Can you persuade big clients to sign your consulting services terms?
Gemma Nugent
Plain English Contract Advice for Contractors, Engineers, Consultants and Small Businesses | Lawyer | Facilitator | Trainer | FAIM
In the world of consulting services, getting clients to agree to your terms and conditions can be a tricky business. This is especially the case when the economy has softened and the marketplace is more competitive. On top of that, recent scandals at the top end of the market have eroded trust in all consultants.
Despite all this, you should always attach terms to your quotation, or include clarifications in relation to the draft contract in the tender package. Whether you're dealing with a government agency or a private sector client, understanding the dynamics can help you protect your interests while fostering strong relationships.
Government Clients: When you’re the contract taker, not the contract maker
When working with government and statutory agencies and large private sector clients, you’ll often find yourself in the position of the contract "taker" rather than the contract "maker." These clients are known for their reluctance to negotiate supplier terms. However, this doesn’t mean you should shy away from including clarifications in your tender. While public sector clients are generally seen as lower risk, it’s important not to accept unreasonable terms in their (or any) contracts.
Key contract risks that consultants should always watch out for include:
You should always ask for a limitation of liability and an exclusion of consequential loss. However, be prepared to compromise as government and large private sector clients tend to be less flexible.
A positive shift with unfair contract terms legislation
Since the introduction of the unfair contract terms legislation in November 2023, there’s been a noticeable shift. Many government and large private sector standard contracts now include fairer risk allocations from the start. Fortescue now has a fault-based indemnity and a limit of liability in its general PO terms. This might seem hard to believe, but see for yourself in clause 22.
This is great news, as it aligns with the balanced approach I have always urged my clients to aim for in their business contracts.
Navigating competitive tenders
In competitive tenders, particularly in the private sector, you’ll often encounter a draft contract that invites you to propose clarifications. If there’s no invitation, it’s wise to prepare a concise table with your proposed amendments and include it in your tender. This approach not only safeguards your interests but also demonstrates that you’ve thoroughly reviewed and understood the contract. Don’t miss out on this opportunity, even in a soft market where you might be tempted to avoid seeming "difficult."
Your clients expect negotiations, so feel confident in requesting reasonable amendments. At the very least, this will show the client that you’re serious about managing risk.
Sole sourced: When the client comes straight to you
When you’re in a sole-sourced situation or if there’s no contract in the tender documents, always include your terms and conditions in your quotation. This establishes a baseline for your pricing and gives you leverage during negotiations. It also allows you to "price" the risk of the client’s terms if they differ significantly from your own, such as adjusting your price to cover the cost of long payment terms or additional insurance.
Navigating contract negotiations can be challenging, but with the right approach, you can protect your business while fostering positive client relationships. It’s about finding a balance that works for both parties.
About Gemma
I help construction, engineering and consulting businesses create and negotiate clear contracts so they can make more profit and achieve great project outcomes.
I founded SoundLegal to help SMEs in the engineering, construction, consulting and light industrial sectors manage their risk to support business growth, by finding practical, common sense solutions to contractual and other legal challenges.
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