A client agreement is an agreement between your business and your clients. We call it a “master” client agreement, because you use the same agreement, changing only the client-specific details, for each new client.
To avoid disputes down the track, it is important to address several issues in your client agreement, including:
- What services are being provided;
- What fees you will be charging;
- When you expect payment for your services;
- How you or your client can terminate the agreement;
- What intellectual property is being transferred; and
- What your business is not liable for.
The focus of this article is the “services, fees and invoicing” clause.
Services
In drafting the agreement, your contract lawyer should clearly set out in the ‘services’ section which services your business provides, and what services it does not. For example, if you have a web design business which does design work only, you should detail what design services are provided, and the time and phases for each step, and you also need to make clear that you are providing only web design services, but not any ongoing hosting or maintenance services. In this clause, you should also indicate that third party service providers may be used, and any third party service provider that is not your direct contractor, will be the responsibility of the client.
Fees and invoicing
It is important that your clients know how much they are paying for your services. Some businesses charge fixed-fees and require payment upfront – requesting payment upfront is often a good way to ensure that you will be paid, and saves you from chasing payment later. On the other hand, some businesses charge hourly rates, and bill their clients at regular intervals. If you invoice your clients regularly, your client agreement should set out the payment terms i.e. how many days your clients are given to pay each invoice. To protect your business, you can also insert terms, which allow you to do any of the following, if a client does not comply with the payment terms:
- Terminate all services immediately;
- Charge interest on the unpaid amounts; and
- Engage debt collection services.
Conclusion
Client agreements are important legal documents, as they create a legally binding relationship between your business and your clients. It is important that the client agreement is clear on what services are being provided, and what and how clients are expected to pay for your services. The scope of services and payments are generally the most common disputes between a business and a client. Having a well drafted “services, fees and invoicing” clause could prevent a dispute down the track.
If you require any assistance with the preparation of a master client agreement, or if you have an existing one you’d like reviewed, contact LegalVision today. Our specialist business and contract lawyers would be happy to help!