Question

Law 3207 – Assignment #2

Background:

You are entering into an Accounting Services Agreement with a client who has hired you to review its financials and prepare its annual tax return.

Questions:

a) Identify four (4) important clauses that should be expressly stated in the agreement to clearly set out the intentions of the parties.

b) For each clause, provide sample wording (ie. actually write out the clause) and explain its importance (ie. how does it protect you from liability, minimize risk).

c) In the event of a dispute regarding the interpretation of a clause, what are 3 rules of construction will the court apply?

d) Assuming this is a standard form agreement (see definition in textbook), what should the accountant do to ensure that the client understands the terms of the agreement?

Tips: Be as specific as possible in your answers. Refer to the textbook (chp 4 & 5) and feel free to consult and use external sources (with proper citations).

GOOD LUCK!!

Answer 1

Solution:-

(A&B)

(1) Be clear about payment :- We need to clearly set out the paymrnt and invoicing terms.In other words, we need to clarify about the maturity of the payment for which you provide service. Because as a service provider, we cant wait till the service ending.

(2)Keep an eye on the clock :- You need to complete your work on timely basis. Also you need to take care about the fact that whether the customer gives you information on timely basis

(3)Consider liability issues carefully:- One of a contract’s most important functions is to allocate risk and liability between the parties. You need to clarify in advance about the liability in the case of any default or any other mishappening.

(4)Define the scope:- You need to clarify about the services that the service provider will provide.Also clearly identify all applicable specifications, metrics, key performance indicators and service levels, so that deliverables and performance can be measured against objective goals.

(c) (1) The “Whole Agreement” Rule:- In the majority of cases, the invocation of the “whole agreement” rule benefits owners over contractors because the rule typically operates to place upon contractors the obligation to perform work when any part or portion of the contract can be construed to require the work.

(2) Course of Dealing: If the disputing parties have acted a certain way in interpreting similar language in the past, this “course of dealing” may be used to show that the parties intended to treat the disputed language in the same way.