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.
1.
Client and Company Details
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.
2.
Project Scope and Terms
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.
3.
Services or Goods Description
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.
4.
Payment Terms
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.
5.
Deadlines and Work Schedule
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.
6.
Expiration Clause
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.
7.
Copyright Ownership
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.
8.
Working Relationships
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.
9.
Termination Clause
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.
10.
Dispute Resolution
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.
11.
Client and Company Signatures
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.
Contact
Us To Help With Your Client Contracts
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.
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