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Clause

Fee basis

The clause that says what you pay and what the fee is worked out on. If you cannot calculate the fee from this clause and your own figures, ask for it to be rewritten until you can.

This page explains a common clause in general terms. It is not legal advice, and contract law differs between countries. Ask a lawyer to review your own engagement letter.

Sample clause

Written for this guide, not from any real contract

The Fee is 1 20% of the Benefit. 2 The Benefit has the meaning given in clause 3. 3 The Fee is calculated on the Benefit as stated in the Claim when it is filed. 4 The Fee is subject to a maximum of $60,000 for any one Claim. 5 Work outside the Services is charged separately at the hourly rates in Schedule 1.

  1. The rate. On its own it tells you little: what it applies to, and whether there is a cap, matter more. 20% is the illustrative rate used across this site.
  2. The base is defined somewhere else in the letter. Read that clause before this one.
  3. "As stated in the Claim when it is filed" fixes the fee before the tax authority has looked at the claim. A fee on the amount received would wait for the money.
  4. A cap. Here it is a figure, which you can check. $60,000 is the illustrative cap used across this site.
  5. Extras. Ask what counts as work outside the Services, and read Schedule 1 for the rates.

What it means in plain English

The fee basis clause sets the model and the rate. In the sample, the fee is a percentage of something the letter calls the Benefit, measured when the claim is filed rather than when the money arrives, with a ceiling for any one claim and extras charged by the hour. The figures are illustrative, from the shared example used across this site.

Three things decide what you will actually pay: what the Benefit means (its own clause, what counts as the benefit), whether the fee is measured as filed or as received, and whether there is a cap, a minimum or extras. The percentage on its own tells you very little.

What to look for

A version that is easy to live with names the base in words you can check, says whether the fee is on the amount claimed or the amount received, states any cap or minimum as a figure, lists what is extra and at what rate, and comes with a worked example on your own figures. You should be able to take the clause and your expected claim and write down the fee.

A version to ask more about uses a percentage of "the benefit" or "the value" without a definition, measures the fee as filed with no adjustment if the claim is later reduced, mentions extras without pricing them, or refers you to standard terms rather than the letter in front of you. None of these means anything is wrong. Each of them means you do not yet know what you will pay.

Contract law differs by country, and so does what a letter can and cannot do. Ask a lawyer to review your own letter before you sign it.

Questions to ask

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