Running a business without written agreements puts you and your clients at risk for misunderstandings. It puts you at risk of not getting paid. And further puts you at risk for chargebacks, where the client goes directly to the credit card company and claims fraud after receiving products and services. Without a written agreement, you will likely have to refund any money you've received, even if your policy is “no refunds.”
Agreements need to be clearly written, including all terms, and signed.
The truth is that contracts, or as I call them business agreements, do not have to be complicated, written in legalese, or 20 pages long to be enforceable. What they need to be is yours, not someone else's copy/paste.
When I say do not “copy/paste” someone else's, I mean please do not copy/ paste. There are formats online you can follow, but don't include things you don't understand and just change terms just because they have it in theirs. I've reviewed many an agreement where people had conflicting terms because they chose the sexy Latin clause without understanding what it meant.
Here are the main things to include in your agreements.
Be Clear and Keep it Simple.
Nobody likes legalese. Nobody. Drop the “whereas” please. Just say it clearly and keep it simple. If the program lasts six months, it lasts 6 months. If there are 4 monthly payments, say that. People want to know what they are signing up for. It doesn't have to be fancy, lengthy, or in legalese to be enforceable. You can have a legally binding agreement written on a napkin in a bar (there's a law case on this!), not that I'm suggesting that approach.
The specific terms need to be spelled out. You can use QTIPS to remind you to include these things:
Q: Quantity (6 sessions, 2 bracelets, 5 massages, etc.)
T: Time of Performance (15 days, 6 months, 1 hour)
I: Identity of the Parties (You and the name of the client/ customer)
P: Price (break out the price per item if needed, but the total price of the agreement is clear)
S: Subject Matter (what are they specifically buying? Coffee? Coaching? Copywriting?)
When you include the above terms of your agreement, there isn't much room for misunderstanding. Just make sure you are specific. Don't say “fruit” if you mean “orange.” It can be a single sentence, “This agreement between Me and You is for Six 30-minute life coaching sessions over 6 weeks for $350.00.” All the terms are there. You know what you are giving, and they clearly know what they are getting.
Now, there are complex contract agreements, like a requirements contract, where you agree to provide or buy “all of your requirements” to or from a supplier. But if you are that stage of business, you should consult an attorney. Really, you should.
Spell out the terms (versus your policies)
This is where people often leave out things that come back to bite them. And the place where there are serious risks for ambiguities.
First, “the terms.” These are the actions that must happen under the agreement for it to be “perfectly performed.” Some might call it the “fine print”, but these are the things that form part of the contract. These are the things everyone entering the agreement is legally required to do.
If you do not offer refunds as a term of the agreement, you must put it in writing, in the agreement and have it signed. If you offer refunds or replacements within 30 days, it must be in there as well. If you require a deposit, if you require pay in full before a VIP Day, if the customer pays shipping, you must let your clients and customers know this is what the legal thingies are BEFORE they complete the purchase.
If someone doesn't like your terms and chooses not to do business with you, trust me, it is far better to walk away without the agreement than to face the bitter dispute with the credit card company over the chargeback later.
Because these terms are what you or the other person would need to enforce if there was an issue in the performance of your clearly written, unambiguous, amazing agreement. A contract agreement is between the parties to that transaction, so the terms “govern” that particular agreement.
Policies are another matter. Your policies are the actual guidelines within which you run your business. These apply broadly to everyone who does business with you. If people must call to reschedule within 48 hours, as a policy of your office, you enforce the policy to everyone, but maybe there's an exception available. Put your policies in writing, yes, but understand these aren't things that you or your clients are “legally required to perform” in the same sense as a contract term.
Get any changes in writing
If you make changes, and they do happen, just put them in writing and sign and date them. “You and I agree to change our agreement to include XYZ. This change is effective immediately.” Do not rely on the memory of what you said on the phone, and the out of context email isn't any better. Take a minute and “memorialize” the change.
Be prepared to enforce the agreement.
This is the part of business nobody really likes, but this is the reason you have written and signed agreements. You must be prepared to enforce them. This is business. Your livelihood depends on your customers and clients keeping their word, and your business growth and development relies on it too. It's uncomfortable at times, but we must choose to be stronger than the feelings. Nobody LIKES enforcing contracts, but hopefully, you would rarely need to take this step, and you would have a good enough relationship with the other party to negotiate how to complete the agreement. You must view this from an objective place and understand that if your clients don't keep the agreements, your business could go under.
Finally, Having an attorney look over your agreements is a wise decision. I don't just say that because I am one. Attorneys went to school to spot gaps and look for language that is written in a way that can be interpreted differently than you think it means or is ambiguous. If you are skipping the attorney for now, but you're still transacting business through email or handshakes and don't have written agreements, set aside time to get your written agreements together soon.