Contracts and Terms and Conditions
Tuesday, January 30, 2007 8:50:24 AM (GMT Standard Time, UTC+00:00)
IIRC as a new business you’re legally entitled to 30 minutes of a solicitor’s time which you should take advantage of. Sadly 30 minutes won’t last very long so prepare a set of your most important questions first. It depends on your local Chamber of Commerce, but when we were a member of the Birmingham Chamber of Commerce, they used to offer you low level legal support as part of your membership.
Although it may seem a large expense when you’re starting out, I really would recommend getting some form of T&Cs drawn up. Spending a couple of hundred pounds at this early stage is likely to save you a lot of hassle later down the road. It’s also an idea to have a coversheet written up that can accompany the T&Cs which has a few blanks you can fill in. We’ve called this our “Agreement for the provision of service” and it reads along the lines of:
Agreement for the provision of services
This agreement made and entered by and between [YOUR COMPANY NAME] (hereinafter referred to as “The Supplier”) and [CLIENT'S NAME], whose principal place of business is [THE CLIENT'S ADDRESS] (hereinafter referred to as “The Client”)
The Supplier agrees to provide [LIST OF SERVICES] services as outlined within the proposal dated [DATE OF DETAILED PROPOSAL].
The Client agrees to pay The Supplier [DEPOSIT AS A PERCENTAGE]% (£[DEPOSIT AS A FIGURE]) of the total project costs on the completion of this agreement followed by [NUMBER OF PAYMANTS AS A FIGURE] ([NUMBER OF PAYMENTS IN WORDS]) additional monthly payments of £[MONTHLY PAYMENT AS NUMBER] from [START DATE] totalling £[TOTAL PAYMENTS AMOUNT IN NUMBERS] ([TOTAL PAYMENT AMOUNT IN WORDS]).
The Client agrees to the total project costs of £[TOTAL PROJECT COSTS AS A FIGURE] ([TOTAL PROJECT COSTS AS WORDS])
The Client is aware and agrees that additional services beyond the original specification may be subject to additional charges. Any additional charges will be confirmed in writing by The Supplier before being undertaken.
The Client also agrees that The Supplier will offer on-going support, maintenance and monthly reporting for a combined total of [DETAILS OF THE SLA] from [START OF SLA] for a monthly payment of £[MONTHLY PAYMENT AMOUNT] until instructed otherwise.
On completion, The Supplier will supply The Client with relevant timesheets for the development work if requested.
In accordance with our Terms and Conditions, Value added Tax, where applicable, will be added at the appropriate rate to the total of all charges shown on the Client’s bill.
We agree to the Terms and Conditions of The Supplier
IMHO you can write these yourself as they’re more just a summary of what you’ll be doing for the client in plain English so there’s no argument. I would state the total amount you’re charging –both in numbers and words, any time frames and additional services i.e. hosting.
Make sure you have the client sign two copies of your coversheet before you start any work for the client, you then sign and return one copy for the client’s records. The other, make sure you store somewhere safe (just incase!). I’ve not found clients object to signing T&Cs before work starts as it protects both the user and the client but I have found the coversheet helps clarify things for everyone.
There are a lot of contracts available for you to download online if you don't want to write your own or can't afford to have them written for you.
If you’re setting up with more than one person –especially if they’re a friend or loved one writing some form of contract between the two of you is incredibly important. Not wanting to sound negative but you never know what stresses and strains may be put on you and what effect they may have.
When forming the contract, if you’re going to do it yourself, make sure you overview the financials very carefully, at the very least I would cover the following:
- Any investments including details about who invested what, how long the investment will be for, any conditions associated with the investment and clear details on the repayment(s) of the investment.
- Profit share, I would suggest including information about percentages if possible (even if you’re planning on a 50-50 split).
- Liabilities and ownership–this is something that will come with time but it would be a good idea to overview everyone’s roles within the company. I wouldn’t encourage a blame culture but associating responsibility is important.
- Decision making. At times you will be required to make important decisions on a company basis, this is easy if you’re a sole trader but if there’s more than one person, how will you decide what to do should there be a split? Will you bring in a mediator to make the final decision or will you toss a coin?
At the end of the day, as John was getting at, no matter what the current the relations are between the company’s partners it’s best to be as explicit as possible to avoid any disagreement later.
A great point and well put. When you set out, scream and shout about the fact; let everyone know what you’re doing –and don’t forget to tell all your friends and family too. If you’re lucky, they’ll know someone who needs your service and will recommend you (or mention the fact allowing you to follow it up). The best business* we’ve had in the past has always come from recommendation.
*“Best” isn’t always quantified by the cheque at the end of the job