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I Run a Catering Business. What Contracts do I Need?

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Are you the owner of a catering business?  You will need contracts to govern your day-to-day working relationships with clients and employees. You also want to protect your business from being held responsible for events out of your control.  This article explains what these type of contracts are and what you need to include in those agreements.

What Contracts do I Need?

It is important to ensure your contracts are tailored to suit your catering business. The contracts you need may depend on:

  • types of catering services you provide or intend to provide;
  • types of clients or customers;
  • staffing arrangements; and
  • whether you hire out equipment or goods, or hire them from another business.

The most common contracts you will need as a catering business include a:  

  1. client agreement;
  2. hire purchase agreement;
  3. supply agreement;
  4. terms of use;
  5. employment agreement; and
  6. independent contractor’s agreement.

Client Agreement

A client agreement is an agreement that can be used to engage individual clients or corporate clients. The client agreement should include provisions such as:  

  • how your clients are to make payment to you;
  • the dates and times when you will be providing the catering;
  • a description of the services you’ll be providing, such as setting up an event, supply equipment like tables, staffing an event with waiters and arranging for cleaners for the event;
  • how you or client can the agreement, such as the client cancelling the catering order ahead of time; and
  • limiting or excluding liability under the agreement for events out of your control or for consequential losses

For example, your catering van breaks down and you failed to provide your services at the event on time. Attendees are unhappy and demand refunds. Your client wants to you to be liable for financial losses suffered. You can have a clause that allows you to avoid liability for that kind of consequential loss.

A client agreement should be tailored to suit your business needs but flexible enough for meet each customer’s brief. Therefore, you do not need to draft multiple contracts for every new customer.  

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Hire Purchase Agreement

A client agreement may be sufficient to cover the hiring of equipment or material that you provide as part of your catering business. However, if you have a large event to cater or your client base has expanded to large corporate clients with greater needs, you may need a separate hire purchase agreement.

This type of agreement will cover the obligations on your clients on how they use your hired agreement as well as demonstrate when the client will be responsible for the handling of the goods, such as when the client provides full payment.

Supply Agreement

As a catering business, you will rely on external suppliers to deliver your services. Therefore, a supply agreement will ensure your supplier complies with their obligations on how they supply catered goods or services.

Some suppliers have their own contract, but you should provide your own agreement as that agreement has been designed to suit your needs as opposed to the needs of the supplier.  

Your supply agreement should cover:

  • how you send orders to the supplier;
  • outline key deadlines for the supply of goods and services;
  • the payment process to the supplier; and
  • who is at fault if you or the supplier breach the contract.

Employment Agreement   

If you employ your own catering staff, you will need to have an employment agreement that complies with the law. Your obligations as an employer include providing your employees with statutory entitlements and paying part of their salary into superannuation.

You will need to avoid sham contracting. A ‘sham contract‘ describes the practice of an employer passing off an employment relationship as a contractor arrangement rather than an employee.  The federal government and ATO provide tools that can help you decide if you are an employee or independent contractor.

Independent Contractor’s Agreement

If your business is engaging independent contractors, an independent contractor’s agreement is crucial. For example, you engage waiters to assist at catering events on an occasional basis.

Independent contractor’s agreements are designed to be flexible. You can issue the agreement to a contractor when they first agree to perform services for you. Therefore, every time you have a catering event, Therefore, every time you need additional assistance for a graphic design project, you can issue a work order to the independent contractor for them rather than a whole new contract. 

Your agreement should cover:

  • the types of services the independent contractor will be providing;
  • how you will pay them for their services;
  • their obligations, such as how contractors can pay their own taxes and super, but provide their uniform.

Website Terms of Use

If you have a website, you will need a simple document which establishes the terms on which customers agree to use your website. A website terms of use will usually have provisions dealing with privacy, intellectual property and a disclaimer regarding any representations you make on the website.

For example, you can have a disclaimer around the statement on “We have the expertise to cater to your every need”.

You may also want a privacy policy, which can be included in the terms of use. The privacy policy govern covers how you hold and store your customer’s personal information.

For example, the privacy policy can state that you collect names and email addresses so that you can send them a personalised email newsletter that outlines catering discounts for corporate clients. 

Key Takeaways

As the owner of a catering business, the type of contracts you need will depend on your business needs. Contracts help protect your business from unwanted liability and clarify working relationships so you can focus on growing your business. Your business should consider having a:

  • client agreement;
  • hire purchase agreement;
  • supply agreement;
  • website terms of use;
  • employment agreement; and
  • independent contractor’s agreement.

If you have questions or need assistance in preparing contracts for your catering business, get in touch with LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

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