Do's and Don'ts For Contracts In Your Business
One of my biggest icks as a lawyer is people copying and pasting contracts from Google… or even worse, not having contracts for their business at all. 🥴
Contracts are an absolute necessity in your business for a variety of reasons and failing to set up legit contracts can result in a lot of wasted time and money.
While they might appear to be stuffy legal documents that you don’t want to fool with, contracts are actually a primary backbone of any successful business venture because they serve as vital agreements between you and the people you work with.
These documents establish expectations, responsibilities and provide legit legal protection so you can avoid or easily resolve any headaches that may come up during a working relationship.
Whether you're a seasoned entrepreneur or just starting your entrepreneurial journey, understanding the do's and don'ts of contracts is crucial for keeping your business running smoothly!
In this blog post, we’ll dive into the key principles and best practices that can help you navigate the world of contracts, so you can save your Google searches and trust that you have everything you need to implement this important aspect of your business with ease.
3 Must DO’s For Contracts In Your Business
- Get everything in writing
This should go without saying, but you’d be surprised at how many people think that a verbal agreement is good enough.
NEWS FLASH: it isn’t! 🙅🏻♀️
Without having everything (and I really do mean everything), from payment terms, to scope of work, to intellectual property rights, confidentiality notices and even the termination clauses, in writing, you take the risk of not having a legal leg to stand on when problems arise.
Before starting any type of work with a client, make sure that they read, sign and agree to all of the contracts in your business and if at any point your working terms change, make sure you get updated contracts from your client as well.
This not only protects you as the business owner, but also the client, and ensures that you both are treated fairly throughout the process of working together.
- Update your contracts
Many people think that once a client signs a contract, they’re taken care of from that point forward.
The TRUTH of the matter is that if anything in your business changes, including prices, scope of work for certain services, deliverables, etc. you must update your contracts, notify your clients and have them re-sign and agree to the new terms.
If you don’t update your contracts and you try to require new things from your clients, such as new pricing, they can refuse to oblige and as the business owner, there’s not much you can do.
So, as your business grows and evolves, make sure that you keep your contracts up to date with new information so that you are fully protected at all times!
- Define technical or confusing terms
I can’t tell you how many times I review contracts just to find a bunch of legal latin inside that no one truly understands.
Oftentimes, people think that if they include this language, their clients will simply sign the contract and move on without asking for clarification – which is a big fat NO in my book, but more on that in a minute!
If you want to start your working relationship off on good footing with your clients, make the contract part of your onboarding process easy for them.
One way to do that is to define technical or confusing terms in your contract that they likely won’t understand.
Not only will this make it easier on them and increase the level of trust that they have with you as their service provider, but it will also save you time in the long run because you won’t be stuck answering questions and clarifying terms that they don’t understand.
The moral of the story is this: if your clients don’t understand what you’re sending to them, they might find it harder to sign on the dotted line and the time you spend explaining your contracts could be time spent doing ACTUAL client work.
So, if your contracts appear to be something that a judge in a courtroom would write, it’s probably time for an upgrade.
3 DON’TS For Contracts In Your Business
- Don’t sign anything you don’t understand
Raise your hand if you know “mens rea” and “habeas corpus” because of Legally Blonde. 🙋♀️
If so, you’re among the majority and you should know that there's absolutely no shame in that because let’s be real: you shouldn’t have to go to Harvard Law to understand the legal contract that you’re signing… nor should your clients.
Any time you enter into a legal agreement, you should understand exactly what you’re signing, so you can feel confident that you’re protected.
On the client side: if you come across something in a contract that you don’t understand, ASK! It’s the job of a service provider or business owner to be able to clarify something in plain terms for you.
On the service provider side: Go ahead and make this easy on your clients by referring to #3 from above.
- Never sign a blank or partially blank contract
One of the many contract red flags that I see are blank or partially blank documents. 🚩
There’s a variety of reasons this can happen, but as a client you NEVER want to sign something that isn’t completely filled out.
If you do, you run the risk of NOT being legally protected if or when legal issues arise.
Service providers: conduct due diligence with your contracts and make sure you’re sending agreements that include all of the information a client needs so you can avoid this absolute nightmare.
- Don’t use archaic or overly long phrases
I’m not sure who made the rule that contracts have to be long, boring or hard to understand, but that’s one rule I personally don’t like to follow.
Contracts in your business are meant to do one thing: protect the parties in a business relationship by defining all working terms and implementing certain legal rights.
And guess what? That can be accomplished WITHOUT a ten page document full of archaic words, legal jargon or overly long phrases that are often used just so you appear smart.
While contracts are important, they don’t have to be intimidating and if you want your clients to view you as professional AND approachable, lead with a contract that is clear and concise.
If contracts like that are new to you and you aren’t sure how to craft them with confidence, well my friend, I’m happy to introduce you to our Contract Template Shop!
It’s a one stop shop for all the legal agreements your business needs and you can easily shop by industry or simply search for what you need.
The legal aspects of your business don’t have to be confusing and I’m here to make sure they aren’t!
P.S. Not sure what exactly needs to be included in your client contracts? Refer to this blog post and scroll to the “Written Agreements” section for a full list!