Some people are proud of their handshake as a badge of honor. And they should be! After all, it is good to be honest and trustworthy. But there may be times when a handshake isn’t enough, and the reason why may have nothing to do with “trustworthiness” and everything to do with the potential for misunderstanding.
In every deal or arrangement, there is a potential for misunderstanding. A written contact sets out the terms, time limits and expectations.
A good contract will state the calendar term of the contract, and whether the contract will expire or automatically renew if not cancelled. The contract will clearly let each party know what is expected of them. It will also state what happens if unforeseen circumstances were to occur, such as illness, disability or natural disaster. It will state exactly what the subject is, who needs to perform what duty (or payment) and how and where that is to occur. There are other basic terms that are covered, as well as specific ones that cover that particular situation.
Certainly there are still circumstances in which a handshake is, and should be, enough. But our experience is that people often hesitate to ask for a contract because they don’t want the other person to feel that they mistrust them.
Having a contract helps both parties because it guides them in their dealings with each other. Not only does it prevent someone taking an unfair advantage of another party, it also helps the parties know when they are justified in asking for additional payment, extra time, or assurance that the project is on schedule.
Small businesses dealing with vendors or customers that they know personally are more likely to forgo a contract in times when one may have been helpful. A dispute or embarrassing situation between the parties can then sabotage a working relationship that had been satisfactory for many years. This can be prevented.
Contracts can be fair, and can use “friendly language”, as long as they are clear and accurately reflect the agreement between the parties. A skilled business attorney can help you draft a contract for a particular situation, and can guide you in using contracts in your long term business plan.
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