As a small business owner or entrepreneur, it can be tempting to enter into business arrangements without entering into a written contract. As every fledging lawyer learns, a well-written contract clearly sets out the agreed terms so everyone knows what they have to do and when.
There are all sorts of reasons why we don’t get around to written contracts; hassle-factor, time, money, apathy. I recently met someone who insisted that in a new paradigm, people don’t even need contracts, because ‘we all operate from the heart”!
An unwritten contract has several weak-spots, including someone saying words with no melody:
“I never said that.”
While you may remember the date, exact location and most of the rest of the conversation, the other person just doesn’t remember, and perhaps that is what they say about you too.
Most of the time, forgetting is genuine, part of being human. Who’s always infallible with a mental shopping list for a bagful of groceries? Last time I forgot the frozen broccoli. It seems significant that it was on someone else’s list. I haven’t been down the chilly aisle in years; so the chances of my remembering it were low.
A written contract is a panacea for forgetfulness.
In many ways, a contract is a glorified list of who does what and when, allowing the relationship to move smoothly.
With this in mind, you can write your own contract in 4 basic steps:
1. Write out your name and address and the other side’s name and address,
2. List what they are going to do,
3. List what you are going to do, and
4, Add the Date and Sign.
The perils of an unwritten contract
You see, in the UK and many other jurisdictions, contracts don’t have to be in writing. If there is nothing in writing, there can be and often still is a contract – an unwritten contract!
The perils of an unwritten contract are that they really do rely on both parties having marvelous memories and being impeccable with their word.
If someone simply forgets, they are more likely to be helpful. Where someone has sinister or fearful intentions, this can lead to subterfuge. For example, folks regret their promises or have a relentless desire to achieve their own goals and either can lead to nastiness and lies. Reworking William Congreve’s “Heaven has no rage like love to hatred turned, Nor hell a fury like a woman scorned”:
Hell hath no fury than an ego entrenched in being right.
For example, as a friendly gesture, I recently let the person who said contracts were of the old paradigm use some of my drawings in an e-book. The credit to me as an artist was latched on at the end of a mass of marketing messages. The e-book author insisted he had done what I asked and anyway, I should have said sooner. The project had been too small and informal for a signed contract; and T-R-U-S-T had been involved!
How a written record can save the day
The importance of receiving a suitable credit for my artwork meant I had communicated the exact wording in an email to be sent on to the layout designer, and there were further written communications on the placement so I was able to resolve the issue, and have my drawings removed, without too much further fuss.
The difference between a signed contract and a written record is that emails and notes can be evidence of the terms that were agreed for an unwritten contract. Very closely related as you can see.
Some records are better than others; compare an exchange of emails with notes claimed to have been during the meeting. What if the notes were made on a branded notepad with the logo of the serviced offices where the meeting took place, what if they were made on an iPad? All useful, to varying degrees. These days, saved text message streams can also be helpful. The best scenario is for the written record to be in one place, showing some form of acknowledgement from the other side.
The lesson here is that a written contract is best, and an, imperfect contract based on making a list can be good enough. My mantra for a simpler business relationship is “Get it down in writing”. Record key terms, what really matters, in an email exchange at the very least!
Memories fade, naturally and selectively. To leave a legacy, to make our contribution to the world, we need to look after our business as a being in its own right and not throw our gifts to the world into the hands of chance or capriciousness.