Letter of understanding

[Weirfire]

I am about to enter into my first contractual agreement and was wondering if those of you that have had experience in this field could give any examples of the type of things that I may wish to include in the letter of understanding?

So far I have noted down


Obligations from both parties
Pay rates
Length of time of the contract


Are there any others which you can think of?

[SEbasic]

Maintenance of the sites is important.
Payment dates from the client

[Trance-formation]

Conditions under which either party may withdraw from the agreement/termination?

[Weirfire]

Thanks guys

I'm going to discuss terms tomorrow so this information will certainly give me a bit of foresite before the terms are discussed. ;)

[nevetS]

If bills are late you are allowed to charge a certain percent of interest by law. (believe it varies per state), but man o man. I wish I would have figured that out earlier. Find the law, and spell out the terms you want in your agreement. Don't be friendly on this matter and start out with net 30. Then you end up giving the guy a grace period and it's all of a sudden three months later when you get paid.

Bills are payable on receipt, 30 day grace. Interest charged on all items unpaid within time frame. IN a dispute place money in reserve and work things out through binding arbitration.

[Weirfire]

ok now I'm scared :eek:

[jarvi]

Just think of everything that can go wrong and make sure there is a plan for how to deal with them. That's the reason many lawyers are pessimists, because they have to think of the worst case scenarios when drafting contracts and agreements.

Regarding the interest on overdue accounts, make sure you check the local laws. Here in Australia I think there is a problem under certain circumstances where you can be classed as a credit provider (if you charge interest), and then you fall under a whole other set of legislation which often makes it not worthwhile charging the interest in the first place. May be better just to stop work until it is paid (if it's for progress payments) or come up with some other disincentive if they don't pay.

[Trance-formation]

Don't worry... in UK it's not all that complicated... invoice payable within (say) 30 days and in terms and conditions just state you reserve the right to add interest (state amount) on any debts not paid within that time (check the wording, its a long time since I did anything like this). I could send you over a copy of terms and conditions back from my recruitment days if you want.... different service, but you could see how we worded the contract re payment and invoicing.

[Weirfire]

Yeah that would be great TF :)

I have to negotiate the commission rate first before any contract gets written up. :eek: That's my first problem as I dont really know how much my target price is.