Legal Definitions - satisfaction contract

A satisfaction contract is a type of agreement where one party's obligation to perform, or the other party's obligation to pay, depends on the subjective approval or "satisfation" of one of the parties. This means the work or service must meet the personal judgment, taste, or aesthetic standards of that party. If the party is genuinely dissatisfied, they are usually not required to accept the performance or make payment, provided their dissatisfaction is held in good faith and not merely to avoid payment.

Here are some examples to illustrate this concept:

• Imagine a homeowner hiring an interior designer to redecorate their living room. The contract specifies that the final payment for the design services and furnishings is contingent upon the homeowner's "complete satisfaction" with the finished room's aesthetic and comfort. If, after completion, the homeowner genuinely feels the design does not meet their personal taste or vision, they might not be obligated to make the final payment, as their subjective satisfaction was a condition of the contract.

  This illustrates a satisfaction contract because the homeowner's personal judgment and aesthetic preference are the deciding factors for fulfilling the agreement, rather than objective standards.

• Consider a small business commissioning a graphic designer to create a new logo. The agreement states that the business owner will only pay for the logo if they are "personally satisfied" with the final design, ensuring it accurately represents their brand identity and appeals to their target audience. If the designer presents a logo that the owner genuinely believes does not capture their brand's essence, the owner might not be required to pay.

  Here, the business owner's subjective assessment of whether the logo effectively conveys their brand vision is the key condition for the contract's fulfillment.

• A novelist contracts with an editor to refine their manuscript. The contract includes a clause that the novelist must be "satisfied with the quality of the edits" before the final payment is due. This allows the novelist to ensure the editor's changes improve the manuscript's flow, clarity, and impact to their personal liking. If the novelist genuinely feels the edits do not enhance the work as expected, they may not be obligated to pay the full amount.

  This example demonstrates a satisfaction contract because the novelist's personal judgment regarding the quality and effectiveness of the editorial work dictates whether the contract's terms are met.