No one enters into a business or professional relationship on the presumption that it will fail and may end up in dispute and possible litigation. However, every (and I stress the word ‘every’) well-run business will be proactive in ensuring that the trading terms which are most beneficial to it are in place. Those terms should be unambiguous, comprehensive, legally compliant and incorporate provisions that are to the financial benefit of the business.
By doing this, many potential disputes will be avoided and there will be a real incentive for disputing clients (or those who simply refuse to pay) to settle claims.
To be effective, your trading terms must be acknowledged by your client as forming part of the contract. Accordingly, they must be aware of them and it would be preferable if they were acknowledged in writing.
The most practical way to handle this is to incorporate the terms in your New Client Form. It would also be sensible to incorporate your full terms on your website and make reference to them in all correspondence with clients, including on letterheads and in emails, adding a link to the relevant page.
A practical clause to include in the terms is one that states you have the right to amend them from time to time and that the applicable terms which govern the relationship are those on the website.
Changes made in 2012 to the consumer legislation now provide for certain compulsory conditions to be incorporated in contracts by service providers, which relate essentially to warranties and disputes. Failure to incorporate these clauses will expose your practice to potentially significant fines that may be imposed by the Australian Competition and Consumer Commission (ACCC). Accountants are clearly service providers.
There will be certain technical clauses included in your terms to limit the capacity of your client to counterclaim or claim significant damages, as well as to overcome issues which arise in the event that they go into receivership, liquidation, or if there is a death.
A particularly important provision is that in the event of default, your defaulting client is to pay all legal costs and commission arising from the default.
Prushka and the IPA
Prushka, in association with the Institute of Public Accountants, provides tailored trading terms for IPA practices and for clients of IPA members. They are prepared by Mendelsons Lawyers, Prushka’s associated legal firm. IPA members are charged a reduced rate. Find out more via the IPA website.
