• IngramLawFirm

What's in a Contract

A contract seems so simple and in the back of your mind you probably know that you need one and the things that you are certain will need to be included for your own peace of mind and for that added layer of legitimacy. But do you actually have that contract in place and if you do is it well written?

A contract can really take many forms. It can define relationships, it can shield you from potential liability and it can put your clients and customers on notice that you in fact do have rules that must be followed within your relationship. Laying out such a structure before you start doing business will prevent any confusion in the future.

The peace of mind that a well written contract is invaluable. The key here is well written. Contracts come in many forms, from a few scribbles on a napkin to a full fledged 300 page document, neither is any more or less enforceable depending on the intent. But the reality is that the one that is more detailed and well thought will give you more protection and help you to avoid questions about intent, purpose and liability in the future. It is key to have all the high points covered as well as a few basics.

What is a contract? Legally it is offer, acceptance and consideration. Simple enough right? For the non legal mind it is I'll do, sell, help you with this, you say ok, and pay me $X. Offer, acceptance, consideration. The contract you use in your business should outline the same concepts. I'll perform these services for you, you accept those services are accepted and the reason we are both agreeing to the terms is that we both see value in the relationship. The business owner values the income, the customer values the service and you both consider it a good deal. Why am I explaining this to you? Well you can't enter into a good contract if you don't understand its purpose. You equally should know the benefit of the bargain to price accordingly.

The major terms in EVERY contract should be the names, location and identifying information about the parties. The terms, i.e. the services provided, the cost, and how the cost will be paid. You want to spell out consequences for failure to pay, any limitations there may be on refunds, cancellation and renewal. Additionally, you want to identify what they can and cannot do, what you will and will not provide and releases for all the don'ts. It is also extremely important in COVID and its aftermath to have a force majuere clause to prevent acts of God from interrupting your cash flow.

The format of the basic contract can be applied to your clients, customers and staff, to your leases, purchase agreements and professional relationships like with your attorney and accountant. It is simply modified for each use as appropriate.

In the big picture every relationship you have is contractual except that of parent/child. Your spouse has agreed to certain terms and the consideration is not always monetary but that certain things will be exchanged by both partners; your friendships are the same scenario where the other person has agreed to certain terms and will continue the relationship; every purchase you make at a store is contractual, whereas you agree to pay a certain amount for a certain item and you consider it a good deal. The back of your receipt spells out the remaining terms for exchange, returns and refunds.

The major takeaway today is that contracts are everywhere and important. Follow up with an attorney to make sure you have everything you need to succeed.

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