How to Write Contracts for Small Businesses
In the life of any company, you’ll need to write a few contracts. Either you’ll need an agreement with someone doing freelance work for you or you’ll want to cover your bases with your customers. Depending on the industry you’re in, you may always have a contract with your clients or you may only occasionally have contracts.
According to the Small Business Administration’s latest numbers, there are around 32.5 million small businesses in the United States. Many businesses are solopreneur operations or run on a tight budget that doesn’t allow a lot of extra room for legal fees.
At the same time, you should protect yourself as much as possible. Fortunately, you have some options for writing contracts for small businesses and protecting yourself and your assets.
Use Simple Language
Don’t try to add a bunch of legalese when you don’t have a law degree. Keep the contract simple and the language straightforward. The entire goal of a contract is to make sure both parties are on the same page and there isn’t any misunderstanding.
Secure an Electronic Signature
Do you plan to have clients sign contracts online? An electronic signature carries the same legal agreement as a written signature as long as the party agrees to the terms. No matter how you collect the digital information, make sure you spell everything out clearly and have the person check a box stating they agree to the terms.
Make sure you offer the full contract so there is no confusion. You may even want to highlight key points. After all, your goal as a business owner is to gain and keep clients, not aggravate them with rules they weren’t aware of.
Outline the rights and obligations of each party signing the contract. There isn’t much room for ambiguity in a legal document. Think through any scenario you might encounter and lay out how it’s handled. Who is responsible for what? The more specific you can be, the better.
Select the Forum
List states and territories covering the contract. Decide where any disputes are litigated and lay out the information within the contract. The Supreme Court has reinforced the enforceability of forum selection clauses, and putting one in your contract keeps you under the laws of your area and prevents you having to travel long distances to defend yourself against a lawsuit.
Use a Template
If you can’t afford to hire an attorney to give you feedback on your contract, you can go with a template from a site such as Rocket Lawyer or LegalTemplates. These forms are standard and already vetted by professional lawyers to ensure their legality.
One problem you might run into with a template is specificity to your business and your area. You may want to start with a template, tweak it and then consult a lawyer to look for any loopholes or things that might cause you issues later.
Give Them an Out
Contracts should have a termination clause. Roping someone into signing an agreement that lasts forever with no way to end the agreement may cause you to lose any filings in court. You can require mitigation, ask for notice or otherwise specify how and when to end the contract, but you must spell it out.
Check for Typos
Even though a legal agreement isn’t a term paper, you should still check it over for readability and typos. The last thing you want to do is come off as unprofessional. Help your customers see you’ve put a lot of thought and care into creating the best contract possible for both parties.
Consider Attorney Fees
You may want to include a clause that states the losing party in any lawsuit must pay attorney fees. Otherwise, you could wind up having to pay out a lot of money due to frivolous litigation. People might think twice before suing if they know they’ll be on the hook for money. Otherwise, they may get an attorney to take them on for a percentage of any money awarded and the only thing stopping them from wasting your time and money is a conscience.
Pay Attention to Small Details
Don’t forget the little details that lead up to the bigger issues. For example, make sure all contact information is listed and that you spell the parties’ names correctly. Ensure every line on the contract gets filled in, including the signature and a date.
Eleanor Hecks is editor-in-chief at Designerly Magazine. She was the creative director at a digital marketing agency before becoming a full-time freelance designer. Eleanor lives in Philly with her husband and pup, Bear.