What are the most common excuses we’ve heard for not having a client contract?
- We’ve worked together for years and nothing has happened
- We’re not offering anything that’s particularly high risk
- We think contracts are too formal which isn’t in line with our brand, culture etc.
- We haven’t got round to it yet
Let’s debunk some of these excuses for not having a contract with your client.
We’ve worked together for years and nothing has happened
This is usually where you don’t want to rock the boat. Things have run smoothly for a long time, you’re all familiar with how things are done, and you have a strong enough relationship to resolve any hiccups by having an open conversation.
The thought of suggesting to your client that you put a contract in place sends a shudder down your spine as you worry about how your client will react. It feels unnecessary, unexpected and you worry that it will change the dynamic of the relationship and maybe even cause them to look elsewhere.
While you’re right to think this way, have you considered this…
Your client might sell their business one day, leaving you with the new owners and leadership team to work with. If there’s not a clear contract in place which sets out how your client can give notice and cancel, you’ll be relying on an implied contract…and the chances are, you haven’t ever talked about what would happen if one of you wanted to cancel which leaves you exposed.
You might sell your business one day, leaving you to explain to your buyer’s legal team why you don’t have a contract in place to manage essential areas of risk, such as liabilities, notice periods for cancelling, scope of work, payment terms, confidentiality.
Your client stops paying you, leaving you with a harder task of recovering the debt and no ability to claim for late payment interest or your debt recovery fees.
A colleague drops the ball, causing a dispute that is looking problematic to resolve. Your liability is uncapped as you don’t have a contract in place to manage this.
Your client starts poaching, finding good people in the current market is tough so they’ve made your colleague an offer they can’t refuse. You’re now left with the task of recruiting and the risk that they will now take your service ‘in house’.
We’re not offering anything that’s particularly high risk
One person’s trash is another person’s treasure, and you could use this metaphor for thinking about one person’s definition of ‘risk’ compared to another person’s.
Risk can apply to lots of things that a carefully drafted contract can cover off.
The risk that your client doesn’t pay you on time.
The risk that your client cancels at short notice.
The risk that your client has a change in staff and expectations have changed with scope creep becoming an issue.
The risk of your new client expecting you to send a sensible contract and your answer being “we don’t have or need one”.
We think contracts are too formal which isn’t in line with our brand, culture etc
Contracts are formal. But they don’t need to ‘feel’ or ‘look’ formal.
We recommend thinking about who your client is and what they’re likely to want to see when they read through your contract.
For example, if you’re working with owner managed businesses in the trade industry, they’re unlikely to be interested in a long formal contract.
But if you’re working with a large corporation, it’s likely they’ll have a legal team that will expect to see a formal and detailed contract although in most cases they’ll probably insist you sign their terms, not yours!
It’s perfectly possible to create a contract that is in plain, conversational English that covers the essentials. The best contracts are the ones that are nice and clear, easy to follow and are equally balanced to protect all parties’ interests so they shouldn’t act as a barrier to business, they should be a catalyst to winning it.
We haven’t got round to it yet
Unfortunately, this reason doesn’t have any legal standing when the proverbial hits the fan. Need we say more?!
If you’d like help with your contracts, please don’t hesitate to get in touch with us. You can book a free initial chat here.
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.
