Entering into a contract with someone is kind of like starting a new relationship. You walk into it with the best of intentions, and you have every hope that it will be a match made in heaven. But…you always have to prepare for the slight possibility that things could go terribly wrong.
It might be that there has been a breakdown in communication, your expectations don’t align or that either parties’ circumstances change so you feel it’s best to part ways now.
But you can with get through a break-up with a good contract in place and avoid any unnecessary tears, struggle and strife.
It is important to include the right kind of break-up (‘termination’) clause into your contract.
So, now think about your termination clause. Does it cover the following? –
- When you can terminate: You should give the situations where you or they can terminate the contract. We want to see that you have the right to terminate the contract where they have committed a material breach of its terms (such as providing a sub-standard service in the case of your agreement with a contractor, failing to pay on time, disclosing confidential information or stealing your IP). It could be that either party can terminate for whatever reason should they wish to, and that’s perfectly fine too.
- What happens to fees: Make sure you will still be paid if the contract is terminated, either for your services rendered or the full fees if you have provided downloadable content, for example.
- Notice requirements: You should state what notice period is required to be served and by what method (i.e. email or post or both). If you are to receive notice by email only, make sure you state that “This shall not apply to the service of legal proceedings.”
- Cooling off period: For B2B contracts (i.e. services provided to a business ) or where downloadable material is provided to the client, the usual rights under consumer legislation don’t apply so there is no cooling off period of 14 days. You therefore have a right to be paid the full cost of the service in the event of early termination, but this is at your discretion and you could instead to charge for the services actually given.
- Suspension of services: If the other party hasn’t paid you, but you don’t want to end the contract, you can include a right for you to suspend services until they do.
If you haven’t been able to tick off the above, your contract needs amendment pronto!
As you know, we are really focusing on coaches at the moment, and we understand that the work you do is most effective when you can establish and build an open and honest relationship with your client. In case you end up with a client who is a bit of nightmare, here’s a little tip for you – think about adding a clause like this into your client contract:
“By purchasing our coaching sessions, you agree that we, at our sole discretion, can terminate the contract, and limit, suspend, or terminate your participation in our coaching without refund if you become disruptive, if you fail to follow the guidelines set by us, are difficult to work with or upon violation of this contract. In the event of such termination, you will still be liable to pay the fees set out in this contract.”
You might need to tweak this a little depending on the terminology you use in your contract (i.e. contract vs agreement) and you might want to soften the wording a little, but you get the gist!
If you have a contract that you’re not sure gives you a Get Out of Jail Contract Free card, pop onto one of our free legal advice calls and we can give you a hand!