Drawing up Contracts

ChicoMendez

Hi

Can any of you help me on the below please?

I have a friend that is in talks with a company to design an application. he has just registered his company and is unsure as to the process of signing a contract etc etc.
I told him id check it out as hes up to his eyes.

Alot of ye have im sure drawn up contracts with clients.

Supposing they have agreed design and cost, how does one draw up a contract.

Does a solicitor have to see it? Or does it just require the 2 parties signing the dotted _________

Supposing Design has not been agreed but cost has and a contract has to be signed.
What is the process then for signing off the design and the implications on the contract.


Do both parties have to be present to sign. Or can the service provider send the contract to be signed?

Any info from the exerience out there would be much appreciated!
Tnx
L8r

De Rebel

A good contract will serve to let everybody know where they stand, and simplify the relationship between the parties. A bad one will create years and tears of work for solicitors.

First thing to get clear is the purpose of the contract, and who wants it.

A good contract will define the work to be done, in terms of deliverables, and when precisely he gets paid.

A second point to consider in a Design contract is ownership of the rights to the design.

Victor

The contract should define:

1. The parties (i.e. the client and your friend's **company** not him individually).
2. The work (the best possible definition).
3. How changes to the work are to be dealt with (say hourly charges).
4. The price (fixed, firm or cost + percentage).
5. How payment is to be made (when to bill, credit terms, etc.).
6. What rights a wronged party in the contract has to either withhold payment or stop work.
7. How disputes are to be resolved. Some sort of conciliation / arbitration is better than solicitors / court.

Changes that will cost money should be advised as early as possible.

One thing I discovered in contracting was that anyone accusing a breach of contract must also suffer if they withhold on their part of the contract. Otherwise people will push things to and beyond the limit.

Specky

All good advice so far.

Three areas I'd be particularly picky about are :

1. the contract basically outlines your terms and conditions of sale. Make sure it includes a retention of ownership clause which states that what you work on belongs to you until it has been paid for. Also make sure there is a clause that imposes a penalty for late payment. This can range anything from 2% to 10% per day over and above the stated payment due date.

2. make absolutely sure both parties sign up to a non-disclosure agreement. This really does protect both parties.

3. It is absolutely imperative that the requirements capture part of the project is thoroughly documented. Put on paper precisely what it is the client expects you to do and when they expect it to be complete. Go over this ad-nauseum if necessary to make sure something is on paper that everyone understands and agrees to. I have had more problems and seen more problems with other people through both parties dissagreeing over whether the work is complete or whether it is what the client asked for etc. Don't be lulled into a false sense of security because it's all friendly and amicable now. Just wait until the end of the project when you/they are under time pressure and you're asking them to cough up real hard cash...then see how keen to accommodate you they are. Get it right, get it on paper and get it agreed. It's really difficult sometimes to get the requirements without doing a lot of the work but it's worth it for a clean finish.

Some sort of staged delivery is also good if you can negotiate it. At least there's a possibility of getting some money out of the client without having to wait until the bitter end.

If you don't ask you won't get.

You can pick up a lot of free contract information on the web (there are a number of websites with free contract templates and a good deal more who charge you for the priveledge) and you can copy existing terms and conditions of sale from people you currently deal with.

There's no harm in having a solicitor look over a contract but to be honest even a well written contract can be circumvented by a suitably motivated company who are willing to pay a clever lawyer so don't waste excess money on it.

RainyDay

Originally posted by ChicoMendez
Supposing Design has not been agreed but cost has and a contract has to be signed.
What is the process then for signing off the design and the implications on the contract.

This doesn't make sense. It is like saying 'I will pay 250k for a house, but we haven't yet agreed how many bedrooms it will have'. It sounds like a recipe for serious dispute somewhere down the line.

Unless of course, the buyer has simply agreed to pay for a fixed amount of time and will accept whatever comes out the other end. Sounds like a bit of a dumb buyer, if that is the case.