Creating a Shield Through a Written Client AgreementWhen you agree to perform services for a client, and the client agrees to pay you for such services, you and your client have entered into a legal contract. The terms of the contract, however, are difficult to recall and prove unless in writing. A written contract is pivotal as it puts clients on notice of business policies and terms, sets a professional tone, promotes consistency of policies, and is legally enforceable in court (the decision whether to sue a client to enforce a contract is, of course, a business decision, as well as a legal one, and should be carefully considered). The contract, thus, helps to prevent misunderstandings and clearly defines the expectations of the parties.
Some entrepreneurs choose not to use contracts for fear that a written agreement may be too formal or legal in nature and, thus, may scare a client away. Again, this is a business decision that should be given consideration, and you should determine if this is a real or imagined fear by communicating with your clients to test the waters. You can also use a “letter agreement,” which may be less intimidating for clients. In the corporate arena, a written contract is generally expected. Another disadvantage of using a written contract is the cost of creating and advising if you use an attorney. While there are standardized contract forms available online and in books, be careful not to accept such standardized forms carte blanche. I often see small business owners fail to adapt contracts appropriately, which causes embarrassing typos, inappropriate clauses, and general confusion. Not only does this look unprofessional, but in extreme cases it can also result in unenforceability of the contract in court. Therefore, it is a good idea to have a business lawyer review the agreement to make sure it adequately protects you, contains the relevant terms, and fulfills the goals you want to accomplish. It is an expense worth paying for to secure adequate protection in the long term.
To Your Success,
Larry D. Hall
- Get It in Writing: A Quick Guide to Agreements and Contracts (wisebread.com)
- 3 Contract Agreements Every Small Business Should Have (smallbiztrends.com)
- Put It In Writing (detroitstartuplawyer.com)
- What an Entrepreneur should have in their Filing Cabinet (privatebusinessplans.wordpress.com)