Reefs in the contract: what mistakes can be costly?

The client offers to conclude a contract. You are happy: in theory, the document will protect the interests of both parties. In practice, it is different. The contract can be spelled out conditions that put in a favorable position of the customer and infringe the interests of the performer. You may not even be paid for the work done, and all within the framework of the contract! Let’s see what tricks can be costly.

1. Money sent. But do not reach

The contract states that the client makes an advance payment in the amount of 30% of the cost of services, and the date of payment is the date of debiting the client’s current account. The customer provides you with a scan of the payment order, according to which the funds allegedly went to the contractor. You must begin work, even if the payment is not credited to your account. You are working. It takes a day or two, but there is no money from the client. The customer throws up his hands and invites you to deal with your bank.

You may receive a fake scan, withdraw a payment, or the payment has not left the client’s account due to lack of funds. In exotic situations, the client actually sent the payment, the money had already been deducted from the account, but the bank went bankrupt and did not send the payment already made to your bank. The client thinks that he has paid (this is true under the contract), you have no money, but you have to work.

Correctly register in the contract as follows: the contractor proceeds to perform work on the day the prepayment is credited from the customer to the account of the contractor .

2. Error in payment

If you did not register in the contract that the moment of payment is the moment of transfer of funds to your account, the client can turn another tricky combination. He can pay for your services, but make a mistake in the details. For example, specify the wrong ID or account number. The client seems to have paid, just made a mistake – it happens. You are asked to start work, but while you are doing a project, the payment will return, and the client will send it using the correct details. Sometimes customers make mistakes, and sometimes they act intentionally. For example, they will quickly get a job, but they will not send a payment for the correct details.

To prevent such situations, indicate in the contract: the customer is solely responsible for the correctness of the payments made by him .

3. Penalty

The client may register in the contract a penalty, which is paid in case of failure to meet the deadlines. Then deliberately begins to sabotage the work so that you do not have time to pass it on time. As a result, you, having done the work, still have to stay with the client.

If the client insists on the inclusion of penalties, try to prescribe the most detailed terms of reference, the order of execution of works and approvals, shift the deadlines for completion of works in case of delays with the agreement. Do not forget to include in the contract penalties for the client in case of delays with the agreement. You can not sign an agreement in which the penalty is provided only for one party.

4. Impossible – possible!

Sometimes clients add clauses to the contract that are technically impossible to fulfill. I will not give specific examples, but in practice such conditions are not uncommon in documents. Therefore, carefully read what you must do and what guarantees you give to the client. All conditions must be real.

5. Commercial information

Now it has become popular to add clauses to contracts that prohibit parties to disclose commercial information. This is a normal condition. The problem arises if the commercial information is treated too widely in the contract, and simply because of the words that you worked with such and such a client – theoretically you could be sued. If the client wants you to guarantee non-disclosure of commercial information, ask him to register in the contract a closed list of information that relates to commercial.

6. The portfolio can not be

If you plan to add work to the portfolio, be sure to include in the contract the right of the contractor to include the project in the portfolio. Also indicate what information about the project you can write in the portfolio. Otherwise, you may be attracted for disclosing commercial information (see clause 5) or may be asked to remove work from the portfolio .

7. Register VAT

There are customers who ask you to specify in the contract the amount of VAT, and you work on a simplified payment system and do not pay VAT in principle. Never agree to such offers! It’s illegal! You also cannot issue an invoice if you are working on a simplified payment system. Insist that the amount will be shown without VAT or refuse to work with such a customer.

If the client “suddenly” sends a payment with VAT to your account, then ask him to send a letter specifying the details in which indicate that the allocation of VAT in the payment was an error and please consider the amount transferred without VAT.

8. In accordance with the laws of the Russian Federation …

Sometimes clients indicate in the contract that in case of disagreement, all disputes will be resolved in accordance with the legislation of the Russian Federation. This is a very broad formulation that is best avoided. After all, you do not know all the laws, right? Therefore, it is difficult to guess how the client will act in case of disagreement.

9. We will sue on Mars

Be sure to specify in the contract, in which court and in which city disputes with the customer will be dealt with, should such a need arise. Especially if the client is in another city. As a rule, the customer insists on legal proceedings in “his city”, and the performer is more comfortable in legal proceedings “in his own”. In any case, it is better to try to prescribe “your city” in the contract.

10. Are all conditions legal?

You can prescribe any conditions in the contract, but if they violate the laws of the Russian Federation, these conditions will be recognized as illegal and will become null and void. To avoid a situation where the court finds your conditions illegal, it is best to show the contract to lawyers before signing. If lawyers recognize any clauses of the contract as not in compliance with the law, they will advise how to spell them correctly.

11. Your contract is not a contract.

In order for a contract to be a contract and be valid, it must contain all essential conditions. If there are no significant conditions in the contract, it may be invalidated. Be sure to check that your contract contains all such conditions. Otherwise, you sign the contract, but in practice it will be just a “piece of paper”.

12. The contract is a formality.

This will convince you if you do not like some clauses in the contract. In fact, this is a formality until you have signed the document. When you sign, the contract will become a reality in which you will have to work. Therefore, if you do not understand any conditions in the contract or are not satisfied, ask them to redo or remove them from the document. Do not sign a contract in which something confuses you.

This is not a complete list of errors and tricks that are found in contracts. Be careful when signing any document. Do not be afraid to read carefully, even if the other side asks you to hurry up and sign documents faster. If in doubt, consult a lawyer. Do not think that a contract is a formality. The contract is a serious document on which you have to work.

Author: Evan

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