I’m a Service Provider, How Should I Draft My Client Agreement?

If you provide services to a client, you should ask them to sign a client agreement. This is a contract that sets out the terms and conditions on which you will provide your services. For example, payment, the type of services, and the timeframe. This article explains some of the main obligations you will have and how to write a draft client agreement to minimise your risks.

Define the Services You Provide

Your main obligation will be to provide the services the client is paying for. Therefore, your client agreement should adequately define those services. Typically, you can do this by including a clear scope of work that sets out exact details and timeframes.

Answering the following questions can help define your scope of work:

1. Will you provide a one-off service, and if so, have you provided the details of what is included and excluded?
2. Do you provide an ongoing service, and if so, how can the client agreement come to an end?
3. Will the client agreement function as a “standing offer” to supply services, whereby your customer can issue you with “service orders” to perform the services throughout the term of the contract?
4. Can the services be changed by you or the client?

Define Payment Options

Secondly, the client agreement should set out the amounts that you will be receiving for the services, including whether the client will be required to pay you on an hourly rate or fixed-fee basis.

The client agreement will need to specify when a payment will be due and how payment should be made. If the service is ongoing and long-term, you should consider whether you should obtain a direct debit request authority from your customer. This will enable you to directly debit the service fee from your customer’s bank account.

Consider Intellectual Property, Confidentiality and Privacy

You may need access to your client’s confidential information and intellectual property. Similarly, to perform your services you may also need to give the client with confidential information or your own intellectual property. Therefore, the client agreement should include intellectual property and confidentiality clauses that protect both parties.

You may also be handling personal information. This is information that identifies a person, such as their credit card details or address. If this is the case, the client agreement should address privacy obligations. For example, that you will only handle information according to the provisions of the Privacy Act 1988 (Cth) and your privacy policy.

Specify What the Client Must Provide

Your draft client agreement should address whether you need anything from the client to perform the services in accordance with the client agreement. For example, do you require:

• permissions;
• information;
• documentation; or
• access to premises?

If so, the client agreement should state points clearly.

You should also consider whether you need the client to refrain from doing anything, such as forwarding your work to another person. If so, the client agreement should clearly spell this out.

Carefully Consider Warranties

The Australian Consumer Law (ACL) implies guarantees into any client agreement worth less than $40,000. You will need to ensure that you comply with these guarantees. Most notably that you:

• provide the services with due care and skill; and
• provide services that match the ones advertised.

The ACL also requires you to uphold any warranties you state in the client agreement. For example, if you state that a client may ask for a refund, you will need to provide a refund when asked for. Therefore, you should be careful that you are capable of meeting any warranties you provide. Ideally, you should carefully draft these to ensure you do not give too much away.

Key Takeaways

Having a draft client agreement is essential to protecting your interests as a service provider. You want to ensure that it clearly states:

• the services;
• payment conditions;
• intellectual property, confidentiality and privacy obligations; and
• anything you need from the client.

Furthermore, if you provide warranties, these should be carefully worded to limit your liability.

If you need help writing a draft client agreement that protects your interests as a service provider, call LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.