Our previous post was all about your Client Service Agreement, and why you absolutely must have every client sign one, or else legal shenanigans might ensue. And while “shenanigans” is a fun-sounding word, trust us, you won’t be enjoying yourself when you are embroiled in a lawsuit or fighting with a client who won’t pay. Having a properly-written CSA is so much better than just talking to your client or relying on your statement of work, because a good CSA contains language that protects you in all sorts of ugly situations.
On today’s menu is boilerplate, the standard language in contracts that tends to stay the same, no matter what kind of contract it is. Boilerplate is all that stuff at the end of the contract that may seem like unnecessary legal jargon to the untrained eye, but—hark!—it’s actually very important. It covers things like what happens in the event that the parties to a contract have to litigate, which state’s laws apply, whether the prevailing party is awarded attorney’s fees, which court a lawsuit has to be filed in, whether the agreement can be edited or updated and how, and more. So there are a lot of things covered in the boilerplate that are super important. Don’t discount or overlook it, or else!
Here are a few common boilerplate provisions you might see in a contract:
- The Limitation on Liabilities Clause prevents the parties to the agreement from suing each other for additional, extra, and over the top damages. It limits overall damages to the amount paid under the contract (nice, huh?), except in certain circumstances. This may not be something you want to include in all contracts, but as a general rule it can protect both parties in your day-to-day service contracts.
- Recovery of Litigation Expenses (also known as the attorney’s fees clause which is easier to say but not nearly as impressive). The typical attorney’s fees clause allows the winning party of a lawsuit to recover their attorney’s fees and other costs incurred to bring the lawsuit to enforce the agreement.
- No Guarantees Clause stating that the service provider (that’s you, pretty thing) cannot guarantee a particular outcome.
- Confidentiality. (The Fight Club part of the contract.) This section protects both parties’ confidential information and prohibits public disclosure of the terms of the contract.
- Independent contractors. This here is your contract DTR. It establishes that you are not an employee of the client, that you are free to work with other clients offering similar services, that you remain in control of how the work will be conducted, and that you are not required to work set hours. Essentially, that you’re the boss of your own life.
- The No-Competition Clause prevents the service provider (you, again) from from performing services for its client’s clients and from hiring the client’s employees, consultants, contractors, or others who work for the client. The purpose of this is to make the client feel comfortable that the you won’t use information you learned in the transaction to become a competitor.
- Transfer of Intellectual Property. This section is mega important because it states how and under what circumstances the intellectual property is transferred from the service provider to the client. For example, if you are providing copywriting services for a client, upon final payment the ownership of the copy written on the client’s behalf would be transferred to the client, who has the right to use the copy in any way it chooses.
- Warranties. The pinky swear section. Warranties are just a promise or guarantee made in writing. This clause usually states that the parties have legal capacity to enter the agreement, that the service provider will provide the services in a professional, competent manner and that no intellectual property rights of third parties will be infringed.
- Entire Agreement; Modifications; and Waiver. This clause states that what is written in the contract is the entire agreement between the parties. That means that emails, conversations, and other statements made between the parties are not a part of the agreement. This section also requires that any modifications to the agreement be done in writing.
Now we don’t want to scare you…actually, yes, we do want to scare you: we know several small business owners, just like you, who created a world of deep doo-doo for themselves by not having signed agreements with their clients. One of our clients at our law firm will probably never get paid for work she did for an overseas customer who bailed on her. Another has been in litigation trying to get huge amounts of money she is owed by a customer. Another business owner called us because the designer he hired won’t hand over the work.
So make sure the boilerplate provisions are there. If you’re wondering if your Client Service Agreement is sufficient, be sure to talk with a small business lawyer.
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