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Template, tips for creating forceful, effective contracts

You probably know that you shouldn’t do business without contracts, so here is a good idea of what you need to get you started or strengthen your current contracts.



Strengthening your contracts in simple steps

Andy Clarke, writer at 24 Ways, suggests you should consider eliminating the legal jargon from your contracts altogether. It makes it easier for you and your customers to understand. While some industries like finance or real estate do not have this option, entrepreneurs and service providers typically do.

The basics: give an overview of who is hiring whom, what they are being hired to do, when this is taking place, and how much money you have agreed to. Then you will need to line out the scope of the deal and remember specific is always better, as well as, what will happen if either side changes their minds about something. Finally, you will want to include legal matters, such as liabilities.

Clarke offers examples on his site and states that “it has been worth its weight in lead and you are welcome to take all or any part of it to use for yourself.” But, before you do that, let us look at some more specifics of what should be included in your contract.

The introduction or first few paragraphs of your contract are the most important. This is where you say who you are, where you are located, what service you are providing, and at what cost. It should also set the overall tone and explain the key points of the contract.

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A well written contract can thwart problems

Next, Clarke suggests, “you should ask your customer to confirm that not only are they authorized to enter into your contract but that they will fulfill all of their obligations to help you meet yours.” This avoids that awkward situation where a member you think you have authorization, but then you find out it was not fully approved. A well written contract can avoid all of these problems, or at least the majority of them.

Here is where things get a bit tricky. You want to insure that you make provisions in case the customer backs out, but you still want them to have the flexibility to change their minds, or direction of the project. Clarke offers some insight in to resolving this issue.

He states, “The estimate/quotation prices at the beginning of this document are based on the number of days that we estimate we’ll need to accomplish everything that you have told us you want to achieve. If you do want to change your mind…You will be charged the daily rate set out in the estimate we gave you.

Along the way we might ask you to put requests in writing so we can keep track of changes.” This is a great way to allow flexibility, but what happens if you are operating on a “per job” basis? You do not really charge by the day and if you your client changes their minds significantly, you have lost your valuable time and money.

Are you required to use a lawyer?

I think the answer here lies in Mike Monteiro whose advice we recently shared with you: use a lawyer and make sure you are covered. Especially in regards to the next issue: copyrights. Make sure that you have outlined who owns the product; in the event that someone tries to utilize stolen graphics as their own, you do not want to be held responsible.

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Again, lawyers are not a bad idea when drawing up your initial contract. It should be noted that even Andy Clarke himself states, “I’ve signed more contracts than I can remember, many so complicated that I should have hired a lawyer (or detective) to make sense of their complicated jargon and solve their cross-reference puzzles.”

And finally, as Monteiro stated, “be specific and confident about money,” and that is the last issue. Payment schedules and all other money related issues need to be absolutely clear.

You are well on your way

If you can do all of this you are well on your way to creating and using a contract that will survive anything they can throw at you, well, the majority of problems, anyway.

In summary, do not be afraid to use a lawyer. They can help save you money in the long run. Do not be afraid to negotiate and never enter into a business deal without a contract.

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Jennifer Walpole is a Senior Staff Writer at The American Genius and holds a Master's degree in English from the University of Oklahoma. She is a science fiction fanatic and enjoys writing way more than she should. She dreams of being a screenwriter and seeing her work on the big screen in Hollywood one day.

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