What you need to know about contracts

If you consult, freelance, do work for hire or otherwise provide services, you should be using a contract.

Why use a contract

There are many reasons for two parties to enter into a professional services contract. The main reason would be to establish rules and parameters. Without a professional services contract, a venture might descend into disorganization or confusion. To avoid this, a professional services contract clearly defines all aspects of the work to be performed. Of course, the contract needs to be comprehensive in order to be effective.

What to include in a contract

  • A contract should include all the necessary information required for the performance of the services. This includes the names of all parties involved and duties to be performed. For example, a contract for cleaning an apartment could detail what specifically needs to be cleaned as well as what does not. This will avoid any confusion as to what specific services are to be provided.Also, the time frame for the completion of services should be detailed. This includes a commencement date and a time frame for completion. This ensures that the job is properly performed within a reasonable time frame. When the timeframe for completion is open ended the job itself may end up dragging on indefinitely. This can often undermine the quality of the job which is not desirable.
  • And, of course, the actual fee that will be paid should be defined along with the specific terms of payment. Detailing the time frame payment will be provided is helpful as well. Clearly, the person providing the services wants to be paid for the work performed. When payment issues are in dispute it is not uncommon for people walk off a job. That would obviously be a disastrous situation. Plus, even if payment issues are straightened out, bad will among the parties may remain. This can undermine the performance of the job and is not beneficial.
  • But, sometimes despite all the best efforts of both parties things just don’t work out. So, when the relationship falters, it may make more sense to terminate the contract. When two parties can not work together, despite communication attempts, it doesn’t make sense to continue the relationship. So, a services contract should also include criteria for dissolving the relationship if needed. Heck, you might want an escape clause like that, just in case you get sick or end up in the hospital.

A clear professional services contract explains all the job and relationship, leaving no room for error. It gets rid of ambiguity and makes it easier for people to understand roles and responsibilities.

Later this week, I’ll be talking about what you can do if you want out of a contract.

(By the way, I’m not a lawyer and this is not legal advice.)

Related to contracts

Comments are closed.