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How do I read a contract?

When reading a client contract, there are a few key areas to pay attention to.

We're all friends until we're not, then all we have is this piece of paper to refer to. Our contracts with clients may look long and convoluted, so here are the key areas to zero in on:

  • Section 1. Program
    • This includes a summary of the program and deliverables.
  • Section 2. Term and Termination
    • 2.1 Term calls out the start and end dates of the initial term and any renewal term.
    • 2.2 Termination outlines how a client can get out of the contract.
      • Note: Common language includes "termination for convenience" (i.e., the client can put in their notice at any time during the engagement) vs. "90 days notice before end of the term" (i.e., the client has one shot per year to give their notice)
  • Section 3. Fees & Expenses.
    • For projects, specifically
    • 3.2 Restart Fee & Project extension fee.
  • Section 4. Payments, Taxes and Late Payments
    • Note: billings for monthly for retainers or milestones for projects
  • Section 5.2 Services, specifically change orders.
    • Note: approvals change orders (overages too)
The rest is legal mumbo jumbo. It rarely gets changed, or if it does, it rarely impacts how we perform the service.