Make the Most of Your Contract Templates
By Nina L. Kaufman, Esq

"Marguerite" owns a web design and online branding company. When a client comes to her, she agonizes over what to include in the proposal. She wants the proposal to reflect her unique approach to the design work she may be hired to do…so she wrestles with every word and struggles with what to charge. As a result, she spends an inordinate amount of time personalizing every agreement. It can also take her over a week to get the agreement to her potential client. "Martha" owns a web design and online branding company as well. By contrast, she opens her "*.dot" (or "*,dotx") Word template file. She fills in the client contact information, specifications of the services she will provide, fills in the blanks for the payment amounts, saves the agreement to a new file, and emails it to the client within 24 hours. The result: Martha saves hours of time and closes a lot more business because she can "strike while the iron is hot." What made the difference? Martha has a standard, or template, agreement for working with her clients. Marguerite does not.

Contract templates do more than just save time and enhance your productivity. They help you think clearly about the services you offer and what you charge for each service. They communicate your "standard operating procedures" to your client about how you expect the relationship to work…and what happens if it doesn't. With contract templates, you can work on multiple projects or change project specs for clients without having to sign multiple multi-page agreements. When it comes to the basic terms that you don't (or won't) want to change from project to project, a standard agreement lets you "set them and forget them."

Here are some of the most popular provisions that entrepreneurs include in their agreements:

  1. Services and payment terms. Yes, these may vary somewhat from client to client, but how you present them needn't. For example, Martha knew that she would handle website development in three phases. She outlined what she would do (e.g., "provide two designs for home page") and the information she needed the client to provide for each phase. She also had the outline for payment terms included so that all she had to do was fill in the dollar amount she would charge the client for each phase or milestone. Similarly, you can set the hourly rates for different kinds of services offered.

  2. Penalties for late payments. While the amount you charge each client may differ, how you handle non-payment situations should not. You have a couple of options at your disposal. You can charge a late fee (usually calculated as a percentage of the outstanding amount). You could charge interest on the outstanding balance (which is ongoing). Either way, if you want to go this route, make sure you include it in your agreement, as courts generally will not grant it to you if you have to sue. The same applies to having your attorneys' fees repaid if you have to collect.

  3. Right to stop work. This is another way to stop the bleeding. If you're not paid timely, it states you have the right to discontinue providing services (or shipping goods) until you're paid. However, this kind of provision must be in writing; otherwise (adding insult to injury) you run the risk that you could be blamed for instigating the problems by stopping work…instead of the fault resting with the slow (or non) paying client.

  4. Dispute resolution. The "where will we duke it out, if it comes to that?" details can provide you with enormous leverage…or become a huge obstacle. Especially if you work with out-of-town (or out-of-state, or overseas) clients. You want to be able to bring your claim to the courthouse or tribunal geographically closest to you. "Berenice" (in Boston) did some consulting work for a Fortune 500 company. They stiffed her for $20,000. Without her own standard agreement, the company selected Boulder as the place for resolving disputes. As a result, Berenice had to (mentally) deduct her travel expenses and costs from whatever she could possibly win (and litigation rarely means 100% recovery) in evaluating whether to sue. In the end, and despite the big hit, the claim wasn't cost-effective to pursue.

  5. Intellectual property. If it's in the nature of your work, you may be providing multiple ideas, plans, sketches, or designs to a client. Often, the client will choose the idea, plan, sketch, or design he likes best. What happens to the ideas not chosen? Who owns them, or has the right to use them? For the ideas, plans, sketches, and designs that the client does choose, are you prepared to turn over all of your intellectual property rights to him? Even before you are paid in full?

To have a smoothly functioning business, you want to handle your clients - and client agreements - consistently. Make sure a business attorney lends a practiced eye to reviewing your standard terms so that you are properly protected. Then you'll know you'll be able to make the most of your contract templates!

© 2004-2009 Ask The Business Lawyer LLC. Nina L. Kaufman, Esq., is a business attorney and the President of Ask The Business Lawyer LLC, which offers easy-to-understand business law resources that protect small businesses and save them money. To learn more, and receive our FREE "LexAppeal" ezine, visit www.WiseCounselPress.com or contact Wise@AskTheBusinessLawyer.com. This article is for your general information only and is not intended to substitute for the specific advice of legal counsel.

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