Q1. A clause in my consultancy contract says that the contract can be terminated forthwith by notice in writing if the client becomes dissatisfied with my work or if my company is engaged in winding up or voluntary arrangement proceedings or if a receiver is appointed. Is this clause enforceable?

A.  These clauses are commonly found in contracts between consultants and the client direct, or in contracts between agents and consultants . The clause is solely to protect the client in the event that the computer contractor does not fulfill his/her obligations concerning the performance of the contact and/or his/her company gets into financial difficulties.

Q2. I recently started work for a client (no agency is involved in the contract)  without the usual written contract. I simply received a purchase order from the client which I accepted. I continue to work for the client so what is my legal position.

A.  Presuming you and the client are based within the jurisdiction of England and Wales there will be a binding contract. This is because for a binding agreement to exist there has to be an offer, an acceptance of that offer, an intention to enter into legal relations and consideration (ie. money or monies worth).
A purchase order can form the basis of such a binding contract and there are often terms and conditions on the back of such documents. Even if the document has no such conditions printed on it - it may well refer to another document which contains them.
If no such terms and conditions are found then the courts will still imply reasonable terms and conditions relying upon your evidence and that of the client ( and possibly custom and practice of the IT  industry) to determine such terms.
To conclude whilst the purchase order can form the basis of a legally binding contract it is far better to have a properly drafted contract prepared at the outset to avoid expensive litigation later.

Q3. What terms should normally be included in an IT Consultant's contract?

A. Such a contract should include terms relating to:-
 
1. The term (length of the contract)
2. How the contract can be terminated
3. Duties of the IT  Consultant in relation to the project
4. Warranties of the IT  Consultant in relation to the project
5. Duties of Client in relation to the project
6.  Warranties of the Client in relation to the project.
7. Ownership of project materials ( eg. copyright).
8. Fees and Expenses
9. Confidential information
10. Restrictions on consultants employment after termination of contract. This clause would not normally be in the consultants interest but many clients insist on its inclusion to stop the consultant working for rival companies. Such conditions are a restraint of trade but will be enforceable if reasonable in scope and necessary to protect legitimate interests of the client.
11. Assignment ie. covering whether the rights and obligations under the contract can be assigned to third parties.
12. Effect of termination ie upon existing obligations within the contract
13. Indemnity - in the event of losses incurred by reason of negligence, recklessness or wilful misconduct of the consultant or his/her employees or agents or subcontractors.
14. Such other clauses as may be necessary depending upon the parties requirements and the nature of the project.
15. Jurisdiction - ie which legal jurisdiction will apply in the event of a dispute.

Q4.  I need a set of terms and conditions to cover the development of software for a client. What matters are covered by a properly drafted contract.

A. Main matters to be covered are as follows :
a) The first matter to be considered is the scope of the contract. The specific services to be provided must be defined.
b) The Functional Specification of the program should be covered and it is prudent to specify the language in which the program is to be written.
c) Payment and expenses.   Software may be purchased under any of three main types of contract:
    1) time and materials
    2) fixed price
    3) estimated maximum price.
 
d) Implementation plan and delays   Milestones are an important aspect of the contract and payment often depends on these being achieved.
e) Alterations  It is extremely common for clients to have second thoughts about the program's specification as delivery date approaches. Provision must be made as to how such requests are to be dealt with. eg. variation of price, implementation plan, and functional specification and any manuals.
f) Delivery and installation  - what is to be delivered and in what form? How is installation to be effected?
g) Testing and acceptance  - Test data is required - who is to attend the tests- the program must perform in accordance with the Functional Specification- what is to happen if it does not?
h) Warranty   The scope needs to be defined and the amount of written notice of the need to remedy a problem must be stated. What is to happen if the warranty obligations are not complied with?
i) Operating manuals  - if these are to be provided specify how many.
j) Training   Specify if to be provided and how much, by whom and if free - if not scale of charges.
k) Proprietary rights - Who is to retain the intellectual property rights - the software house or Client?
If software house then a licence needs to be granted to the Client whose terms need to be defined. Many Clients prefer the software house to retain the intellectual property rights because to encourage the software house to keep the software maintained.
l) Indemnity   The Client should be required to indemnify the software house if any claims are made in relation to use by the software house of information or material supplied by the Client to assist in writing the program.
m) Maintenance    It is normal to have the parties undertake to enter into a maintenance agreement and annexe a draft to the agreement.
n) Termination     Normally termination will be by completion of satisfactory performance. If the Client fails to pay sums when due then it is essential to have a clause enabling termination by the software house. If the Client suffers incapacity due to receivership, winding up etc then a clause should cover termination. The effects of termination need to be mentioned.
o) Other general provisions    Clauses covering such detail as the parties nominated representatives
and confidentiality ( the software house will acquire alot of information about the Client during the course of the contract) should be included as well as the details of the facilities on site which will be offered to the software house to complete the contract.
The limitation of liability for breaches may need to be considered as will the method of resolving disputes. It is important to specify which legal jurisdiction is to apply in the event of disputes.

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