If you run a small business, you may have thought that you do not need contracts, that it is all too complicated and steal valuable time? (yep, myself included) But what happens if the customer wants more than what was first agreed? What if the customer changes his mind along the way or wants to cancel the project? Or what if deadlines are not met?
A contract ensures that both parties know what to do, who to do what, when to do it and what happens if something goes wrong. I always start a project with a desire to do my very best to meet customer needs and expectations, I have the world's best customers and have never experienced conflicts or disagreements. But still, it's so important to get things written down. A contract is in the best interests of both parties, both now and in the future. Win, win in other words:)
The content of a standard contract will be a little different for different industries and for different companies. But a lot of things will be the same… Ps. The tips below are probably best suited for my customer group; designers, photographers, artists, etc.
Why do you need it?
1. Reduces the chances of misunderstandings by regulating exactly what to do, by whom, for whom, and for how much.
2. determines who has the right to use and own the finished product.
3. Minimizes delays and helps you get paid on time.
4. prevents confusion about the progress plan and what the delivery consists of.
5. tells what happens if there are disagreements or changes.
6. testify that your business is professional and serious - not least:)
When do you need it?
ALWAYS. Make it a rule of thumb to always enter into good and safe agreements with your customers. This includes a contract.
What should you include in the contract?
Below you will find a small overview of what is included in my standard contract. It is divided into two parts. In part 1 you will find an overview of preparations, services, and progress plan related to the project. Part 2 contains the legal "standard elements".
Tips! If you set up the contract point by point, it will be easier to read and easier to refer to. Feel free to use numbers before the headings, with the decimal numbering of the sub-points (2.1, 2.2, 2.3… etc.).
Headline (contract) and date
Names of the parties who will sign the contract. That is the name/company name and organization number.
«This agreement has been entered into between…. and…. »
Be as specific as possible when describing the project and what services are to be performed. Includes what is not included as well. The customer should have the chance to give feedback if you have misunderstood something or not included all the wishes of the customer.
Make an overview of which services are to be performed when they are to be performed. And the project's due date. Also, note that major changes or additional services could lead to a delayed end date. Something similar :
«In the event of delays or postponements,… shall provide the other party with feedback on this. … Reserves the right to make delays due to technical challenges, major changes, or late feedback. If the customer wishes to terminate the contract, the customer must pay for the work performed and a minimum of…% of the contract amount »
Changes and additional services
Tell what happens if the customer wants to make major changes or add extra services after the contract is signed. Include how much these additional services will cost. For example. that services not specified in the contract are invoiced at an hourly rate of NOK VAT. or according to an agreed fixed price »and that major changes after the contract have been signed require a separate price offer with a new signature/acceptance from the customer.
If the customer rejects the offer, you are only obliged to complete the contract that has already been signed.
Price and payment terms:
Include the price (with or without VAT, this often depends on whether the customer is a private person or a company) Feel free to make a payment plan with due dates for each installment. I always recommend partial prepayment and installments along the way.
The payment plan can, for example, look like this:
The contract amount is invoiced as follows:
- 30% upon signing the contract,
- 30% after half-finished project
- remaining amount is at handover.
«In the event of late payment,…% default interest / a reminder fee of DKK is calculated. VAT"
Usage and copyright:
The most normal thing in Norway is to retain the rights to your intellectual property. The customer has the right to use your product freely within certain limits. Something similar :
«The customer acquires the right to use the product when the last invoice has been paid. Beyond this, the product can not be changed or transferred to others without consent »
I would also like to include that I reserve the right to share glimpses of the process and the semi-finished product in my own marketing + that I can show the final product after the project is finished, e.g. in the portfolio on its own website and in social media.
Feel free to include something that you are obliged to contribute information to avoid solutions that may seem to plagiarize and that the customer is obliged to take the necessary precautions to avoid plagiarism. I also include that .. «both parties have a duty of confidentiality in relation to the assignment and each other's business matters and are otherwise obliged to comply with the provisions of the Copyright Act»
Cancellation and postponements:
Tell what happens if the project is interrupted or postponed after the agreement is signed. For example. that the customer pays for work performed and a minimum of…% of the contract amount. I also include a statement that the rights to the material/product are returned to A Design Studio. And that .. "the parties shall without undue delay notify each other of matters they understand or should understand may have an impact on the implementation of the agreement, including any expected delays."
Give a brief summary of what the contract is about, what the parties agree on, and what is the agreed price to be paid.
»… Delivers… to (name of customer) in accordance with the descriptions in point… The agreed price is NOK. … Ex. VAT. invoiced in accordance with point… of the standard terms. "
And finally, the standard wording (which must be included) «In the event of a dispute concerning the understanding of this agreement, a decision shall be made in accordance with Norwegian law, unless both parties agree otherwise. The parties agree on the designer's home as the sole venue. "
And do not forget to sign! And feel free to bring something like this:
" By signing below, the customer agrees that he/she has read, understood, and is considered legally bound by these terms."
How to send and sign electronically?
I would never have made it without the digital platform www.DocuSign.in! With this tool, I can create price estimates, contracts, send invoices and sign contracts electronically. When I send away my contract document, it usually looks like this:
It consists of 3 steps…
1st price (which must be approved)
2nd contract (signed electronically)
3rd first invoice (30% of the total amount)
The best? All of it can be automated so you do not have to keep track of the date you must invoice, send reminders. DocuSign is highly recommended!
I hope these tips will be useful when creating your own contract! And you, feel free to leave a little greeting in the comments below. It's so nice to hear from you :)