Most businesses provide their clients with a client agreement. This can be in the form of a service agreement signed by both parties, but in this day and age is more often drafted as a set of terms and conditions that can be sent to a client over email. If the client hires the service provider then he or she is deemed to have accepted the conditions set out in the terms and conditions, otherwise know as a client agreement. Obviously your client agreement should be tailored to suit the individual circumstances for your business, but there are a number of key clauses that should be present in every client agreement. We’ve set these out in this email so you have a checklist to refer to when completing your initial review.
1. Description of Services
Perhaps the most important clause in a client agreement is that describing the services. It is crucial that this clause is extremely clear, as the majority of disputes emanating from a disagreement over a client agreement are caused by a dispute over the services provided. Make sure that it is extremely clear what services you’re providing, and equally clear what you’re not providing.
2. Payment and Payment Terms
There’s no point doing a whole lot of work and not getting paid. It’s therefore important that you payment terms, as well as the amount which you will be paid for the job, are clearly set out in your client agreement. If you provide quotes over email it’s perfectly OK to refer to the price quoted in the email to which the client agreement is attached. Whether they’re 7 days or 30 days your payment terms need to be crystal clear. It’s a great policy to take all payments upfront if you can, but having clear payment terms is the next best option.
3. Dispute Resolution and Mediation
It’s important that you refer to dispute resolution in your client agreement if you’re dealing with transactions for a substantial amount of money. It can be a good idea to include a clause which requires the parties to attempt mediation before any dispute is taken to court. This can reduce the legal costs you’ll need to bear if you do end up in dispute with a client.
4. Termination of Client Agreement
You need to think about how you want both parties to be able to terminate the agreement. Depending on the type of services provided, it may make sense to require a full payment on termination. Alternatively a payment for services provided up to termination could be more appropriate.
5. Limitation on Liability
The service provider will always want to limit his or her liability to the fullest extent possible under the law. The client will want the service provider to bear as much liability as possible. If you have a standard set of terms and conditions or client agreement you’re in a good position to set out pretty clear limitations on your liability as you can advise customers that your agreement is non-negotiable. There’s also a good chance they won’t actually read the client agreement before entering into a contract with you.
It’s best to work with a business attorney to draft your client agreement, but it’s important you understand some of the important clauses to keep an eye out for. Use this checklist to keep ahead of the game.