Contract Tip: Payment Milestones

Home improvement projects are completed in stages, and smart homeowners negotiate payment milestones based on completion of the work.

I often recommend doing the same for business transactions which include provision of time-sensitive deliverables.

My client was buying a complex software implementation service from an IT provider. The project would take six months and involve several stages. I advised them against paying the fee up front because that would take away some of the seller's incentive to perform.

The seller was concerned that my client would have the right to determine satisfactory performance "in its discretion."

We worked together to define objective criteria to judge performance results, and set up a payment schedule based on achieving those results.

A fair outcome for both sides.