Welcome to the first blog post from Stanford Gould Online! This blog aims to offer general advice on contractual issues to help that side of your business run smoothly. In the first of these regular blogs, director Heather Stanford shares her 5 reasons why client contracts are essential. So why would you need a client contract and what does it need to say?
Many businesses operate without proper contracts in place and this can be risky for many reasons. You need to protect yourself and your business and set out clear expectations from the outset, for the benefit of all parties. Here are my top 5 reasons for having client contracts you can trust. Don’t forget, template client contracts for professionals in the wedding sector, can be purchased here.
1. Manage your client’s expectations and your own.
This is the primary reason why T and Cs exist – setting out what you are expecting to do as your part of the bargain – and what your customer is expected to do as well. This is a two-way street and both sides have responsibilities and obligations as part of the delivery of your goods and services. Be clear. Nasty surprises often lead to fall outs…
The most important thing is to be clear about what, when and how you are going to deliver, and what information you need from them and their payment obligations.
2. Define your services or goods properly.
What’s included, what’s not. What bang are they getting for their buck? What are the extras? Do you change for travel, mileage, other expenses like meals or drinks (often called subsistence), Is VAT applicable (watch the rules if you are not registered for VAT and check with your accountant about what you can claim back, or pass to your customer) Do you add delivery charges, handing fees, postage?
This is about being clear about WHAT you are providing, WHEN you are providing it and to some extent HOW you are providing the goods or services. Be careful not to get too hung up in the details and then end up with a set of T’s and C’s running to several pages of logistics and expectations. It’s always a balance between clarity and trying to deal with likely outcomes ahead of them arising, with being sensible and having a document that you understand and actually works for both of you.
3. Be explicit about deposits and cancellations.
One of the most problematic areas if your client contract is silent on this issue. Define the deposit or booking fee and why you might make it non-refundable – for example because it secures the date of your delivery, and what it covers otherwise. What happens if you cancel? What happens if the customer changes their mind? These two things are different and should have different consequences. Be clear.
Whatever cancellation provisions you have, they need to be tied into your payment schedule or time line. Do not find yourself in a position where your client cancels and you still need to extract some payment from them as a cancellation fee or penalty …you will soon know the meaning of the expression ‘blood from the proverbial stone….’
4. Limiting your liability.
Yes you can, but do not attempt a blanket clause that makes you responsible for nothing, ever, anywhere…. There are statutory provisions and case law that make such clauses ‘unfair’ and thus unenforceable. You cannot limit your liability for causing death or serious injury – that’s in part why public liability insurance exists – but you may be able to limit your exposure for causing loss when you ‘cock it up’. This is obviously not a legal expression, but it means you can limit your liability when you are in breach of contract or negligent. Take advice about this. You can also legally exclude your responsibility for some specific types of loss – like loss of profits. Make sure you understand your exposure and have appropriate insurance cover to protect you.
5. Getting paid – probably for most of us the most important clause in the contract!
I like to get paid when I’ve done my job…otherwise we could all be busy and make no money (not the definition of a business the last time I looked…) Your terms need to be clear on when you will invoice, when your invoice is due to be paid, how you are paid, and what happens if you are paid late, or not at all. Can you ask to be paid in advance? Commercial Interest can accrue on late payments – check the rates that currently apply – and you may also add administration fees to deal with late payers. All this needs to be in the contract. And if you do nothing else, be sure to have a clause which entitles you to stop work if payment is not made or is delayed – sounds like a no brainer, but it actually isn’t!