I simultaneously like, don’t like, and disagree with Dealing With – And Enforcing – Verbal Contracts on TheSelfEmployed.Com. And I definitely recommend that you read it.
What I like about it is Post author Marshall Lee practical advice on what to do when you didn’t get it in writing.
- Immediately archive and back up all secondary documents such as emails and text messages, quotes, faxes, written correspondence—everything. Even if you don’t have the terms of the agreement in writing, these documents could help you overcome the burden of proof
- Make contemporaneous notes of the agreement and keep them
- Send a writing as soon as possible outlining the terms of the agreement as you see it
- Make sure any witnesses to the agreement make note of what was agreed to
What I don’t like is the backwards way of getting to the really good advice here, which is the following, buried near the bottom:
It goes without saying: the best way to deal with a botched verbal contract is to avoid the whole mess in the first place. Get it in writing. People remember things differently. People don’t remember. People lie. So ask your clients to sign some simple paperwork. This is business, after all, and anyone who balks at written contracts is likely to pull a disappearing act once the bill comes due.
The emphasis there is mine, and I put it there to highlight what I disagree with in this post. I say we way overestimate the value of a “contract.” I saw, as in the italicized portion of the paragraph above, never do a contract when a letter will do. I say you get 95% if the value of a contract with 10% of the hassle by writing a one- or two-page letter. I even ask people to simply reply in email that they agree.
Very often the reason things aren’t in writing is, at least partially, because people avoid it because they think that means a contract, which means lawyers, which means negotiating detailed points, which means delays and distractions galore.
Look for the very happy medium: get it in writing, in plain English, simply.
I’m not an attorney so please don’t take this as legal advice. I am a business founder and owner though so I’ve been through a lot of legal hassles. What I’ve seen in practical application is contracts don’t solve many real problems any better than simple letters. Suing to enforce a contract is so rare, so expensive, and so often useless. In most cases, if people don’t honor what they agreed in a simple letter, then you’re not going to force them to honor the same thing in a contract.
So the moral is: Get it in writing. Quickly, simply, with plain English.
By the way, if you aren’t aware of TheSelfEmployed.com, but you are self employed, go visit. It’s a great resource for a lot of people in your situation. Information, advice, tips, and pitfalls.
Signed document image courtesy of Shutterstock
Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.
