Contract & Statement of Work

person-holding-silver-pen-signing-photographers-signature-175045Your Statement of Work and Contract are two of the most important documents you will use to communicate your business relationship to your clients and to protect yourself. The two documents should work together, with the Statement of Work specifically outlining what you’ll be doing and the Contract (sometimes called a Service Agreement) designating various warranties, indemnifications, remedies, and details that define procedures and responsibilities of the parties.

Some examples of the importance of a Statement of Work:

A. If a client complains, for example, that the domain name registration has lapsed or that a particular system has viruses, you could say that “Domain Renewal” and “David’s Home Laptop” are not listed in the Statement of Work. 

B. An “Exclusions” section of your Statement of Work would exclude from your responsibility problems that result from use of systems in a way that is not recommended. For example, if a client disables an antivirus or refuses to put passwords on the system. Likewise you can exclude problems that arise from a client preventing you from performing required maintenance and updates, perhaps by not giving you access to the system.

C. If a client complains that he couldn’t get in touch with you, you can show that you offer support hours from, say 8am to 5pm.

In general, the Statement of Work is essential to protect you and accurately describe what services your clients are getting from you. Without one, clients will tend to assume that anything and everything related to technology in their office is your responsibility.

Now while your Statement of Work protects you by putting limitations on what your actual services and responsibilities are, your contract spells out a lot of protections for you, such as:

  • indemnification (compensation) from client breach of the contract
  • protection for breach of contract on account of acts of God (aka force majeure, i.e. unforeseeable circumstances)
  • 3rd party products are provided without warranty
  • what happens if they don’t pay you, or don’t pay on time
  • ownership of intellectual property
  • under what circumstances either party may terminate the contract
  • scheduled downtime
  • confidentiality

Overall, the contract is going to protect you in all sorts of ways from all sorts of liabilities that you can’t foresee, which is why you should have a lawyer prepare one. They know the language, and they not only know what to say, they know what not to say. If you take things into your own hands or simply try to tweak a prefab contract, you’re going to leave something out or misphrase something such that you put yourself on the hook.

This is not the place in your business to cut corners and save a few bucks, not only because your liability insurance will be less if you operate with a contract, but also because you won’t have such a risk of liability.

So have a contract and statement of work prepared for you to use with clients and at the start of their trial period with you, leave them a copy to review. Then after the trial period is over, you and they sign off on them. With your mutual consent you’ll be able to change them later on, for example to add systems or adjust rates, so don’t feel that you’re limiting yourself.

Finally, if they want to change anything before they sign, don’t panic or take offence. Just take their suggestion and refer it to your lawyer. Remember that they need your services but that they need to protect themselves too.

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