Many disputes between businesses are caused because the parties involved did not use proper written contracts when doing business. This is understandable, as many companies don’t want to use overly long or complex contracts for fear of scaring away customers. But a good contract does not need to be long or full of legal jargon. As long as it addresses some key issues, it can be short, sweet and give both parties the certainty and protection they need. The following are 5 key issues to consider in your customer contract:
- Payment Terms and Pricing. This may sound obvious but many companies overlook the importance of being very clear about how much is being charged for a product or service, instead using language like “as quoted” or “to be agreed-upon”. The importance of being clear and specific about pricing can’t be overstated. By clearly getting it in writing, you are ensuring that there is no ambiguity if the price is disputed by the other side and the contract ends up in front of a judge.
- Products/Services to be Provided and Timelines. Many disputes revolve around arguments as to what was promised in a contract, and when it was supposed to be provided. This can be easily avoided by specifying in as much detail as possible what the contract is for, and where something is to be provided in stages or regular intervals, be clear about what is to be provided at each stage.
- Term and Termination. If the contract relates to an ongoing relationship between the parties it is important to be very clear about what rights each party has to end the agreement, how much notice they have to give the other side, and how the liabilities resulting from termination (if any) will be shared between the parties. For instance, what happens if part of the purchase price hasn’t been paid, but the products have been delivered? A good contract will foresee these issues, and get the parties to agree on a procedure for addressing them, again, limiting the potential for disputes down the road.
- Confidentiality and Company Property. In many contracts the client is given access to information that is proprietary or confidential. In such cases, it is important to have strong confidentiality and ownership provisions to ensure that any party to whom confidential or proprietary information is disclosed does not go out disclose it to a third party or use it for their own purposes. This is particularly important when a company’s value is closely related to their intellectual property, such as software or technology companies.
- Dispute Resolution and Governing Law. In some cases disputes are unavoidable. For this reason, a good contract will include a dispute resolution clause setting out how the parties will resolve any dispute that arises between them. There are many options to choose from, such as negotiation, mediation, arbitration, small claims court, provincial court or some combination thereof. A governing law clause provides even greater certainty, by determining in advance where disputes will be resolved when they arise. This is especially important when doing business in another province or country, as trying to pursue companies in foreign courts can be costly and in some cases practically impossible.
These provisions are useful to include in nearly every customer contract, but there are many other provisions that may be useful or necessary depending on the circumstances. A good lawyer will balance the legal protection that you require from your contract with the realities of your industry and the appetite that your customers have for entering into such contracts.
If you are in need a contract for your customers, call HazloLaw today.
This article is for informational purposes only and does not constitute legal advice. If you wish to discuss your issue with a lawyer, contact Martin today. 613-747-2459 ext.308, [email protected]