services rendered.
Termination for convenience: This provision allows either party to terminate the contract without cause, but usually requires written notice and a specified amount of time to pass before the termination takes effect. Additionally, in this section the interior designer can specify whether an early termination fee will apply in the case on an early termination and if a licensing fee will apply if the client decides to use the designer’s drawings without retaining the designer.
Automatic termination: This provision sets forth circumstances under which the contract will automatically terminate, such as if the interior designer dies or becomes incapacitated.
Right of first refusal: This optional provision requires the client to offer the interior designer the first opportunity to complete any future interior design work for the client.
8. Include Confidentiality & Non-disclosure Terms
A confidentiality clause can protect an interior designer’s proprietary information, including their drawings and proposals.
However, it’s a good idea to include a confidentiality clause that is mutual so that clients are assured that their privacy and confidential information will also be respected.
Such a confidentiality clause should include:
a statement describing what type of information will be considered “confidential;”
a requirement that the parties will only use the confidential information to the extent it’s necessary for the project; and
a requirement that any materials containing confidential information be returned to the disclosing party when the agreement terminates.
9. Include Indemnification & Limitation of Liability Language
In addition to describing the terms and conditions, another important function of a written agreement is to describe the different responsibilities in the event something goes wrong, and to set the limitations to those responsibilities.
For instance, indemnification clauses can limit the types of claims each party will pay if the other party is sued by a third party for damages relating to the interior design project. Here, the designer can limit their own liability by agreeing to pay only for those claims that arise out of the designer’s negligent acts.
The contract can also require that the client pay for all third-party claims against the interior designer caused by the client or by the client’s other contractors.
Additionally, interior design services contracts commonly include a clause that limits the amount a party will pay for direct claims (claims between the parties to the agreement). This “limitations of liability” clause typically excludes extraordinary damages such as lost profits and punitive damages.
Here, interior designers can also set limitations by specifying a maximum dollar amount, or by specifying that they will only be liable for those fees payable by their applicable liability insurance.
10. Disclaim Warranties
A warranty disclaimer clause is a statement that limits or disclaims the designer's responsibility for any defects, damages, or other issues that may arise from the design work or materials used. It informs the client that the designer cannot guarantee or be held liable for certain outcomes or results.
The scope and enforceability of warranty disclaimers may depend on state law and should be reviewed by your local counsel.
Final Thoughts
Now that you have a grasp of what every interior design services agreement should include, you are ready to negotiate your own! Keep in mind that a good contract is one that is fair and balanced and protects both the interior designer and the client.
It’s also important to work with a qualified licensed attorney in your state to ensure that all the terms are properly tailored to your particular business and the services your provide.
If you need help getting started with your own client services agreement, the ID Law Shop’s Interior Design Services Agreement template, as well as their Simple Letter Services Agreement template, can help you get started!
This article is provided for general informational purposes and should not be construed as legal advice nor as a solicitation of, or advertisement for, legal services. Legal advice is specific to each situation and if you have a legal issue, you should consult a qualified attorney licensed to practice in your state. No actual or implied attorney-client relationship is created by virtue of this article or by your purchase of any templates from the ID Law Shop.
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