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Contractural Advantage

Contractural Advantage

Teacher: Steve Cartwright

So what’s contractual advantage when it’s at home then? Well I’m sure you’ve all come across that customer that is constantly asking for more, making your life a misery and generally causing you more work than you budgeted for at the start. I know Website Designs has experienced this in the past, and it was partly our own fault. You see with a little forward planning and by adopting good business practices we have eliminated this problem almost entirely, this is what I call “contractual advantage”.

You never want to stop a customer from asking for more. After all, its his right to ask for more and we’d all be out of business if this happened. It should be actively encouraged. Its also extremely good business practice in my opinion to adopt a positive approach when dealing with customers, my favourite saying being “The answer’s ‘yes’, now what’s the question?”, so how can we say “yes” while also meaning “no”, again this is “contractual advantage”.

Now that I’ve caught your attention, I should perhaps give you a little background information on myself. I’ve not always worked in a computer related industry. Prior to founding Website Designs, I worked for a dozen or so years in various senior management positions for various construction companies around the world. Now if you’ve ever worked in the construction industry, you’ll know exactly how contractual it is. Well I worked and thrived in this environment for years. Now that you know a little about me, I’ll continue…

So what’s contractual advantage? Well, it’s actually your company’s terms and conditions. These are perhaps the most important things you show to your customers. They express how professional of an organisation you are, how business oriented you are, and how fair you play the game. We’ve all heard the phrase, “read the small print”. Well, I actually suggest you present this information in an easy to read format – Better yet if it can be understood as well. Try to make your terms and conditions as fair as possible, but always edge them in your favour. Remember the idea is to tell your customer what’s expected from both sides and to put systems in place should this not happen.

Lets look at a few specific clauses that Website Designs uses:

The clause: “All Prices quoted are exclusive of taxes, and are open to acceptance for a period of thirty days from date of quotation, after which time further written confirmation will be required.”

This is a pretty straight-forward and self-explanatory clause, but it’s important none the less. It informs the customer that any taxes due are not included within your quoted price, and that you guarantee only to accept an order within the next thirty days at the price quoted. This can actually help a sales department close that exclusive sale if handled right - well sometimes - as prices don’t always remain the same do they especially if another big order comes in. Remember workload determines price, but hey… that’s another article in itself, lets get back to matters at hand.

The Clause: “In the event of _________ delaying payment, a surcharge of ten percent will be made on the outstanding balance per month. Website Designs reserves the right to suspend all services, web site hosting, e-mail facilities, etc., until payment is received in full.”

Again this clause speaks for itself. It encourages payments to be made on time and informs your customer of action you will take should payment be delayed. It is rare that you will have to implement it, as a seven day notice threatening to withdraw services usually results in prompt payment.

The Clause: “Should an order be placed based upon this quotation then it shall be understood by all parties concerned that a contract shall not exist between ourselves until Website Designs (UK) Limited acknowledges receipt and acceptance of the aforementioned order.”

This is perhaps the most important clause that we use, as in most countries, once an offer has been made and accepted, a legally binding contract is usually in force. The offer is normally your quotation, be it a formal document or a quick email saying “We’ll do it for this much”. Once a potential customer informs you that he has accepted it, then that’s it – you’re bound to one another. Always give yourself an option of turning an order away. You might have made a mistake with your price, perhaps a larger more prestigious project has just come in requiring all your development team’s time and effort. No matter, always give yourself this option.

I could go on detailing clause after clause and explaining why we use a particular clause and the thought that’s gone in to the writing of it. But half the enjoyment of this, is sitting down and developing your own clauses, specific to your company and the developments it undertakes. Remember to plan them out carefully and then you can get that “contractual advantage” working for you, and how do you say “yes” while meaning “no”? Well, that’s an easy one provided you have the right terms and conditions in place. If so, you simply answer:

“Yes, but that will form an extra over to the value of our contract.”

Now all you have to do is price a variation and get written approval before proceeding. Indeed I would always suggest you ask for written instructions before making any changes to a site, be it a variation or not.

About the teacher:
Steve is the CEO and executive publisher of Cyber Aspect and is the senior management of the publication. Steve is also a regular contributor to the international edition of Cyber Aspect and Web Builder Bulletin. When not working on matters of publishing and news, Steve serves as the CEO of Website Designs Ltd in the United Kingdom and is the founder of the company. Prior to entering the Internet industry, Steve was involved on a senior management level within the international construction industry, working with super skyscrapers throughout the Middle East and other global locations.


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