On today’s episode, Carrie interviews Karim Marucchi and Rian Kinney about contracts and what to consider when you are preparing to work with a client.
About the Guests:
Karim Marucchi is the CEO of Crowd favorite. In the past 20 years, his career has covered many opportunities including founding startups, working for large web agencies and taking companies public.
Rian Kinney is an attorney covering Sports, Entertainment, Intellectual Property and Real Estate from the Florida area. In the spirit of the open source community, she wants to take the mystery and FUD out of CYA’ing your site and contracts. Rian offers marketing consulting to new and small businesses to better position them to reach their target market through innovative and cohesive branding, at affordable prices.
What you will learn in this episode:
- You can be sued for a poor contract and for any reason.
- A proposal is not as formal as a written contract. It can also serve as an estimate.
- Presenting your terms at the end of the written proposal keeps it simple.
- A contract consists of an offer, an acceptance and the meeting of the minds.
- If the terms are not complete and closed in the contract, you should have the offer expire after a certain amount of time. (ex: 30, 60 or 90 days)
- A larger client may expect a formal contract or Statement of Work.
- An electronic signature is legally binding.
Some things to be aware of when preparing a contract:
- You want to “right size” things according to the sophistication level of your client and not scare potential clients away.
- You can consider “non-response” late fees in the case when a client does not get back to you in an agreed-upon amount of time.
- After a set amount of time, the client can fall into the “Silence of Assent” – if the client has not gotten back to you, you can assume that the client approves the work.
Important Considerations for Digital Services:
- Scope – you need to be precise on what you are going to be delivering.
- Timelines – identify your tasks and what might be a client delay.
- Establish a Performance Period – you can add a clause that says the performance period is 8 weeks. If the project gets delayed and impacts the schedule by more than 2 weeks, you can renegotiate the agreement.
- Define your liability concerning the cost of the project. (ex: if a client’s site goes down, it is outside of your direct control).
- Define warranties and maintenance – If a client has not found something in 30 days, make sure that it is covered in your warranty or support especially when updates are involved.
- Set clear roles and responsibilities for both sides.
- Invest the time upfront to review the contract with the client.
- Know the Anatomy of a contract – Include an effective date.
- Name all the parties involved in the work clearly.
- Jurisdiction – Limit where you or your company can be sued. You want to acknowledge the attorney in the state where you are doing business.
- Notice or Notification – is email acceptable?
- Identify the number of working days on a project.
- Drafters rule – any ambiguity will be construed against the creator or owner in a court of law.
You want to always have a contract when working with a client. Boilerplate contracts and templates are widely available for small businesses. You can download one of those contracts and make it specific to protect you. Keep iterating on your contracts as your business and sophistication grows.
To Follow Karim:
To Follow Rian: