5 Clauses You’ll Be Thankful To Have in Your Contract
When you’re agreeing to buy goods or perform services, it is important to have a solid written contract that accounts for everyone’s roles and responsibilities, as well as what is going to happen if something doesn’t work out. But contracts are not only about enforcement. Contracts can serve as a great guide for how a transactional relationship is going to work. Below are a few clauses you can be thankful for so everyone involved is on the same page (oh boy – a contract pun!).
Clause #1 You’ll be Thankful For: A Comprehensive Scope of Services
The scope of services should detail exactly what services or goods will be provided to clients and how that work will be performed. We recommend being as specific as possible with what is included in the price you’re charging under the contract, such as a specific amount of revisions, etc. Additionally, you can list items that are not included in the services. These can also help avoid scope creep, explained in the scenario below.
Scenario: Say a soap company asks you to write a blog for their company website all about their soaps. But then, they ask for another blog or keep sending you more revisions to the blog. Maybe they ask for some social content for their Instagram or Tik Tok, or some photos to add to the blog. This is scope creep. You were contracted to write a blog and that was what you charged them for, but then the company asks for a little more here and there until you realize you’ve been doing much more than the agreed-upon work. You’ll be thankful for a clause in your contract that accounts for a specific amount of revisions, and provides a process or additional fees (explained below) in the event they’re asking more than the original scope.
Clause #2 You’ll be Thankful For: A Clear Modification Process
Include a clause that outlines your official process for adding or changing the services you will be providing and when additional costs may apply. (This section can also help prevent the client from engaging in the “scope creep” explained above.) One option in a modification clause would be to require the change to be in writing and signed by both parties before it officially goes into effect.
Scenario: You agree to build a sunshine yellow playhouse for a homeowner’s kids. Halfway through the build-out – but before you’ve purchased paint – the homeowner learns that her kids actually despise yellow and want it to be robin’s egg blue. Sure, you say. But you’ll be thankful to have a clear clause explaining how to change this in her order so that when you do paint it that gorgeous blue, they can’t come back and say you were supposed to paint it yellow and you’re in breach of the original agreement. It will also be helpful if the clause requires consent by both parties if they try to change the color AFTER you bought the paint and you don’t want to agree to change the color without additional cost.
(Also, note that home improvement contracts require specific terms for modification by Pennsylvania law.) And, be sure to check out our contract amendment/addendum for sale in the template library. The template actually contains TWO documents: a contract amendment, which should be used when you are making changes to an existing contract, and a contract addendum, which is to be used when you are making additions to an existing contract.
Clause #3 You’ll be Thankful for: Solid Termination Language
Both parties are usually happy to work together so when you enter into a contract, ending it is often the last thing on your mind. But, things happen. Sometimes the relationship isn’t working out, the work isn’t what you thought it would be, or even something major happens that keeps you from being able to hold up your end of the bargain. A termination clause explains how, when, and the procedure surrounding a contract’s end. You’ll be thankful for a clause that gives you a way out without putting you out, that is, having clear terms that make sense for your specific relationship and don’t cost you too much time or money. Avoiding boilerplate termination language – or standard terms you found in another unrelated agreement – that won’t fit your specific scenario is important. You want to really think through every situation, such as what may need to be provided if work is incomplete or expenses have already been accrued, and make sure the process covers each scenario.
(As a side, you also want to make sure that your contract accounts for the termination in the event of a force majeure event, or unforeseen circumstances, such as a government shutdown (see our COVID-19 blog) or flood or fire.)
Scenario: You’ve been working on editing a video for a client using the raw footage that they provide. The raw footage is very low quality and hard to work with even after asking them for better options repeatedly. You decide it’s best to terminate the contract. When looking at your contract, you aren’t sure if this is enough to constitute a breach of the agreement. Luckily, your termination clause allows for ten days' written notice for any reason. The contract may require you to use the ten days to send them what you have so far, and hopefully, they will still have to pay you for your work done to that point but will give you a way to terminate the relationship even though the project isn’t complete.
Clause #4 You’ll be Thankful For: Detailed Compensation and Payment Terms
Everybody wants to get paid for the work they do. You’ll be thankful for a solid compensation clause that contains details surrounding how much your services will cost, how you will be paid, and what constitutes any additional costs. You will also be thankful for a clear schedule surrounding when payments are due if any fees are non-refundable, what happens when payment is not made on time, and how refunds will be issued upon early termination. (See our Free Resource Client Contracts 101 to learn more about late fees and structuring fees.)
An important note, courts have been hesitant to enforce contract language around non-refundable fees when the work involved so far has been minimal. Non-refundable deposits or retainers can often account for saving dates and saying no to other opportunities, but an outright non-refundable payment-in-full for an event that's years out may not be one a court will be quick to allow.
Scenario: Say you’re a wedding planner and a couple reserves a date for your planning services leading up to and on the date of their event. It makes sense to have a payment schedule in place for this situation that includes a deposit (to reserve the date) as well as payment along the way that accounts for the work you’re doing as the date arises. The deposit could be non-refundable as you’re using that money to reserve the date, turn down other prospective couples, and start on wedding plans, but the other payments may follow a different plan depending on the work you’ve done so far. (Check out our wedding bells blog post for wedding-related business’ legal considerations!)
(Also, be sure to check out our event planner contract template for sale in the template library.)
Clause #5 You’ll be Thankful for: Who Owns What IP?
When you’re agreeing to do any kind of original work, you want to address who is going to have the official ownership of the creative that arises from this work, and all the pieces and parts associated with it. That’s intellectual property. You’ll be thankful for solid terms that account for each component of a project, and the work that makes up the complete project. Depending on the type of contract, you may want to account for any rules surrounding the use of that intellectual property, such as whether you’re transferring ownership completely or just providing permission to use it, and whether there are any limitations on that use, such as the ability to sell ownership to another, modify the work, or use it for other purposes. (Check out the free Intellectual Property Toolbox available for download in the Resource Library.)
Scenario: Imagine you are a world-class beekeeper who’s contracted with a design company to build out your website. As part of the project, they’ve come to photograph your hives and they’ve taken some breathtaking images of your busy bees just as the sun sets over your field. You want to use these photos on some of your jars of honey and any other advertisements. Maybe even photoshop them a bit or make them into a logo of sorts. Luckily, your web design contract explains that anything on the website that the company builds for you, including creative designs and photography, belongs to you, and you have the right to manipulate them however you want (also known as derivative works). That’s a best-case scenario – they’ve released all intellectual property just for you! As an alternative, your contract might explain that the complete design is yours but any components, including photography, and source code, that they’ve used on the site is the company’s. In this second scenario, you’d need to contract with them separately (and probably pay them a little more) for the permission, rights, or ownership (see our maker’s blog that covers licensing agreements vs. releases ) to use those gorgeous sunset shots somewhere else (and to manipulate them if you’d like).
Note: Intellectual property is a COMPLICATED area of law, so it can be worth spending the money on a lawyer to help guide you.
If you want to get started on your own contract for services, check out the Trellis Template Library for a Client Contract Template. Each contract is attorney drafted, utilizes these important terms, and others, and can be customized to fit your business needs!
DISCLAIMER: This blog post is meant for informational purposes only and does not constitute specific legal advice or create an attorney-client relationship. Readers should discuss their specific situation with an attorney.