A customer contract, or customer agreement, is a legal agreement between a company and a customer. This contract helps set expectations for anyone using your company’s products and services. It also guides how to handle dissatisfaction and how to reach customer services.
Businesses want to keep their customers happy, but there are limits to how much they can do for them.
A customer contract helps balance customer satisfaction and protecting your business.
Here are 9 things to include in a customer contract when you write one for your company.
1. Information of Both Parties
Start the contract by establishing who the contract is between. Namely, introduce your business, including its full legal name and any names it is known by. Next, you must define the customer as a buyer or purchaser.
Write the customer’s legal name as it appears on any official documentation. So, no nicknames, usernames, or stage names are not valid substitutes.
Here is an article on what a customer is in legal terms.
2. Terms and Scope of the Project
If you are writing a contract for services, you must describe the exact purpose and scope of the work.
Avoid any overly technical terms or legal jargon. You do not have to write a contract in high-level legal terms for it to be legally binding.
Keep the description detailed, precise, and clear, so all parties agree on what the customer is paying and what you will provide.
Here is an article that describes a customer service agreement contract.
3. Description of Goods or Services
Describe each item in detail when providing goods or services in exchange for payment. When it comes to services, you may wish to itemize services and break them down into a list.
For example, a freelance photographer may offer multiple services in one package, such as staging, shooting, and editing photos. Describing each service in detail clarifies the customer while setting professional limitations.
About goods, it is best to describe the item and mention it is being sold “as is.”
Here is an article that describes what selling goods “as is” means and how it affects your business’s warranties.
4. Payment Terms
Explain how the buyer will purchase your goods or services. Payment terms can include:
- A one-time payment
- Installments with or without interest
- A subscription
Companies that use a subscription-based payment model should list the effective start and end date of the customer’s subscription. They should also include an advanced notification clause and specify whether the subscription auto-renews if the customer does not cancel by a certain date.
In addition to payment terms, you can also list approved payment methods, such as bank checks, credit cards, and wire transfers.
Here is an article about writing payment terms in a legal contract.
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5. Schedule and Deadlines for Work
In service contracts, it is always best to define a schedule for the work and a definitive deadline. This ensures that the business has promised a specific task to be done on a given date, preventing the customer from prematurely suing or withholding payment.
You may negotiate the schedule and deadline with your customers before reaching a mutual decision. However, give your business adequate time to perform a task to avoid producing something that does not meet the customer’s quality standards.
In some cases, failing to give proper notice or perform due diligence could be a valid dispute in a court.
Here is an article about how to write a contract schedule.
6. Expiration Clause
An expiration clause describes what events will make the contract expire. This is usually by fulfilling its own terms to completion. So, the contract between the company and customer will effectively expire upon receiving their goods or services.
Providing an expiration date establishes a format date for the last day the contract is valid and legally enforceable.
Here is an article about contract expiration dates.
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7. Termination Clause
A termination clause, or a termination of services agreement, gives the company or customer the right to end the agreement at any time. However, it can be costly for businesses to have customers who paid for goods or services back out of agreements with little to no notice.
Termination clauses can set requirements and penalties for cancellations or breaches of contract. For example, you may specify that a client must provide a 30-day notice to end service, or they will receive an early termination fee.
Here is an article about termination clauses in contracts.
8. Dispute Resolution
A dispute resolution agreement prevents lawsuits by outlining methods for conflict resolution. This can outline steps the company and client agree to take together before ever taking legal action against one another.
For example, in a dispute, the customer can agree to first contact customer support and negotiate. Therefore, you should provide a contact number and/or email address in this portion of the customer contract.
Here is an article with tips on how to resolve disputes with customers.
9. Signature of Both Parties
Make sure that you close your customer agreement with signatures from both parties. Each signature should also include a date. This ensures that you and the customer agree on the nature of the document as it is on the day it is signed.
The signature date may or may not be the same as the effective date, so both are important.
Here is an article with more information on different dates in contracts.
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