Posted by Amelia Abbott on 9 April 2019
It’s true what they say – it’s good to get a contract drafted if you’re providing services or selling stuff.
It’s also good to attach the contract to a quote, and send it off to your client.
But does that mean you have a contract you can rely on if something goes wrong?
In short, not yet.
Actually, that’s a lot like proposing marriage to someone but not waiting for an answer.
If you start work, you’re planning a wedding without a partner. Awkward. What’s worse? You could get left at the altar and lumped with the bill…
When Should I Start Work?
So, you’ve got yourself a nicely drafted contract which includes certain terms around what you’ll do, when you’ll do it, and how much the client will pay you.
You provide that contract to your client and even make sure they have to read and understand it.
What else needs to happen before you should start work?
We know that there’s lots of pressure on service providers to move quickly – and often we see services commencing before a valid contract is in place between the service provider and the client. Sounds like risky business!
Before you start work, you should wait for your client to let you know that they accept your contract. That way, you can rely on the contract later if you need to.
What Does The Law Say?
Acceptance, in legalease, is an “unequivocal assent to the terms”… What?
Basically, acceptance means that the other party has let you know that they agree to be bound by your contract. A good contract will specify how the contract can be accepted, or what constitutes “letting you know”.
Strictly speaking, your client should sign the agreement and return the signed copy to you. In fact, there are requirements for properly signing documents under the Corporations Act 2001.
But what about where that’s just not going to happen. What if that’s not how things are done in your industry, and you’d be left with no clients?
Where signing and returning a contract to you is not practical for your business model or in your industry, it’s far better (and legally possible!) to put a practical process in place rather than do nothing and hope for the best.
Your lawyer can draft a clause for you which sets out other actions that the client can do to indicate they accept your contract – like paying a deposit, continuing to use a website, or instructing you.
This is known as “acceptance by conduct”. If this sounds like it would suit your business, ask your lawyer to build it into your contracts.
If getting contracts signed is well and truly in the too hard basket, remember these few key tips:
- The basic rule is that actions can indicate acceptance, but silence is generally not enough. If you don’t hear back from a client, don’t start work!
- If your contract is properly drafted for your purposes, it will state other ways for your client to accept your contract other than just signing. This is the best way to ensure that the conduct you want to rely on will be “accepted” by a court as acceptance.
- Your client must be “aware of the terms” of your contract – you cannot have them sign a quote saying they agree to your contract if you never gave them the full contract.
- For those projects you’ve already started without a contract – you can back-date a contract to the day you started work – it’s never too late to follow up on getting written agreement to your terms.
What To Take Away…
Having a contract and sending it to your clients is great – but make sure they accept it before going ahead!
There are various ways your clients can accept your contract. If you’re not sure which ones apply to you, it’s a good idea to chat to a lawyer about your options.