What to Do When a Designer Demands Payment for Defective Work

We all know the old saying that "you are judged by your appearance". That is why food manufacturers take developing their own style and choosing label designs for their products very seriously. There is no doubt that the design of the label on a product has a considerable influence on consumers and on how well that product sells. Numerous studies have repeatedly confirmed that an unusual label design attracts consumers' attention more often and leads them to choose that product over other brands. Quality is, of course, central to a consumer's choice, but unfortunately quality alone is not enough to increase a company's sales significantly. A label not only draws attention to a product; it sets it apart from the competition, persuades the buyer to choose that particular product and communicates its key advantages. Today label design is an entire industry, and the label itself is a work of art. Label design is a harmonious combination of marketing calculation and the designer's creative idea. The label is part — and usually the central part — of the overall product design. The main aim of label design is to create a harmonious composition, and today the most unusual solutions are used to achieve it: unconventional imaging techniques, combinations of different materials, original packaging shapes and other design innovations. A label design should reflect the unified corporate identity of the company or brand through the artistic imagery it creates, while also highlighting the product's essential advantages and matching its functional purpose.

In view of these and other considerations, manufacturers are extremely careful when choosing the professional to whom they entrust the development of their brand style and the packaging design of their finished products. Companies usually try to compare the services of several agencies with a proven track record and choose the offer with the best value for money. The lion's share of such services is provided by small and medium-sized businesses, but there are also plenty of independent designers on the market — self-employed professionals who create design products themselves. As we have mentioned several times in our previous articles, whenever you purchase services or enter into any business relationship, it is crucial to conclude a competently drafted contract that protects the rights and interests of both parties. Would-be entrepreneurs who take the rash step of building business relationships solely on verbal agreements, without any signed documents, often find that their business partners fail to meet their obligations. In such a case, there is no option but to gather all available circumstantial evidence and go to court to protect one's interests. An experienced attorney who knows exactly what to look for and what to present in court in order to resolve the dispute in the client's favour as quickly as possible can provide legal support in such laborious matters. In this article, we would like to describe one such case.

A young managing director — let's call him Yuri — came to us for help. For many years his company had successfully produced foods such as pickled vegetables, sauces and canned vegetables and sold them to large supermarket chains. For many years, the same design agency had been commissioned to develop an individual packaging style for the company's finished products. The agency's prices were above the market average, but the quality of its work and its turnaround times justified the company's investment. The company under Yuri's management never stood still and kept launching new products. The last six months had been particularly busy and productive — the company was planning to launch a new range of sauces that went perfectly with barbecue dishes. The new sauces were to go on sale in spring, at the start of the "barbecue season". The new products needed a modern, attractive design. This time, our future client decided not to work with the agency that had proven itself over the years, and instead agreed to work with a freelance designer — a young and attractive woman named Sofia (name changed). This decision was taken together with the company's commercial director — no doubt not only because of the young designer's boundless charm, but also on the basis of the quality of the design samples she presented and the cost of her services. The deciding factor in concluding the contract was an additional 10% discount Sofia granted on the price she had originally quoted. Both parties, extremely pleased with each other, "shook hands" on the deal. It was agreed that Sofia would start work immediately and present samples of the designs as the work progressed. Interim deadlines for accepting the finished work were also discussed, and the company's representatives gave quite clear instructions about their preferences and their expectations of the finished result. Unfortunately, this is by no means the only case in which the parties relied on mutual trust without putting their agreements in writing. The creative work was "left" to the professional, and Yuri and his team threw themselves into other urgent business matters. About two months after the commission, the company's representatives asked the designer how she was getting on. As our readers have no doubt guessed, they did not receive anything like a satisfactory answer from Sofia. The young woman, open-minded and with an exceptionally positive outlook on life, travelled a great deal and replied to the client by e-mail that she was now in Vietnam, now in South America, now in California. At the same time, she promised to devote herself intensively to the assignment very soon. At first, such e-mails drew only indulgent smiles from the representatives of Yuri's company. But the end of the year was approaching, and there was no sign of any results. Two weeks after the commercial director's first firmly worded letter, Sofia finally "produced" a draft of one of the labels. It could not be said that the design lacked originality or flair, but it did not meet the client's stated expectations and concept at all. Yuri personally replied to the young woman's e-mail and explained in detail what exactly he was dissatisfied with. He politely asked her to revise the label design within the next two weeks and at the same time enquired about progress on the label designs for the other sauces.

Surprisingly, exactly three weeks later — without any further reminder — the young designer sent samples of all the labels ordered, including a revision of the first one. Unfortunately, it was too early to celebrate. After a close look at the results, the company's representatives concluded that the company could not put its finished products on the market with the proposed labels. Most annoyingly, the young woman had "not heard" the client's wishes when the work was commissioned, just as she had "not heard" the comments in Yuri's e-mail. It was decided to end the cooperation with the young designer and to go back to the trusted agency. Sofia was sent a letter on the company's letterhead informing her that her services would no longer be required and offering to pay 1,000.00 euros for the work done. As so often happens, no one at the company had expected that they would soon be served with a lawsuit from Sofia demanding 8,000.00 euros for the work performed. It should be noted that the young woman was demanding payment in full for her work, without even taking into account the 10% discount that had been agreed and granted earlier.

Yuri came to our law firm for a consultation. The attorney who took on the client's case listened to him carefully and explained the prospects of success in court. Without doubt, the "weak link" in this case was the absence of a Werkvertrag signed by both parties. On the other hand, two people from the client's side had been present at almost all of the conversations with Sofia, and printouts of the e-mail correspondence were available. At the court hearing, our attorney set out our client's legal position, which included the following:

- The work performed by the contractor did not correspond to the company's order;

- The work was carried out in gross disregard of the deadlines agreed by the parties;

- By its nature, the contract is a Werkvertrag, proper performance of which consists in a finished, high-quality result — in this case, the label design — and not merely in the hours spent on the work;

- Even after detailed instructions from the client, the contractor was unable to remedy the serious defects in the result and repeated the same mistakes in the designs for the other products.

The judge accepted all of these arguments as well-founded. The claimant, for her part, was given the opportunity to explain on what basis she was claiming 8,000.00 euros from the company. As a result of the negotiations our firm's attorney conducted with the claimant, the parties agreed to conclude a settlement (Vergleich), under which Sofia was to receive 1,000.00 euros from the client for the work performed.

The client thanked us for an excellent job and promised to turn exclusively to our law firm with any legal questions that might arise in the future. For our part, we wished Yuri continued business success and stressed once again how important it is to put all agreements reached precisely in writing.

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