Client contracts, or agreements, refer to legal agreements
between businesses and consumers. They help establish expectations for the
individuals who use a business’s products or services. Additionally, they
outline what customers can do if they have an issue with the product or
service. Businesses typically use client contracts to ensure their customers
remain satisfied while also protecting the business’s interests. Understanding
the essential elements to include in a client contract can help business owners
achieve this and develop clear, binding agreements.
Client contracts typically begin by outlining the parties involved in the agreement. This involves clearly stating the full name of the business, the business address, and any other names associated with the company. Alongside this, it is necessary to mention who the customer is by stating their full legal name. It is essential to avoid referring to the customer by any nicknames or other handles.
If the contract involves services, outline the exact scope and purpose of the service. When doing this, avoid jargon and technical terms. Remember that a client contract can be binding without the need for this language. The critical thing is to include as many details as possible about the service and to be clear about what the company is going to provide and for how much.
Another essential thing to include in a client contract is a detailed description of all the goods and services the company intends to provide to the customer for which they have paid. If the client agreement involves services, it is an excellent idea to itemize these and present them as a list. For instance, freelance graphic designers may offer various services as part of a single package. Doing this is key in clarifying what the customer can expect. Moreover, it helps set limitations for the business concerning what they need to provide. In contrast, if the contract involves goods, simply mention what the business sells.
It is also vital to mention how the customer plans to purchase the business’s services or goods. These payment terms may involve one-off payments, subscriptions, or installments. It is necessary to mention when the subscription started and the planned end date for the sale of subscriptions. Additionally, good client contracts involving subscriptions include clauses concerning auto-renewals and advanced notification clauses.
If the agreement involves services, it is good to outline a work schedule and a clear deadline. This ensures the company knows when to provide the service and prevents customers from withholding payment or filing a lawsuit. To ensure both parties are happy, the company and customer should negotiate the deadline and schedule beforehand. For the company, they must choose a deadline they can meet while also being able to provide a high-quality service.
These clauses outline what happens once the agreement concludes. Usually, this clause comes into effect after both parties fulfill their side of the agreement. Essentially, the agreement concludes once the customer receives their services or goods. Some agreements also include a specific expiration date to clarify when the contract is no longer binding.
If the agreement involves the production of original materials, such as graphic design or writing, it is advisable to outline which party owns the copyright for the materials. Usually, the individual or entity providing the service owns these rights until the other party pays in full. After this, the client typically obtains these rights and may use these materials in any way they see fit. If one party has concerns regarding the copyright for these materials, including clauses in the client contract is essential.
If the client contract involves one party acting as a contractor, it is a good idea to mention that it is that party’s responsibility to pay their taxes. This is crucial as businesses may encounter issues with tax authorities if they categorize contractors as employees. By including this type of language in the client contract, the company hiring the contractor will likely avoid these issues when filing their taxes.
Termination clauses allow companies and customers to end the agreement whenever they want. That said, there are usually penalties or conditions to fulfill when one party breaches the contract or wants to cancel the agreement. For instance, some client agreements may state that the customer must provide a month’s notice to terminate the agreement to avoid an early cancellation fee.
According to the American Bar Association, dispute resolution refers to several processes used for resolving claims, disputes, or conflicts that do not involve going to court. Many client contracts include dispute resolution agreements that aim to reduce lawsuits by mentioning the available methods for resolving any conflicts between the customer and the company. For instance, many of these agreements outline what the parties may do before resorting to legal action, such as requiring the customer to contact the company beforehand to negotiate. When including these clauses in a client contract, it is necessary to provide contact details for resolving conflicts.
Client contracts typically conclude with signatures from the customer and company, alongside dates. Including dates is key as it shows both parties agreed on the document’s terms as laid out on the date they signed the agreement. If the signature dates and the contract's effective date vary, it is essential to include both.
We can help you by drafting and reviewing your client contracts. Through detailed and specific client contracts, business owners can create clear and thorough agreements that protect their companies. Even though this may not prevent disputes, having effective contracts can significantly reduce the chances of businesses encountering issues. Consider contacting us for additional advice and support regarding the client contracts you need for your business.
This article is a service of Ganvir Law, Personal Family Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a Business Strategy Session for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.