Episode #319: Make Sure Your Contracts Have These Key Things in Them
TAYLOR BRADFORD: You are listening to episode number 319 of the Boss Girl Creative podcast. Today I’m talking about what we all need to know about contracts. On to the episode.
Hello, welcome to Episode 319. I’m your host, Taylor Bradford. I’m excited that you’re here. We’re gonna be talking about contracts. Full disclosure, I’m not an attorney. I don’t claim to be one, so take this information that I talk about in this episode with that in mind. I will be talking about some of my own personal experiences as of late, and it’s why it’s on the top of my mind and why I’m a bit frustrated in the world where contracts exist. But anyways, it is what it is at this present moment.
Before I dive into talking about contracts, and what’s important in them and why we need to have contracts, etc., etc., I do want to say the doors to the Inner Circle membership are reopening August 1st, if you want to be alerted when those doors reopen so that you can get yourself in ASAP. Go to bossgirlcreative.com/InnerCircle. It’s $27 a month. You have access to the community. We do a live Q&A once a month. We have a business book club where we actually spend time implementing the things that we learn from a book that we’re reading. Currently, we’re reading Girl on Fire. You also have access to two co-working sessions a month plus one-to-one Voxer interaction with me on Wednesdays for office hours. So if you are stuck or need help working through an idea or need some strategy, or just want to vent or whatever, you can do that on Wednesdays, through office hours. And it’s a really great community, and I want you to be a part of it. And you definitely want to be a part of it, because there’s some really amazing things happening in there. So get yourself on the waitlist. Doors reopen August 1st. Go to bossgirlcreative.com/InnerCircle.
Okay, so let’s talk about contracts. And I want to start off by saying that I have really frustrated you guys. I’m frustrated because I feel like over the last few months that I’ve entered into agreements with people, and they are disappointing me left and right. And I guess I also feel like they think my checkbook and/or my wallet are just wide open. So it’s super frustrating, especially when you have a conversation, and you’re onboarding somebody, and you explicitly state a cost for something and then what the cost would be after something else happens. And you agree to those things, but then there’s nothing put in writing to confirm those things. And then that person just starts working, and then time goes by, and then all of a sudden, the invoice is literally almost three times what you were quoted, which is what I’m frustrated about something that has recently happened. And it’s just super frustrating because I’m not an open wallet, and I thought I was agreeing to a certain amount of terms. And then somewhere, the terms change, and that wasn’t communicated. And now here we are. And not as just one instance. We’ve got other instances happening right now in our world and the land of The House of Sugar Creek. And it’s like, oh my gosh, I’m just really tired of being taken advantage of. And also like, why sign a contract if you don’t intend to hold your side up over it? Like, that’s also frustrating. Like, we’re in the process of trying to buy another rental property and signed a contract, dropped it off to the title company to get the title policy going, and the seller came back and said, “Oh, I just I just don’t think I’m ready to sell this.” Wait, you signed a contract. We agreed to terms. We wrote down said terms. We turned it over to the title company to start that process. Our closing date is this date. You don’t get to just change your mind. Like, you didn’t write in an out into the contract for you to change your mind. So anyway, super frustrated about contracts, which is why this is top of mind and why we’re going to discuss it.
So, there are three parts that are super important to a contract: the offer, the acceptance of the offer, and the consideration for the offer. So the offer is what will be done. Signatures to the contract is the acceptance of what will be done. And then consideration – and it has to be monetary consideration or something of value that is stated by the court. Now, it could be stocks, that can be real estate, that could be money, something of value, it has to have consideration. The contract also needs to identify all of these things related to money: who, what, when, where, why, and how much. Answer all of those questions with thoughts about the consideration part, the money part. Everything needs to be in writing, and this is the key because people remember things differently. I know that verbal contracts can stand up in court. However, again, people remember things differently. People remember things incorrectly, people forget things, and people lie. That’s why it’s important to get it in writing.
Consult an attorney when necessary. Obviously, the necessary part is when there’s big money on the line or an asset transfer, or maybe it’s your actual job. Those things are important. My Sugar Creek contract has been reviewed by an attorney. It was a template purchase from one attorney and then reviewed by an attorney in my own market. So it’s important that an attorney be involved, especially if it’s something you do on the day-to-day. It’s part of your job. It’s how you make money. It’s how you run your business. If there’s a big asset involved or a big chunk of money involved, this is when it’s necessary to consult an attorney to hire one. And if you don’t understand the contract, don’t sign it—another time when an attorney is valuable to you. Plus, you got to read the contract, don’t just sign it just because it seems good. You got to read it. You got to understand it. You got to agree to all of it before you sign it.
So some important parts to a contract. And this is if you are in business, and this is your personal contract for your business, or if you’re hiring somebody to do something on your behalf. Even if you feel it is the most mundane thing, you need to get it in writing. You need to get terms in writing. I should have had terms in writing on the first instance I mentioned. But there was nothing sent back to me from the business owner I was hiring, and so it was a phone conversation that was accepted – those terms were accepted via that phone conversation – and I obviously since I received an invoice that was nearly three times what I thought we were being charged, I obviously remember our conversation very differently than the business owner.
Know how to – first of all, okay, termination. That’s what we’re going to talk about before we dive into the other things but know how to terminate a contract. Make sure there’s a get-out clause for you, the person signing it, and for you as the business owner. This is important because there are possibilities – I’m in one right now actually; I’m in a couple which is why this is frustrating me right now – make sure there’s a get-out clause. If this doesn’t happen – and define this, what is this if this quote-unquote “this” – doesn’t happen by this date, the contract is null and void. Now, that’s super simple terms. They don’t have to be that simple, but it’s important that you understand how a contract can be terminated and that there is a way out for both parties should both parties not fulfill the agreement. Whatever that is—whatever and however you define that.
A lot of times, if I go back to get it all in writing because people remember things differently, incorrectly, people forget things, and people lie, most of the time when there is a contract misunderstanding, it is a true misunderstanding, and not being done in bad faith. The person isn’t your enemy. They probably have good intentions behind their actions, and they’re not being malicious by any means, but people tend to interpret the same information in different ways. It’s why text messaging can go so south so fast because there’s no true intent behind the message. I am an Enneagram One who wings Nine. I don’t like confrontation, but I’m also super black and white. There’s very little gray area with me. I don’t understand the gray. It’s either yes or no. And when I’m in an emotional crisis of my own, and something from someone else comes my way, I have the tendency to just acknowledge it without a whole lot of context. Like, I’m, I like, okay – the word okay or a derivative of the word okay. Like the letter K. I’m saying, I hear you, I’m not in a space to respond, or I’m not in an emotional space to respond. But I hear you; I’m acknowledging you with the word okay. And there’s no intent, malicious or, or anything else behind that, but if you’re a more feely person – I’m not a feely person – if you’re a more feely person, that can be misconstrued, and that isn’t my intent. Never is my intent. You would know if my intent were malicious, I’d let you know, Again, black and white. So misunderstanding is your enemy. It’s not because of bad faith. People just tend to interpret things in different ways. And when there’s no feedback loop, communication feedback loop happening, through text through email, through a contract even, when you can’t sit down and read somebody’s body language and hear how they react and hear their tone and their inflection of their tone, it can be really challenging, and you may think they’re being malicious. And all it is is a misunderstanding.
Okay, so I want you to think about all of your past problems related to contracts, either your own ones that you’ve signed or yours that you currently use. Think about all of your past problems and make a list to check against a future contract, whether that is yours internally that you use for your business or ones that you plan on signing or will be signing in the future. And add to the list as new things arise. Things that you just are like, yep, nope, never doing that again. I think most all of us changed our contracts when COVID popped up. So I want you to think about that as you move forward in business and in your own life. When you are either signing a contract for a service, you’re hiring or product, your purchasing, etc. What do you want to make sure to never happen again? I would even ask your friends about their own contract situations and see what they’ve encountered that you don’t want to encounter. When legalese is confusing, in a contract to you that you are in charge of writing, or you’re working through an agreement with somebody, consider writing it out in your own words, but make sure that you take your time, and you’ll be as precise as possible, because it will be upheld and you don’t want to do something in haste, because you’re in a hurry, and you just want to get something signed.
Okay, so let’s go back to the body of a contract. Like, what is in it, the nitty-gritty parts. I know at the top of the show, I talked about a contract being made up of an offer, the acceptance or agreement of the offer, and the consideration, but let’s get into the nitty-gritty of it all. What is the actual scope of work that you’re agreeing to? Going back to that who, what, when, where, why, and how much. So here are some questions to consider for the scope. Will you receive a portion of your fees upfront? Or alternatively, will you pay a portion of the fees upfront if you are the one hiring the service? Will you be paid at delivery? Will you be paid according to a specific timeline? Or will you be paid according to your actual time involved? Alternatively, how are you going to be paying for the service? Will you be paying at delivery? Will you be paying according to a specific timeline? Or will you be paying for their actual time on an hourly basis? What and how can the work be canceled? Let’s go back to that termination. What and how can the work be canceled? Will there be a late fee if the service is not rendered in time? Will you be reimbursed for expenses for the work you’re performing, or will you have to reimburse the person you’re hiring for expenses? Who will actually own the work once it’s complete? Will the work be assigned to the client, which means you’re actually giving them the work, or will you be granting a license for use, which means you retain the actual control and ownership of the work? Alternatively, will you own the work? Will it be assigned to you? What you are paying for is it yours at the end of the day? Or are you receiving a license for the work? If licenses are being granted in the scope of work, you need to clearly define everything related to the license. So, where and how it can be used. Length of time it can be used. Is it licensed exclusively to you, or can it also be licensed to others? Can there be modifications once you receive it, or can derivatives of the work be created from it? Is your client, or are you required to credit the author or the artist, or the creator? And will you be paid royalties if it is your work that you’re selling upon its use or sale of the work? And alternatively, will you be paying royalties if you use it or if you sell it? These things are important to figure out when it comes to licensing. So make sure you’ve got that stuff figured out.
Alright, more things to consider in that scope of work? How will changes to the project or the terms of the project affect the fees involved? Something else that I have personally learned is that even with like amendments and stuff to contracts or agreements, that you got to be clear that the contract is the entirety of the agreement. It’s is the whole agreement. So even if a portion is changed or agreed to be amended, it doesn’t affect the rest of the contract. That’s important. So I really hope that you’re never in positions like I’ve been in, in the past few months. Like, just, I want to pull my hair out because it’s like, oh my gosh, we’re either in a contract that needs to be but like the other person just doesn’t want to hold up or we make an arrangement to hire a service, and then the terms change, and I’m not alerted, etc., etc. So this is why I wanted to bring this topic back to the top, because – because we’re in Q3, and towards the end of this quarter, and ramping into Q4, it’s the busiest time for freelancers and influencers, bloggers alike. And I just want to make sure that your contract is in order. That you’ve had it reviewed by an attorney, or that you’re checking a list of things you don’t want to ever repeat again, in a future contract or in your own business experiences. Because that’s typically when we make adjustments to our contracts is when we’ve experienced something we never thought would happen, and so now we’ve got to make a change to our contracts so that that thing won’t ever happen again. Yes, contracts are super fun, said no one ever. Maybe attorneys say they’re super fun; I don’t know. Okay.
Thank you for listening to this episode. And again, if you want to be a part of the Inner Circle membership – which I don’t know why you wouldn’t – go to bossgirlcreative.com/InnerCircle. Get yourself on the waitlist. Doors reopen August 1st. You definitely don’t want to miss out. They won’t reopen again until December, and then they won’t reopen again until April. So get yourself on that waitlist so that you don’t miss out on the next round. bossgirlcreative.com/InnerCircle. Until next time, I hope you have a great rest of this week.