A fair amount of the work we do for clients consists of drafting, reviewing or revising contracts. It makes sense, we work with a lot of start-up and growth businesses, and they all have a lot of interactions to make their businesses run. Each of these interactions can and should have a contract to govern it. But we often hear folks say “I don’t really need a contract for this.” The reasons vary, from something not being a very long project to not being worth a lot of money to them knowing and trusting the other party, but no matter the reason, we always tend to disagree. Why? Well there are a lot of reasons, but today we’ll mention those we witness most often:
- Even small/short projects can run into problems. While it’s true that your short-term project or small dollar amount deal might not warrant a long drawn out contract negotiation, it’s not certain that it won’t run into problems. Even a short statement of work signed by both parties detailing the absolute basic contract terms (who is doing what, on what timeline, and what happens if they don’t) can make sure that the project everyone intended to get done quickly still has some ground rules when it stretches on longer and costs far more than anyone expected. Better to have something in writing and not need it than to need it and not have it.
- If you don’t set the rules, someone else will. This comes up quite a bit when clients are working for a larger or more established company. They will agree with the client that a contract isn’t needed, but when the client gets push back from a higher-up at their company will find themselves faced with not only a contract, but a very one-sided heavy-handed beast of a contract. It’s amazing how saying “I have some standard terms of service” can give you absolute control over how the relationship will work.
- Who you’re contracting with might change. You may implicitly trust the person on the other side of a transaction, and may believe that they will never stop being the person you deal with related to this matter, but as we all know, s*h!t happens. Someone might sell their business, or get fired, or be hit by a bus, and this may leave you dealing with their successor or family member. The next person in line may not be as understanding as the one you’re used to dealing with. Do yourself a favor, get things written down while you’re dealing with the one you trust.
- Setting expectations = Great for everyone. Have you ever found yourself in a situation thinking “I wish everyone here had been less clear about what they wanted”? Probably not. The same is true for business transactions. Being able to set out what everyone is doing, what they are NOT doing (sometimes just as important), how long they have to do it and what happens if someone doesn’t is a good idea for any situation. Don’t miss an opportunity to record that while everyone is getting along. It can come in very handy when folks aren’t.
- It doesn’t have to be that hard. Creating a contract sounds about as much fun as having a tooth drilled, believe me, we get that. But it doesn’t have to be a terrible process. A good attorney can provide you with a basic agreement that you can then tailor to your particular needs. And, you can request that the one agreement be versatile enough for you to use in multiple situations. So don’t avoid it just because you think it is going to be difficult. Get your expectations and needs clear, and then present them every time you are entering into a business relationship. Set the terms so you won’t face any surprises, and if/when you do, you can know what to expect.
Have these reasons convinced you that you should have a contract for something you’re working on? Be one of the 6 folks to receive a heavily discounted admission to the first Converge Retreat on February 6, 2015 and have your contract drafted along with a detailed marketing plan and a 2015 budget. Find all the details about Converge here!