Who Wins With This Phrase: "Consultant Shall Perform the Services Until the Client is Reasonably Satisfied"?
Before diving into the main content of this article, let’s first break down our topic - a Client Services Agreement.
What is a Client Services Agreement and why do you need one?
A Client Services Agreement is an arrangement between a client and service provider. It states the terms and conditions for the services that will be provided to the client. Whether you call it a Client Services Agreement, Consulting Agreement, Services Agreement or another similar name, this agreement is the key to making sure that you have productive and profitable relationships with your clients.
Unlike when you buy a physical product or goods such as a new television or pair of jeans, which show exactly what you are getting for your money, when someone purchases services, you’re typically not buying anything that you can pick up and bring home.
That is why it’s critical to have a written, legal Client Services Agreement that is signed by both the person providing the services (the independent contractor, consultant or freelancer) and the client - before any services begin. This document will explain and outline what services are being provided, the expectations for service delivery, and other responsibilities and obligations of the parties (such as the obligation for the client to pay for the services).
Yes, it is possible to access Client Services Agreement templates in free formats on the web. These templates often appear to be comprehensive legal documents. They seem to outline the terms of service between contractor and client. It is easy to think that using such templates will save a significant amount of money and time.
However, a poorly drafted Client Services Agreement can ruin your business. There can be huge risks involved, including whether the client can demand changes to the services without the consultant’s permission or require free reperformance of services, whether the consultant has options if the client pays late or completely withholds payment, and whether the consultant can even legally work for other clients in the future.
This is why it is necessary to have a strong Client Services Agreement that is written and reviewed by a professional, and that is written to benefit and protect the service provider.
Take the phrase "Consultant shall perform the services until the Client is reasonably satisfied" as an example. It seems like this phrase addresses a consultant’s responsibilities while also considering the client’s needs. Upon closer evaluation, these 11 words have the potential to cause significant business losses for the consultant. From the perspective of the consultant, this phrase should never be included in the Client Services Agreement.
The phrase, "Consultant shall perform the services until the Client is reasonably satisfied", means that the consultant has legally committed themself to unlimited free reperformance of services until the client says "they're satisfied." The consultant has given up all control in the ability to determine when they have finished performing the services owed to the client. They also release control of when they’re potentially going to be paid for those services.
If you are a consultant, the above example is never a situation that you want to be in. It is easy to think that including the word ‘reasonable’ is enough protection. This is not the case. As long as the client has a valid business reason to ask for reperformance of services, you are on the hook!
Giving up control over determining an end to your services means that you have committed to free reperformance of services until the client says 'I'm satisfied.’ This can be for reasons such as a client changed their mind about what they wanted, or they just weren't happy with the initial service delivery. You are losing money on that particular contract, and you're losing the time that you could be performing another contract for someone else. A client’s demand for free reperformance of services can easily exceed the original value of the contract.
If you've signed a Client Services Agreement or consulting agreement that contains the phrase "Consultant will perform the services until the Client is reasonably satisfied", or any version of a similar phrase, that is a huge problem.
If this is in your agreement, whether it's a version that the client sent you, or a template that you downloaded for free on the internet, you have legally committed yourself to free reperformance of services until the client is satisfied. When you sign a Client Services Agreement it must contain specific measurable qualities. The client service agreement needs to state when your work is enough and when the client has to pay you. This document should help establish a business relationship that runs smoothly without any misunderstandings. When both parties are clear in their understanding of the terms of a project, the contracted work can be performed efficiently and without unnecessary interruptions. That is the key to happy, productive, and profitable client relationships.
Understanding the nuances of your Client Services Agreement is paramount to protecting your business and ensuring profitable client relationships. As we've explored today, even seemingly innocuous phrases like 'Consultant shall perform the services until the Client is reasonably satisfied' can carry significant risks for service providers.
Building on this critical foundation, our next newsletter will delve into another crucial clause often found in these agreements – the assignment of work product. We'll be asking the important question: Who Benefits if a Client Services Agreement Says "The Consultant Will Assign All of the Work to the Client?"
Stay tuned to learn why understanding the implications of assigning your work product is just as vital as defining the scope of your services. You might be surprised at who truly benefits from such a clause, and how it can impact your future business endeavors. Don't miss our next deep dive into the essential elements of a strong Client Services Agreement!
