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Essential Contract Clauses for Service Based Companies - Part 2

Episode 8: Essential Contract Clauses for Service Based Companies - Part 2


This is Part 2 of our discussion last week on the essential contract clauses for any service-based company. Last week we talked about the Entire Agreement Clause, Description ofServicesClause, Venue and Jurisdiction Clause, Severability Clause, Transfer Clause, Billing StructureClause. Today we’re adding onto that with a few more essential clauses. Let's do this!!

In this episode we talked about:

  • Going over the Intellectual Property Clause, the Counterparts and Facsimile Signature Clause, Communication Clause, an Indemnity Clause, Arbitration Clause, Canceling and Rescheduling Clauses, and a Force Majure Clause.
  • Intellectual Property Clause: In this clause, you need to clarify the rights to your intellectual property, and you need to explain that the intellectual property is owned by you.
  • CounterpartsClause: States something that makes it clear that the agreement may be executed in any number of counterparts. Meaning that each part is a duplicate of the original. A Facsimile Signature Clause is typically included in a Counterparts Clause. Making it a Dual Clause altogether.
  • Facsimile Signature Clause: An electronic signature of one or both parties are still valid and makes the contract still the original version, even if it's not hand signed.
  • Communication Clause: States the expectation of your work ours and the time responses are made. This clause could state your office hours, your typical response times for emails and it could inform your clients that you answer primarily through email and not through text.
  • Indemnity Clause: Some type of contractual transfer of risk between the two parties that are contracting together, and it usually prevents loss or compensates one of the parties for any loss which may occur as a result of you participating in a certain event.
  • Arbitration Clause: A clause that allows the settle of any type of dispute before a lawsuit occurs.
  • Canceling and Rescheduling Clauses: Lays out the canceling and rescheduling procedures. “The time that your clients must inform you of cancellation or any type of scheduling change in order to get their deposit or a retainer back and do not have to pay the entire fee."
  • Force Majure (Act of God or Limitations of Liability Clause): If something of superior strength happens in the world, you are not liable under your contract for performing your obligations, until the act of God is resolved. This clause is also two-sided, meaning the client also isn’t responsible for their obligation until the act of God is resolved.

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

<3:04> “remember that a copyright in general is a legal right, which exists in the United States that grants the creator of a type of an original work, the exclusive rights to determine whether and under what conditions that work would be able to be used by others.”

<3:31> “So photographers, when you snap a photo, you own that copyright. The minute you compose the shot and click the shutter videographers, same thing. The minute that you press record and you're recording it onto your memory disk, you own the copyright to that. And designer, same thing. The minute you start designing something, whether that's a graphic design, whether that is a calligraphy design, an invitation suite, anything like that, you would own the copyrights to that.”

<6:07> “Counterpart clauses are useful when all parties want that assurance that each copy of the agreement is treated as the original.”

<9:51> “…you're sitting back, you're having Margaritas with your girlfriends on a Friday night and you get that ominous text from a client and previously for the past year you probably would've responded back because you want to be that really awesome business owner, but you can feel good knowing that you can set that phone aside and not have to text that client back because you have made it clear from the beginning of your relationship that you do not answer communications after your office hours and that you will respond to them when you're back in the office.”

<12:15> “It also just really explains who's liable for who, when are they liable, and it just commits that compensation of transferring any harm or liability or loss arising out of the contract all together.”

<12:29> “I also think an indemnity clause is really, really important if you're providing services as an independent contractor to others. So all of you are copywriters, editors, virtual assistants out there listening, really anyone you guys out there, a coach, something like that. You want to have an indemnity clause in your contract because it's a promise that you make to be hired and then you accept the risk of loss or damage that you may suffer as a result of your work.”

<14:55> “It will save you thousands down the line if you potentially get into a situation where somebody could file suit against you or you file suit against somebody else and instead you will go arbitrate it with a third party arbitrator instead to resolve it.”

<17:46> “I just always suggest we'd be better business owners and we give some grace period for our customers. Life happens, things happen and rescheduling happens all the time in the wedding industry world and also just in the online world when we're doing any type of work with our clients.”

<19:51> “…and this coincides with that transfer clause because if an act of God were to happen and you might have to transfer something, you're not liable and then the transfer clause says that you just need to inform your client of whomever is going to take your place and they need to agree to it.”


Links Mentioned On Our Show:

TLP's Contract Clauses Checklist
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