As a lawyer who helps small businesses draft and understand legal agreements, I have met many small business owners who either do not have contracts in place or are not 100% confident in the agreements that they have. Neither of these are good business ideas. Everything is fun and games (or in actuality, a lot of sweat equity) in the initial stages of a business. But what happens when the relationship with your business partner, service provider, client, contractor or employee breaks down?
The first thing that people do is look to their agreements. What was the deal that was agreed upon? How can they terminate the agreement if it is not working? How much money is owing and when?
What happens when there is no written agreement? Although in general, a contract does not need to be written to be enforceable, that does not make it a good idea. If the contract is not written, the parties need to first prove that the contract actually exists. This is not an easy feat and can quickly escalate into a “he said/she said” argument and a lot of wasted time, money and energy. So don’t even go there in the first place. When you have a written agreement, you can see in black and white what was agreed upon (although whether the contract is well written or not is another article entirely).
I understand that entrepreneurs and small business owners don’t have a lot of cash when starting their businesses. I understand the need to cut costs. I am a small business owner myself. But I do not recommend cutting costs by not having proper written agreements. If you do, this could cost you a lot more than it would have cost you to have a legal agreement written for you in the first place.
In order to protect your assets, your business and your reputation, you need to get all of your agreements in writing.
A well written contract will give you peace of mind that all of the “what if” scenarios are covered. It sets in one place exactly what was agreed upon. Not only that, but it shows clients your professionalism and that you take their business (and yours) seriously. Once it is signed, then by all means, go out and create the next SnapChat. When you do, please don’t forget us little guys/gals who helped you out in the early days 😉
Wondering about how to find the right lawyer to help draft your contracts? Check out my previous blog post on the topic here or contact me to learn more about my services by emailing me at email@example.com or clicking here.