May 31st, 2019

Legal Talk ​21: What Clauses Should I Include in a Services Contract?

You call me. You're very excited. Your second deal is likely to come in. 

The Customer doesn't have a standard template because it is a medium sized business and so has asked you to send them the first draft. I can help you to prepare a template.
 
“Great,” you say. “Can I have it now?”

Slow down a second, I say. I think that key things to understand at this point is who are you dealing with and what are they looking for. 

You say that you are dealing with an IT manager and that they want to order about $30k worth of software and services initially. They are keen to do the deal. 

Okay, what you need is something really short and user friendly. Perhaps just a few pages. The only things that you really need to make sure are in there are clauses to say: 

1. You get paid
2. You keep all IP
3. You spell out what is in scope and what is out of scope. 
4. You are not responsible for losses above a cap (normally the value of the contract). 

I can put this in a letter from you to the IT manager which he can sign and return to you and you will have a contract. 

It really is something short and simple. Some lawyers might turn their noses up at this approach and insist upon you presenting a 20 pager to the IT manager. But the problem with this, in my experience, is that the IT manager might get spooked and send it to his legal department or external law firm. If this happens then it could end up taking a long time for any kind of response and there is a good chance that his legal people will insist on a long contract which is quite onerous on you. You might have little option but to accept, otherwise the whole deal could be put on hold.  

So, let's prepare a letter just spelling out the key terms and then ask the IT manager to amend it as he thinks fit and then sign it.
 
“Good”, you say. “I just need to keep getting these deals in and then signing them off.” You want to move forward fast! 

Okay, this is a good approach at this stage, I think. Of course, when you get bigger and the deals become more complex then longer contracts might be needed but for now let's go with the letter and see what happens. 

I say that I will get the letter over to you later in the day and hopefully the IT manager will sign today or tomorrow. 

You're excited about how things are moving forward and I am too. I get on with the letter and send it to you within the hour. In the meantime, check out this PDF for some further information:  file:///C:/Users/Lawyer/Downloads/10_Must_Have_Contract_Clauses%20(1).pdf.
 
Look forward to hearing about how things go. 

Best wishes,


Jimmy Desai
Your Legal Coach

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