6 Killer Phrases to Include in any One Page Business Contract
It is tempting to write your own contract without consulting an attorney when starting your own company. I do this all the time either because there is no time or no margin to involve any attorney into the process.
There are several reasons to keep an attorney away from those first contracts:
- The money spent for attorney fees are better spent building value in the company
- If you have nothing, there is nothing you need to protect (!)
Contracts have a different importance in different parts of the world and you will always have to weigh the risks against the benefits.
I’m a big fan of the so-called One Page Business Contracts, which is simply one page in a plain language that both parties understand and that can easily be read and altered without legal assistance.
There are 6 phrases I will always include in my One Page Business Contracts:
1. Stupidity from Your Customer
Customer’s representatives will have the necessary skill, expertise, experience and employment permits, will act professionally and in due time with reasonable skill and care.
By including this sentence, your customer guarantees that you will not have to waste time working with stupid people who will delay the project or to whom you have to teach the basic skills.
2. Changes in the Project Specification or Missing Payment
It is expected that the project will be completed by 1st January 2012. This assumption is based on no significant new information becoming available during the work on the project and that the payments are processed according to the payment milestones in this project.
The client often changes project specifications without expecting the deadlines to change accordingly. This phrase will both protect you against changes in the project specification and lack of punctual payments.
3. Increase Price with Project Changes
This price is based on no significant changes in the project description.
Rarely will any project be executed according to the plan and with unchanged specifications. This phrase lets you increase the price with any changes in the project regardless of whether or not it involves additional work.
4. Wipe all previous communication away
This agreement replaces the provisions of any other communications between the Customer and Vendor relating to this project.
In sales situations, promises will be added which do not necessarily comply with the project or product that the customer is purchasing. It is therefore important to wipe any previous communication regarding the project in the contract.
5. Deem the Invoice Accurate
Invoices shall be deemed accurate, if not disputed within 90 days of invoice date.
Some clients just refuse to pay the last invoice as the project is completed and, after months, they are getting back to you arguing that something is wrong with the invoice.
By deeming the invoice correct, if not disputed after a specific period of time, it will give you a much easier job and it will actually enforce debt collection in many countries.
6. Limit the Risk
Client agrees that the maximum aggregate liability for Vendor in no event shall exceed the total amount paid by the client for the project
This will limit your risk against liabilities for more than what the client actually paid you for the job. Makes a lot of sense and will effectively stop any claim that you will have to cover lost revenue of Millions of Dollars for a 100 Dollar job.
As Is – No Warranty
The tips in this article are provided As Is and with no warranty or liability. I’m not a trained attorney or have any other legal background.
The phrases suggested in this article are based on my own experience reading and signing hundreds of contracts across several parts of the world.
Do you have any Killer Phrases that you use in your contracts? Use the form below to let us all know about them.
Image courtesy of Flickr user smlp.co.uk.