So your development work is done, you’ve started marketing your product, everyone is waiting for the first nibble and then it comes: http://www.youtube.com/watch?v=xuVmJ8TPTNU. Well, hopefully you’ll be better prepared than these folks. So, when you’ve finally hooked your first clients, what type of contract are you going to provide them? Is this an internet based service where you can use on-line terms and conditions – if so will you require the client to affirmatively click acceptance? Maybe you will you require a “paper” agreement with a hard signature – this is likely the case if your contract needs to be personalized to the individual client. Will it be a single use contract or a master agreement with schedules? But let’s get to the heart of the issue. The purpose of your client agreement is to put on paper the expectations of the parties and most importantly to allocate risk between yourself and your client. Some things to think about in making these decisions: what are you trying to protect [e.g. your intellectual property (software firm, data firm, design firm), your employees (consulting firm)]; what is the cost of your product versus your potential liability exposure if something goes wrong; do you have insurance that provides protection in the event of a liability exposure; are there industry standards that you will need to adhere to in order to attract clients (e.g. most software firms will find that their clients demand an IP indemnity to protect them – should this indemnity be limited by geography, by amount, by potential fault of the client – what if you incorporate open source or other third party products within your product)? Reality is that this is one of the most important documents your company will deal with. You will need to balance the need for protecting your firm and its assets with your desire to sign on new customers – after all, no customers, no business. Remember, your client agreement is in your control. You can always amend it if your original format doesn’t work. The important thing is to think it through with someone who understands risk and the demands of your marketplace.
Next installment, Your Web Site, and remember, ALWAYS CONSULT AN ATTORNEY FIRST.