Businesses are transactional in nature, and in order to grow, you have to trust that the person on the other side of the transaction will deliver on their promised goods or services.
And most people do, but to protect yourself and your business interests, it’s important to put down on paper the expectations and commitments both parties promise to deliver. The best way to do that is with a client service agreement (CSA).
While a lot of new business owners just Google search for a contract online, this can lead to major issues down the road, especially because the contract is not customized for their business and local laws. For example, what they may not realize is there could be a choice of law provision where the transaction takes place in Florida, but the contract calls for all disputes to take place in Honolulu, Hawaii – a great place for a wonderful vacation but not a convenient place for Florida parties to litigate!
Why Create a Client Service Agreement
Taking on a new partnership brings risk. Even if you know the other person well and trust them to do as they say, potential conflicts can arise if expectations are not spelled out and communicated.
A CSA puts on paper the scope of work, terms and conditions of its completion, and overall cost of the agreed-upon arrangement. Using a documented CSA provides transparency with your client and minimizes the risk for misunderstandings, disputes, and potential lawsuits.
What to Include in Your CSA
CSAs are primarily used for services that are performed over a long period of time. Sometimes a client may require an up-front fee before any services are delivered. Other times fees are paid after the work is completed or any combination in between. Within the written contract, you should include the following elements:
- A description of who is involved in the agreement – The CSA should spell out the names and addresses of the parties involved. If it’s a business entity, include the business name and type of corporation (i.e., a limited liability company).
- The scope of work – Be specific in detailing the work to be performed. Quantify where applicable as you describe the tasks and deliverables included in the agreement.
- Fees and payment schedule – Include the terms of payment (whether it is a flat-fee or if you are charging hourly, weekly, or monthly), and if any expenses are to be billed separately. Be sure to also include a payment schedule with due dates and amounts, the type of payments you accept, and any penalties for late payment.
- An attorney fee provision – Adding this provision to your contracts puts in writing what happens if there were to be a dispute. An attorney fee provision says that if there is any dispute between the parties, the prevailing party is entitled to have their attorney’s fees and costs paid by the losing party.
Your CSA should also include a title, effective date, and a place for signatures. Depending on your business or the services rendered, you may consider including other provisions for specialized situations, as well as terms of dissolution in the event that one or both parties decide to terminate the agreement.
With any business contract, we recommend consulting a small business lawyer to ensure that you are protected and your CSA is free of errors and omissions. At Silverberg|Brito, PLLC, we can help you draft your client service agreement and mitigate the risk to your business. Call us today at 305-735-3966 for help.