anatomy-contract

During my time working with clients I had to learn the hard way contracts are the most important piece of information in the client-consultant relationship. Of course it is important to build a rapport and choose the right client but when it comes to a contract both parties should be in agreement about what goes in the contract and what each part of a contract means.

I would like to cover the areas of a contract that I have found essential. If you are considering revising your current contract or do not know where to start then this article was written just for you. I recommend at the very least to include the following items.

  • Agreement parties
  • Statement of Work
  • Payment Terms
  • Default in Payment
  • Project changes/Revisions
  • Client Responsibility
  • Cancellation and Kill Fees
  • Permissions and Releases
  • Accreditation/Promotions
  • Assumed Services
  • Limitation of Liability
  • Rush Fee
  • Layout
  • Signature / Client Approval

Agreement parties
Make sure to state the name of both parties, the date, both business names and what the goal of the project is. Here is an example from the contracts I use:

This AGREEMENT is dated and in effect as of the [Date], between [Client] of [Business Name], hereafter referred to as “Client” and inPhocus Media, hereafter referred to as “Consultant”. This agreement is with respect to the design of [Business Name] website for [website name] hereinafter referred to as the “Work.” Whereas, Consultant is a professional web designer of good standing; Whereas, Client wishes Consultant to create certain Work described more fully herein; and Whereas, Consultant wishes to create such Work; Now, therefore, in consideration of the foregoing premises and the mutual covenants hereinafter set forth and other valuable considerations, the parties hereto agree as follows:

Statement of Work
In this section this is where you map out the scope of what. What is the actual service or product you will be providing and what is the defined work that will be completed. This area is important because if there are any discrepancies you will be held accountable and judged based on what the statement of work is. It helps to be thorough in this area, an example is “Manage the social media accounts for ABC Company, their twitter which is @abccompany and we plan to…”. Try to be as detailed as possible, being too vague leaves room for confusion.

Payment Terms
In another blog post I mention “an invoice is not a contract” I also mention that a contract is supposed to spell out the terms of payment and an invoice is a reminder that payment for the project is due. In this area write out everything that has to do with payment, total amount due, late fees, deposits, payment due date, transfer of rights upon payment and whatever else pertains to the situation finally.

Rush Fee
In the event that a client is asking for the work to be completed in a rush, then a rush fee would apply and you should notify the client first so they will not be surprised when they view it on the invoice. Also note it is the consultant’s duty to define what the term “rush” means. However long it takes you to complete a task if the client wants it in half the time, or they would like to be moved above all other work you have then that may be a reason for them to be charged a rush fee.

Default in Payment
There will be a time in which you may begin a project and someone cannot pay, this is not always for financial reasons. I recall I was building a website for a client and their grandfather. The client’s grandfather passed away and they really did not need the website, so what happens? In this area write out what takes place in the event that someone chooses not to pay. This section is a must if you are billing on a monthly fee or have setup a payment plan with your client.

Cancellation and Kill Fees
What happens if the client has to cancel and does not finish the project? Is the client entitled to a refund? Do you collect 50%? This is the area in which you make sure to write out the details of 2 areas: (1) who retains ownership of the project/work since it was not fully paid for (2) what fees are to be collected for the amount of work that has already been completed. You never want to go into an agreement without having discussed this because you will be disappointed to have completed work only to be canceled on and uncompensated.

Project changes/Revisions
The client will almost always have some type of feedback which will be slightly different from what was originally agreed upon. How do you plan to deal with these changes? I normally give clients 2 – 3 revisions so that they will only give focused revisions since they have a limited amount of changes. However you choose to handle changes you’ll definitely want to define this otherwise you may fall victim to the cycle of never-ending changes.

Client Responsibility
During the course of the project what is required of the client? Normally in the contacts I write I mention that the client is responsible for responding in a timely manner and any delays on their end may extend the project deadline. Take some time to think about the type of work you provide and how you plan to communicate with your clients is there any time during the process that the client will be fully responsible for?

Accreditation/Promotions
Not everyone will use this area but it is worth adding to the contract. I always include this area since I plan to show my previous work on my portfolio, design galleries, design publications or even enter them in web design contests. Even if you are not a designer it is important to include a statement that requests your client’s permission to use the work you produce for them for promotional purposes of your business. If you want to write up a case study in the future, then your contract should definitely include this statement.

Assumed Services
There are times when working with clients there will be somewhat of a gray area and they will assume you will provide certain services. For example it has been my experience with web design that clients assume website backups are completed on a monthly basis no matter what. In this area, write out those services that you are the client’s responsibility so that there are no assumptions which can lead to confusion later. No assumptions only facts.

Limitation of Liability
Most people see this in a contract and skip right over it. This is normally the area of a contract that written in ALL CAPS. It is not written in all caps because it is supposed to read while screaming, it is in all caps because of the importance of the statement. The whole contact is a legally binding document but this is the area in which you protect yourself . Think about what can be detrimental to your client if you were to breach the contact on your end. Would they lose income? Would their public image be ruined? Would they lose important data?

The goal of this section is to define a limit for what you are liable for. If you do not properly define your liabilities in a legal case someone may try to sue you for more than what you were actually responsible for.

Signature / Client Approval
The whole purpose of the contract is to get a signature from your client in order to solidify both parties agree to the terms outlined in the contract. In this area simply have an area for both parties to sign, the consultant (you) as well as the client including the date. There are many online resources that allow you to sign documents electronically a few of the one I recommend are:

Remember every contract is different and you are not limited to the areas that I discuss above, I just feel that at a minimum the area I discussed should be included in the contract or at the very least considered. Contract templates are available in the Freelance Jumpstart bundle, a step by step guide to freelancing for creatives.