Do I Need a Contract For This?
As a Lawyer & Coach, that’s actually a question I get a fair amount from clients: Is this something I need a contract for?
In other words, they are usually initiating some type of business relationship – client, vendor, partnership arrangement- and they are wondering if they actually need an official contract.
We all know what we want, right?
Answer: Yes…right now.
In other words, relationships are evolving entities and business relationships are no different. So even though we are all on the same page now, that doesn’t mean that we can’t get off track later on…through no fault of our own.
And that’s why as a general rule, I advise clients to document everything, proposals, client agreements, corporate formalities…everything.
Because you never know when you’re going to need something to reference back to later on.
Now as I’ve said before, I understand that for some people, documenting can feel like a real pain. And to be honest…it can be.
But what can also be a (more formidable pain) is what happens when you DON’T document.
I’m talking about what happens to business relationships when you don’t document.
What happens to key business contacts and service agreements?
What happens to your business when you engage in a transaction when you think one thing and the other person is equally sure it was something else?
So while “documenting everything” might not be what every business owner wants to hear, it can have a huge impact on the growth (and protection) of your business in the long run.
So with that said, let’s talk about a couple instances where documentation is a good idea.
Contracts and Agreements: This is by far the most important category. Contracts and Agreements are the lifeblood of any business; they include the rental agreement for the business office, employee contracts, non-compete agreements, licensing agreements, vendor contracts, purchase orders and even the Terms and Conditions associated with the sale of goods.
Contracts can be simple or complicated, short or perpetual. Without keeping good records of all agreements your company has made, it is impossible to fulfill the terms your company is obligated to fulfill under the contracts.
Proposals: This category refers to documentation or presentations you make to prospective clients and/or vendors. Not only is it important to keep records of who you make proposals to, it is also important to keep a record of these documents so that you know exactly what was offered to the clients and vendors.
In certain circumstances, if the person who made the proposal is unable to speak to the potential customer or vendor, another employee can look at the documents and know exactly what has been offered. This can be an absolute lifesaver in a variety of circumstances.
The Bottom Line
Take my word for it when I say that many potential lawsuits have been head off at the past by having these two types of documents on the books.
So if you’re a business owner or entrepreneur thinking about “documenting” a particular agreement or client contract, absolutely do it. Your business (and your relationship with that person) will thank you for it later!