How to create an “ironclad” services agreement

As a services provider, you’re building your business one client at a time, and every new client you land is a good thing. But many people who are in the business of providing services often neglect one important step when taking on work for a new client.

Immortalize each new client relationship in writing

In the rush of excitement and that sense of success you feel when a new client comes on board, putting together a services agreement — in writing — is often a task that’s put to the side. After all, you and your client have orally agreed to work together, and isn’t a handshake as good as putting it in writing?

Well, yes … and no.

Yes, in that a verbal contract is just as valid in the eyes of the law as a written contract. You and your client are both bound by what you’ve agreed to orally, and getting it all down in writing doesn’t make a difference when it comes to the enforceability of the agreement you have entered into with each other.

But the problem with an oral agreement, cemented by that handshake, is that it’s open to a ton of complications down the road if any potential conflicts arise between you and your client. Your client may not pay on time, violate one of the things you agreed on — many reasons can be named, but the idea is that in the end you may be left with damaged business and reputation looking for ways to deal with it.

The best way to cope with this problem? Protect both you and your client, and get your services contract in writing.

How does a services contract protect you?

Now, there’s definitely no guarantee that just because you have a written services contract in place, you’re in for a conflict-free ride with your client. And, while a contract means your agreement is enforceable in court, the legal reality is that no contract can be truly “ironclad.”

The value of a contract is that the terms and conditions of the parties’ business relationship are clearly set out and, if either party doesn’t do what they’re supposed to under those terms — in legalese, this is known as “breach of contract” — the other party is able to pursue a remedy in court.

When you’re bound by contract, then, strictly speaking, it doesn’t mean you can’t get out of the contract. What it does mean, though, is that you can’t do so without suffering the consequences of the breach. In other words, there is a cost — often a severe cost — when breaking free from contractual terms.

Making your services agreement “ironclad”

Keeping in mind that having a written contract in place doesn’t guarantee that either side won’t eventually break the contract, there are steps you can take to make the contract as “ironclad” as you possibly can.

How do you take this “ironclad” approach to creating contracts? Here are four tips:

1. Use templates as stepping stones

When utilizing a DIY approach to drafting contracts, you don’t have to reinvent the wheel. Begin with a template for the type of services you provide, and then customize that template so it reflects your specific circumstances.

For example, if you’re providing freelance services, begin your draft with an independent contractor agreement, but don’t just stop there. Add in everything that needs to be included, so your final agreement is customized to your exact needs.

2. Be as detailed as possible

Whether your contract is a specialized contract, such as a management services agreement, or you’re just putting together a general agreement for the provision of your services, this written contract will play an important role in outlining the parameters of your relationship with your client.

So, when issues come up, as they often do at one point or another during a business relationship, the contract is often the first place you will look to see who is responsible for what. And, because of this, the more detailed you are about all aspects of the relationship — the who, what, where, when and how of your agreement — the more effective your contract will be in reducing the potential for future conflict.

3. Put on your contingency-thinking hat

It’s true, no one enters into a new business relationship thinking about all the things that might go wrong. But, when it comes to drafting your services contract, it’s important to put some thought into all the possible contingencies that could arise.

You should be realistic, of course. If you’ll be providing your services through online channels only, for example, there’s no point in including provisions for the event of a postal strike or stoppage. On the other hand, if your agreement provides for payments by check, you might want to include alternate modes of payment, for those occasions (like postal issues) when the normal method of payment won’t get the money to you in time.

4. Be sure you do have a valid contract

Finally, your contract will do you no good if it actually isn’t valid. The good news is, unless the agreement you’re dealing with is particularly complicated, you don’t need to hire an attorney to draft the contract in order for it to be valid.

For a contract to be valid, there has to be an offer of something by one party, and an acceptance of that offer by the other party. This offer and acceptance, of course, is subject to any changes in terms that result from the parties’ negotiations.

Additionally, the parties have to exchange something of value, which also may be referred to as the “consideration.” This means that something that’s one-sided, such as a gift or a promise with nothing in return, wouldn’t qualify as a valid agreement, because there is no exchange taking place. But, as you can probably see, in most business situations, this requirement for the exchange of something of value will not pose any problems, as one of you is providing a service and the other is paying for that service.

Succeeding in a services business requires a number of things, with good client relationships being near the top of the list. Running your business can be a rocky process. You can make your journey toward success easier by creating clear and comprehensive services agreements with each new client you gain.

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