20 January 2025 5 mins

Contracts. They’re the unsung heroes—or villains—of the business world. Whether you’re signing a deal with a client, a supplier, or a freelancer, a contract has the power to either protect your progress or completely derail it.

The right contract can be your safety net, your guarantee, your voice of reason when things get tricky. The wrong one? It can lock you into years of frustration, cost you thousands, and put your business on the back foot.

So, how do you make sure your contracts work for you rather than against you?

How contracts can help you

A well-drafted contract can be your best business ally. Here’s how:

  1. Protect your revenue

    No one wants to think about clients jumping ship early, but it happens. A good contract can help safeguard your income by setting clear terms around cancellations. If a client wants to end the relationship prematurely, your contract can outline the notice period required—or even stipulate compensation for the lost revenue.

    This isn’t about being difficult; it’s about being fair. You’ve planned resources, invested time, and allocated effort based on that agreement. The contract ensures you’re not left high and dry.
  2. Make sure you get paid

    It’s an uncomfortable reality: some clients will delay payment or try to avoid it altogether. But a contract can make those difficult conversations easier. When payment terms are clear and enforceable, you’ve got the leverage to say, “This is what we agreed—now let’s stick to it.”

    Without a contract, you’re left relying on goodwill. And as we all know, goodwill doesn’t always pay the bills.
  3. Avoid scope creep

    Have you ever had a project that started as one thing and slowly morphed into something else entirely? That’s scope creep. A solid contract spells out exactly what’s included in your services—and what isn’t.

    When a client asks for extra work, your contract can help you handle it professionally. You can say, “Happy to accommodate, but here’s the cost for that additional request.” It avoids awkwardness and ensures you’re not doing extra work for free.

How contracts can hinder you

Of course, contracts aren’t just about what you write—they’re also about what you sign. A poorly drafted or one-sided contract can cause as many problems as it solves. Here’s where things can go wrong:

  1. The auto-renewal trap
    Imagine this: you sign up for a service or supplier, and everything’s fine—for a while. Then you realise it’s not working for you anymore. Maybe the costs have gone up, or the service just isn’t meeting your needs.

    But when you go to cancel, you find you’ve missed the notice period. You’re now tied into another three years, and there’s no way out without paying a hefty penalty.

    Avoid this trap by checking for auto-renewal clauses in any contract you sign. If they’re unavoidable, make sure there’s a fair and clear exit option.
  2. Intellectual Property (IP) issues

    If you’re working with freelancers or contractors, don’t assume that you automatically own the intellectual property they create for you. Without a contract that explicitly transfers IP ownership upon completion, you could find yourself stuck.

    For example, you might want to adapt or re-use some content but realise you don’t legally own it—you’re just licensing it. That means you’ll need to pay additional fees or jump through hoops every time you want to make changes.

    The fix? Always include an IP clause in your contracts that states the work becomes yours upon payment.
  3. One-sided agreements

    It’s easy to skim a contract and assume it’s standard, but one-sided terms can lock you into unfair obligations. For example, a supplier might have a clause limiting their liability if something goes wrong, while holding you to strict penalties for any delays on your part.

    Always read the fine print—and don’t be afraid to question or negotiate terms that seem unfair. A good contract should work for both parties, not just one.

How to stay contract smart

Here are a few tips to keep your contracts working for you:

  • Read everything: Yes, even the boring bits. The devil really is in the details.
  • Negotiate: Most contracts aren’t set in stone. If something doesn’t sit right with you, speak up.
  • Know when to walk away: If a contract feels too restrictive or one-sided, don’t be afraid to say no. Better to lose a deal now than be stuck in a bad agreement later.
  • Get a professional review: If in doubt, have a lawyer take a look. It’s a small investment compared to the cost of being tied into a bad contract.

The power is in the pen

A contract isn’t just paperwork; it’s a roadmap for how you’ll work together. It sets expectations, prevents misunderstandings, and protects your interests. But remember, the power isn’t just in the contract itself—it’s in how well it’s written and how carefully you approach it.

The next time you’re faced with a contract, ask yourself: will this help or hinder me? If you’re not sure, take the time to find out—or get help from someone who can. After all, in business, the pen really is mightier than the sword.

What’s your biggest contract challenge? We’d love to help you stay contract smart.

If you need support with any of the above so please don’t hesitate to contact us.

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Ryan Lisk

Ryan has helped a vast number of businesses protect and control their intellectual property as well as drafting and advising on consumer and commercial contracts.

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