Business Law Breakdown: Services and Deliverables Contracts

 

If you own a business, it’s highly likely that you’re going to hire someone to do something for you at some point. Maybe you’re a person or a company that provides services and deliverables to others. In either case, you should have a written contract. I would like to talk about some things that should be in these contracts.

Define Expectations

The first thing to consider is the basics. Does the contract describe the deliverables and services, how much they will cost, and when everybody will get paid? Services and deliverables should be described with a sufficient amount of detail to reflect the parties’ expectations. Everyone will be unhappy if a party does not get what they expect.

Define these expectations, write them down and put them in the contract. Make sure that the contract has provisions about what will happen if the deliverables or services do not conform to expectations. How will these nonconforming items be addressed, and when? Consider putting milestones in the agreement to define when the different components will be delivered—and you might want to tie payment to these milestones too.

Determine Ownership

Another big issue is ownership. The contract should define who is the owner of the deliverables and how they can be used by the service provider for other projects and other clients. If you pay for it, you probably expect to own it, however the contract should specify these terms. The more technical the work performed, the bigger this issue becomes. The agreement should specify what information is confidential, and how this information can be used by the parties.

Depending on the nature of the services performed, the contract might also need to address non-competition and non-solicitation of customers and employees. The non-solicitation issue goes both ways. As a service provider, you may not want your clients poaching your best people.

Provide Terms for Dispute Resolution

Lastly, contracts should have provisions for how disputes will be resolved, what venue they should be resolved in, and what law should be applied. Sometimes the parties will want to try to resolve disputes through mediation or arbitration before they have to go to court, but you have to decide what works for your business.

Contracts are important. They define your obligations, but they can also limit your risk if done right. Having good legal counsel can be invaluable. We can help you understand what you’re getting into or help define everyone’s obligations so that expectations are met. There’s no substitute for experience.

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