Use different types of minor contracts

– There are minor types of contracts you can use that are less cumbersome and less complicated than a master services agreement or a full services agreement. Letters of agreement are typically used for an individual project. If you sell another project in the future, you’ll need to do another letter of agreement. These agreements tend to be much lighter in terms of the topics they cover. The positive of this is that there are fewer clauses to review and negotiate. The negative is it can expose you to greater risks because things like liability, intellectual property ownership, warranties, and other risks aren’t included. Letters of agreement can be great for very limited scope engagements like a paid presentation. For larger consulting projects, they’re risky and ill-advised because of all the issues they don’t cover. Letters of intent outline an agreement before a formal agreement is finalized. Generally, it’s non-binding with the exception of some of the provisions like confidentiality and non-disclosure. It’s not recommended to perform any services under an LOI because the commercial terms usually aren’t binding. Statements of work or task orders are often referred to as SOWs or TOs. They’re essentially addendums to an MSA. The MSA usually dictates the form and content of an SOW or TO. The SOW or TO spells out project-specific deliverables, timelines, performance requirements, and pricing. Every time you conduct a new project, you’ll need to agree to a new SOW or TO. SOWs and TOs are great because they can be executed quickly by a business unit or a function, since all other terms have already been agreed to at the corporate level as part of an MSA. If there are new project-specific terms and conditions that differ from the MSA, these can typically be handled as part of an SOW. But note, those new terms will only apply to that particular SOW. They don’t change the MSA. Purchase orders are usually referred to as a PO. They’re an order for services and follow the terms of an MSA or follow the terms of a specific PO. They usually specify the service to be provided, payment terms, and the amount to be paid. Before you do any work or sign any documents, make sure you know the use of each of these types of contracts, as well as the benefits and drawbacks of using each one.