As a business owner, it is essential to establish an explicit agreement with your clients, outlining the terms and conditions under which you will provide services. This document is often referred to as a ‘client agreement‘ and must include your clients’ obligations. You can draft this agreement to accommodate varying commercial details for each client; this is why it is called the ‘master’ client agreement.
A critical part of your client agreement is clauses about your client’s obligations. This article will explore the types of client obligations to consider including in your client agreement to ensure smooth service provision. It also covers what client obligations are, along with examples of situations where they may be necessary to include.
What are ‘Client Obligations’?
Client obligations are the duties, responsibilities, and requirements that you must fulfil or comply with under a client agreement. These obligations depend on the services or goods you provide, meaning they vary from one business to another. They encompass the terms and conditions agreed upon between the service provider and the client, outlining the framework of the business relationship and the client’s use of the provided services or goods.
In addition to industry-specific obligations, there are some key ones you might want to include in your client agreement:
1. Compliance With All Applicable Laws
When working with clients, it is essential to ensure compliance with relevant laws. For instance, if your client provides information or documentation, they should be able to do so without restrictions. This information might include personal data, which is protected by privacy laws.
If you provide specialised services or goods, you may also need your client to follow industry-specific regulations. For example, if you supply regulated goods, your client may need to obtain, hold, and maintain all necessary licenses for handling and storing these goods.
2. Access to Certain Information
You may need certain information to provide services to the client properly. Therefore, a client agreement can require the client to provide you with all necessary documentation, instructions, and cooperation for your business to render services. For example, you might need their business details or instructions to develop a webpage or marketing campaign.
In these client responsibilities, you can specify the consequences of the client’s failure to grant access to the necessary information. For instance, you can clarify that certain services cannot be provided unless the client supplies the required information.
3. Clear Instructions
When you offer a specialised service, like cleaning someone’s office, clear instructions are essential. In such cases, your client may need to provide you with specific instructions about what they expect you to clean, whether there are restricted areas or any special handling requirements you should be aware of.
4. Providing Information and Documentation on Time
When you need information, like filing a tax return, make sure your client gives it to you on time. This helps you meet deadlines.
You can also protect yourself by including a disclaimer. It should say that you will not be responsible for fines or delays if the client does not give you all the information or documents on time.
5. Information Accuracy
You need to trust the accuracy of the information provided by the client. For example, when the client gives specific details about their business, you base your advice on those details. Additionally, if you offer delivery or logistic services, you depend on the client for the accurate delivery address or correct delivery procedures. Your ability to perform these services depends on having accurate, correct, and complete information from the client. Therefore, ensuring the client provides accurate and complete information is important.
6. Information Does Not Infringe Third-Party Intellectual Property Rights
When you design a web page or conduct marketing for a client, you must ensure that any information the client provides for inclusion in the design or marketing does not infringe on someone else’s intellectual property rights.
This obligation from the client is meant to shield you from potential legal issues or claims that might arise if the information happens to violate third-party intellectual property rights. You are shifting the risk and responsibility to the client, making sure they have the proper rights, permissions, or licenses to use the information.
7. Safe and Secure Access to Client Premises
You may be required to enter the client’s premises in order to carry out the services. You want to ensure the client provides you with access to their premises free from harm. For example, if you are required to go to the client’s home and they have an aggressive dog, you must ensure you can access the property safely.
8. Client Participation in Training for Their Staff
If you are providing services to update specific processes or procedures for a client, it is important to ensure that the client actively participates in any training for both themselves and their staff. This ensures everyone knows how to use the new processes and procedures effectively.
9. Using Your Client’s Intellectual Property
When you incorporate a client’s content into your marketing materials, you require a licence from the client to utilise their intellectual property (IP).
Also, note that Intellectual Property Rights encompass various rights, such as:
- domain names;
- know-how;
- inventions;
- processes;
- trade secrets;
- circuit layouts;
- software;
- computer programs;
- databases; and
- source codes.
Client Obligations and Consequences
For any client obligations you outline in your agreements, you may want to detail any specific consequences that arise as a result of the client failing to meet their obligations. A business may spell out these consequences to provide a clear protocol on how they respond or to ensure clients follow their obligations.
However, you must ensure that these consequences are not unfair contract terms.
Continue reading this article below the formWhat Happens If You Do Not Include Client Obligations?
If you neglect to outline the responsibilities your client must fulfil in your client agreement, it might become more challenging for you to argue that the client has not fulfilled their end of the deal. This could result in a dispute.
Potential issues include:
- delays in service provision due to incomplete information from the client;
- depending on incorrect information from the wrong client; and
- utilising content from the client without proper licensing or ownership.
Other Key Terms
In addition to your client obligations, your client agreement should include important clauses. These consist of:
- clearly describing the services to be provided;
- specifying the fee for the services and outlining how and when you will pay it;
- defining ownership of intellectual property;
- stating termination rights for either party; and
- establishing exclusions for liability.
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Key Takeaways
To protect your business, you need a well-drafted and tailored client agreement, commonly known as a master service agreement. Make sure it includes the relevant obligations for the client to carry out, such as ensuring timely payments, adhering to the terms of the service agreement, committing to future contracts, and outlining a clear dispute resolution process, among other important clauses.
If you need assistance preparing a client agreement to protect your business, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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