General Terms and Conditions, frequently referred to as “Boilerplate,” defines how the Client and Consultant will relate to each other in a business relationship without regard to a specific project. The following is a critical “Boilerplate” item that if not clearly and equitably stated will likely result in misunderstandings and confrontational situations:
The terminology used to describe that which will be delivered to the Client is very important. The use of inappropriate language can nullify the protection afforded by the “Standard of Care” clause in the contract. The deliverables that are to be provided to the Client are intellectual property. They are “instruments of service”. Unfortunately, often deliverables are described in a contract as “work product”. The problem with use of the term “work product” is that it can be argued that what is being provided is a “product,” which it is not. If that argument is successful and the deliverables are declared products, then the realm of liability can be changed from “professional liability” to “product liability,” to which the law applies a very different standard of performance. In certain forms of product liability, proving negligence is not a required element for the establishment of liability. Further, since professional liability insurance affords protection only for negligent acts, it may not be available if the deliverables are described as “work product”. Accordingly, whenever possible, describing deliverables as “work product” should be avoided.