The Faintest Ink

I stopped taking payments 2 years ago. I only start working when I have 100% of the fee paid upfront.

I don't use a formal contract. I do send an email detailing the agreed upon work and my only guarantee which is if they run the copy as I write it and it doesn't convert immediately, I'll edit it up to twice in the first 30 days.

If they don't have their act together and don't run the copy right away, I'm not to blame.

I make them send the email back with a statement that they agree to the terms set forth.

I've not had a problem yet doing business this way. I learned this from Tina Lorenz. I don't know if she still does business this way or not. It works for me.

If I had to take a 50% payment upfront instead, I'd follow Ryan's kill fee approach.

I've had to refer back to the agreements myself just to remind myself what I promised and what time frames.

@Jenny - Ouch! That's not cool. "I'm taking my business in a different direction" -- classic. I've heard that one before.

I wonder how this client thinks she can sue you. If there's no contract, how can she find you in violation of it?

Suggestion: Although I've not used this in my contracts because I get paid 100% up front for one-off projects, if I was getting 50% up front, I'd put in a clause about "kill fees."

Basically, if the client decides not to use the copy for any reason, you get to keep the 50% down payment as a "kill fee." They killed the project -- but you should still get paid.

Hope everything works out okay for you, Jenny. Let me know if I can help.

Ryan

Hi Ryan,

Read this post with interest when you first put it up and am compelled to leave a comment today because of events that have transpired this week.

I've used contracts since I started my business because it adds a level of professionalism and, as you noted, is good for ensuring everyone is on the same page about what has been agreed to.

But I got lax with a recent client. She kept "forgetting" to fax the contract, and we were in a rush. It was a small project, so I just went and did the work. Her deposit was big enough to cover my initial time investment, so I wasn't worried.

Two months later, she's decided to take her biz in a new direction. She doesn't want the copy I wrote anymore, she wants her money refunded, and today she's contacting her attorneys to investigate whether she can sue me. I took detailed notes of our conversations and use a time clock to keep track of my hours -- she's accusing me of making up my documentation. A contract would be mighty handy right now ...

I've also found contracts to be handy if you need to turn a client's account over for collection, as well as if their credit card issuer flags a payment as suspicious (as happened when an overseas client made two payments of the same amount -- 50% down, 50% at completion -- within a month).

Thanks for bringing up a valuable topic!

@Diana - Contracts, as you point out, are good for positioning purposes. They make you look more professional.

@Kevin - Love your analogy. Too funny. Glad you found this post helpful.

@DK - I remember you describing that situation to me. No fun. I think that's a good idea to sign a contract with yourself -- helps you stay committed to your personal goals.

@John - I love what you wrote: "Yes, contracts are PERFECT for helping positively disposed people with faulty memories!"

@Ben - Like you, I'm a fan of handshake deals. And I think you and I are in agreement... the key is simply to record the commitments each of you has made to avoid confusion.

@Kevin - Excellent point. Contracts help keep clients on schedule, too. As you said, it's a two-way street.

@John - Yep, possibilities are very different than commitments. I like how you put that proverb at the top of your contacts. Cool idea.

@Shawn - I've done the same thing when submitting an invoice in a Word doc. Just outlined all the details of the project inside the invoice. Again, it's the principle of getting the details of the project in writing -- not necessarily the medium.

Ryan

Great post Ryan!

Alot of times, when I sent clients an invoice using paypal, I'll set the parameters of the job right in the notes section of paypal, detailing the job that's to be done, the deadline, the fee, and any other pertinent info. At least that way, if there's a dispute, I can show the client the paypal reciept, that has the agreed upon terms, fees, work, and deadlines, right there in the invoice.

Shawn Lebrun

The Chinese proverb you quoted is at the top of all my contracts. Clarity is the only reason I used contracts (or, as I call them, a "letter of agreement.")

I've had client try to lock me into things that I've casually mentioned in emails months before a project even began. E.g., they asked me if I could do something, and I said, "yes, I _could_" and then they try to lock me in with that. I didn't say I would. It was a possibility. There was no type of agreement. We were just bouncing ideas.

Even clients I've been working with 3+ years I still draw up quick contracts. With those clients we don't usually bother faxing signatures back and forth -- just a digital signature. But having it all in writing helps keep 3+ year relationships healthy and prosperous.

Yeah, gotta agree with Ben here. Maybe I've been lucky, but I've never had issue. (I'm bound to get screwed now that I said that!)

An organization I work with does use agreements and another benefit is keeping everyone on schedule - the writer AND the client.

If client doesn't meet deadlines for delivering research material, etc. then the entire schedule gets adjusted. Helps them realize it's a 2 way street.

Good article.

Kevin

I'm in agreement here. Contracts provide a reliable record that keeps both parties honest. Everyone can be sure they are getting the work they paid for, and doing the work they agreed to.

Recording calls, digitally signing emails and project specs, having a written contract, however you choose to do it... all serves the same purpose. Keeping honest people honest, and protecting against the inconsistency of human memory.

Hey Ryan, although I'd never tell anyone not to use a contract, I have ONLY been screwed when a contract was involved.

Whenever it's been "handshake" (or email shake, I have never even met any of my clients) it's gone smooth.

So I don't even bother with them anymore.

I do record calls with clients though.

That way, if any questions come up, the details of our deal are easily accessed.

Ben

I read the beginning of your post, Ryan, and was winding up to say what you said toward the end.

Yes, contracts are PERFECT for helping positively disposed people with faulty memories!

As soon as I knew your post was about contracts, it brought to mind the really bad experience I had with a client, which lasted from about June till November of 2008.

Before going further, I should say that I take full responsibility for putting myself in the situation that I put myself into. I don't blame him, and I don't think I have any more anger toward him.

It was stupid of me to do work for this guy without getting some upfront fee. I'd been warned against doing so, but in my defense, I will say that since he was a purchaser of Product Launch Formula (we were in the same PLF mastermind group), I thought he would honor his word and come up with the funds to pay me.

So, I signed a contract with him.

To keep a long stroy short, he failed to live up to his word and his part of the agreements so many times. I should've seen it coming.

I grew increasingly impatient with him, until one day, he asked me an insulting question:

"Can you calculate how much it'll cost to get an autoresponder, hosting, graphics, etc.?"

The thing that made it insulting was that he had earlier (much earlier) said he'd ask his "investors" to back him up.

So why was he now asking me this? The fact that he as asking me that, at this time, implied that he did now know how muct to ask his investors for?

If he didn't know how much to ask his investors for, then why did he say he asked them to back him up?

For me, that was the final straw that broke the camel's back. I'd essentiallly lost it.

I e-mailed him and told him that the contrat we had was now voided.

(Wow...I know I said at the beginning of this entry that I no longer feel anger, but now that I revisit this, and am typing it, the anger sort of stems up. But that can be used for good. I'm putting more "heart" into this.)

Anyway, he said that I didn't finish my end of the deal. Well...one of the things I agreed to do was put up a web salesletter. So, I ask, "How can I put up a web salesletter when he doesn't have the hosting to put it on?"

Regardless, the man was simply a liar.

In hindsight, I just see the whole thing as an experience that I needed to go through. And I'm better for it.

I've learned that the best client I can have is myself. And I do have myself as a client and some projects I'm working on.

In fact, I wrote an article based on this experience, which you can see at Ezine Articles: 3 Signs of Problem Clients

Oh, and since we're on the subject of contracts, why don't you write and sign a contract with yourself? Make a pledge to yourself that you'll do what it takes, just as you would with any other person, and sign it.

I agree that contracts are best with honest people in the same respect that locks keep honest people from breaking in :-)

I recently got ripped off $900 by an unscrupulous Forex client, and we had a written proposal... but not a contract.

I'm going to switch to a contract model in my business right away, for the very reason you suggest: making sure everyone "remembers" the terms. Thanks for a valuable post, Ryan.

Offering a contract or letter of agreement was important to me, because it set the tone that I'm a business professional when I first started out. It's important to be personable, but the client is looking for a professional and the paperwork helps solidify that subconsciously. Also, it serves as a means to encourage payment compliance.

And it's very useful as you state above, although I'm a note taker and those notes are more extensive than the official paperwork.

But honestly, I don't insist on using the contract or letter of agreement, and haven't had to use them much. Probably should get into the habit. They are there to protect both the provider and the client in the deal, as you show so well.