Episode 7: Essential Contract Clauses for Service Based Companies - Part 1

Friends! This is one of my favorite things to talk about… contract clauses! Haha, I’m sure you’re not as excited as I am, but I promise you that once you listen in to these episodes you’ll be much happier than before and a smarter business owner because I’ll easily explain the most important clauses you need in your service contract and why they’re important to have. I’m also going to break this episode up into a two-part episode series. Today is part 1 and next week will be part 2, because I’m not about “the overwhelm” and want you to have some time to digest the first set of clauses that I am going to talk about today before we jump into the next set. So, TUNE in NOW for part 1 and make sure you also listen to part 2 coming up next week! (Psssst.. link to your free contract clause checklist is down below in links mentioned in our show! xo)

In this episode we talked about:

• The mention of the Entire Agreement Clause (The “Biggie”), Description of Services Clause, Venue and Jurisdiction Clause, Severability Clause, Transfer Clause, Billing Structure Clause, Intellectual Property Clause, Counterparts and Facsimile Signature Clause, Communication Clause, Indemnity Clause, Arbitration Clause, A Cancelation and Rescheduling Clause, and a Force Majeure Clause.

• The importance of having an Entire Agreement Clause to every contract.

• Description of Services Clause: Provides details about the work that is going to be done or the services that are going to be provided and then the result that should be expected from your client.

• Venue and Jurisdiction Clause: States where a legal dispute should be resolved if one were to come up.

• Severability Clause: If one of your clauses in your contract is found to be invalid, that the remainder of your contract stays intact.

• Transfer Clause: Allows your client to have a say in who you transfer your obligations to if any situation were to arise and vice versa.

• Billing Structure Clause (“Fee Structure Clause”): Lays out all of the fees, ongoing rates, whether you bill by the hour or by the project, if there is a deposit or retainer (I mention the difference between deposit and retainer), how many of their payments they have when those payments are due, what happens if you have a late payment, how often are you going to get charged a late fee and then what services they are actually paying for, and more!

Here’s a few quotes that we thought were awesome:

<4:23> “…It’s very very important for every contract to have, because it’s stating that everything is in the contract, the four corners of the contract control the relationship between you and your client.”

<9:18> “I think you need to list out exactly what the general description of your services is to your clients so they can refer to that in your contract and you can inform them like these are the big things that I am agreeing to delivering for you as a service provider under your contract.”

<9:27> “You don't want to like be hauled into court in New York City and have to deal with all of the legalities and costs of getting out there so you need this in your contract because you definitely don't want your client to potentially sue you in a different state.”

<12:29> “Just remember the word sever. It won't sever the entire contract as a whole it we'll just put one clause as invalid and the rest of the contract is still valid.”

<16:05> “You cannot transfer your obligations under the contract to another professional. You can't transfer your payments to another person without both parties in agreeance there.”

<17:26> “The more information you give, the less likely there is to be a dispute related to the fees or their payments at any time in the future.”

Links Mentioned On Our Show:

TLP's Contract Clause Checklist