Why Does My Business Need a Client Agreement?

Legal Documents

A Client Agreement can be in the form of a Service Agreement that sets out the terms and conditions between you and your client. This article will go through the essential reasons why your business needs this agreement.

1. A Client Agreement Limits Liability

It is important to ensure you are protecting your business by limiting your business’ potential liability within the scope of the law. Without this agreement, it’s difficult to define what your business can be liable for and the limits of its potential liability in the future.

2. Specific Targets

This agreement can set out what your client has to do before you provide the service. An example could be that your client has to provide specific information before you can complete the job. Therefore, it’s important that the agreement contains the information your client has to provide and when it should be provided. Having specific targets provides a guide for your business relationship.

3. Clear Payment Terms

A client agreement sets out your business payment terms. This includes:

  • Service fees
  • When payment is due
  • Payment methods

When you fail to provide clear payment terms to your clients it may result in disagreements. The absence of this agreement may result in a late payment or your client failing to pay for your services. For example, if your business only accepts payment through PayPal, you should include that in the client agreement. If you don’t include these terms, your client won’t know that cash is an unacceptable form of payment.

4. Easy Termination

This agreement should include how each party can terminate the agreement. Without this agreement, there may be confusion over when you can terminate. This may lead to claims that you didn’t do the work. A clear termination clause allows you to get out of a business relationship depending on circumstances.

5. Quicker Dispute Resolution

This agreement can help businesses prevent future disputes with their clients. It can do so by outlining how the parties will handle disputes. This method is not restricted to mediation, although it’s commonly preferred. Mediation allows the parties to resolve their dispute without escalation. This option is widely known to achieve faster and cheaper resolutions.


Without this document, any disagreements between your business and your clients over the terms may cost your business an unnecessary amount of time and money to resolve. By including certain terms in your agreement, you’ll be able to reduce the chances of a dispute arising. We can provide you with a range of Business Lawyers that can help you in drafting your Client Agreement.

Don’t know where to start? Contact us on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest lawyer marketplace.

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