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| NetLawMan Legal Contracts For Small Businesses and Sole Traders |
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Why do we need a contract... don't you trust me? This article will be useful reading for independent contractors / sole traders and individuals.
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It explains why both independent contractors and individuals (whether other businesses or consumers) should ensure that a contract is used and the pitfalls of not using one.
The word ‘contract’ incites numerous connotations of intimidating language, incomprehensible terms, and expensive fees. Unfortunately, this results in so many small businesses not using a written contract and thus leaving themselves open to disaster. Ensuring a well drawn contract is in place does not create mistrust nor does it have to be expensive, time consuming or complicated. Simply, it is the basis for trust. If all the terms are written down in one place, there is little room for miscommunication, misinterpretation and missed deadlines. Whether you are the provider or the client, using a well drawn contract protects your valuable interests. It simply makes good business sense.
If you are apprehensive about asking a client to sign a contract, for fear that they will think you don’t trust them, don’t trust them! You simply have too much to lose by trusting them. A contract isn’t a replacement for trust; it is the basis for trust. Further, there are many benefits of using a contract. Read on to find out.
Written or verbal?
There is an argument that a verbal contract is just as good as a written one. Whilst that is true, how are you going to prove you have a contract at all, if it is your word against his? Take for example, a contract to rewire a remote farmhouse. If you are the contractor and drive 60 kilometres to arrive at the location only to find that the client has gone out for the day and not left a key, you will have wasted your transport time, petrol costs and you will have endured much frustration. With no contract, the client can simply say ‘we agreed the 21 st, not the 22 nd’. You can do nothing about it. You have lost a days work. Of course the same applies if you are the client and have taken a day off work to be available for when the electrician calls. The bottom line is that by using a written agreement, you are more likely to avoid such pitfalls in the first place and second, you will have a course of action to compensate you for your wasted time.
Terms and conditions or agreement?
A contract is simply an agreement to do something in return for something else (usually monetary compensation where businesses are concerned) with the intention that either party can follow the matter up with the law if the other of them does not fulfil their side of the agreement.
Many people are put off by the word ‘contract’. Why not use ‘agreement’ instead? It means the same thing. Depending on what type of business you are in, you may use a ‘terms and conditions’ document instead of an agreement. What is the difference? An agreement involves negotiation between the parties. Either party can review the document and decide against any term within it. The matter can be negotiated and the document amended. Both parties then agree and sign the document. Most situations call for an agreement. However, if you deal over the Internet, or simply have very strict terms, you need a ‘terms and conditions’ document. This is a non negotiable contract – they are your business terms and if the customer doesn’t want to sign the document, they go elsewhere. Terms and conditions documents, or ‘T&Cs’ as they are often called, are characterised by the signing of only the client or customer. Further, they are often agreed using a tick box on the Internet.
Whether you need T&Cs or an agreement, you can avoid the word contract completely and avoid scaring off your potential clients.
What to look for in a legal agreement
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Simple, plain English language.
We mentioned that an agreement does not have to be complex or filled with age old words from a time gone by. We actively promote the use of plain English language. Many template agreements which can be purchased from the web are much easier to understand than their counterpart 20 page documents drawn up by high street solicitors. However, if you require the most simple language, use Net Lawman. By using plain English, the document does not become less valid, less important or legal. It is just as watertight and protects your interests just as well. (On that note, you may be interested to know that if a term is unclear, a court will interpret in its simplest form and if it is completely onerous, they will simply favour the party making the claim. It really does pay to keep things simple.)
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A document less than 8 pages long.
If the document uses 12pt, Arial text, an agreement for a contractor should be no longer than 8 pages. Why? There is simply no more than can possibly be added other than the usual standard requirements by either party, delivery, other obligations, confidentiality and a few other paragraphs. If your document is more than 8 pages, you know it lacks clarity. It will certainly put your customer off.
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A service that provides back up legal advice.
If your terms change, or you find a potential client that requires different terms, you may need to amend the document. If you use a plain English document in the first place, you may well be able to do this yourself. If however, you’d like peace of mind, you should instruct a solicitor to re draw the amended terms. If you go to a high street solicitor, you pay for their service in every way. High street solicitors’ licences come with chains – their charges are often reasonable given the hoops they must jump through. However, if you can’t afford to pay someone to jump through hoops, use a low cost legal adviser. If you search online, you save travel costs too.
How can using a contract enhance my business?
Providing a simple agreement or terms and conditions document for your client to sign can make you look professional. It shows that you know what you are doing, that you are proud of it and that you are professional.
You can even use a little reverse psychology and tell your client that you use legal documents so that they have confidence that the job will be done on time, in a professional manner, with care and skill. This goes a long way.
Finally, use a legal agreement simply because it will protect your business. It is highly likely that it took you a long time to get to where you are today. Don’t risk falling behind and having a claim made against you by neglecting the basics. I iterate, the contract does not undermine trust, it forms trust. |
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To discuss your requirements please contact us.

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