Legal 101

How to use contractual clauses to protect yourself

Drafting a contract (or even reading one) when you have no legal training is intimidating, especially if it’s littered with jargon. To help you navigate the legal terrain and protect your work, we’ve put together a list of some of the most common clauses and provisions.*

Billing and payment clause

Make sure you get paid for your work by including your schedule for project billings (if applicable). Your payment terms should include payment due date from invoice issuance, method of payment, as well as late payment penalties on overdue payments (standard rate is 1.5 percent per month for creative work) and your rights in the event of non-payment.

Work+Store Tip: Be careful of signing contract with vague statements that permit your clients from withholding payments.

Indemnification clause

An indemnification clause is one of the most important clauses in service contracts and will protect you from the breach of actions or negligence (failure to use reasonable care) of the other contracted party. If your client breaches any warranty they have given, they’ll have to pay you any loss or damages incurred resulted from the breach. Adding an indemnification clause against third party claims will guarantee your client pays any damages as well as legal fees that might have to be paid to third parties. But be warned, if you breach any warranty you have given, you’ll have to pay up too.

Intellectual property provision

If you’re in the creative field or have previously worked with designers, you’re probably familiar with the different scope of licenses in intellectual property usage. A license is a limited grant given by an artist to a client so the client can use the artwork in a specified way. Exclusive license prevents other parties from using artworks covered in the contract, and will be more expensive. A non-exclusive license enables the artist to sell their artwork to other clients. Typically, a license will specify clients’ usage rights, for example placements, durations, geographical territories, and whether they have the right to modify your work without your consent.

Limitation of liability (LoL) clause

Never sign a contract without a LoL clause. Liability is important as it keeps you legally accountable to the client should you incur damage or loss to your client as a consequence of your actions or omissions, and vice versa. Including a LoL clause will define the maximum liability you will be responsible for should your client submit a claim.

Non-waiver clause

A non-waiver clause enable contracts to remain fully enforceable even if one party allows the other party to violate a provision of the contract. Let’s say you’re hired as a designer. The contract calls for a $300 late penalty if your client does not pay you within 7 days of invoice issuance, however, you never impose the penalty. Without the non-waiver clause, your acceptance of this contractual breach may change the enforceability of that particular provision; with a non-waiver clause, you can still require the late penalty to be paid.

Privacy Policy

Whether you’re running an online shop or simply have an active business website with mailing subscription services, you’ll need to set up a privacy policy agreement which complies with existing data privacy laws in Singapore (monitored by the Personal Data Protection Commission). Your privacy policy should address:

• Types of personal data collected
• How the data will be used
• Who the data will be shared with
• Basic security measures to protect the personal data
• Actions individuals can take when they change their mind about their consent
• List of any definitions

Most platforms will have a privacy policy drafted, but you need to check that they align with local regulation. Click here for a sample privacy policy template generated by Shopify.

Severability Clause

Did you know simple spelling mistakes, misusage of a punctuation mark, and even grammatical errors in your contract can render your contract useless? Including a severability clause will save you the legal trouble as you can simply correct sections deemed invalid to fit their original intention while making sure the remainder of the contract stays in full effect.

*While we try our best to ensure the accuracy of information presented, this article is only meant as a guide and should not be used as a substitute for official legal advice. When in doubt, please talk to your attorney or consult professional legal counsel.