10 Things Your Client Contract Needs
I know. It’s pretty much the last thing you want to think about with respect to your business: your client contract.
Is it effective? Does it have everything it needs? Does it effectively require my client to pay me? Will it legally protect me and my business? Will it even hold up in court?
Contracts are not the most fun thing to deal with in your business. Luckily, I have some pointers for you:
Most importantly, and you’ll hear me touch on this a lot, but your client contract must be clear and easy to understand. If you or your client can’t understand the contract, it will be difficult to determine what the contract means, which will make it more likely that a court will have to decide.
To be effective, your contract must be signed at least by your client, but preferably by both your client and a company representative who is authorized to sign on behalf of your company.
You should specifically spell out the work to be performed or goods to be provided in the contract and state that any additional goods or services are not included and will need to be agreed upon in another contract.
You also need to specify the payment terms: how much the client is paying, when the client needs to pay, and whether any of that amount is refundable.
Just like payment terms, you also need to specify your cancellation terms and whether your client can get a refund. Specifying whether you or your client can cancel the contract, your refund policy, and what needs to be done to cancel or get a refund will save you headaches down the road.
Disclaimer: warns your clients of risks and helps limit your company’s liability with respect to those risks.
Intellectual Property Agreements: If applicable, specify who owns any content or other intellectual property and how that material can be used. For example, if you are a course creator, you want to make sure you have a clause in your contract stating you own the copyrights to your course material. It should also specifically state that your clients cannot distribute that material to others.
It’s also a good idea to specify where disputes over the contract occur. These are called choice of law provisions. Most businesses choose the state and county where their principal place of business is, but there are sometimes strategic reasons to choose a different place. You can also specify whether the parties must go to mediation or arbitration before filing a lawsuit.
Attorneys’ fees provisions: You can also specify who will have to pay attorneys’ fees in the event of a dispute between the parties. Most of the time, these provisions state that the party who loses the lawsuit has to pay the winning party’s attorneys’ fees. This usually discourages frivolous lawsuits as your client will have to pay your attorneys’ fees if you win in court.
Force majeure clauses: Specify what happens if a change of circumstances occurs that makes the contract extremely difficult or impossible to perform. Many companies who had these clauses in place at the outset of Covid-19 were able to cancel contracts they weren’t able to perform without penalty.
Wanting to refresh your contracts but don’t know where to start? Download the free guide explaining what contracts most online businesses need below or book a free consult today.
Disclaimer: This information is provided for general information purposes only and should not be construed as legal advice with respect to any matter. This information is not intended to be an exhaustive list of the topics discussed. It does not create an attorney-client relationship and should not be used as a substitute for legal advice in any specific situation.
© 2021 Iluma Law Firm, PLLC. All rights reserved.
