Freelancers, here’s your cut-out-and-keep legal guide to…client obligations
With both Payment Terms and Schedule of Works now demystified, that design freelancer who inspired this FreelanceUK series of legal guides for the self-employed might be soon doing us legal advisers out of a job!
What is the Client Obligations clause?
The Client Obligations clause sets out the conditions that your client must fulfil in order to ensure that you are able to perform the services specified in the contract.
This clause is usually situated in the middle of the contract. This is an important clause, as failure to comply with these obligations could give you (the freelancer), the right to damages, a renegotiation of the terms, or early termination of the contract.
What should this clause generally include?
The client obligations clause will of course depend on the type of business that you and your client are carrying out. However, there are a few elements that should always be included.
The obligation to cooperate and provide information...
So here, the wording is likely to be that the client should ‘cooperate and provide all relevant materials and information.’
In and around this wording, you can also include specific timeframes within which the client must validate work products, provide information or ancillary materials, or respond to a request for, let’s say, approval of designs, or budgets.
The obligation to provide access to premises and people...
Here, ensure that there is an obligation for the client to provide you access where necessary. This can be particularly important if you are working at the client’s premises, if you need contact with various stakeholders to provide your services, or if you are working on the client’s systems -- in which case the client should provide access to the relevant premises, people, software, passwords and codes.
The trick for freelancers here is to think of any practical things that you need the client to do, so that you can provide your services effectively – and then add them in here.
Exclusivity and confidentiality obligations
Depending on your relationship with the client, your negotiations and the type of services you are providing – consider including an exclusivity or non-compete provision, which specifies that the client is obliged to exclusively use your services -- as opposed to those of your rival freelancers for a defined period of time. This ensures that you are able to recoup any time, effort, and investment you have allocated to the relationship.
Furthermore, you can also propose or even insist on a confidentiality provision where you feel the nature of your services or working practices require this.
Corporate compliance obligations
This clause should include the client’s obligations for ensuring your health and safety, security, especially when you are working on the client’s side.
Similarly, the clause should ensure the client’s anti-slavery and anti-bribery compliance which is important too, and you ought to make sure the client has all the relevant policies in place (and you should ask for a copy).
The client should also have any appropriate insurance policies, in place -- particularly if you are working at the client’s premises, or with their systems or machinery.
Should intellectual property and data protection obligations be included in the client obligations clause too?
This is an understandable question from freelance services suppliers. Well, while intellectual property rights and data protection obligations can often be seen as their own separate clauses in such contracts, they can also fall under the client obligations clause. If this is not the case, you should ensure that these matters are nonetheless covered off in the agreement.
Here, you will want a confirmation that your use of the client’s materials when providing your services will not infringe on third parties’ intellectual property rights. Similarly, you may want to propose or even insist on an indemnity from the client to hold you harmless against any third-party claims.
If you will be processing any personal data when you are providing the services, you should have a guarantee from the client that they have obtained their personal data in reliance on a valid legal basis and transferred it to you, lawfully.
If you or the client will be processing personal data on each other’s behalf, you should also include appropriate guarantees as specified under the GDPR (General Data Protection Regulation). You even ought to consider entering into a separate data processing agreement where this is legally required.
Should the client obligations clause also refer to the client’s liability towards me?
The liability section is usually a separate clause – and is not generally included in the client obligations section. However, an agreement will usually cap the client’s liability to a certain amount (sometimes this is capped to a percentage of the fees).
Whether this is contained in the client obligations clause or in a separate liability section, you should ensure that this a ‘reasonable’ amount in your view, taking into account both the nature of your business and the services that you are providing. Also ensure the sum is balanced with any liability you have towards the client – and the value of the services you are providing. As personal injury, fraud or death cannot be excluded by law, you should ensure that the cap does not apply to these matters.
Finally, our top tip in the current climate where not all clients are able to pay, all the time!
In the current climate of the coronavirus crisis, and even beyond it, you might want to ensure that the termination clause (which the next instalment of this FreelanceUK series will explore), allows for early termination -- if the client does not fulfil their obligations. Unfortunately, a pandemic means the likelihood of end-users not doing their bit, contractually, increases.
Usually, you can insert wording that allows you to flag up any issues, in writing, to the client. And then, if they have not been remedied in a reasonable timeframe, such as 10 to 15 days, the wording can go on to state that you are entitled to terminate, receive payment of your fees either in full or on a pro-rata basis up to the termination date, or require a renegotiation of the terms or the fees. It’s not a nice situation for any freelancer to envisage but it’s nice to have a clause in your contract for peace of mind, should the worst happen! More on this for FreelanceUK readers soon, in part four.