Client Contract: Everything You Need To Know
A client contract spells out the policies and procedures of your company in an agreement each new customer must sign.3 min read
2. Elements of a Client Contract
A client contract spells out the policies and procedures of your company in an agreement each new customer must sign.
Benefits of a Client Contract
A well-written client agreement serves several purposes, including but not restricted to:
- Limiting liability with specific disclaimers and limitations.
- Protecting your energy and time with legal language.
- Establishing a payment schedule and penalties for late payments.
- Creating a clear refund policy.
- Establishing guidelines for handling missed appointments or calls.
- Attracting clients by increasing the perceived legitimacy of your business.
Your contract for clients should be specific to your business, with language and clauses establishing fair parameters for the customer relationship.
Elements of a Client Contract
Client agreements should not include complex legal jargon. Instead, simply detail who is doing what for whom and at what price. Every client agreement should include:
- Full legal name, legal business name, and contact information including the billing/mailing address for both parties. Use actual names rather than general placeholders wherever possible.
- Length of the contract, whether a year, three months, or an indefinite time period
- Clear payment terms, including whether you charge an hourly or project-based rate and how often invoices will be due. Indicate the method of payment, such as cash, check, or credit card, and establish a recurring invoice schedule if possible. Include penalties for late payments.
- Comprehensive schedule with clear deadlines and milestones toward the final deliverables. Make the deliverables as specific as possible. Describe exactly what the client can expect to receive along with quantities and other pertinent information.
- Procedures to follow in order to terminate the contract. For example, you can require the client to provide two weeks notice and promise the same. Indicate that payments are non-refundable if the contract is ended for any reason, then invoice regularly to avoid losing money. Also note that if work is delayed for 30 or more days, you will invoice for work completed thus far. Some companies establish mutual termination, which means both parties can walk away unscathed if they agree the partnership is not working. Others void the contract if either party becomes insolvent or defaults on agreed-upon payments or deliverables.
- Information about who owns the final copyrights on all phases of a project eligible for copyright protection. In most cases, you own your work until it is completely paid for, at which point the rights transfer to your customer.
- Legal language that establishes your role as an independent contractor and your intention to pay your own taxes rather than through withholding. This prevents the client from categorizing you as an employee rather than as an independent contractor.
- Indicate where contract disputes will be handled; this is especially important if the client in question is based in another state. Choose your own location so that you don't have to travel to out-of-state court dates.
- Allow for arbitration in the event of a contract dispute. This means a neutral third party will make a decision after hearing the facts of the case. Arbitration is typically quicker and less costly than filing a lawsuit. The American Arbitration Association provides sample clauses you can use.
- Both parties should agree to non-disclosure of the details they learn about the other party's business in the course of the project.
- Limited liability waiver, which protects you from client lawsuits claiming damages caused by your work
- Indication that waiving one part of the client agreement does not waive the whole contract
- Indication that if one section of the agreement becomes enforceable, the other sections are not void
- Force majeure clause, which suspends the contract if an act of God such as a hurricane occurs
- Good faith clause indicating that both parties are entering the contract with the best of intentions
- Automatic renewal clause at a price no more than 10 percent higher than the previous-year contract
- Information about mutual linking and other co-promotional efforts if applicable
- Consent to transmit email and electronic records
- Hours of operation and holiday schedule, along with a rate for off-hours work
- Signature and date line for each party
If a contract goes through several revisions, mark each new document with a version number so that it can easily be tracked.
If you need help with a client contract, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.