April 20, 2009 at 15:04We draw up a design studio contract, part 3: contract structure
The contract should not be a hard-to-read continuous web of chaotic text. It should be structured if you have nothing to hide. In addition, there are mandatory and well-established sections, which I will describe below.
It is worth remembering the principle of freedom of contract. That is, with rare exceptions, there are no strictly fixed names and formulations. You are free to create your own structure, your own section names. Just do not overdo it so that later there will be no problems in the interpretation of the text by the parties and the arbitrator.
The following sections are usually present:
We have sections in the agreement that describe how the parties interact, exchange correspondence, and important messages. Important points of interaction, such as approval of a design, should be described in the form of a procedure and fixed in a contract.
What we colloquially call the “cap” of the treaty, respectable uncles call the preamble. The details of the contract and the parties are indicated here.
The details of the agreement are not bank details. This is the number, place and date of the contract.
Each party ensures registration of the contract with a specific number. How to assign numbers is a personal matter for each of the parties. Therefore, the contract usually has two or more numbers - according to the number of parties, and numbers follow the slash in the order in which the parties are listed.
To avoid misunderstandings, I recommend that you do not use a slash in your internal numbering. For example, if the heading says “1231 / U / 2314”, then how do you understand where the letter “U” refers? How are the contracts numbered: “1231 / U” + “2314” or “1231” + “U / 2314”?
The place of drawing up the contract is essential for tax purposes. In most cases, you should indicate your city.
There are several important points in the description of the parties. Firstly, correctly indicate the full names of legal entities.
Attention! The names of the parties in the preamble and on the seals must match letter to letter, otherwise the contract may be invalidated due to a silly typo.
Secondly, use the terms correctly, depending on the type of contract. Say, if this is a contract, then the parties should be called “customer” and “contractor”. If this is a service agreement, then the parties will be called the “customer” and “contractor”. In no case do not mix “contractor” and “contractor” in one contract, unless these three different parties agree.
By the way, if the contract is drawn up incorrectly and is recognized null and void (there is such a concept in the legislation), then the transaction will qualify as a tax violation. Simply put, even if you did not plan to evade taxes, they can still be fined.
If it is easier: what, in fact, agree. The very essence of the transaction. It is clear that there will still be a bunch of conditions regarding payment, deadlines, sanctions and other things. In the subject of the contract indicate the essence.
For example: “The Contractor undertakes to perform the work specified in Appendix No. 1 (terms of reference) and transfer its result to the Customer, and the Customer undertakes to accept and pay for the result of the work.”
This is a basic formulation, it can be expanded and supplemented. For example, to make other important agreements, say, on the transfer of certain rights to the subject of the agreement.
This section is very specific and difficult. There are practically no legal, unambiguous formulations in our industry.
With regard to web development: the parties should agree on what they consider, for example, a site. Otherwise, it turns out that the contractor had in mind the design, templates and engine, and the customer wants the content written.
By the way, it would be great to organize a working group here and work out some terms and definitions together, and put them together with lawyers.
This section is an essential condition of the contract. If the contract or its annexes does not contain value or a way to determine it, the contract may be declared non-concluded! With all the ensuing consequences.
In a previous post, I recommended putting the value into the app. That is exactly what was done with us. In the section “cost and settlement procedure” we refer to the application, which is an integral part of the contract.
Advice for companies working on the "simplification": after the cost, be sure to write "VAT is not taxed." And in the contract, and in acts, and in accounts. If the money is sent with VAT, then there will be excess hemorrhoids with their return and potential misunderstandings with the tax.
The order of calculations is an important topic. Usually they write here, they say, within so many banking days from the moment of such and such transfer to the current account ... settlements in rubles ... and so on.
In one of the previous notes, I wrote that the calculations must be carried out in stages . This is what allows us, in conditions when customers polls late payments, not to fly to minus. Here is the phasing, the settlement scheme and it is necessary to prescribe in the contract (or in the application - the payment schedule, as we have).
I don’t want to write much today, and the sequel will probably follow ;-)
It is worth remembering the principle of freedom of contract. That is, with rare exceptions, there are no strictly fixed names and formulations. You are free to create your own structure, your own section names. Just do not overdo it so that later there will be no problems in the interpretation of the text by the parties and the arbitrator.
The following sections are usually present:
- Preamble.
- Terms and Definitions.
- Subject of the contract.
- Cost and settlement procedure.
- Dates.
- Rights and obligations of the parties.
- Responsibility of the parties.
- Confidentiality.
- Force Majeure.
- Dispute Resolution
- Termination of the contract.
- Final provisions.
- Details of the parties.
- Signatures and stamps of the parties.
We have sections in the agreement that describe how the parties interact, exchange correspondence, and important messages. Important points of interaction, such as approval of a design, should be described in the form of a procedure and fixed in a contract.
Preamble
What we colloquially call the “cap” of the treaty, respectable uncles call the preamble. The details of the contract and the parties are indicated here.
The details of the agreement are not bank details. This is the number, place and date of the contract.
Each party ensures registration of the contract with a specific number. How to assign numbers is a personal matter for each of the parties. Therefore, the contract usually has two or more numbers - according to the number of parties, and numbers follow the slash in the order in which the parties are listed.
To avoid misunderstandings, I recommend that you do not use a slash in your internal numbering. For example, if the heading says “1231 / U / 2314”, then how do you understand where the letter “U” refers? How are the contracts numbered: “1231 / U” + “2314” or “1231” + “U / 2314”?
The place of drawing up the contract is essential for tax purposes. In most cases, you should indicate your city.
There are several important points in the description of the parties. Firstly, correctly indicate the full names of legal entities.
Attention! The names of the parties in the preamble and on the seals must match letter to letter, otherwise the contract may be invalidated due to a silly typo.
Secondly, use the terms correctly, depending on the type of contract. Say, if this is a contract, then the parties should be called “customer” and “contractor”. If this is a service agreement, then the parties will be called the “customer” and “contractor”. In no case do not mix “contractor” and “contractor” in one contract, unless these three different parties agree.
By the way, if the contract is drawn up incorrectly and is recognized null and void (there is such a concept in the legislation), then the transaction will qualify as a tax violation. Simply put, even if you did not plan to evade taxes, they can still be fined.
Subject of the contract
If it is easier: what, in fact, agree. The very essence of the transaction. It is clear that there will still be a bunch of conditions regarding payment, deadlines, sanctions and other things. In the subject of the contract indicate the essence.
For example: “The Contractor undertakes to perform the work specified in Appendix No. 1 (terms of reference) and transfer its result to the Customer, and the Customer undertakes to accept and pay for the result of the work.”
This is a basic formulation, it can be expanded and supplemented. For example, to make other important agreements, say, on the transfer of certain rights to the subject of the agreement.
Terms and Definitions
This section is very specific and difficult. There are practically no legal, unambiguous formulations in our industry.
With regard to web development: the parties should agree on what they consider, for example, a site. Otherwise, it turns out that the contractor had in mind the design, templates and engine, and the customer wants the content written.
By the way, it would be great to organize a working group here and work out some terms and definitions together, and put them together with lawyers.
Cost and settlement procedure
This section is an essential condition of the contract. If the contract or its annexes does not contain value or a way to determine it, the contract may be declared non-concluded! With all the ensuing consequences.
In a previous post, I recommended putting the value into the app. That is exactly what was done with us. In the section “cost and settlement procedure” we refer to the application, which is an integral part of the contract.
Advice for companies working on the "simplification": after the cost, be sure to write "VAT is not taxed." And in the contract, and in acts, and in accounts. If the money is sent with VAT, then there will be excess hemorrhoids with their return and potential misunderstandings with the tax.
The order of calculations is an important topic. Usually they write here, they say, within so many banking days from the moment of such and such transfer to the current account ... settlements in rubles ... and so on.
In one of the previous notes, I wrote that the calculations must be carried out in stages . This is what allows us, in conditions when customers polls late payments, not to fly to minus. Here is the phasing, the settlement scheme and it is necessary to prescribe in the contract (or in the application - the payment schedule, as we have).
I don’t want to write much today, and the sequel will probably follow ;-)