One of the the most important things you can do to set yourself apart from your competition is to have a clear, concise and easy to read contract for use with your clients. Failing to have a contract, or worse, one that is confusing and contradictory, can mean the difference between landing an awesome client and struggling to get work.
To make your client contract clear and easy to understand, you need to make sure it includes the following five essential contract clauses. Heeding this advice will allow you to avoid misunderstandings with your clients, prevent foreseeable disputes, and make sure that everyone is on the same page in terms of the work you will be doing and how you will get paid.
Here are the five necessary clauses that you should include in every client contract:
- Scope of Work: Properly defining the work you will do for the client is probably the most important component of any well-written contract. When written clearly and concisely, not only will this section help you to establish clear expectations and boundaries with your clients, but it will also help to avoid the dreaded scope creep. (If you didn’t know, scope creep is what happens when your client asks you to do more and more work that wasn’t described in the contract). In addition to clearly articulating the services and/or products that you will provide to the client, as well as any deliverables, this section can set deadlines for project completion, and milestones that you must hit to trigger payments.
- Payment Terms: Without clear guidelines for how you will get paid, your contract is very likely unenforceable. Some of the details you should include in this section of your contract include how and when you will get paid (i.e. due dates and payment schedules), late payment fees, and the method for payment (i.e. check, paypal, venmo, etc.).
- Intellectual Property: As a trademark lawyer, I know all too well what can go wrong if you do not include a provision in your contract regarding the ownership of intellectual property. This is especially important if you are creating intellectual property for the client. This could include blog posts, videos, graphics, audio files, photographs, etc. As a contractor, you likely will want to make ownership of intellectual property contingent on proper payment. If you are hiring a contractor to create IP assets for you, then you will want to include a work for hire section in the contract.
- Termination Clause: When working with my legal clients I typically refer to their contracts and agreements as “dis” agreements. This is because the only time they are typically enforced is when there is a disagreement between the parties about what should or should not be done under the contract. For that reason, having a clear termination clause that defines when the contract can be terminated is vitally important. In this paragraph, you could include a list of events that would trigger a termination of the contract, and state what notice requirements may be necessary.
- Venue Clause: If you are working with clients around the country, then you will likely want to include a venue and choice of law clause. This is a short section that basically states that in the event of a dispute, the parties will have to travel to you home “court” to resolve the matter.
- Refund Clause: In almost every client contract, I like to include a refund clause. This basically lets the client know under what circumstances a refund is warranted. If you do not allow refunds, (or even if you do), then you want to make sure to include a chargeback clause as well. While a refund clause will detail under what circumstances a refund may or may not be warranted, a chargeback clause is intended to deter clients from attempting a chargeback with their credit card company, and outlines what would happen if they did pursue a chargeback.
- Chargeback Clause: A chargeback occurs when a client disputes a charge with their credit card issuer or bank, and the funds are reversed. Chargebacks are intended to protect consumers from fraud and stolen credit cards. But more and more frequently, we are seeing customers use chargebacks as a cheap and fraudulent alternative to get out of a completely valid contract. While you won’t be able to stop a chargeback from occurring, having a strongly worded chargeback clause in your contract will be invaluable to you in the event you get into a chargeback dispute. When that happens, the merchant bank will ask you to submit evidence in the form of a client contract to bolster your case. Having that chargeback clause in your contract can mean the difference between winning your dispute and losing potentially thousands of dollars, forcing you to sue a client to recover those funds. You may also specify that chargebacks will subject the client to additional fees, which covers the costs associated with the dispute resolution process, in addition to reporting their delinquent account to the credit bureaus.
Including these seven essential clauses in your client contracts can help you to establish clear expectations and boundaries with your clients, protect your business from unintended work and failed payments, and avoid foreseeable disputes. If you're unsure how to properly draft a client contract that includes these invaluable clauses consider consulting with a lawyer in your jurisdiction or purchasing our client services agreement template which contains everything you need to protect your business.