6 Reasons you Need a Client Service Agreement for Your Business

6 Reasons a Client Service Agreement Should be Your first Contract Template

A client service agreement is one of the first major contract templates you should purchase for your online business. Unfortunately, most entrepreneurs, whether they are just starting out or have been in business for some time, don’t think they need a client service agreement. But in this post, I’m going to explain the top 6 reasons why this vitally important contract template should be one of the most important tools in your legal toolkit.

#1 You are Putting the Client’s Needs First 

Most online businesses don’t think of a contract as a way to put their client’s needs first, but in reality it does. Savvy client’s typically expect a legitimate business to have a contract for them to sign.

A well-written contract tells the client what services they are getting when they hire you. They will know what their payment schedule will be (if appropriate), how you will handle their credit card, what additional services you may provide (and what the cost will be for those services), and much more.

Take a minute to think about the last time you hired a service provider. Did they have a contract? If not, did you think twice about whether you should hire them or find another professional?

Chances are, if you are spending more than a few hundred dollars on a professional, you want to know that there is a contract in place that protects you if the service provider fails to do the work, or otherwise breaches the contract.

Having a solid client service agreement template in place can put your client’s minds at ease.

#2 Your Service Contract Protects you both Legally and Financially

But just like a contract protects your client, a client service agreement also protects you from actions taken by your client

What happens if a client hires you, pays you a large retainer, and then attempts to fire you after you have already completed a large amount of work?

Without a contract you may be stuck and forced to pay a refund, or worse, receive a large chargeback on your credit card.

#3 You will have a Mechanism for Dispute Resolution

One of the major benefits of having a solid service contract is that it can provide you with a means to resolve disputes with your clients without going to court. I typically include arbitration and/or mediation clauses in my contract templates.

Both of these dispute resolution mechanisms are much faster and significantly less expensive than litigating a dispute in the court system.

#4 In a Client Service Agreement you can Dictate where Disputes will be Resolved (and the Applicable Laws for your Dispute)

In addition to providing a method for resolving disputes, you can also include language in your contract regarding where any disputes will be resolved.

This is especially important if you live in one state, but handle clients from across the United States, or even the world. By including what is referred to as a “venue” clause in your agreement, you can transfer any lawsuit that might be filed against you to your home state and county.

Not only does this give you a significant home “court” advantage in any legal dispute, but it also may deter people from suing you if they realize they would have to travel to your city and state to have the case heard.  

#5 A Legal Contract gives you Peace of Mind

One of the reasons that lawyers get a bad name is that they are constantly brainstorming all the bad things that can happen in a business setting.

Honestly, that’s all law school is – 3 years of teaching us how to find problems in every situation.

But when it comes to your contracts, this can be a good thing. 

A contract that identifies all the potential problems that could come up in your business and then provides a road map for how to handle those problems is actually a good thing.

Knowing that no matter what issue arises, you have a way to deal with it in your contract can provide you with a great deal of peace of mind.

Trust me, having a solid contract in place will allow you to sleep better at night.

#6 Having a Professional Client Contract Makes You Stand Out

If you want to stand out as a professional services provider or top notch online business, you must have a professional looking contract in place as your main service agreement.

This brings us all the way back to the first reason you must have a professional contract for your business. By investing the time and money into a professional client service agreement, you will come across as more professional by your customers and clients.

But failure to have a professional looking contract in place will make you look unprofessional and come across as a fly by night type of operation.

Other Reasons You Should have a Standard Service Agreement

I have outlined 6 of the top reasons you need to have a contract agreement whenever you are working with clients or customers. Here are a few other ways that a client service agreement can protect you.

A Contract can protect your Trade Secrets

If you are running an online business and sharing your proprietary systems and methods with your clients, then you want to make sure those methods are protected. With a client service agreement you can include a confidentiality clause that will prevent your students and clients from disseminating that confidential information to third parties or on the internet. 

You can Outline the Payment Terms for Your Contract

When clients are spending a considerable amount of money to hire you or purchase your course or program, you may want to offer a payment plan. You can spell out the terms of that payment plan in your contract, as well as explain nicely what will happen if they stop paying.

How to Deal with Unexpected Events

It is always a good idea, especially as we move into a post-COVID world, to have a Force Majeure clause in your contracts. This is a clause that details what will happen if there is an event that makes it impossible for either you or your client to perform under the contract. 

This is more than just “they can't pay” or “you don't feel like working with the client”. Rather, this must be something big, like a fire, earthquake, pandemic, war, or other act of God.

You can Dictate the End Date for Your Contract

Most people don't want their contracts to go on forever. At some point, your engagement should end, and having language that dictates when the time frame of the contract is important. You can even include renewal language in the agreement so that if both you and the client want to continue working together it is easy for that to happen.

A Contract will Outline the Provision of Services

The best contracts are very clear about what the service provider will and will not do for the client. As an example, I handle a lot of trademark applications for my legal clients. There is one fee that covers research, preparing an application, initial phone calls, etc. And then I have another fee that covers what will happen if a substantive legal brief is needed. 

You can do something similar with your contracts. If you are a web designer or a photographer, you can outline the various stages of the engagement and what fees are due at which points.

Having language like this in a legal document will protect you in the event the client decides that they want to cancel the engagement and is seeking a refund.

Not Legal Advice

I realize it goes without saying, but no attorney-client relationship is formed just because you have read this post. This post is for informational purposes only, and if you require additional legal support or advice you may click here to schedule a strategy session with a lawyer from The Hart Law Firm, P.A.

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