When it comes to contracts, knowing who has the responsibility can feel like a legal minefield. But, if you’ve found yourself in this situation, don’t worry because I’m going to tell you all you need to know.
I’m Simon, by the way—founder of The Contract Company. I basically live and breathe contracts, so you’re in good hands.
I want to talk to you about the battle of the forms. Or, in other words, who contract should you use—yours or theirs? But before I continue, if you have any questions about today’s video, or about contract law in general, please do get in touch with us by calling us 1-800-355-455 or emailing simon@contractcompany.com.au.
So, whose contract should you use?
A client, partner or supplier has asked you to sign a contract. You want to get your relationship off to the best possible start. But, do you sign, or so you offer them a contract of your own?
Let’s look at a recent example. A client came to us as he wanted to get an app developed overseas. He wanted to present the app developer his contract.
My response? Let’s take a look…
“In my experience, it’s normal that the service provider, either the one who’s providing the goods or the services, is the party whose terms are used.”
Now, that doesn’t mean you have to go down this route (it’s not written in legal stone). With commercial law, you can, to some extent, choose how you want to tackle things.
But, it is usual for the person providing the goods or services to work their terms. In this instance, you would aim to negotiate or amend those terms to strike a happy medium. You can, of course, also opt to present your own contract as the recipient of the goods or services.
But, just to reiterate: you will get the deal done and closed quicker if you go with the service providers’ terms and conditions.
THE general rule of thumb
So, THE general rule of thumb is: if you’re the service or goods provider, you will usually set out your own terms.
From a business perspective, this makes sense because if you’re the provider, you’re essentially selling your goods or services. And in that sense, you should have the authority to set your terms based on the way you work and the goods or services you offer.
So, the purchaser of those services or goods should, in reality, accept your terms based on your way of operation. That said, sophisticated service buyers will say along the lines of:
“Send me your proposal or your quote, and once I get you acquired, I’ll take a good look at it.
“And, just keep in mind that my lawyer or I may want to come back to you “with changes to the contract.”
So, to summarise:
Well, just a couple of points.
One: If you’re the service or goods provider, it’s expected that you would set out your own terms and, therefore, present your own contract.
Two: If you’re the purchaser or recipient, it’s expected that you sign up to the other party’s terms & conditions.
The negotiation
While following the general rule of thumb is advised, as mentioned, you can request amend the terms of the contract if you see fit. Yes, you can, and you should negotiate any terms you believe could do with a little tweaking.
Circling back to the guy who was looking to get his app developed. I said to him:
“Look, if you want to sign up to, and work with, the app developers terms and conditions, that’s fine. You’re getting what you want from the app in the sense that you’re getting what you pay for.
But, it’s the IP issue: who owns the IP in the app, exactly? And, when is that IP going to be transferred?”
So, in this case, I advised that providing he made it clear in the contract that he will earn the IP when it’s created, making that small but essential amendment, he can sign and recline with peace of mind.
I hope you’ve found this ‘whose contract’ advice useful. If you have any questions, please give us a call 1-800-355-455 or contact us here at The Contract Company.
Thanks very much.
