Agreements and contract templates for online business

Love them or hate them, contracts feature heavily in the online world. Whether you're signing up for an online service or sealing a web development, marketing or ecommerce deal, there will probably be a contract involved. If there isn't one, there certainly should be.

As much as I loathe contracts and much prefer "gentleman agreements", given the nature of commerce being rather predatory it's important that you use formal agreements in your online business; especially if you're a web developer or if you communicate commercial in confidence type marketing/ecommerce information with potential partners or clients. 

Many a good idea has been stolen due to contractual glitches or lack of any sort of contract altogether. While verbal contracts are a legal agreement, proving a breach and enforcing obligations is awfully difficult, so it's best to have agreements in writing. Creating a set of templates for these purposes is a wise investment of time.

Agreement & contract templates Contract Pack Pro - 200+ contract templates and sample agreements for online business & IT with variations for USA, Canada, UK & Australia. Templates can also be purchased separately!

Familiarity and contracts

Even if you're dealing with friends, clients, partners or merchants whom you're very familiar with; remember the maxim "there are no friends in business". People change, companies change - good arrangements can turn sour overnight. Having a contract in place also adds a degree of professionalism and conveys that you're serious about the agreement.

I was recently burned in an arrangement with a partner company whom I knew well - since 2001. We signed a special affiliate partnership type contract back in 2002 and at the time, the terms seemed perfectly fine. 

The problems started occurring when the company was acquired by an aggressive multi-national company a few years later. That company had shareholders. Generally speaking, shareholders don't care about your arrangements; only their returns. Business ethics tend to fly out the window. If a small company you have an arrangement with should be acquired by such an organization; all your alarm bells should start ringing - especially if you don't have a good contract in place.

From the point of acquisition, the relationship I had with my once solid partner gradually degraded (despite what turned out to be empty promises) until this year when the company decided to terminate the contract altogether. 

Due to a rather gaping hole or more accurately, a grey area in the contract, this also meant the loss of ongoing commissions on clients already referred... and we're talking a 5 figure sum at least that I'll be losing. It was a very bitter experience, but a good opportunity to learn an important lesson about contracts.

Balance, responsibilities and expectations

Think of a contract also as a way of protecting the other party and as a document for clearly outlining the responsibilities of both parties. 

In my opinion, a good contract is balanced, yet so many of documents these days are just about covering the providing parties' butt. That is an important aspect, but bear in mind that an unbalanced contract can also scare away potential clients and partners. 

I was reviewing a contract template just a couple of days ago that basically said "we promise you nothing, we'll take your clients away from you at our discretion". The lawyer who prepared that contract may know law, but obviously knows nothing about building relationships in the online world :).

Contract negotiations can also suck up substantial resources - a recent negotiation I was involved with that really should have been straightforward went on for literally months; just in relation to the document itself. Get it right from the outset by ensuring the interests of both parties are covered and you can save a great deal of frustration, time and money.

Where do you need to use a contract?

When you think about it, any time you are entering into a transaction or exchange of goods and services, that's a scenario where a contract template should be developed. Of course, you can get so contract-focused that nothing actually gets done, so exercise discretion. 

Ask yourself a few questions about the scenario:

• Is there money involved?

• Is there substantial time or effort on my part involved?

• Does the situation involve me providing confidential information?

• Are there legal implications should this arrangement fail?

• Will my clients' suffer if this arrangement fails?

If you answered "yes" to any of the above; then it's probably wise to have a contract template ready for the purpose.

Agreement & contract templates Contract Pack Pro - 200+ contract templates and sample agreements for online business & IT with variations for USA, Canada, UK & Australia. Templates can also be purchased separately!

Common contracts in online business scenarios

The following is a list of some of the various agreement and contract template types that you may need in your online business, depending upon your focus.

- Pre-Contract Agreement. A template document for protecting designs, strategies and concepts prior to a contract for a project being signed. 

- Non-Disclosure Agreement (NDA). Similar to a pre-contract agreement. This is to protect proprietary information about your company, products or anything you may discuss with a potential partner or client; including the proposal itself.

- Web Site Development. Clearly outlines the responsibilities and expectations of both parties for a web development project; including payment details. A web site development project is also essential for preventing what's called "scope creep" i.e., a situation where you wind up doing more work than was originally agreed upon.

- Maintenance Agreement. After the site has been completed, customers usually have ongoing questions, requests for "tweaks" etc. A maintenance agreement can help ensure that the client is aware that this work will cost them.

- Graphic Design Contract. An agreement in relation to the production of logos, web site graphics, brochures etc. This contract can also act help ensure the client understands that you are absolved of any copyright infringement responsibilities related to any materials they supply.

- Search engine optimization contract. An agreement that outlines your role in optimization vs. results, which often can't be guaranteed given the unknown element in which search engine algorithms operate and frequently change. 

- Cross promotion advertising agreement. Often in the online world, rather than an exchange of money, two companies will agree to promote each other on their web sites, to their respective users via email etc. This contract clearly outlines the expectations of both parties and duration of the arrangement.

- Advertising and marketing services agreement. Covering aspects of campaign management, creative and marketing material creation and the involvement of third parties.

- General project work. A short contract covering issues related to low cost and low risk small projects. Usually just a couple of pages, it covers all the various areas related to conditions and payment without going into all the intricacies necessary for larger projects.
For small, low risk jobs.

- Permission to quote. This agreement template provides a written record that a client or partner has given you permission to quote something they have said or written; for example, a client testimonial.

- Affiliate agreement. A contract that clearly outlines the responsibilities and expectations of a merchant and the partner promoting the merchant's products on a commission basis. It includes payment schedules, details of whether the commissions are one-time or on a recurring basis, acceptable forms of promotion etc.

Agreement & contract templates Contract Pack Pro - 200+ contract templates and sample agreements for online business & IT with variations for USA, Canada, UK & Australia. Templates can also be purchased separately!

This is really only just scratching the surface. With so many so many different types of online businesses around these days covering every industry imaginable, it's impossible to sum up in a single article every contract you might need. Here's a few more templates you may need to consider:

• Privacy agreements

• Terms of use

• Copyright transfer

• Content reproduction

• Equity investment

• EULA's (End User License Agreement)

• Contract variation agreements

• Domain name/site transfer contract

• Sweepstakes and giveaway agreements

• Credit card charge authorization

• Client debt compromise contract

• Contract dissolution agreement

It's also wise to have the following templates on hand for situations where a partner or client is in breach, or another party is infringing on your rights:

• Notification of outstanding account

• Final notice of overdue account

• Termination of account notice

• Trademark cease and desist notification form

• Copyright cease and desist notification Form

• Breach of contract notice

Sourcing contract templates.

Having to prepare contracts for individual situations each time they arise is costly and wastes a lot of time; so it's best to have contract templates available; base documents where you can basically just fill in the blanks.

Thankfully, you won't have to spend tens of thousands of dollars in legal fees in order to have these templates prepared for you. You can find sample contract templates by searching the web; but you do need to be a little careful in their usage.

Firstly, the content of free templates may be totally out of date in terms of current legal requirements. It's safer to pay for a contract template set from a reputable source as these are more likely to be up to date.

Secondly, laws vary from state to state and country to country, so what may be a legal contract in the USA may not be in the UK, Canada, Australia etc. Again, purchasing contract templates from a reputable documentation company can be a better way to go as often they'll have contract template variations for your region. 

I recommend  Contract Pack Pro, which includes over 200 contract templates suited to IT and online business, along with variations for the USA, Canada, UK and Australia. You can also purchase individual contract and agreement templates from the pack.

In any case, for important contracts developed from templates, it's wise to run them by your lawyer first - but you'll still save money on needing your lawyer to prepare the contract from scratch.

Related articles:

How to write a web development proposal

Michael Bloch
Taming the Beast
http://www.tamingthebeast.net 
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