The Battle Of The Forms: When 2 Parties’ T&Cs Go To War!

Whenever a client agrees to engage with your business for work, it’s best practice to ensure they sign something before you commence services.

An Engagement Letter sets out the terms on which your business is entering into a relationship with your clients in New Zealand.

The purpose of an Engagement Letter is to establish the expectations of both parties to the agreement.

It’s crucial to have the terms on which you’re entering into a business relationship documented in this formal agreement. An Engagement Letter ensures both parties understand what services are being provided and the manner of their delivery.

An Engagement Letter also serves as the foundational agreement between your business and its clients—establishing clarity throughout the course of your business interactions.

When Do I Need An Engagement Letter?

Engagement Letters are typically used when a professional services firm is engaged by a client for a specific task or project.

Most businesses in New Zealand use Engagement Letters when onboarding new clients.

While Engagement Letters are less formal than a contract, they are still legally binding in New Zealand and serve a similar purpose as they do in Australia.

Crucially, Engagement Letters mitigate liability and clearly define the roles and responsibilities of both your business and its clients.

What’s Included In An Engagement Letter?

Engagement Letters detail the scope of services to be delivered to your client, clarifying exactly what they are paying for and what they will receive.

You can also use an Engagement Letter to outline how your client can request additional services.

Although intended to be concise, Engagement Letters effectively communicate the scope of services, the terms and conditions of your business, and any relevant deadlines.

Some standard provisions included in an Engagement Letter are:

• Payment terms and consequences of late payment
• Scope of services to be provided
• Limitations of liability
• Ownership of intellectual property
• Confidentiality agreements
• Duration, termination clauses, and deadlines

Need Help?

Having a properly drafted Engagement Letter is vital for the smooth operation of your business. It sets clear expectations with your clients, secures your payments, safeguards your intellectual property, and helps prevent legal issues.

If you’re not legally trained, it can be challenging to ensure your Engagement Letter covers all necessary aspects.

Engaging a lawyer to draft a comprehensive Engagement Letter can provide you with peace of mind regarding the terms on which you’re working with your clients. It also allows you to concentrate on your passion, leaving the legal concerns to the experts.

If you need an Engagement Letter drafted, don’t hesitate to send us an email at [email protected] or call us on 0800 002 184. We offer a free, no-obligation consultation to discuss your unique needs.

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