Freelancers: 6 Nightmare Client Terms and Conditions You Must Spot
Although small businesses often have a far less formal way of working than larger ones, inevitably there will be clients who want to work with you under contract. Conversely, having a contract outline or handful of useful clauses yourself is a sensible idea.
The problem is often that while a contract in theory is good, often they are long and complex documents with terms and conditions that can have serious consequences for you as a small business.
With the above in mind, here are some key terms and conditions to look out for in client contracts. If any of these crop up in a contract you’re required to sign, be aware of the problems they could cause!
1. Payment? What Payment?
If a contract includes a clause that makes payment entirely dependent on ‘client satisfaction’ or that otherwise kicks payment into the long grass, it needs to be avoided at all costs.
While client satisfaction is a given goal for any small business, you need to arrange the contract to agree to stage work so that client satisfaction is achieved at various points throughout the project. More specifically, there needs to be a clause that ensures payment is made periodically as appropriate depending on the length and type of work, with the period and basis of payment (for example per hour, or per work segment) clearly stated.
If it’s going to be a very short contract, this may not be possible, in which case the key is to have a set of concrete final outcomes that both sides can agree constitute ‘client satisfaction’ and which, if completed, trigger payment.
2. Extra Work
If a contract contains any phrase such as ‘extra work may be required within the existing contract scope’ then watch out – you could be in for a lot more hours of work than you expected.
A good clause would set out clearly what is within the scope of the project (such as rectifying errors and a practical amount of revisions), and set out a process to agree additional funding and/or new deadlines for work outside this carefully defined remit.
3. Deadline Penalties
One to watch out for is anything that suggests a penalty for missing a deadline. While this might sound like a great idea to the client for concentrating the small business mind, it might not be the small business that causes the issue that ends with a breach of the deadline.
Suppose, for instance, a client were to ask for additional work, as outlined above, and you didn’t have a clause to take this into account. If the client also had a deadline penalty clause you could find yourself not only doing extra work, but getting paid less for it!
It’s well worth inserting a different clause instead, to the effect that the completed work, to the originally agreed scope, will be delivered to an agreed deadline for the agreed fee. This should satisfy any reasonable client.
4. Hidden Work
It is not unknown for clients to be unclear about the scope of the work you are to do – you’ll start work and find that the reality is quite different to the outline you were given, and that there’s significantly more work than you’d been led to believe.
The trouble with this is that if you only have a contract clause that says you’re to undertake the work you agreed to, this could leave you with far more (and potentially more difficult) work on your hands than you originally thought.
The solution is to insert a clause that says words to the effect of ‘should it become apparent once the work commences that significantly more work is required than outlined or anticipated, then the fee and/or deadline can be renegotiated’.
5. Unclear Point of Contact
For any contract, you need to have a clear understanding of the chain of command and who you answer to – there’s little worse than either not being able to contact anyone, or having someone unexpected come in at a late stage and entirely change the project focus.
This can be indicated more by a lack of a clause than the existence of one, because clients aren’t likely to put a clause in that says nobody in particular is responsible for the project.
Therefore, it will probably be up to you to suggest a clause that sets out clearly who on the client side will act as the main point of contact, and who is ultimately responsible for agreeing that work has been achieved to satisfaction. It would be wise to suggest that more than one person should be identified as a contact with some power to agree changes, because it’s always possible that your main contact might go off sick or on holiday.
It may be that the client will explain this informally during preliminary discussions, in which case simply add this information to the terms and conditions to put it on a legal footing.
Some clients are notoriously averse to anyone working for them using their name in promotional material, and occasionally they will forget to mention this up front.
Of course, you could find yourself faced with a draconian secrecy clause that will prevent you ever speaking about the contract or using it in your publicity material. In fact, since client confidentiality is an important issue, many small businesses will happily agree to keep the client name out of any blog, press release or advertising.
However, it would also be good to include in the contract a caveat stating that work of this nature may be referred to in general terms in your literature and publicity, while retaining complete client confidentiality and anonymity, and not referring to the project in any way that could cause it to be identified.
While this may be a sticking point for some clients, it’s necessary to cover yourself for particular problem cases. For example, say you write about your work in general, and a client objects to this on the grounds that because you did ‘x’ for them, and they have a confidentiality clause, you should never discuss ‘x’ at all!
Whilst contracts can be difficult to understand, it’s necessary to ensure you fully understand what you sign, even if that means having them checked over by a legal expert if something is difficult to fathom. While this will cost you, given the problems that can arise from nightmare terms and conditions, it’s a wise investment and offers peace of mind.
Now let’s recap those terms, conditions you should look out for (or look to have included!):
- Anything that makes payment difficult.
- Anything that doesn’t agree modified terms for extra work.
- Unconditional deadline penalties.
- No allowance for hidden workload.
- No clear chain of command.
- All-encompassing confidentiality agreements.
With the help of the suggestions above (and legal advice if you really are in doubt), it should be possible to work round such clauses successfully.
Have you ever come up against really bad contract clauses? How were you affected, and how did you get round them? Let us know in the comments section below!
For advince on invoicing, entrepreneurship and all things small business, from the best business cards and ice breaker questions to the best resources for small business loans, keep exploring the Hiveage blog!