Watch out for miscellaneous issues

Some contract provisions can seem innocent, but they pack a big punch if you don’t know what they mean. Topics of intellectual property ownership and unfair insurance and liability provisions can cause big problems for you if they’re not negotiated well. Here are some common traps to watch out for. Intellectual property ownership can be risky. If you’re not careful, the client could end up owning all of your IP without having to compensate you for it. Make sure this section clearly spells out what you keep and what your client’s rights are to it. Liability and indemnity clauses tend to be written very one sided in favor of the client. Out of fairness, request that everything be bilateral where each party protects and holds the other harmless for negligent acts or misconduct. Clients may ask for excessive amounts of insurance. Either use it as a negotiating point where you get something in return for providing high levels of insurance coverage since they cost a lot or explain why those limits are excessive and request a specific lower amount. Some contracts call for audit rights so a client can examine your books and invoices. Those provisions often state that if you’ve overcharged the client, then you owe them those funds. Plus, you have to pay the cost of the audit. Audits can be expensive. Ask for the clause to work both ways so that if there are no audit discrepancies found, then the client should pay for the audit cost. The cost or expenses of contract enforcement can be written in a one-sided way too. Either put a cap on the amount you would be liable for or specify which expenses you would or would not have to pay. You may even ask that the clause be stricken from the contract. If the clause is kept in, make sure it’s bilateral where the client is subject to the same enforcement provisions you are. Notification provisions matter. You’ll need to notify the client of price increases, scope changes, invoices, late payments, and many other elements of the contract. If something isn’t documented, it can be treated like the notification was never provided. You’re dealing with big companies. Documents get lost. People change jobs. Phone calls are forgotten. Keep good records and ensure all notifications are provided in writing. Get a read receipt for emails. Get signature documentation for physical mail. This eliminates the possible argument of a client claiming they were never notified of something. If you know and pay attention to these cautions, your contracting will go more smoothly and you’ll have a more productive client relationship.