Monday, May 19, 2014

'Contracts or Service Agreements' as a small business do we really need them?

I wonder how many of us keep telling ourselves that we need to start supplying contracts when we take on decor and event work but have yet to do it?

Contracts sound very formal, however, putting your agreements in writing (between you and your clients) keeps your business relationships in good standing and potentially out of court! 
Contracts can be given a variety of titles; including: supply agreements, services agreements, service contracts, supply contracts, contract of work and just about any other permutation of these words and more!
Often a contract is formed once you have finalised all the details with your client, it could be that you have had face to face and site meetings, phone calls or a number of emails, but there comes a point when it needs to be summarised and collated into a formal document, thus creating a contract between you and your client.
Firstly you should create all of your documents on your company letter headed paper, if you are planning on emailing documents such as contracts and invoices, there are many free templates that will allow you to create your own, once you have spent the time creating your letterhead remember to save it as a template so that you can find it easily for the next time.
I am unsure of the legalities worldwide but in the UK there are legal requirements for business letterheads;

Sole trader business guidelines

If you are a sole trader you can trade under your own name or you can choose a different business name. If you choose a business name that is not your own name, you must include your own name and the business address on all letterheads and order forms.

Partnership business guidelines

If you are a partnership business your letterheads, order forms, receipts and even invoices must include the names of all partners and the address of the main office. If there are many partners then it is also acceptable to state where a list of partners may be found.

Limited company guidelines

If your company is trading as a limited company the letterhead and order form stationery (whether printed or electronic versions) must include:
  • Your full registered company name
  • The company registration number and place of registration
  • The company registered address and the address of its place of business, if different
  • There is no need to include the names of the directors on the letterhead for a limited company, but if you choose to name directors all directors must be named
Most letterheads also include a telephone and fax number, a url for the business’ website and an email address.

Contract content

  • Client name, address & contact numbers, if you have been dealing with someone specific make sure that you include their name as well as the company if relevant.
  • The date.
  • Project/Work Title.
  • Project/Work Description.
  • Event Venue including address.
  • Event Name and Event date.
  • Installation date and time. If you have agreed a specific access time with the venue/organiser or preparation area, include this within your contract, stating any named parties such as the 'banqueting manager' or 'shopping mall deputy manager's' name if that's who you agreed these with.
  • Removal of Installation. If you are 'striking' the event, state the date and time when this will take place. If you are not required to go back to remove the decor after the event, I would recommend stating; 
The client is responsible for the removal of all provided decor and please note: 
Foil balloons may conduct electricity. Do not release helium filled foil balloons outdoors or use near overhead power lines. 
Foil balloons are non biodegradable and therefore should be disposed of carefully with general household waste. 
Latex Balloons, Warning! Children under eight years can choke or suffocate on un-inflated or broken balloons. Adult supervision required. Keep un-inflated balloons from children. Discard broken balloons at once.  
  • Pricing. I would recommend listing what this includes - this could include headings (not actual items) such as 'materials', 'Preparation of balloons', 'inflation and Installation', 'Delivery'', and 'removal of Installation' this will ensure that both parties know exactly what is included within the price and more importantly what's not included * see below regarding 'ownership of materials'.
  • Payment Terms. Deposit and payment of final balance - how much is the deposit, when is it due, is it a refundable or non-refundable deposit? When is the balance due, make sure that you clearly state a date. 
Many professionals suggest taking a down-payment or deposit of up to 50% before the start of any project, and collecting the balance by the day of completion, before turning over any goods or services to your client. 
  • Cancellation/ Force Majeure (unforeseeable circumstances that prevent someone from fulfilling a contract). What is your cancellation policy? Many companies will have cancellation fee's and terms that relates to the amount of notice given. These could read like this;
      • All requests for cancellations and/or transfers must be received in writing.
      • Changes will become effective on the date of written confirmation being received.
      • Event cancelled less than ** days prior to the event will be subject to a **% cancellation fee.
Ensure that your terms are fair and balanced, you cannot expect your customer to pay excessive cancellation charges and loss of up-front payments if good notice is given, contracts cannot be unbalanced, that means that they cannot weight heavily in your favour, as in it's not OK to state that a customer cannot cancel an order without giving a minimum of 6 weeks notice, but you can cancel an order within 24 hours!

Other things that can also be included within your contracts:

  • Ownership of materials; This will cover any hire/rental items that may be included as part of the event. It is important that client is aware of all rental items and how these items will be collected or if the client is responsible for the return of the items?  A return by date and any charges that the client may incur for lost or damaged items should also be included. 
  •  Design change and bad weather policy; Weather can play a major factor especially when creating decor for outside events. I would recommend adding any agreed changes or that decor could be subject to change in the event of bad weather.

Finally, when you email or send your 'contract of work' to your client I would also include your invoice (including full details of payment terms and how you want to be paid), a copy of your public liability insurance document (anyone who offers services such as event decor, face painting, candy carts or other party supplies should have public liability insurance cover) and risk assessment. I am unsure if risk assessments are a legal requirement for everyone, however many clients will request that you submit a risk assessment.

I have create a sample 'Contract of Work' letter, to show you how easy it is to create a contract between you and your customers, you could easily create something like this as a template, making it quick and simple every time!

 Example 'Contract of Work' letter.

I hope this helps? The business side of running a business can be very daunting sometimes, however, a contract is vital for your own protection, you never know when you might need it!
To learn more about the business side of a balloon business and much more why not join the Qualatex balloon Network, for more details on this program click here!

Happy Ballooning!

For more information regarding writing contracts visit:

For Public Liability cover in the UK contact the Balloon and Party Industry Alliance


Unknown said...

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