Does my small business need a client agreement? Small business lawyer series – article 4

At LegalVision, we have assisted numerous small businesses who ask us: “Does my business need a client agreement?” Our answer is YES! If you operate a small business that provides services to clients, then you will need a client agreement. It’s as simple as that. A small business lawyer will be best placed to create your client agreement.

For example, if you are selling goods to a customer you will need to enter into a contract with the customer that sets out both parties’ rights and responsibilities. A common feature of such contracts are the payment terms and schedules, which ensure that you are getting paid for the goods you provide to your customers.

Why should this be any different for a service provider?

Small businesses providing services to customers need a similar contractual arrangement under which you can clearly identify the terms and conditions of your services.

What is a client agreement?

A client agreement is a legal contract that sets out the terms and conditions under which you provide your services to your clients. There is a suite of provisions that a client agreement should have in order to effectively set out the rights and obligations of both parties, and protect your business’s interests when providing these services.

What should I look for?

A strong client agreement should cover the following points:

• A description of the services provided.
• The payment terms which should include your rights to charge interest and engage debt collection services if invoices are outstanding for a certain period of time.
• A detailed list of your clients’ obligations under the contract. For example, the client may have to provide you with certain information for you to begin the provision of the services.
• An outline of the warranties that you provide and that your client must agree to. For example, your client may warrant that all information provided to you is true, complete and correct.
• If you are required to use the intellectual property of your clients, they must agree to provide you with a licence to use such property. You will also need to protect any intellectual property that you will be giving to your clients when carrying out the services.
• A clause which stipulates that confidential information shared between the parties will not be disclosed. This is an important clause as, depending on the services you provide, there may be confidential information passing between you and your client.
• A description of the extent of your liability under this agreement and any disclaimers as required by law.
• An outline of how this agreement can be terminated and what happens after termination.
• An indication of what the governing law and jurisdiction of this agreement will be.

Conclusion

Client agreements are important legal documents that we believe you should have in place when providing services to your clients. A small business lawyer should draft your client agreement. For more information on client agreements and how much it costs to draft one, please do not hesitate to get in contact with us.