3 factors that tell you it’s time to get a contract

September 17, 2018

You are an intelligent woman, building a business working from home. Your marketing is based on connection, you pursue collaborations rather than competing with others in your field and your relationship with your clients is based on trust and mutual respect.

No wonder the concept of whipping out a legal document and asking your gorgeous clients to sign it before they can work with you feels a bit weird.

So, what’s with the contract? Is it just an outdated remnant of a patriarchal business model, based on fear and avoidance of liability? What place does it have in a heart-centred, feminine approach to business, where you see yourself holding a space of freedom and openness for your client?

Contracts are a fact of business

The thing is, if you offer a service and a client pays you for it, you already have a contract.

At its simplest, a contract is an agreement to supply something in return for something of value.

The terms of your contract will be drawn from your sales copy, and any correspondence or conversations you have had with your client. However, because the details are not clearly set out in writing, there is potential for misunderstanding and confusion to arise around what the agreed terms are.

This is important on two levels.

From a practical perspective, I can give you hundreds of stories about situations where disputes have arisen because of mismatched expectations, fuzzy boundaries and undisclosed assumptions. The consequences can range from stress and aggravation to refund requests to legal claims being threatened – or made – against you.

Then, on an emotional level, lack of clarity around your services can mean that your client carries a degree of uncertainty and anxiety with them while working with you, because they are not quite sure what they are getting, or what they are getting into. This shifts them into being either more needy or more withdrawn. Worst case scenario, they back away from working with you.

Either way, you risk ending up in a situation where you feel resentful, overwhelmed and exhausted while your clients feel confused and disappointed.

But my clients aren’t like that!

OK… so I might have got a little carried away with the doom and gloom for a moment there. You may be doing perfectly well managing your client’s expectations and setting boundaries with an informal or oral (spoken) contract… for now! As your business evolves and your audience grows, your contractual needs will change.

So how do you know what you need – and when you need it?

I tell my clients there are three factors to consider when deciding whether you need a written contract, and what level of detail you need. Imagine each of these factors as a sliding continuum. The further you are towards the high end for each factor, the more important it is to have legal protection for yourself and your client.

1. Level of Investment

The first factor is the amount of money and time (yours and theirs) being invested in the relationship.

From the client’s perspective, the more someone is investing with you, the more potential there is for them to get seriously upset if they feel they are not getting what they paid for, and the more you need to lovingly manage their expectations. It’s also common sense to realise that you are likely to find it more difficult to use a refund to make an unreasonable client go away. (For $5, you wouldn’t think twice, but $500 would hurt a lot more!)

Similarly, the more long-term the relationship, the more potential there is for unforeseen circumstances to crop up, and the longer you have been working together, the harder it is to bow out gracefully if the relationship no longer feels like a good fit.

A contract plays an important role in clearly setting out exactly what you and your client expect from each other, and it can provide a clear process for ending the relationship if it is no longer mutually beneficial.

2. Level of Risk / Vulnerability

The more chance there is that someone could get hurt or suffer negative consequences of some kind (and that includes you and your professional reputation, as well as their health, finances, business, family…) the more important it is to clearly set out your boundaries and manage your potential liability by making it very clear where your responsibility ends and theirs begins.

Your contract contains disclaimers, which let your client know in detail what your service can and can’t do for them. It reminds them to stand in their own power, do their own research and make independent, informed decisions. It also lets you give them important warnings about safety concerns and identify any considerations that may make your service unsuitable for particular people.

It is important to note that by managing your liability in this way you are not saying “no matter what I do to you I can’t get into trouble for it” (which is an approach often seen in  traditional contracts). Instead, you are educating your client about how to care for their safety and wellbeing, and how to be a conscious and conscientious user of your services, so they will get the most benefit (and the least harm) from working with you.

3. Your Comfort Level

The final factor is how comfortable and confident you feel about serving your clients without proper contractual protection.

Some people are comfortable flying naked, and that is a wonderful thing. Others don’t feel safe without a full suit of armour and maybe even a tank around them. That is also a wonderful way to be!

If you don’t feel safe, you are going to sabotage your business, avoid taking on new clients, and keep playing small. There is no right or wrong here, but there are circumstances where having a contract can make the difference between hiding and shining, simply because of the confidence it provides.

Do they have to sign on the dotted line?

No! There are many different levels of contractual protection, and many different ways in which a contract can be presented to your clients. Once again, which is appropriate in your situation is going to be based on the factors outlined above.

You might just have simple, gentle terms that you provide to your client when you start working with them, to help give them clarity and certainty about how your relationship will unfold. You might have terms that you ask a client to “tick a box” to accept, or you might use an electronic signature service or ask them to return a signed physical copy.

Each of these options constitutes a written contract – and none of them need to be the traditional barbed wire fence! They can all be loving, gentle, fair and reasonable “contracts that care” holding space for your working relationship while communicating all the necessary details.

Be Prepared!

There is plenty of value to be gained just in thinking about and preparing a contract – even if you never give it to your clients (although I highly recommend that you do!)

I find that the process of creating a contract can have a really educational effect. It gets you thinking about aspects of your business you might otherwise never consider until a problem arises.

I feel there is great value in planning your policies around issues like refunds, cancellations, intellectual property and dispute resolution in advance (even if you choose not to formulate a policy, or to keep your policy in your filing cabinet until needed rather than disclosing it in advance – although, again, I am all in favour of transparency) because it gives you the space to respond calmly when dealing with uncomfortable situations rather than scrambling in a panic to find a solution.

How I can help

Contracts that care(TM) is the name I created to describe the kind of contracts my clients crave. They don’t want incomprehensible barbed wire fences based in fear and avoidance of liability (which is what many contractual precedents come across as.) They don’t want legal documents to be stiff and formal and feeling like they have been tacked on their beautiful business like an alien appendage. My clients want legal documents that hold a safe space for their relationships to flourish. They want contracts that are aligned to their values and vision, and that they can take full ownership of.

They want Contracts that Care!

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