Let’s talk contracts and why you should put it in writing!
Your businesses potential for making money hinges on the relationships that you form, from those with your suppliers right through to your clients, and/or customers.
Those contractual relationships whether they are in writing or made verbally are fundamental to its success so leaving yourself exposed by not properly protecting yourself with clear terms could be catastrophic.
Let’s think about what a contract actually is and how they come about?
In short, it is an agreement between two parties. That’s it. Whether it’s on the back of a cigarette packet (I’m not sure that’s a socially acceptable analogy these days but hey, I was dancing my way through the nineties, so I’ll go with it), a verbal agreement or an email exchange.
The actual existence of a formal written document isn’t necessary and the courts will recognise a contract, even in the most obscure situations if two parties have shown a clear informed intention to reach an agreement, so it’s so important for you to have control over the terms you want to be bound by, as otherwise default terms will be implied into your agreement.
When does a contract come into existence?
This is important because it determines when your customer becomes legally bound to buy from you, or vice versa, for you to provide services or goods, and ordinary contractual principles apply to electronic communications so whether you’re trading online or offline the formation of a proper contract is subject to the same rules.
What often happens however is that the parties fail to recognise the existence of a contract or when it becomes legally binding, incorrectly working on the assumption that it is ok to change their mind and simply walk away and sadly that is not always the case.
What if a conversation took place between two parties, let’s say in January, for a programme or course starting in July?
Under English law the general rule is that a contract is formed when the offer is accepted by the buyer and there is an intention to form a contract, additionally in e-commerce selling, that there is sufficient certainty of the terms that have been agreed.
Anything leading up to that point is just a negotiation between two parties and either can walk away.
The position when determining if a legally binding agreement has been formed therefore between you and another is to consider whether there has been
- an offer,
- acceptance of that offer,
- consideration,
- an intention to create a legal relationship
- and sufficient certainty of the terms that have been agreed.
Without those elements the existence of a contract is unlikely .
Despite the huge growth in the e-commerce sector there is still no clear guidance under English law of how the rules of offer and acceptance should be interpreted when contracts are formed using internet based methods of communication.
If you are unsure, best practice would be to consider all of the circumstances and the context for the particular arrangement.
For instance a zoom call is likely to be deemed as similar to face to face selling whereas email or text may be closer to the rules for written offer and acceptance are dealt with in writing.
In our scenario, when you have provided the details of what you are selling to a customer giving them enough information to make an informed decision (offer) and they communicate a positive acceptance of that decision to you (acceptance) and subsequently pay a deposit (consideration), it is safe to assume that their intention is to create a legal relationship with you and this is when the contract is formed and becomes legally binding.
Whether or not that contract is confirmed in writing is irrele‐ vant and while it will always be preferable to confirm your terms in writing a contract will also come into existence when an agreement is made verbally.
What can happen however is that the absence of a formal written contract leaves business owners unsure of their position and they therefore don’t feel confident to confirm that the agreement has already become contractual.
The best way to make sure the proper and intended terms are being agreed to and that your buyer understands that they have entered into a legally binding agreement with you at that point is to PUT IT IN WRITING.
I joked to a client recently that I was going to get t-shirts printed with “PUT IT IN WRITING” on as I say it so often.
But it’s actually the most important message I can give you so if you take anything away from this, please let it be this point.
Your business is built on every agreement you enter into. I know it sounds dramatic and can feel like this doesn’t apply to you, but remember . . .
The risks to you are unlimited if something goes wrong because you can’t prove what was agreed between you and didn’t have the proper protections in place to limit your liability which could spark the beginning of the end of your business, and I don’t want that for you.
It’s not just your clients that need a contract though … Do you collaborate with other business owners? Do you buy from suppliers? Do you work with freelancers? Do you have employees? Do you work with affiliates? Do you collect people’s data? Do you need investment?
Every single one of those parts of your business need a contract of some form so don’t get caught out.
PUT IT IN WRITING!!
And of course once you’ve established that you need a contract, it’s time to decide what that contract will look like.
For more information on the terms you need to include in your contracts to ensure you are legally compliant join the waitlist for my first book which will be released on 28th April, it’s a legal handbook that will help you step into yout power freely with the confidence to make the important decisions to scale your business, and I can’t wait to share it with you!
Jo x
P.S I’m offering you the chance to get your client contract in place with support on the draft in a zoom session for just £97 for a limited time only. The usual cost for this bespoke contact is £797. Yes you read that right £97!!
In this live experience on the 25 April at 12pm,, I will take you through your client contract clause by clause making sure that YOU get terms and conditions that are bespoke to YOUR business and total legal protection.
Don’t leave it to chance, sign up now
