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Risk Management through Contracts

Structuring client relationships with contracts is essential to setting clear expectations and limiting your liability. We covered contracts in great detail in an eBook we published several years ago, but we thought the topic was worth updating. Visit the links below for highlights from the earlier eBook and read on for additional useful information on using contracts to reduce your risk exposure.

Contract Basics for IT Professionals

  1. Contracts to Start Client Relationships Right
  2. Contracts You Need When Hiring a Contractor
  3. Client Contracts: Is There Such a Thing as Too Much Insurance?
  4. ASP Contracts: Keep Control, Cut Risks
  5. Software Licensing Agreements: Protect the Value of Your Work
  6. Clear Documentation = Better Results
  7. Employment Contract = Valuable Part of Hiring
  8. What Makes a Good Network Services Agreement

Essential Contracts for IT Firms: NDA, Privacy Policy, & Website Terms of Use

As any owner of an IT business can attest, the legalities of running a business can get complicated. Between contracts, licenses, terms of use documents, privacy policies, contractor agreements, and more, there are dozens of legal forms that dictate how your business runs and what your legal responsibilities are.

And creating all those contracts can get expensive: in order to be legally binding, a contract has to meet stringent criteria, which means you'll likely have to hire a lawyer to help. But many lawyers aren't familiar with the ins and outs of your tech business, which means you'll have to pay for the hours it takes your counsel to learn how your business works so that he or she can construct documents that accurately reflect the work you do and the risks you face.

Those expenses can add up quickly, making even basic contracts and legal agreements a financial strain for smaller IT businesses. But forgoing such contracts opens you up to the risk of even greater financial loss: without a limitation of liability clause in a website privacy policy, for example, you could be on the hook for tens of thousands of dollars in settlement costs if someone sues you.

Protecting Your Business with Contracts

Through conversations with owners of small tech firms, we've found that the following three contracts are among the most in-demand. The good news? You can download free samples of each of these contracts by visiting TechInsurance's free sample contracts page.

  • Mutual Non-Disclosure Agreement (NDA): This form is essential if and when you work with a business partner or contractor who needs access to proprietary information or other sensitive data (including trade secrets). It requires parties to the contract to maintain confidentiality and outlines legal remedies if any party breaches the terms of the agreement.
  • Website Terms of Use (Terms and Conditions) Agreement: This contract limits the liability of a website creator. When you build a website for a client, the Terms and Conditions Agreement states that you cannot be held liable for losses website users incur related to the content of the site. It also asserts that you do not vouch for the completeness or accuracy of information included on the site.
  • Website Privacy Policy: An important contract for anyone building a website for a client, the Privacy Policy outlines how the site administrators plan to use visitors' data and limits the website maker's liability for losses related to data use.

Next: Chapter 3: Errors & Omissions Insurance for IT Professionals

70% of businesses raise prices or cut hiring when sued