Posted: Sunday, 25 September 2011 @ 17:05
Working with a lot of IT companies and web developers I’ve realised over recent years how many leave themselves open to potential legal difficulties.
It goes without saying that most modern businesses rely heavily on their IT systems to run their business and on their websites for showcasing their products and services, if not also directly for sales. So, if your business provides IT or website development services, you are responsible for a critical component in your clients’ businesses. If there’s a problem it could all fall back on you.
You may think you’re very clear about the service you are offering. But IT is a bit technical and before you know it the client has become confused. You believe you’ve specified that you are supplying access to a piece of software, for example, or have agreed to develop their website for them, yet you can soon find that they are expecting your advice on a whole range of additional issues, blaming you when their email goes down or asking why you didn’t alert them to the latest cookies regulation before you put their new website live.
It’s the same in any technical or professional field. The client sees you as the expert so may well expect you not only to specify what you are providing, but to advise on a broad range of (as you see it) unrelated or extra issues. So already there’s a discrepancy between your clients’ expectations and your own.
The only way to protect yourself from, at the irritation level, clients who are on the phone every five minutes asking you how to do things or for advice you don’t feel they have paid for, and at the severe level, claims against you by clients who feel you’ve failed to provide them with a complete solution, is to make sure your contracts for supply of IT services or web development are watertight.
So what should be included as an absolute minimum in your contract for services?
Details of the service – make sure your description of the service or service specification makes it clear not only what you will be doing for your customer, but sometimes more importantly, what is not included.
Price - your proposal no doubt indicates whether your price is a fixed one or whether there are any variables such as time and materials. A client will usually look for some certainty in its outlay. In such cases, can you quote a fixed price with sufficient confidence? If not, or if the requirements are not absolutely clear at the outset, or if any variations in scope are likely as the project progresses, particularly in larger or more groundbreaking projects, then some form of change control mechanism may be appropriate.
Extras - if additional services or components may be necessary for the service you are providing to function as the client may reasonably expect, then that should be made clear. The reason may be that you do not provide the particular service or item, or perhaps you have not included it as it is not essential but desirable, although it may add significantly to the price. Whatever the reason, an indication in your contract will reduce the likelihood of future claims as to whether or not your part of the bargain has been fulfilled. A website for example will require hosting, maintaining and regular or periodic updating. Make it clear to your client whether your specification and costings include all or any of these services and what options they have going forward.
Timescale - your client will usually expect a delivery or completion date for your services. In larger projects there may well be a series of dates by which certain stages, or milestones, are to be finished, sometimes linked to stage payments. If your ability to achieve any completion or milestone dates depends on either your client or anyone providing input then you should specify that your obligation to meet those targets is to be conditional on that input being provided and being provided on time.
Ownership of intellectual property - if you are producing original material for your client such as website content/ graphic design, software etc, or if you are working with material from your client or third parties, it is advisable to set the ownership and rights relating to all such materials to avoid any future dispute.
Performance criteria - another fruitful area for misunderstandings and disputes relates to the performance of the website or IT service in practice. What warranties are given by your business and the extent to which your potential liabilities are validly limited in your contracts will be of significant importance to your business as it develops because some of those could come back to cause a serious impact in the future.
It’s great to be seen as an expert in your field and to have clients beating a path to your door as they recognise your skills and the quality of your services – but to take care and give proper consideration at the outset to what services you are providing to clients and making sure that this is all properly documented.
Commercial Contracts Solicitor
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Blog by Sue Mann
Sue is an experienced commercial solicitor based in Birmingham from where she helps businesses all over the country advising on, drafting, and reviewing business contracts and commercial agreements. View profile
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