I have received consults and queries about the use of contracts for business and all I can say is: DEFINITELY YES!
The only way to protect your interests as well as your clients’ of course is to draft a contract that outlines the nature of your agreement. This avoids confusion, misunderstandings and basically being taken for a ride by crafty “business people”. If you are entering a long-term agreement, a contract is the way to go but even if you are doing one-off projects, some type of agreement is also advised for the same reasons.
What details should you include in your contract?
- Your full name
- Your ID number (if this applies in your country)
- Your registered tax address
- If you run a limited company or similar, you must include the official name, ID code and any other relevant details
- All of the above for your client
- The date
- The objective and terms of the service contract
- Your fees (monthly retainer/ hourly etc) and how your fee should be paid
- Confidentiality clause as per the laws of your country
- Duration of contract
- Established address for official purposes such as notifications
- Reasons for cancellation of contract (non-fulfilment, non-payment, misconduct etc)
- Penalty clause
- Any other clauses you feel necessary
Unfortunately in this day and age, many are on the prowl for unsuspecting service providers and will take any opportunity to either delay payment or not pay at all for the services received. Recently I have had a bad experience in that area and even though I have a signed contract with the now ex-client, the situation is complicated. The last thing you want while you’re trying to run your business is to be dragged into the unpleasantness of having to claim unreceived fees, deal with lawyers, the court system etc. I am glad however that there is a signed contract otherwise I wouldn’t have a leg to stand on nor would I have a way to even begin to fight for what is MINE. I will put this down to another learning experience but when you deal with others, these situations aren’t something you can always predict or prevent so the only thing you can do is arm yourself as best you can. Depending on your country’s laws, you may want to or may be obligated to register your contract with the mercantile registry office.
My general policy is to charge upfront either in part or in full (so far nobody has protested this) but you may want to allow for some flexibility in certain cases. The downside is that people who you believe to be trustworthy may let you down and try to dodge payment but do you tarnish everybody with the same brush? Even after the experience I had, I am obviously more aware than ever of the risks and will more than likely be more cautious but I also remember and appreciate the clients I do have that have never let me down, have always paid on time and make it possible for us to collaborate in a way that is pleasant for both so no, I won’t turn into a total cynic but caution is definitely advised.
Just remember, it is YOUR business and YOU establish the way in which it should run so even though you should take your clients’ comments on board, they shouldn’t become law nor can you look at what everyone else is doing. You can only decide what methods suit you and work in that way. Protect your business, protect yourself!