Client Contracts

Skill level: Beginner

Description

A client contract is an agreement between a supplier and a client where consideration has been given. From the viewpoint of quality as defined by Dr. Deming, the client contract includes the requirements for quality. In service quality, however, the contracts often can only be vaguely described.

Benefits

  • Defines requirements for quality
  • Sets acceptance criteria
  • Limits disputes
  • Helps in providing remedy in event of default

How to Use

Use a client contract whenever two or more parties create an agreement by negotiating the terms and then documenting it in writing.  Often signatures are required; however, some client contracts may be enforceable without signatures. Usually the statute of frauds governs when a contract must be written or signed.

Relevant Definitions

Consideration: Anything given in exchange for an agreement. For example, if $1 is given in exchange for a lottery ticket, the understanding is that if the numbers on the ticket are selected, the ticket owner shall be paid a certain sum as agreed upon.

Contract: An agreement between two or more parties where consideration is given.

Default: Breaking a tenet of a contract.

Purchase order: A type of client contract where a referral is made from an existing contract or is limited in detail.

Remedy: To make right.

Statute of frauds: A legal requirement that certain types of contracts must be in writing to be enforceable.

Example

A client (customer) signs a contract agreeing that he will stay with a cellular phone company for 12 months and receives a telephone. The customer gives his agreement as consideration and the company gives the phone as consideration. The contract states the duties that the company must perform and the duties of the customer. In the event either defaults, mitigation methods will use the contract as basis for remedy.

 

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