I regularly receive questions about who is the actual owner of intellectual property in items created by employees, contractors and suppliers – and often the answer isnt quite what people expect! So in this episode I provide an overview of intellectual property ownership, I explain underlying issues and some of the hidden traps to be aware of, and I highlight tips about how businesses can protect themselves.
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00:54 What is Intellectual Property
01:50 Ideas vs Expression
02:58 Types of Intellectual Property
03:23 Who owns the underlying rights to intellectual property
05:03 Employment Agreements
06:59 Contractor and Supply agreements
08:26 Making sense of the legal jargon
10:21 Consequences of not having the right agreements at the beginning
13:42 Action Steps
15:31 IP ownership for existing contracts
17:00 Background IP vs Project IP
19:28 Note to Suppliers
This area is an area that I'm asked about regularly in relation to who owns the intellectual property in things created by employees or created by contractors or created by suppliers in providing things like training or design or website development or advertising materials. So given I'm asked about this area all of the time I thought maybe it would be appropriate today to give a bit of an overview of the area and what you can do to protect yourself in relation to this area.
What is Intellectual Property?
Let's start with what is intellectual property. Intellectual property is property of the mind as distinct from real property like for example a table. If a table is stolen, we'll know because the table isn't there anymore. But intellectual property is a little bit more complicated because obviously if intellectual property is stolen it might still be in the original spot but also copied in other places as well. And the issues with intellectual property are not just in identifying whether or not material has been stolen or copied or used without your consent or the consent of the owner of the intellectual property. But there can also be a more confusing element in relation to who indeed owns the underlying intellectual property rights to that intellectual property in the first place.
Idea vs Expression
One of the myths that we should really deal with right upfront is this concept of ideas vs. implementation or expression. It's really important for us to remember that ideas themselves are not protectable. The only thing that we can protect with intellectual property rights are the expression of those ideas. That's one really important thing to bear in mind if what you're trying to do is protect ideas rather than the actual expression of those ideas. What you really need to think about is having the right confidentiality agreement in place because that is the document in many forms that will help you to protect discussion of ideas that you might have in certain contexts. If that's something you're interested in we'll talk about that in another episode. But for today we're talking about intellectual property rights that are capable of protection. We're talking about the expression of those ideas.
Types of Intellectual Property
What type of intellectual property can we have? We can have intellectual property that's created by our employees. We can have intellectual property that's created by contractors or by suppliers. And I guess the question becomes how is it that you can protect yourself in the area depending on who it is that's creating this intellectual property.
Who Owns the Underlying Rights to Intellectual Property
First we'll go back to the general propositions of who is it that owns the underlying rights to intellectual property in each of these areas. If there's no written contract specifying the contrary, intellectual property created by employees of an organisation is usually owned by that organisation, so by the employer, as long as the intellectual property has been created in the course of the employment. Examples of this might be a piece of software, an article, a logo, a product or process, a business plan, advertising material - all of those sorts of things.
In Australia, as I said, the employer owns intellectual property created by an employee. If it's related to the employer's business, unless we have any contractual means for changing that initial position. For employees, this means if they are creating things outside of the business you want to be very careful about ensuring that that is clearly something that you're doing outside of the business not on company time, not using company resources. And if you're an employer and something that your employees are creating has high importance to you, you should ensure that you're protecting yourself properly in the employment contracts that you were using within your organisation.
What are the sorts of things that we can have in these employment contracts? We should be clear about the intellectual property belonging to the employer. That means we need to have clauses within these employment agreements that are clear about intellectual property ownership and the bounds of that intellectual property ownership. We should also have moral rights clearance clauses if required and these sorts of clauses will be relevant for some types of employees say for example employees who are creating things like designs that might be then used within your own organisation or indeed provided to your organisation's clients or customers as part of your services. You should have the appropriate confidentiality clauses within the agreement and you should also often have restraints or non-competition clauses if these clauses are appropriate to the situation.
I'm quite often asked whether or not restraints and non-competition clauses can actually be upheld in the area of employment agreements. Once again I'll talk about this in detail in another podcast because it's a really interesting area. But the important thing to remember is yes indeed these sorts of clauses can be enforceable but only if they are appropriate for the circumstances that they're used in. Like a lot of things in the area of law, it's very important that when you have these agreements you're drafting them in the right way so that you're not overshooting or trying to get more than would be reasonable in the circumstances because by doing so you're risking the position that these clauses might be seen as invalid. It's about having the appropriate clauses in these sorts of agreements.
Contractor and Supply Agreements
So we've talked now about employment agreements, how about we moved to contractor and supply agreements. And essentially the issues are similar but the underlying contractual position or position before a contract is slightly different.
Intellectual property that's created by contractors - so that can include any type of supplier to your business or staff that you may be engaged in a contracting type arrangement. This might include advisors or consultants that work on a performance basis. Contractors are often engaged to create a wide variety of materials for an organisation so that can include advertising materials design materials and all sorts of range of materials for an organisation. What is very important to understand is that without a contractual obligation for the contractor to assign the intellectual property to your organisation the underlying position is that that contractor may indeed retain the rights to that intellectual property, with the organisation effectively just having a license to the use of the intellectual property for the purposes for which it was created.
Making Sense of the Legal Jargon
What does all of that mean without all of the jargon? Essentially it means that if you engage a contractor or a supplier to create anything that has intellectual property and it's something that you want to own the underlying intellectual property rights for or your organisation wants to own that underlying intellectual property rights for, then you need to ensure that your contract adequately deals with intellectual property and how that transfers to your organisation. We need to make sure an agreement is in place and that the agreement is in place before work has commenced.
I'll talk in a second about what we do if we have a situation where work has commenced before an agreement is in place. But talking about the ideal situation here. We want the contract in place before the works under the agreement commence. We want to be clear about who owns the IP and when that IP transfers if there is a transfer. Once again, it might be appropriate for us to have moral rights clearance clauses if needed. And confidentiality clauses are another type of clause that are really important to consider including in the agreement.
As with employment agreements, restraints and non-competition clauses can also be a really useful type of clause to enter into these sorts of agreements. They're not always appropriate. And so it's really about working out when these sorts of restraints or non-competition clauses might be appropriate. But certainly in some cases they might be. It's one of those things you should keep in your checklist to ensure that you're considering in each contract or relationship you're engaging in intellectual property is being created.
Consequences of Not Having the Right Agreements at the Start
What are the consequences of not having the right agreements in place at the beginning?
Confusion Over Ownership
The first consequence is that there can be great confusion over who it is that owns the underlying intellectual property rights. This might mean that you can't use the intellectual property in the ways that you had intended. It might mean that once you finish with working together with a particular employee or supplier or contractor who has created these intellectual property rights an argument then arises as to who has the ongoing rights to the use of this intellectual property. It might be that a supplier that has done work for you is now going and using this type of work for a competitor of yours. And if that's something that you wouldn't want then it's important that you're clear in your agreement right from the beginning about the bounds of the intellectual property rights and therefore the restriction on them in using that intellectual property with someone else who might be a competitor of yours.
Impact on Business Sale
This can also impact if your organisation ever looks to sell the business itself or any of the assets of the business because in a sale environment if you can't prove the chain of ownership of intellectual property that is important and underlies the value of the business then you can be eroding the value of the business as it is.
Businesses Engaged in Providing Goods or Services
And finally if you're engaged in the type of services or provision of goods where intellectual property that you have is part of what you are providing to customers or clients, then it's extremely important that it's clear that you own intellectual property to do that. Otherwise you could be on the end of some adverse action from your end customer or client if they find that they don't have the intellectual property rights that they had thought they had. And for example this might play out in the employee or the ex-employee, the supplier or the contractor taking an action against you or your customers or clients for breach of intellectual property rights if this issue isn't sorted out. So it's extremely important to get this clear right from the beginning.
And if you're in the position where you're already engaged in a contract either with an employee or a contractor or supplier where intellectual property is being created or has been created, but you can now identify that there has been some issues in the contracts that have underpinned this arrangement then it's not necessarily too late. You can go after the fact and organise for an assignment of that intellectual property but it's very important that you jump on this as quickly as possible because the more value that is attributed to the intellectual property the more likely it will be difficult to fix this up later and perhaps more costly to fix this up after the issue has arisen.
What are the action steps that we can take moving forward out of everything we've talked about today?
Identify and Understand
The first thing is to identify and understand what intellectual property is relating to your business so make yourself aware of what intellectual property is in your business. Make sure you're asking questions when you're entering into new relationships with suppliers as to whether or not what they are doing for you has some sort of intellectual property basis or issue to consider as part of that.
Then secondly review all of your contracts that are on foot at the moment all that relate to intellectual property that has been created in the past and make sure you have these clauses that I'd gone through earlier on to ensure that you have the right intellectual property ownership structure for yourself in place. Make sure the contracts are clear about who owns the intellectual property and at what point or you know under what circumstances intellectual property transfers are dealt with if there are transfers in place.
Collate and Track
And my last tip is to create an IP register where you collate all of your intellectual property and that has been created for you or by your organisation over time. And there, have reference to any contracts that may be relevant to prove the undetected underlying intellectual property rights.
That's I guess the outline today of the major issues underpinning intellectual property relating to an organisation through its contracts with employees and contractors. I just wanted to turn now to a question that I'd received that led me to talk about this topic because I think it raises some further issues that might be relevant to people who are listening in today.
IP Ownership for Existing Contracts
This question was from a business in relation to a contract that they'd been asked to sign. They were concerned about the ownership of the intellectual property once the contract was entered into and what happens to intellectual property that was going to be created by them for them by the supplier if either party ceased the agreement.
Just to make it clear they're entering into an agreement where various marketing items were being created for them to use in their website and they were concerned about clauses that were being used in relation to what would happen if either party ceased the agreement. I won't read the whole paragraph out, but the paragraph was under the title ownership of materials and intellectual property which is a fairly standard sort of place for these terms to be or clauses to be in a contract. Usually, you'll find these clauses in somewhere where there's a relation a reference to ownership and intellectual property. This particular clause talked about background IP and work product.
Background IP vs Project IP
Now one of the things that I want to explain from the outset is what background IP and project IP or foreground IP or work product IP is because it has a fairly specific meaning and these sorts of clauses are fairly common or clauses where we have these sorts of words being used.
Background IP usually relates to the intellectual property that either party or both parties are bringing to the relationship. That's intellectual property that they have created in the past prior to the commencement of this relationship. And usually foreground IP or project IP or work product IP relates to intellectual property rights relating to something that is being created as part of the project.
Usually, what happens when we're using a background IP versus project IP type clause is we have the opportunity to say that each of the parties bring their own background IP and the other party doesn't get ownership of that background IP. But the customer might often get a license to the use of that background IP to the extent that it's required for them to be able to use the IP that's created as part of the project, so the project IP.
In the project IP clause we usually have wording that says something to the effect of the project IP (i.e. that the intellectual property that's created as part of the project that is being undertaken by these parties together) is owned by, and here you insert whoever it is that you intend owns the intellectual property. If you are the customer in this situation, usually you would then at this point say that you own the intellectual property in the project IP if indeed you want to ensure that you have ongoing rights to the use of this intellectual property that aren't impeded by the supplier so that your right to the use of this project IP continues after the termination of your agreement with the supplier.
There's lots of other things to think about in these clauses so you need to be clear about how the license for the background IP actually works and make sure it works for you in whatever situation you're in and clear about the project IP.
Note to Suppliers
Just a note here for people who are using this where they are the supplier. If you are the supplier in this sort of situation and a customer is asking for full ownership of all intellectual property from the project, which you know isn't necessarily uncommon, and if you are prepared to give the customer that intellectual property, then it's important that if the project intellectual property includes a base of something that you use with other clients you must ensure that you have a background IP clause to ensure that it's clear that the underlying rights of whatever the base is that you had created prior to working with this particular client are still able to be used by you with other clients into the future.
I hope that clears up the area of background IP and foreground or project IP also known as work product IP. It's a bit of a confusing area. If you're confused by any of that or by any of the other areas that we've talked about today just pop over to the show notes talkinglaw.com.au and this episode in relation to who owns IP relating to your contracts and your organisation. And we'll have some downloads there for you in relation to all of these areas that I've talked about today. Downloads in relation to a checklist about how to protect yourself moving forward and make sure that you have the right clauses in place in your agreements from the outset.
Well, thanks a lot for listening in. Hopefully you've found that really useful. And once again if you enjoyed what you heard today please pop over to iTunes and leave us a review. And if you're interested in hearing about me talk about the legal implications of an issue that you're thinking about. I'd encourage you also to go to our website and leave us a message at the website with questions that you would like us to cover off in future episodes. Thanks a lot for listening in and see you next time!
One common legal issue businesses face are problems that crop up from time to time with clients. This can lead to clients paying slowly, or not at all, costly and time consuming disputes, and brand damage. In this episode we discuss how having the right approach from the start can help you to avoid most of these problems.
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1:40 Five customer engagement issues you need to look into
5:11 Setting up the right terms and conditions
6:00 What should you include in your terms and conditions
6:38 Clarity on responsibility of both parties
7:49 Clarify who owns the intellectual property
9:06 Payment terms – incentives and penalties
9:57 Liability clauses you need to include
13:50 Writing your terms and conditions in plain English
14:55 Fulfill your own terms – and be proactive
16:24 Consider the cost of inaction
17:31 Four action steps you need to take
Today we’re talking about the ways that you can set up your client relationships right from the start.
So, why is this important? One common legal issue that businesses face, are problems that crop up from time to time with clients or customers, depending on which language you use.
That might reflect itself in:
- Clients being slow payers;
- Clients not paying at all;
- Clients that raise issues with the goods or services you’ve provided;
- Clients that try to terminate contracts with you before they’ve come to an end; or, at the worst,
- Situations where clients try to make you liable for the loss they have suffered, that potentially could even be greater than the value of the goods or services that you’ve provided to them.
The most common of all of these that I see are payment related issues and disputes about the goods or services that have been provided. Although, I have to note that when disputes occur, they often directly link also to slow non-payment as well because when customers aren’t happy they generally stop paying, so all of these problems can be interlinked.
In most cases these sorts of issues essentially come down to a failure in the process of the original engagement with the customer and the systems you set up right from the start to support them and deal with any issues as they occur. For example, generally I see these issues arising from one of these particular situations:
- Terms and conditions or terms of sale that have been used in the beginning that haven’t had the right clauses included or, they’ve had the clauses but they’ve been set up in a way that means that they don’t have the effect that they were meant to have;
- There were no Terms and Conditions right from the beginning of the relationship with the client;
- The Terms and Conditions were not read and understood by the client;
- There was a lack of communication in any engagement process and throughout the relationship, which then allowed issues to bubble up to the surface; or, finally
- There was a lack of systems established to monitor the relationship and deal with any issues as they occurred.
Today we’re going to talk about each of these five areas. Essentially, having terms and conditions in place to begin with that include the right clauses, communicated in a way that your customers understand; ensuring that your communications throughout the process of delivering the goods and services are clear, and that your systems support the rights and obligations that arise through your terms and conditions document.
What does that mean? Essentially, that you have systems in place to make sure that you are providing what you have said to your client that you will provide. Now, if all of these things are ticked off, I think you’re fine and that you’re in a situation where it is extremely unlikely that you will have customer issues going forward.
An example of this having been done really well is a recent case that I worked on where we were able to get a $250,000 win for one of our clients, on the basis of really tight wording that we used in their contract initially and a good negotiation strategy in dealing with the contractor’s view.
That’s an example of where terms and conditions have really correctly and helpfully given you a basis that you can launch from if a dispute does occur in the future even though, if done well, you’re also highly reducing the likelihood of dispute. But, on the flip side, we’ve had many instances where businesses have signed up clients for lots of projects who have then pulled out half way through and refused to pay for the work done, or clients who have come in to see us who have lost tens of thousands, sometimes hundreds of thousands of dollars when their clients refused to pay, because an argument erupted during the period of the provision of the goods or services. All of those usually link back to some issue in one of those five areas that I mentioned a few minutes ago.
What processes should you have in place?
Today, we’re going to start discussing what processes you need to have in place to ward off issues from the start. I’ve also created an action guide for you as a checklist that you can use to guide you through all of these areas because we’re going to be talking about a lot today, obviously too much for you to take note of while you’re listening to a podcast.
So, to make it really easy, I’ve made a checklist available for you related to this episode at talkinglaw.com.au or you can access it via the website of my commercial legal practice at aspectlegal.com.au
Okay, so let’s launch into what you need to do to have the right terms and conditions in place.
The concept of having the right terms and conditions in place comes from, in essence, the concept that a contract is imperative.
- A contract sets the relationships between parties;
- It sets the expectations between the parties; and
- It’s not a document that describes simply what you will and won’t provide but also what you expect of your clients.
When done well, it helps to ward off arguments with clients because, essentially, arguments only occur when both parties think they’re right.
Thatmeans arguments can only occur when something hasn’t been clear, so our task is ensuring that we have documents that make all of these areas really clear that help to protect you from open liability and that helps you to set up the right expectations from the start.
Okay, so what should you be including in these documents? I’ll go through a bit of a checklist of the sorts of things that you should be considering including, but obviously I need to add a caveat that each business is different so you need to ensure that your terms and conditions are a reflection of your business not a reflection of someone else’s.
This is why copying and pasting someone else’s terms and conditions doesn’t really work because they’re not your business they’re a different business. So if you have copied and pasted a set of terms and conditions it’s important that you go back and that you review them thoroughly in light of the things that I’m about to talk about now.
Alright, so what should you be including in these documents?
Clarity on What You’re Responsible for
Firstly, clarity about what you will do and what you’re responsible for. This is, essentially, the crux of the documents. This is something that you should sit down and think about and understand first before you even get started in working out whether or not your current terms are appropriate for you where you are now. Other areas that you need to think about clarity are on payment terms, which sounds obvious but it’s so often not dealt with clearly enough in the agreement and it’s super important. You need to be clear on what the client’s obligations are and what you need from – if you’re going to require anything from them – to be able to deliver your goods or services. These issues are really important and often forgotten. If you need something from them, you need to be clear about this in your terms.
If they’re providing things to you then you need to ensure that you get protection in relation to any information they give you.
For example, sometimes this might look like licenses in relation to your use of those things. You need to be clear that intellectual property (I’m not going to go into this in too much detail, we’ll do it in some future episodes) but essentially intellectual property you need to think about a few different things.
Clarify who owns the intellectual property
Number one, if intellectual property ownership is important, you need to make it clear about who will own the intellectual property and, if intellectual property will pass over at some point, you need to be clear about when that will pass over. For example, very simply, many documents just simply say intellectual property will pass to the client but that isn’t making clear that you won’t pass to the client until the client has actually made payment. So that’s an important thing to include.
Also, bear in mind that sometimes, intellectual property clauses need specific caveats. So, that means if you are providing services or goods to your client that are based on some things that you then use with other clients as well, you just need to make sure you’re clear about what you’re actually handing over in any intellectual property clauses.
You don’t want clauses that essentially say all intellectual property will pass to the client, because that’s not really reflective of what’s happening and it might restrain you from being able to use that base intellectual property with other clients moving on into the future. Or, maybe you don’t even own all of the intellectual property yourself, say for example, if you’re licensing images from someone else and you’re providing graphic design or web development services you need to make sure that you’re clear that that intellectual property is not something that you can ever pass over in intellectual property form.
The next area that you might want to consider building into terms and conditions documents are clauses that deal with slow payment.
You might, for example, want to include some sort of incentive for your clients not to want to be a late payer. For example, Interest. Even if you won’t be applying the interest, or administration fees, or whatever else you’re calling fees that you might threaten to apply to slow payers, at least if you have clauses that allow you to charge these figures, it gives you something that you can threaten to apply if you have slow payers. It gives you some carrot to encourage them to pay in a timely manner.
Slow payment is a whole different topic which I will deal with in another episode in the future, but for now it’s enough to say that it’s important that when you’re reviewing your terms and conditions, you have the appropriate clauses to deal with slow payment.
You also need to make sure you have the ability to on-charge your customers for any enforcement cost and you need to make sure you have the right protection against liability and that in this you don’t over shoot the mark. Quite often I see liability clauses that really aren’t appropriate for the situation that they’ve been used in and that really overshoot the mark. The problem with that is that there’s various legislation around that might create an issue or the situation in which that clause then becomes invalid and you, therefore, don’t have any protection from that liability clause at all.
So, it’s really important when you have liability clauses – and when I say liability, I mean clauses that might be under the heading of indemnities or waivers or release clauses or there might be exclusion of warranty or exclusion of liability clauses, anything with that sort of heading – you need to make sure you understand what those clauses actually mean and make sure that they are appropriate for the situation of your relationship with your client.
I often find that people look at these clauses and have no idea what they mean and then decide, therefore, just to ignore them. But, that’s completely the wrong approach because if you do that and the clauses are incorrect for your business, then you don’t want to be finding that out later when it’s too late.
So, it’s really important that you understand what each of these clauses mean in your business and that they are appropriate for your business.
And then finally, you should also be thinking about how it is that you link this document – being your standard terms and conditions document – together with the documents where you provide the specifics of what you’re providing your customer.
Quite often businesses would use separate documents like, for example, proposals or estimates or schedules, or a statement of works where they set out the details of what it is that they‘re going to be providing to the customer, that isn’t something that’s included in the general terms and conditions.
It’s really important that each of these documents are referred to correctly in the terms and conditions and that you work out how they are going to interact together, and that you’ve also worked out a framework for what needs to be included in these documents that are your proposals or estimates, to make sure you’ve covered off the detail that you need to, to link it up correctly with your terms and conditions.
Alright, and the list goes on but these are the major issues that you should be considering.
But it’s not enough to just have your terms and conditions document in place, you also need to make sure they’re up to date with current legislation – and that current legislation, I must say, is changing all the time, so you really need to have your agreement updated at least once a year to ensure that you’re on top of that changing legislation and on top of your changing business phase. Quite often your business will be in a completely different stage now than it was one year before or one year in the future, and therefore, your terms and conditions need to accurately reflect where your business currently is now and the way you interact with your clients now; not how you did in the past or how you’re going to do it in the future.
There’s no point having terms if they aren’t understood by you and if they aren’t understood by your clients. I’m often surprised by how often people in the business don’t know or don’t understand what’s in their terms. It’s not just the owners and managers that need to understand agreements that regulate your relationship with your clients, but anyone who is part of the initial sale or who is client facing throughout the relationship.
So how do we do this? How do we create the situation where we have documents that are understood by you and understood by your clients? Because, let’s face it, I think the reality is, that many of us click away terms and conditions without ever reading them and I think that’s the reality that many of us have businesses or work in businesses where we deal with terms and conditions that we don’t even understand ourselves.
So where do we start with all of this?
Writing your terms and conditions in plain English
The first thing is we need to have our own client agreements that are written in plain English and that are easy to understand and that aren’t overly long or overly complicated, because the longer they are the less likely that any of the terms are going to be read or considered carefully by the very people that you want to communicate these to.
So, if we think about our agreements, essentially it’s a checklist for us. It’s a way for us to think about the important elements of our relationship with our clients, and that essentially means that we need these documents to be something that we understand and that they understand.
Another important thing to do then is also to review your terms and conditions and to work out what are the really important clauses to you and restate this to your clients in a really clear and succinct way in a separate communication to your client.
A nice way to do that, for example, might be to send out a welcome pack, or onboarding documents, or whatever you call them.
Firstly, as I said you need to understand the documents and then you need to make sure that your clients understand them as well.
Then, the next element to consider is whether or not you’re actually complying with the terms yourself, so you need to put the systems in place to make sure you can deliver your services or goods the way you’ve promise them.
You need to be rigorous about the standard of products and services you provide and the way in which you provide them, and this is particularly important as you grow because sometimes businesses grow quicker than the systems that are supporting them and the reality is that poor customer service will cost you dearly in the long run. So, if you’re making promises that you’re not going to back up, then you’re going to be creating a difficult contractual situation for yourself, but you’re also going to be creating bad blood with your customers.
So, you need to jump on issues quickly. You need to communicate early and this means that you need to have systems in place that can identify the issues before they escalate.
And fourthly, make sure your clients don’t slip too far away from the obligations that they have under the contract.
This can be a slippery slope. Sometimes, it feels really hard to pull up clients if they are not complying with their end of the bargain, but it’s really important that you reign them in gently at first, but quickly because these sorts of things, as I said, can end up being a slippery slope. So you need to have systems in place that can help you to identify if your client’s aren’t complying with their obligations and you need to ensure that you deal with it as soon as you’ve identified these as an issue.
The cost of inaction
What if you’re busy and you don’t have time for thinking about your terms of sale and you think people don’t even read them anyway? The thing that I would say to you in this situation, which I completely understand – we’re all busy and, as I said before, certainly there’s the belief that people often don’t read the terms and conditions that you send to them.
I think it’s really important that you think about the cost of inaction. So think now about what it would cost you if even just a few clients decided that they didn’t pay. Obviously, this is far, far greater potential cost than the cost of actually sitting down and going through the process properly.
What if, on the other hand you get upfront payments or deposits to cover your initial costs so you figure slow payment isn’t relevant? Don’t think you’re immune in this situation. We see lots of instances of customers demanding money back which then puts a strain on the business. But, simple economics aside, remember that client’s that are unhappy can do a lot of harm to your brand, so the concept of proper client engagement is as much about building and protecting your brand it is about legal and financial protection.
Four Action Steps for You to Take
We’ve talked about what you can include in your terms and conditions, now let’s talk about the Action Steps that you should be following in relation to this whole process, once you’ve got your terms and conditions, to ensure that you’re implementing them in the correct way. And, remember, if you’d like a download of this guide that we’ve gone through today, head over to our show notes at talkinglaw.com.au and download the guide from there.
So, your action steps are four to keep it really simple:
- Firstly, as I said review your terms and conditions of sale.
- Do you have each of the elements that we’ve discussed above? That’s the first thing;
- Are they compliant with current legislation?
- Are they easy to read and understand?
- Do your customers actually sign them, or do they just a tick a box that you know they’ll never be able to read?
- Do you understand what’s in your terms and do your staff or to the other staff in your organization understand what’s in your terms?
So these are the first things to do in relation to your review of your terms and conditions of sale.
- Then the second action step, is to think about your process of on boarding. Once you’ve got your terms and conditions right – once you’re confident that they contain all of the right elements and once you’re confident that you have produced them in a way that your clients and your staff will understand them, then now think about on boarding of your clients.
If your clients receive your terms and conditions in a tick a box exercise, then I would suggest that you separately send your terms to your clients as part of the onboarding process to give them the opportunity to have a copy of the terms, so that they can have a read through them. Obviously, it won’t be so exciting for them to read through the terms and conditions if they’re long and boring, so this gets back to ensuring that your terms and conditions are easy to read in the first place. And then, in your process of on boarding, the other thing that I recommend is being clear about the items that are important. So, as I said before, restate them in a welcome pack. You can say things like this in a nice way but just make sure you’re communicating it clearly.
So we’ve talked about the action steps of reviewing your terms and conditions of sale and thinking about your process of on boarding. The third element in your action step here is to review your systems for complying with your terms.
System and compliance reviews
- Do you measure how you are delivering your goods and services?
- Do all of your client-facing staff understand the terms and conditions and your obligations and your client’s obligations?
- Do you pick up your clients if they aren’t complying?
- Are there review periods in these terms?
Think about all of these issues in relation to how you can build systems to ensure that you are complying with the terms.
And finally, and this is action step number four, have a process for ensuring that you jump on emerging problems quickly before they gather speed.
So that’s it. That’s all I have today to say about this episode so just a quick recap. In this episode we talked about:
- Ways to set up your client relationships correctly right from the start. If you’d like more information about this topic, as I said, head over to our show notes at talkinglaw.com.au for your free download and through that website, you’ll also be able to get a transcript to this podcast episode if you’d like to hear or read each of these elements in more detail, and there you’ll also find details of how to contact our lawyers at Aspect Legal if you’d like help with any of the items we covered today.
We can certainly help guide you through what can be a bit of a complicated process if you’re trying to do it on your own.
And finally, if you enjoyed what you heard today, please head over to iTunes and leave us a review. We’d be very grateful and if you’d like us to talk about a particular topic, feel free to head over to our website and leave us a voice message with a particular question or issue that you would like covered. We’d be more than happy to cover any of the questions that you have and certainly I’d really like this podcast episode to be all about what you want to hear about.
Ask me what you want to hear about commercial law and business law and I’ll try to cover it in the future.
Thanks for listening in to what can sometimes be a dry topic, but I really hope you’ve got some pointers to take away that will help you really super charge those client relationships and help you ward off problems before they occur.