Section Four - Payment Terms and Structures

Welcome to Section Four of the contract customization process! This section deals with payment terms and structures—arguably one of the most significant aspects of any contract. Payment terms often form the crux of disputes, so it’s essential to get them right. Here’s a comprehensive guide to help you navigate through Section Four effectively. 

table of contents

  1. Choosing Your Payment Structure

    2. Invoice and Payment Due Dates

    3. Handling Additional Costs

    4. Setting Up a Payment Plan

    5. Managing Late Payments

    6. Reimbursements and Additional Expenses


Choosing Your Payment Structure

Question: Will the client be paying for the Services via:

This provision sets out clearly the Vendor's Fees, specifying that the Client will either be paying an hourly rate, or a package.


If you select “Completion of # Hours Spent” above, you will see the following 6 questions:

Question: The Vendor's hourly rate is $ amount…

This provision sets out clearly the Vendor's Fees, specifying that the Client will either be paying an hourly rate, or a package.

Question: ...per each hour spent over [amount of time purchased] OR on [productivity task]

Time Purchased: This is appropriate when the Client is hiring the Vendor for a specific hourly rate, to perform the services outlined in the "Services" section. For example, if the Client hires a Designer to create a website, and agrees to pay hourly, the Client is agreeing that they do not have control over how many total hours the Vendor may take, unless explicitly specified (this language is drafted so that the Client may purchase a specific allotment of hours, such as "10 hours for Design").


Productivity Task: This is the appropriate choice when the Client has hired the Vendor for one specific task, which could take a varying amount of hours. The Parties have agreed that the Vendor will charge the Client per hour on this work. For example, the Client hires the Vendor to draft a contract, which is estimated to take 8-10 billable hours. Or, the Client has  hired the Vendor to paint a custom painting for the Client, which would take approximately 20 hours.


If you select “Time Purchased” above, you will see the following question:

Question: Amount of time purchased:

If you select “Productivity Task” above, you will see the following question: 

Question: Productivity task:

Invoice and Payment Due Dates

Question: The Vendor will provide the client with an invoice within # days before/ after Event or specific date

Question: The Client shall remit payment within number of days.

Question: The total cost of the services will be $ amount.

What is the total amount the Client should expect to be charged for the performance of these Services?

Question: Payment will be made by method of payment.

For example, credit card, Paypal, Wise, etc.

Question: Payment will be made by method of payment.

For example, credit card, Paypal, Wise, etc.

Handling Additional Costs

Do your services include setup time, travel time, out-of-pocket costs, software licenses, administrative fees, assistance, and subcontractor costs?

If unsure, click YES. This clarifies any additional expenses that could arise, outside of the cost of the services themselves.

Setting Up a Payment Plan

Question: Will the client be paying by payment plan?

This is another way of saying "payment installments". Will the client be permitted to pay over a period of time? We recommend based on state contract laws that if the agreement is for a protracted period of time or for an event that the client pays in installments. This is a recommended provision.


If you selected “Yes” above, you will now see the following 5 questions:

Question: The Client will pay $ amount initial payment.

This is the Creative Law Shop® recommended language for "Retainer" or "Deposit". Different courts prefer one phrase or the other, but at the end of the day, we're all talking about the payment the client must make to secure the services. In order to be able to be upheld in court, this provision covers what you need to ensure your provision will hold up in court:


Was it clear to the client that: The deposit or retainer was nonrefundable; Why it was nonrefundable (do you literally spell this out?); and was the amount reasonable? 


This is a recommended provision.

Question: The initial payment is due _________.

In the strongest terms possible, we do not recommend that you require a 50% initial payment, unless the term of the Agreement is very short. This is for two reasons: 1. You want to be in a position to negotiate if a cancellation or termination occurs; and 2. 50% initial payments, particularly for wedding events, are usually considered inequitable in court.

Question: A payment of $________ is due ________.

Question: The final payment is due at least _________ working days prior to the conclusion of the Term of this Agreement.

This can be defined as either the day the Term ends, or a period of time beforehand (for example, if you are providing services for a wedding, you likely don't want the final payment to be do on the wedding date).

Managing Late Payments

Question: Do you want to include a "stop work" and/or "late fees" provision?

Late Fees: This provision is in place so that the Vendor is equipped to be able to be compensated appropriately for any late fees incurred by the Client's non -payment. This provision is auto-filled  to state the payment date, and  date of the payment in accordance with what is considered equitable in the court (many times, late fees cannot be upheld in court because the Vendor has charged what is considered an inequitable amount in court). This is a recommended provision.


Stop Work: This provision allows the Vendor to reserve the right to stop the work until payment is received, if the Client is late in making payments. It also protects the Vendor from being responsible for any increase in costs due to nonpayment, and sets a time frame for when the "stop work" can lead to termination of the agreement.

If you select “Late Fees” above, you will now see the following question:

Question: Do you want to include a "stop work" and/or "late fees" provision?

Late Fees: This provision is in place so that the Vendor is equipped to be able to be compensated appropriately for any late fees incurred by the Client's non -payment. This provision is auto-filled  to state the payment date, and  date of the payment in accordance with what is considered equitable in the court (many times, late fees cannot be upheld in court because the Vendor has charged what is considered an inequitable amount in court). This is a recommended provision.


If you select “Late Fees” above, you will now see the following question: 

Question: Within a number of days after a payment due date the payment will be considered late.

This can be any time that you feel appropriate, but most users build in a bit of flexibility for the client. For example, the client's bank may put funds on hold, review a transaction, etc. 7 days is standard


If you select “Stop Work” above, you will now see the following 2 questions:

Question: Within how many days after a payment is made will the work be halted?

Your "stop work" provision should be a longer amount of time than your typical late fee payment, such as 30 days vs 10 days.

Question: Within how many days after that will the agreement be terminated?

This is of course a last resort, so the time frame should be at least as long as an additional "late fee" period, or pause period. For example, if you allow payments to be up to 7 days late before incurring penalties, and 14 days before a project is paused, 21 days (or 30) would be appropriate to terminate the project.

Reimbursements and Additional Expenses

Question: Will the Vendor be making any payments on behalf of the client?

This provision allows the Parties to decide ahead of time whether or not the Vendor can make purchases on behalf of the Client, such as software or products. This is a recommended provision. 


If you select “Yes” above, you will see the following question:

Question: Do you want to include a "Additional Expenses/Reimbursement" provision?

This allows the Vendor to submit any travel receipts/processing receipts/ /documentation for reimbursement that  have been approved by the Client prior. The reimbursement must be for a reasonable amount, pre-approved by the Client and Vendor.

Question: Before moving on to the next Section, would you like to add any of the following?

Service Pricing: The clause accounts for the possibility of price changes over time. It specifies that any additional services requested after the contract signing will be charged based on the current rates. For example, if the Client waits 6 months to sign this Agreement 3 months later, and the prices of the services have fluctuated, the Client will be billed as such. This allows the Vendor to adjust prices as market conditions or their business model evolves. Alternatively, the clause offers an option where additional services are billed at the rates listed in Exhibit A. This option can be beneficial for the Client, as it locks in the rates for additional services, protecting them from potential price increases.


If you select “Service Pricing” above, you will see the following question:

Question: Orders placed after signing this Agreement are billed at the rates in effect on the most recently published price list OR at the rates listed in Exhibit A.

If the Term of your agreement spans a lengthy amount of time, you may want to build in the flexibility to amend the quoted pricing for orders placed for a client, rather than your original estimate. For example, if you're a wedding planner who has signed a contract for a wedding 24 months away, the price for orders placed for clients will likely fluctuate.

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