The Basic Provisions You Need In Your Client Contract
I’m not going to waste three paragraphs on why you need a contract. If you’re here, you already know why. Here’s what I want you to know about a contract. While a contract is a legal document, it need not have legalese. A good contract is a simple contract. If both parties to a contract don’t understand the terms and know how the working relationship between you, the service provider, and them, the client, then the contract isn’t all that helpful. It will still help you in a lawsuit, but it won’t help prevent problems.
Contracts need to be specific and clear. If you are going through your contract, read each provision and ask yourself whether it is specific and clear. Put yourself in the shoes of your client. Could they understand exactly what’s going to happen? You should be able to hand your contract to your client without ever having spoke to them about the document and your services, and your client should understand from that contract exactly how the transaction and relationship is going to work.
Ok, we got the intro out of the way. Let’s talk nuts and bolts. Here are the primary provision your contract needs.
The beginning portion of your client service agreement should include information about the parties, including names, and possibly addresses. Here you should consider who is the party you are contracting with. For example, if there is more than one person who has a say or is paying the bill, they may be referred to as one party “jointly.” If your client is a representative of a company, you should discuss and specify if you are contracting with the company represented by your client or by the client individually. If you have an LLC, make sure you’re specifying your LLC as the party to the contract. Also note if you have a DBA. Example: This contract is by and between Braden Drake LLC, dba Creativepreneur Consulting and Meryl Photography. If you have more questions on business entities, check out my blog on startupguide.biz.
scope of services
Scope creep. We have all been there right?
“Hey, can you edit this photo again. I’d prefer one less chin.”
“Thanks, so much but I think the green is like a little too green. You know what I mean. You can make it like a yellower green?”
“O my goodness! I’m so excited for the wedding. I just found out my friend and her boyfriend she met three days ago are going to be in town. Can you add two extra dinners and seats to our reception? Thanks.”
Most of the time, our clients aren’t trying to be a pain in the ass. However, when we quote them before entering a contract, we are provided a quote for a specified scope of services. It’s important that our contract carefully detail what those services are and how it will be handled if additional services are requested.
Scope of services is the most important part of the contract, and the more explicit and detailed it is, the better, because it will save you from unreasonable expectations and misunderstandings on the client’s part in the event of a dispute. This section of the contract should describe your services with specificity and in definite terms, so the Client understands what is included and what is not included with the contract. Include the date and/or time of when the services will be provided/due.
If you are an event organizer, be sure to include type of event, date and venue details, any venue-related limitations you may have, your hours of work, your technical capacities, and the deliverables. For example, if you are having tables decorated with 6 flower arrangements, you should describe these and attach the picture or a sketch of a similar arrangement, name the flowers you are going to use, type and the size of vases, etc. The more details you will have, the better. Finally, discuss what happens to the arrangements after the event, i.e. you take them back or the client gets to keep them.
Finally, if your performance depends upon the client’s actions, for example, you need information from the client, source material or access to the venue, the contract should describe what you would need and when the client must provide you with it for successful completion of your work.
terms of payment, cancellation, and refund policy
Here, the contract needs to speak to what your retainer fee is, the payment plan, when you expect the payment and what happens if the client doesn’t pay on time. For example, you may put in a clause that would have you keep the portion or the whole retainer if there is a last-minute cancellation of the contract by the client or if the client refuses to pay according to the payment terms. It’s helpful to set a definite cancellation period without penalties. Then, describe what a late cancellation is and what portion of the retainer you get to keep and how much of the fee you get to keep if there is a last-minute cancellation. There may be several scenarios here. The portion of the fee you keep can vary depending on the reason of the cancellation. For instance, something neither you nor the client could anticipate compared to the client changing her mind after you have already made the arrangements and bookings in your schedule. Basically, consider the when, what, where, how, and even sometimes why.
It is always helpful to specify your refund policy, so the client has no false expectations. If you are wondering what your refund policy should be, adhere to the industry standard as the most adequate guideline. If you offer no refunds, specify it in the contract and draw your client’s attention to that. Make sure it is clear and visible in the body of your contract.
Specify who will be responsible for these expenses, you or the client. If your client will cover the cost, include whether you will first pay for costs and get reimbursed, or if you will choose another method. Also consider things like travel time. If you need to drive for two hours, will there be a charge for that? Will you bill at your standard hourly rate? In my contract, I charge 1/4 my normal hourly rate for travel time. Note that if a client does not reimburse you for costs, that is a tax deduction. If you want more details on deductions, make sure to grab my small biz tax deduction guide.
It is always good to include into the service contact insurance information if your industry standard requires that you be professionally insured.
Typically, you want an “entire agreement” provision that says something like:
“This Agreement contains the entire agreement of the parties. No other agreement, statement, or promise made on or before the effective date of this Agreement will be binding on the parties.”
This provision makes it crystal clear that something you discussed in an email or phone call is not actually a binding obligation if it’s not in the contract.
You generally want a provision that states on the contract can be modified. I recommend stating that your contract can only be amended if in writing signed by both parties.
Non-disparagement clauses are causing more and more controversy today, so I briefly wanted to touch upon that. Non-disparagement clauses prohibit a person from expressing any negative experiences they have associated with the contract. While California allows the use of non-disparagement clauses in employment and severance contracts, under California Civil Code section 1670.8, the use of “non-disparagement” clauses in consumer contracts is prohibited. Violation penalties vary between $2,500 and $10,000. This means that not only such clauses are not enforceable for photography contracts on California, but you may be penalized for trying to introduce such clause into your contract.
Dispute Resolution and Governing Law
It is always a good idea to set a protocol for dispute resolution and mention the governing law of the contract. That’s the jurisdictional law that will apply in case you do not resolve the dispute and end up having to go to court. Typically, you would go to court at the place of where your business established, or where the services were provided. For effective dispute resolution you may suggest mediation first.
This blog covered a sampling of the provisions that should be in most contracts. Other provisions will vary based on industry and services. If you ever need one-on-one help with your contract, you can reach out to me through Braden Drake Law.