“Hello. Of course I trust you!”

 

Starting work with a new client can be an exciting experience.

But what if the relationship goes wrong and the paperwork isn’t in order?

Over the years I’ve been burned, especially when I worked on a commission basis only.

Don’t get me wrong, most of my clients have been delightful people to work with, and excellent payers.

Unfortunately, despite the best-laid plans, I’ve had my day in court.

Even though I was successful in winning a six-figure judgement I ended up with nothing because the client pulled a smart move and the company went belly up.

These days I ask for payment upfront, or for a good faith deposit to show that my customer has the intention of completing the deal.

Do yourself a favour.

Before you commit to a business relationship, protect yourself by creating a contract your client will sign.
After all, this is your livelihood at stake.

Types of contracts

A contract can be anything from an email to a very simple one-page document or a 100 page agreement (depending on the subject matter), or a verbal promise, or simply a hug or a handshake deal.

Whatever form it takes, even a quote on a scrap of paper, if you agree to provide a service for money, and your customer is promising to pay you for it, you have entered into a contract.

And the agreement you’ve made is legally binding.

But beware!

There are definite benefits in having a written contract.

Benefits of a written contract

Most important it provides proof of what was agreed between you and your customer.

It will help to prevent any misunderstandings or disputes down the track by making the agreement clear from the outset.

It will give you security and peace of mind knowing you have work for a particular period of time and precisely how much you will be paid for your services.

It should specify how either party can end the contract before the work is completed and, if applicable, set out the full terms and conditions of any penalties, refunds or guarantees.

Risks of not having a written contract

If your contract is not in writing you may have to rely on each other’s word, or memory.

Misunderstandings happen all the time.

If the matter should proceed to litigation the court may not be able to enforce the contract because there is no proof of its existence or its terms.

Verbal contracts

Verbal contracts work well only if there are no disputes.

At the very least, you should write down the main points that you agreed to, and avoid relying on memory alone.

And make sure you keep any paperwork or communication associated with your agreement, like emails, text messages, etc.

Get advice

If you need advice or assistance in drawing up a contract for your services, speak with your business adviser or mentor.