Why You Need Written, Detailed Contracts – Even with People You Trust

Last November, I went to small claims court and sued a lawyer for non-payment.

After some wrangling, we settled with both of us feeling ripped off.

In retrospect, we could have avoided all the ugliness – and perhaps even still be working together – if we had written and both signed a contract that detailed the project and clearly defined what was included (and not included) in my fee, along with our respective obligations and responsibilities for moving the work forward. Our primary point of contention had to do with revisions. He retained me to ghostwrite and produce a book; I thought I was clear on how revisions would be handled, but he disagreed. We both dropped the ball – and we both knew better.

Insisting on a detailed contract does not indicate a lack of trust. Rather, it provides a vehicle for you to confirm your mutual understanding of your agreement. Contracts don’t have to be formal, complex documents (depending, of course, on what they cover); they just have to clearly outline the deal you’re making. This is the chance for you to say, “Wait, that’s not what I meant,” or “That’s exactly what I expect.”

Some tips on contracts:

• Make standard provisions apply to both parties. If, for example, the contract exempts the supplier from specific liabilities, the language should be revised to exempt the customer as well.
• Use precise language. It’s difficult to enforce vague language, so be specific. A clause that states a supplier isn’t responsible for failures due to causes “beyond the vendor’s control” leaves a lot of room for interpretation. More precise language forces a greater level of accountability.
• Include a default provision and an escape clause. Describe the circumstances under which either party would be considered in default and what will happen. Also define what’s necessary to terminate the contract if either party wants out.
• Don’t assume anything not in writing. If it’s in the contract, it’s enforceable; if it’s not in the contract, it’s not enforceable. Period.
• Consider a legal review. Depending on the amount of money and the degree of risk and liability involved, you may want to have an attorney take a look at your contracts.

One of my clients puts it this way: If you don’t have a written agreement that's been signed either physically or electronically, you don’t have a deal.

As a ghostwriter and book collaborator, I work with a lot of entrepreneurs and business owners. One thing most of them have in common is a resistance to handling the details. I’ve learned to tell them that’s fine—the details are my job once we have the agreement in place, but we need that agreement first. That non-payment lawsuit was an adventure I don’t want to repeat.