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The Importance of Having a Good Contract of Services

When we start as entrepreneurs, there are many things to think about, like marketing, rates, customers, create a website, etc.  However, there is an element that service providers always seem to forget: the contract of services.  I agree that your contract of services is not the thing that is the most fun to think about. Nonetheless, the contract of services is the basis of the relationship you will have with your customers.  <h3>What is the purpose of a contract of services?</h3> The contract of services is mostly used to manage the expectations of the parties who sign it. Let me explain. When you start a business relationship, it often comes with a lot of questions. <ul> <li> How will I get paid? </li> <li> What will the service delivery will look like? </li> <li> Can I leave this business relationship if I want to? </li> <li> What will happen if we have a dispute? </li> </ul> The contract of services allows you to write down everything and bring clarity to both parties involved in this business relationship. How much will it cost? The answer is in the contract. How can we resolve our disputes? The answer is in the contract. When will I receive the final version of what I asked? The answer to this question can also be in the contract.  <h3>Why is an email not enough?</h3> It is probably the most frequent question regarding the importance of having a good contract of services. The main issue with the use of emails to write down the terms of your business relationship is this one: because of the format of the email, many essential elements that should be in a contract of services are simply never addressed.  Let me give you a simple example. Have you ever taken the time to talk about the ways to end your agreement in your contract? Or the options to resolve any disputes? Probably not.  The email simply does not allow (at least in a natural way) to address all aspects that should be addressed to protect yourself adequately in your business relationships. <h3>What should include a contract of services?</h3> What you should include in your contract of services will depend on the type of service you provide. For example, a photographer who is specialized in weddings will not have the same concerns as a web programmer. There are, however, some rather universal elements.  1- A precise description of the service delivery Since the services you provide are the heart of your business relationship, it is essential to take the time to define the extent of them in your contract. You can also take the time to list the services that are not included in your offer, and that will be added to your customer as a supplement. This is particularly useful when you know that some tasks may seem included in your proposal when it is not the case (for example, infinite photo touch-ups).   2- The conduct of the service delivery The contract is an excellent tool to explain the way you work to your customers when you provide services. For example, if during the conduct you book a moment in your schedule each week to do a follow-up with your customers regarding the work progress, it could be extremely relevant to write it down in the contract. If your clients know what to expect at the beginning of the relationship, you will avoid many issues with them. 3- Your terms of payment It is not only essential to talk about your rates in your contract of services (the price you will get for your work), but also the way you will receive this money. What kind of payments do you accept? When your client must pay you? Before the service delivery? At the end? Both? Within the 30 days after receipt of your invoice? Talking about invoices, many entrepreneurs ask if they can add interest charges to their customers in the event of late payment. The answer is yes.  There are, however, a few rules to follow.  First, interest charges must be addressed in the contract of services signed by both parties (this is why it is important to have a good contract of services and not a simple email). Then, you must make sure that the annual interest charges, and not only the monthly fees, are clearly addressed in the contract. Finally, the interest charges to bill your customers must be reasonable and non-abusive. The annual rates we usually see are about 18% to 26% per year. 4- Intellectual property Intellectual property is a vital part that is often forgotten in a contract of services. Who is the owner of the intellectual property created during the mandate? There are many myths regarding intellectual property (especially regarding copyright). It is then necessary to remember that the service providers have the copyrights on the work they create for their customers unless there is a contrary mention in a contract signed by both parties. Take the time to explain these notions to your customers. What can they do with the created work? What can you do with your work? How long can your client use your work? It must be addressed with your client in order to avoid any confusion. 5- Termination of contract   If you or your client want to end your agreement, how will you do it? In which situations can you terminate this agreement? What will happen at the end of your accord? Must you give back some documents to your clients? Must they pay you some fees? It is better to address these questions at the beginning of your business relationship (when it is still good) than during a dispute. Do not forget that this list of elements is not exhaustive; however, I hope that it will guide you in writing or reviewing your contract of services. Please note that this blog article does not constitute formal legal advice, but instead legal information. If you have any questions on the contract of services or if you need any assistance in writing your contract, you can contact me on my <a href="https://artylaw.ca/contact-us-2/">website</a>, visit my <a href="https://artylaw.ca/blog/">blog</a> or send me an email at  info@artylaw.ca!

Aicha Tohry