Any agreement, whether itÆs written or verbal, can be considered a legally-binding contract. A lot of business is carried out over a handshake and verbal understanding of what each party is supposed to do. Generally, this understanding may be somewhat formalized by a letter confirming what you will do, by when, and how much the client will have to pay for these services. However, there are a lot of things that go unsaid, and these issues can cause misunderstandings and problems between you and your client. You have to consider these items, and the important ones have to be addressed in your Standard Terms of Agreement.
The best source of help is a lawyer. Although this is an expense, itÆs important that these ôunderstandingsö be written from your perspective; otherwise youÆll be accepting your clientÆs position --- which generally is in his/her favor, and definitely not yours. Another source of information is Standard Terms of Agreement from other companies. Reviewing these will give you an idea of the different things to consider, how different companies structure the phraseology to their benefit, as well as the different ways different companies handle some of these issues.
Some of the issues to consider include:
Basis of Charges
ò Are you charging a flat fee, or costs plus a fee, or time and expenses? ò How will you charge your time? Will it be by the hour, or on a per diem basis? ò Are there different rates for different individuals, or just a flat rate? ò How do you bill travel time? ò How do you bill expenses? ò How do you charge for special services, like the use of specialized lab equipment? ò Are State and Local taxes included in the quotation, or are they billed in addition to the quoted price?
ò Is the project to be billed on a regular cycle, like bi-weekly or monthly, or is there a defined schedule of payments? ò Is payment due on receipt, or after some period of time like 15 or 30 days? ò Is there a discount for early payment, or a penalty for late payment? ò Who is responsible for payment when the invoice is to be addressed to a third party?
ò Do you require a retainer? ò What is your definition of a retainer? ò What does the client get for the retainer? ò Is it actually a retainer or a deposit?
Confidential Treatment of Information
ò What is your definition of confidentiality? ò What is considered confidential or proprietary information? ò What is your time limitation on maintaining confidential information? ò What about your proprietary and confidential information to which your client may have access? ò How would press releases be handled? Will you have any control? ò Under what conditions may confidentiality be breached that is considered not to be under your control?
Patent & Intellectual Property Rights
ò To whom will the rights of innovative ideas be awarded? ò Who owns the computer program developed during the project? ò Who can publish the data?
Data and Document Retention
ò Who is responsible for maintaining the data, notebooks, reports, etc. after the project is completed? ò If you, when and under what conditions can you dispose of the project documentation? ò What are the costs and charges associated with maintaining the documentation? ò After the project is completed, who is responsible for costs associated with requests for the production of documents, subpoenas, depositions and other demands for information regarding the completed project and its documentation?
Liability and Indemnification
ò Who is liable for property damage, or injury or death during the performance of contract? ò What is the limit of your liability, or the clientÆs?
These and other issues need to be considered by you, and addressed in your Standard Terms of Agreement.
In the event that your client has his own Standard Terms of Agreement or has you sign a contract which stipulates to terms that differ from your position, it is your responsibility to address these issues up front --- preferably after being reviewed by your lawyer. DonÆt sweep these items under the rug, negotiate these issues to your best advantage, or you may pay dearly in the end.
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