Running a business without written agreements puts you and your clients at risk for misunderstandings. It puts you at risk of not getting paid. It may put you at risk with vendors and due dates for deliveries. And further puts you at risk for chargebacks, where the client goes directly to the credit card company and claims fraud after receiving services. Without a written agreement, you will likely have to refund any money you’ve received, even if your policy is “no refunds.”
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, clearly written, including all terms, and signed. When I say do not “copy/paste” someone else’s, I mean 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.
Here are some important things to consider for your business 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, so say that. If there are 4 monthly payments, say that. If you get paid before you ship the item, 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.
- Include the QTIPS
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 (self-explanatory)
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.
- Terms vs Policies
This isn’t meant to be legal advice but let me give you a little legal education to perhaps prevent issues later. A “term” of the contract is something in the specific agreement between you and the other party. The terms must be “performed” to prevent breach. A “policy” is something that applies equally to everyone in your business, because it is how you run things inside your business. There is a big difference. And when people omit terms from contracts because they, “have a policy on their website,” well, this is where people find issues that may come back to bite them.
For example, if you have a no refunds policy, but do not include it in the specific agreement that is signed, there may be some wiggle room for a claimed refund. If you have a no refunds “term” in the contract, you must put it in writing, and have it signed. That makes it clear that the other party knew there were no refunds available in your agreement. And so on.
Policies are still important to have and should be spelled out and should let the customer know HOW you run your business. You need policies that apply equally to every transaction, and they should be clearly visible to the customer. Walk through the customer journey in your mind and find the sticky spots where they may have a question or an issue about your product or service, and how you want to resolve it. Put that in writing as well.
If people must call to reschedule within 48 hours, you should have a written policy. If you offer refunds or replacements within 30 days, it should 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 people know this BEFORE they complete the purchase. Many times, I see entrepreneurs who have policies develop only after an incident. You must be more intentional than that. If someone doesn’t like your policies and chooses not to do business with you, trust me, it is far better than the bitter dispute with the credit card company over the chargeback later.
- 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. If you have the terms in writing, and one side is struggling to perform, you can modify and amend the parts of the agreement that create a win-win. Maybe a supplier needs net 30 instead of net 7 because of a cash flow issue. Perhaps a vehicle crashed into the side of a store and there is a 6-month pause while the building is repaired (yup, it happens).
But if the other side isn’t interested in modifying anything or there isn’t a good reason to stop performing, having the agreement in writing will likely give you the evidence you need to enforce the agreement (again, not legal advice). So, be sure you have that evidence of the agreement.
I haven’t personally had to go out and enforce anything, because I have great clients and vet them carefully before we sign anything, but if that day ever came, I would. This is business. My livelihood depends on my clients keeping their word, and their own business growth and development relies on it too. You must view this from an objective place and understand that if your clients don’t keep the agreements, your business could go under. Be stronger than that.
Finally, having an attorney look over your agreements is a wise decision. I don’t just say that because I have a law degree. 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 don’t have written agreements, set aside time to follow the above steps and get your agreements together now.
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