Engagement Agreement for Client: Essential Clauses

The Importance of an Engagement Agreement

A contract is vital for any business relationship. Without one, problems often arise. Small claims courts handle many client lawsuits. Most revolve around the Engagement Agreement.

Clients claim one deal, businesses another. Without a documented contract, both struggle.

Your Questions About Commercial Contracts Answered

What is a commercial contract? Do you need a lawyer to draft one? Are there standard contracts for industries? What clauses must it contain?

We’ve gathered all this in our article. Plus, we’ve included a sample Engagement Agreement.

What Is an Engagement Agreement?

A contract forms via offer and acceptance. This is per Section 1 of the Contracts Law (General Part), 5733-1973. You can make a contract orally, in writing, or otherwise. Unless a specific method is required, per Section 23. For instance, real estate agreements must be in writing. This is stated in Section 7(a) of the Land Law.

Generally, a client’s commercial Engagement Agreement needn’t be written. Oral agreements are legally binding if proven. Yet, a written contract prevents many issues. Even a work order, emails, or detailed invoice can be a binding contract.

Do You Need a Lawyer for an Engagement Agreement?

Legally, you don’t need a lawyer for any contract. Even property sales can be drafted alone. Most people avoid this due to complex real estate laws.

It depends on the agreement’s type. For complex or sensitive commercial deals, like medical beauty treatments, professional advice is wise. Simple terms may only need a few clauses.

Are There Mandatory Industry Contracts?

No, not in the short answer. The longer answer is most industries follow custom. Nail salons, for example, post price lists and terms. This clear sign forms a sufficient client contract.

Freelancers, like plumbers, often skip contracts. This is unfortunate. A better way is an order form. Clients sign it before work starts. This clearly defines the Engagement Agreement.

Key Clauses for Your Engagement Agreement

Here are essential clauses for any client Engagement Agreement:

Date of Signature

Note the signature date. For displayed contracts, keep display date records. Also, mark the date on the sign. This prevents claims about contract terms.

Services, Products, and Delivery

Detail service or product type. Define contract duration. Include delivery dates and methods.

Payment Arrangements

Many payment options exist. Here are common points:

• Product/service cost.
• Payment milestones.
• Final payment date.
• Agreed payment method.
• Penalties for late payment (interest, service delays).

Cancellation Terms

Consumer Protection Law dictates cancellation rules. These apply even if not written. It’s best clients know all terms. Especially if your terms are better than the law. Learn more about consumer contract cancellation [here].

When defining cancellation, specify the method (e.g., written notice/address). Set deadlines. List exceptions. Outline cancellation implications (e.g., partial refund).

Breach of Contract Actions

Define consequences if either party breaches. For example, when service ends. Or when a client must return a product. Also, when refunds or compensation apply.

Jurisdiction for Dispute Resolution

Pre-determination of the jurisdiction where the parties can file a lawsuit. This allows the business to sue/be sued in a convenient location, particularly for businesses operating nationwide and accepting online orders. According to local jurisdiction laws, a lawsuit related to online commerce can be filed in the district of the plaintiff’s (not the defendant’s) residence/business. For example, if you live in Tel Aviv but sold a product online to a client in Kiryat Shmona, you might be required to travel there. A jurisdictional clause would prevent this.

Dismissal of External Representations

A clause explicitly stating that no external representation of the agreement (such as conduct or oral conversation) is valid, and that any change to the agreement requires a written document signed by both parties.

Client Breaches Engagement Agreement? What to Do

First, try to resolve the dispute amicably. If that fails, send a warning letter. State the breach and your demands. If this doesn’t work, or you prefer not to, file a civil lawsuit.

Small Claims Lawsuit Option

If your business isn’t a corporation, and the claim is under NIS 38,900 (Jan 2023), file a small claims lawsuit. These offer many advantages for smaller disputes.

• No lawyers needed, so costs are lower.
• It’s much faster than regular civil lawsuits.
• Filing fees are less than half of regular cases.

Dino’s system helps you generate a small claims lawsuit online. It’s quick, from any device, on any subject, in three steps! This unique Israeli system lets users create a lawsuit in about 14 minutes.