Advocate Vicky Milner was called to the English Bar in 1996 and the Jersey Bar in 2008. She started Callington Chambers, a boutique employment law practice, in 2013. She has a keen interest in technology law developments including data protection, privacy and human rights and recently participated in her first hackathon. Here she provides her top five tips for contracts.
You’ve got a brilliant business concept and are chomping at the bit to get started. To do that you will need to engage with suppliers and clients and that will mean putting suitable contracts in place. It is worth investing a little time on this at the outset, so you don’t end up trying to close the stable door after the horse has bolted.
1. Know thyself
Who are you and is it legal for you to put this contract in place? Are you going to contract in your
own name, a trading name, in the name of a company or partnership? If a company, for example,
does it actually exist yet? Have you met any applicable licensing requirements (eg by obtaining a
business licence under the Control of Housing & Work (Jersey) Law 2012) before these
arrangements are put in place? What about insurance cover if things go wrong? Do seek advice
including from government-funded specialists such as Jersey Business/Startup Guernsey in the
Channel Islands: it is easier to make sure you are on the right track before you are too far down
2. Know who you’re dealing with
Client due diligence or “know your client” (“KYC”) processes are often criticised for being
unnecessarily cumbersome and bureaucratic. While many organisations (within the finance,
accounting and legal sectors for example), are required by law to complete KYC procedures
before taking on new business, others are not. But you always need to know who you are dealing
If, for example, you do not have the client’s name recorded correctly in the contract it may be
unenforceable, meaning that you could not require the other side to pay up for work done. This is
because if parties to the contract are misnamed or one of the people said to be entering into the
contract does not exist (eg if I say that I am contracting as “Donald Duck”) there is no legally
enforceable contract and you won’t have any ability to make the client pay the fees that you say
3. Be clear
The point of a written contract (and you can have unwritten contracts too – typically a nightmare to
enforce) is to make clear who is doing what, where and when, including, crucially, what is being
paid, so that it is legally enforceable. Accordingly, as well as including the names and addresses
of the people who are entering into the contract (the “parties”), the document needs to set out
matters such as the work that is going to be done/the product to be provided, who is paying what
and the date by which any specific steps are required to be taken.
4. Take advice
Most businesses will have some standard terms drawn up which can be adapted as required.
You should consider taking legal advice on such terms, certainly at the outset. You may not need
to continue to take advice each time you enter into a new contract once you are comfortable with
your standard terms, but that does require a real understanding of your contract. Don’t put in
place contracts that you don’t understand, otherwise it will be impossible to fight your corner if you
fall out with the other party. Advisers will be happy to talk things through with you – but obviously
make sure you understand how their fees are calculated before you instruct them. Use your
contacts and shop around before instructing advisers. (The advice and support of your peers will
be invaluable in this regard and generally.) You may be able to agree special fee arrangements if
these are negotiated before any work has been done.
5. Keep clients informed; agree contract variations in writing
If you are providing a product or service for a set-price/agreed fee you are not going to be able to
charge more if things run over unless your client understands what has happened and agrees to
pay an additional sum. So if the scope of the project changes (eg if the client changes his mind
about what he expects the product to do) discuss this with the client, show the client what you
have done so far and why more now needs to be done. The agreed revised scope and additional
charges must be confirmed in writing, forming a variation to the contract. If the other party had a
fixed budget for the job there may be no more money available and you may need to consider
completing the work at no extra cost (on a “good will” basis), for reputational reasons or where
you want the repeat business.
Contracts are an essential part of your business toolkit. Don’t shy away from them and enjoy the
challenges of your new business!
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