Clear, well-written client contracts are a must. Not only do they help set boundaries and expectations between you and your clients, but they also protect your small business.
What makes a strong client contract? To start, make sure your contract contains the following information:
What should be included in all your client contracts
1. Names of all parties
It is vital that your client contracts identify who the parties are. Do this by naming the client and your company, noting your roles in your business arrangement. If you are incorporated, make sure to properly identify your company so that you do not end up entering into the contract personally.
2. Clients’ contact information
Every contract should include contact information for your company and your client. If your client has requested that communication goes through a specific channel, such as email, you may want to note this as well.
3. Expected services
Here, you lay out the specific services that you are undertaking with the client. Be as specific as possible, but don’t box yourself into a corner by narrowing down the work too much. For example, indicating that you will “Design a website” is too vague, so perhaps list the number of pages and how much customization is involved. Don’t, however, list every item to be included on each page.
4. Additional Details
Outline any further terms of the agreement. For example:
- What are the deadlines of the project?
- Who reviews and approves work?
- What is the timeline for feedback on the work?
This may sound like fine detail, but by laying this out now, you will ensure you have a productive relationship with little dispute.
5. Price
This should include both the fee and what is included within it. Make sure all of the work you are agreeing to is laid out so there is no confusion.
6. A summary of anything not covered in the fee
Here, you want to identify any work that is outside the scope of the project. This can include work that you do but is not included in the price, as well as work that the client will be contracting out to another company for or will be handling in-house.
7. Additional fees
Lay out what situations would lead to more charges – and what these charges would be. It is important to cover side services that the client can opt into and what happens if the scope of the project expands. For instance, if the project includes 100 hours of work paid by the hour, does the rate change if more time is needed?
8. Protection of your intellectual property
You do not want to suggest that you are giving up any of your intellectual property if that’s not your intention. In many design related projects, the final product will belong to the client and you will assign your intellectual property rights to them. However, there may be times where you will be using some of your previously created work so it’s important to clarify which, if any, part of the final product is being transferred.
9. A termination clause
Make sure you have an option to end the relationship in case things aren’t working out. The client should also have the same option. Some factors to consider are:
- What happens if one or both parties want to cancel the contract?
- How is the final payment handled?
- How much notice will be provided?
10. Method of payment and schedule of payments
Many companies overlook this information but it’s very important to outline the payment terms, especially due dates. If you do not provide a provision for interest on late payments, you won’t be able to charge it.
11. Disclaimers and Warranties
If you have any disclaimers or offer warranties, make sure that they are included in the contract. Never provide disclaimers or warranties verbally.
12. Confidentiality clause
Make sure you are clear about what information is confidential, and not just for the clients. If in the course of your work, clients have access to your proprietary intellectual property, you may also want to ensure they do not share this with others.
13. Signatures
Always have the contract signed and dated. If you do not do this, your client is not bound by the terms of your agreement.
Work with a small business lawyer when creating your client contracts
Lawyers are experts in creating contracts. When you have your contracts drafted or reviewed by a small business lawyer, you can rest assured that you will be properly protected, allowing you to focus on your work for your new client.
While client contracts are important, they are not the only documents you should have in place. Before entering into any partnership, make sure you have a comprehensive partnership agreement set up.