Articles by Nina Litovsky

Contracts and Outsourcing to Foreign Companies

Before you start working with any web consultant or company, I have two recommendations:

Always sign a contract

Let me clarify that by “contract” I mean a legal form of work agreement, not a monthly subscription contract. Your web company should provide a legal document verifying your professional relationship and signed by both parties. If they don’t offer you one, ask for it. If they work without a contract, it’s unprofessional and you should look for someone else. If they talk good talk and say sweet things such as, “we don’t like to be bound by contracts and always go the extra mile to deliver the best results,” you should still insist on a contract as a base legal document. Many professionals want to be nice and accommodate their clients, in which case nothing prevents them from showing good will and going beyond the letter of the contract. However, it’s extremely important to have at least a basic contract which is enforceable. Remember: the contract is there to protect you.

Even if you hire a friend, have a contract with them. Personal relationship is one thing, professional relationship is quite another. Even between friends things can go sour, especially if money is involved. A contract doesn’t affect your personal relationship with your vendor. Rather, it serves as a safety net which, hopefully, neither party will need. In case things go wrong, however, having legal recourse is important than many realize.

People often come to me after having been screwed up by other companies and consultants with whom they worked previously without a contract. These clients thought they could just shake hands and trust their consultants, only to find out later that they didn’t get the promised deliverables, were abandoned in the middle of the project, and wasted time and money with no hope of getting any recourse.

If you get employed somewhere, they probably give you some type of a contract to sign. If you are a practice or a business owner, you probably sign a contract with the people you hire. You probably sign some type of a contract with your insurance company, attorney, landlord, etc. Why should web/marketing, where thousands of dollars are involved, be any different? A contract is an industry standard, and I don’t see a reason to potentially put yourself at a greater risk by working with someone without a contract.

Q: Even in the US you have essentially no legal recourse, because the loss has to be in the tens of thousands to justify calling a lawyer and litigating it.

A: No, it doesn’t have to be a lot of money involved. As far as I know, even over a few thousand dollars you can go to a Small Claims court, and if you have a contract, you have a good chance of winning.  It doesn’t mean that you will always win. Rather, if it’s a clear breach of contract you probably have a case which can stand in court without a need to hire a lawyer: a Small Claims judge may award you the case based on the contract terms which the other party has clearly violated. But what constitutes “a violation of contract” is determined on a case-by-case basis. I am not a lawyer and cannot comment on any specific law or situation. However, if you have a contract, you at least have a chance in court. If you don’t have a contract, you most likely have no chance.

Also remember, it’s not just about lost money, it’s about your lost time and stress. Plus, with your business website, you will likely need ongoing advice and help, which becomes a lost opportunity if your relationship with your vendor is severed without a remedy.

Instead of risking your valuable time and a few thousand dollars, I suggest finding the right provider to begin with, and signing a good contract with them to secure your rights.

Q: Just because a company doesn’t use them isn’t cause for alarm.  Much more important is a company’s reputation and track record.

A. Reputation helps, but legally it doesn’t matter. There could still be problems on both sides. It’s an simple legal document which should be at the base of every professional relationship. I don’t see a reason to risk money and time by going with a company that doesn’t have one. If a company is well-established and has a solid reputation, they should stick to the basic professional best practices and have a contract. It shows that the company takes basic legal measures to protect both their clients and themselves.

A contract is a “sign-it-and-forget-it” kind of thing. It’s there as a safety net which hopefully no one needs. Personally, I don’t check my contracts every day to make sure I only deliver what is specified there and nothing more. It’s quite the opposite: I strive to go above and beyond and over-deliver whenever I can, because I care about long-term relationship with my clients and want to show good will. Yet, the contract is there to ensure that both parties are committed to the professional relationship, and to ensure that both parties are legally protected.

Having a contract does not necessarily imply that the parties don’t trust each other and treat each other with suspicion. A contract should not be viewed as a necessary evil. It’s simply a basic legal document that solidifies a good, trusting professional relationship which has already started. The contract further enhances this relationship and serves as a written evidence of commitment and transparency on behalf of both parties.

Q: Anytime someone tells me to sign a contract, I’m that worried  maybe they want to lock me into a contract that I wouldn’t want to be in.  

A: I am the one who always advocates for clients to retain flexibility when working with marketing/web consultants. I am the last person to lock anyone into a contract with me, because it’s against my values. I believe in building long-term relationships with clients because of the quality service I provide, not because some contract forces them to stay with me.

Therefore, my contracts have a “Termination Clause”, which says that clients can terminate the professional relationship at any point. Many other professional contracts have similar termination clauses. If you are offered a contract without one, I recommend that you ask for one to be added.

Remember, both parties – including you – are supposed to be comfortable with the contract before you sign, and there are always things such as clauses and amendments that can be added to the contract. You should always read the terms and make sure that you are comfortable with what you are signing, and if you have concerns, talk with your provider and talk with your attorney, and you should be able to ask for additional clauses to be added to the contract, such as the termination clause.

A contract with a termination clause is exactly what you need to protect yourself from being forced to stick with something you don’t want anymore. Without a contract, nothing prevents an indecent company from, for example, delaying the deliverables and forcing you to keep paying. Or, they can take your full payment and deliver only half of what’s promised, and when you ask for the rest they can say you need to pay an additional fee. So you will be stuck with the company and keep waiting for them to deliver. I’ve seen many cases when things like that happened to people. Without a contract, you and your money can be held hostage.

The necessity of having a contract brings up the second recommendation:

Be careful when you hire foreign companies

Do not work with foreign companies unless they have the owner, a partner, or another legal representative in the US. If you are on the American soil, you want to hire someone who is subject to US law, so you can have legal recourse in case things go wrong. American vendors are fully accountable to US law while foreign vendors are not.

Yes, there are indecent vendors in America just like anywhere else. But here, you can have legal recourse against a domestic company if you have a valid contract with them. If you hire a foreign-based web company, I highly doubt that their contracts are very unlikely to be enforceable in the American court. It’s not worth risking your time and money.

Q: Outsourcing is huge and we live in a global economy and connected world. I guess we shouldn’t drive foreign cars either?

A: I recommended not to work with foreign companies “unless they have a legal rep in the US” – that last part is key. Going back to the foreign cars analogy: Honda is a Japanese company, but it has legal representation in the US. If you drive a Honda and you have issues, you don’t have to deal with their Japanese factory. Rather, you complain to their US-based office which is under the US jurisdiction and is subject to the US law.

If you work with a foreign company that is based entirely offshore, who are you going to take to court in case of troubles? I highly doubt that you can sue in the US court anyone who is not based in the US and who is not subject to the US law. Therefore, the foreign company probably has no legal liability to you, and even if they offer you a contract, it’s probably not enforceable. Again, if you are a consumer of services, I don’t see a reason to risk your time and money with a web/marketing company that has no legal representation in the country where you live.

You will need lots of experience, trial and error to understand how to properly vet designers and developers in other countries, or else you will most likely find a terrible web designer who will give you a very frustrating and infuriating experience.

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