SMALL BUSINESS CONTRACTS Q & A
by Joelle Steele, Legal Writer
I answer questions by Monday mornings. Every question is answered by E-mail, so be sure your E-mail address is correct when you write.
Q & A Material as of JANUARY 1, 2018
Q. I bought a contract from another online source and it wasn't slanted enough in my favor. Can you do a contract for me that is?
A. The contract you bought was fair for both parties and I can't see anything that should be or needs to be slanted more in your favor. Doing so is rarely a good idea anyway because that creates a poor business relationship right from the start. I recommend that you discuss this with an attorney.
Q. Why don't your contracts have the scope of the work already written? That'a a lot of work to do on my own.
A. I don't fill out the scope of the work with anything other than sample language (if that) because no two companies that provide the same service do it in the exact same way.
Q. I notice that the contract I got from you does not list all of the things that could potentially happen that are out of my control. Should I list those things myself?
A. Many attorneys like to list everything. They call it using "an abundance of caution," i.e., taking no chance that anything is left out. In most of my contracts I prefer to use simple language that says "any and all" rather than listing a ton of stuff. I leave it up to you to list specifics if you feel a need to do so.
Q. Should I have my partnership agreement notarized? What kinds of documents need to be notarized?
A. In general, anything where you need an impartial witness who can verify the identities of the signing parties should be notarized. See my article on notaries for details.
Q. Is a signed and faxed contract legally binding, or do I need to have the signed original too?
A. These days, faxed contracts are generally accepted as enforceable. However, as a handwriting expert (retired), I strongly advise everyone to maintain signed originals. When the parties are not together at the signing to witness each other's signatures, the possibilities for fraud – withdrawal, denial of signing, unauthorized signers, forgery, etc., can occur. It is not possible to reliably analyze a faxed or scanned signature if there is a suspected forgery, because the finer handwriting strokes a handwriting expert needs to analyze are lost in the photographic process.
Q. Aren't the two paragraphs "entire" and "severability" the same?
A. No. They are both about what is included in the contract, but the "entire agreement" paragraph means the contract doesn't cover anything that is not written in it. The "severability" paragraph means that if you eliminate something that is written in the contract that the rest of the contract will still be valid. Also, there is the "additional work" paragraph which means that if you want to add something to a contract and make it a part of the contract, you can do so with a signed Work Change Order.
Q. Should a "reasonable" construction delay be stated in terms of days?
A. Probably not. Most delays are caused by unforeseen circumstances that are outside the control of a contractor. For example, the client asks for additional work, a storm causes flooding, a supplier's warehouse burns down and a new supplier must be found, etc. Stating a certain number of days as "reasonable" would be impossible, and doing so would likely cause more problems than it would solve.
Q. What is the difference between a joint venture contract and a partnership contract?
A. These are contracts for two different business relationships. In a partnership, you own a business together, and you share everything, either equally or by percentage of ownership. In a joint venture, you each have your own separate businesses but work together in your own specialty areas on a third separate business or shared client project that requires your different kinds of expertise.
Q. What is meant by "acceptance" of a contract? Is this the same as agreement?
A. Acceptance is agreement. There are basically three kinds of acceptance: express, implied, and conditional. All are legally valid. Express acceptance is when you both consent/agree to a contract and its terms by signing it or maybe just by a handshake to an oral agreement. Implied acceptance is where both parties have a history with each other for the same or similar kind of oral contract, e.g., the man who stops by and routinely cleans your roof gutters a few times a year. Lastly, there's conditional acceptance. Like it sounds, it places a condition on the acceptance, e.g., a company (the buyer) will purchase the remaining inventory of another company (the seller), but only if the seller delivers it to the buyer within a specified period of time.
Q. Why can't I have a landscape contract that has the installation and the maintenance together?
A. Because that would not be a good contract, no matter who writes it. The terms and the risks for installation are completely different than those for maintenance services. So, to make sure you are completely protected for both kinds of transactions, you need two separate contracts.
Q. What's the difference between a "contract" and an "agreement"?
A. Not a thing. Some people just prefer one word over the other. You can change the word "contract" to "agreement," or vice versa, in any contract template you buy from me or anyone else.
Q. Why can't I just write my own contract?
A. You can, but that doesn't mean it will protect your interests if it is challenged in a court of law should you ever be sued. Most people do not possess the legal knowledge or even the writing ability to create an enforceable contract. They also leave out many of the most important clauses that will give them the best protection.
Q. Which business or individual should prepare and present the contract when you both have a contract?
A. There is no specific protocol for this. In most cases, both parties should look at the two contracts to make sure that everything they both want and need is outlined in the contract that they will ultimately sign. If one contract is fine except that it is missing a paragraph that the other party wants, then that paragraph should probably be added to the contract before signing.
Q. I'm worried about using a contract. Won't it just intimidate my prospective clients?
A. It shouldn't if it's written in plain English. It should make your prospective clients feel secure knowing that you are professional enough to want a clearly defined working agreement to protect both of your interests.
Q. Sometimes my clients want certain paragraphs removed from my contract, but I think they should remain. What is considered to be negotiable in a contract?
A. In general, the main negotiable parts of most business contracts are going to be those that cover the scope of the work to be done, the price/fees, and the payment terms. Any other language that protects you or your client should be left intact.
Q. When is it better to hire an attorney to write a contract instead of buying one online?
A. When you are entering into any complex business transaction that you do not fully understand and that requires an expert to answer your questions and help you make good decisions, you should consult an attorney. That said, you should also always consult a lawyer for a quick review of any contract that you purchase online. Laws can vary from city to city, county to county, state to state, and certainly from country to country, and an attorney in your jurisdiction can ensure that your contract complies with any such local laws.
Q. Can a contract that you are forced to sign be valid?
A. No. If you sign under duress, a contract is not valid. The same applies if you are not mentally competent or if you are tricked into agreeing to an oral (or possibly written) contract that was not a legitimate offer. For a contract to be legally valid and binding, both parties have to be mentally competent and willingly agree to all the terms and conditions.
Q. I really like your contracts, but why don't you offer more estate planning documents? I need a living trust.
A. I specialize in writing simple documents that the average person or small business should be able to use. When it comes to more complex transactions such as real estate, estate planning, corporate mergers, and incorporation, you should meet with and discuss those documents face-to-face with an attorney.
Q. If a business doesn't hold up their end of a contract, what measures can be taken to fix the problem without having to file a lawsuit?
A. If talking about the problem to the business owner has not resolved the issue, sometimes a formal, polite, and non-threatening business letter asking that they fulfill the contract will encourage compliance. Some contracts have clauses in them that call for arbitration or mediation in the event of a dispute. That is certainly a very viable means of enforcing the contract or re-negotiating it in a way that is acceptable to both parties, regardless of whether it is written into the contract to do so. As a last resort, take them to court.
Q. Can a cohabitation agreement be turned into a pre-marital or marriage agreement once you decide to marry?
A. The two documents are very different, so you may want both. But, the cohabitation agreement can usually be used in whole or in part after you marry. This is something for which you should consult an attorney.
Q. If a contract is offered to me and I don't like one of the terms, do I have to hire an attorney to write a counter offer?
A. Not usually. It depends on how complex the contract is and whether you are capable of making the counter offer yourself. This all falls under the heading of negotiating a contract. Nowadays, contracts are frequently sent as Word docs attached to E-mails, and so you can simply add, revise, or remove language and state in the reply E-mail what you have done and see if the other party will agree to it. They may accept your changes and/or counter your offer. This is a common process. If you don't feel capable of doing this yourself, by all means consult an attorney.
Q. I bought your snow removal contract, and it seems overly long and complicated, like it is for much bigger commercial jobs. Do you have a more simplified version?
A. Snow removal and de-icing are high risk occupations with the potential for costly property damage as well as slip-and-fall injuries, so all that language is there to protect you and your clients, no matter how large or small the job.
Q. Why don't you list all of the services offered under the scope of the work in your contracting agreements?
A. I always leave the scope of the work to be filled in by the person who buys the contract, because no two landscape businesses, no two publishing businesses, etc., are the same. Every business is slightly different both in the services they provide and how they describe those services.
Q. Are oral contracts enforceable?
A. Yes, but they are not as easily enforceable as written ones. I recommend that any time you make an important agreement that you put it in writing, even if it is a simple hand-written agreement that both/all parties sign. You only have to spend an afternoon in small claims court to see how confusing it is for a judge to rule on a case where each party remembers the oral agreement differently. Putting things in writing is always a good preventative measure.
Q. What is the difference between Wills — simple, bequest, pourover? Which is the one that you sell?
A. A simple Will usually has a single beneficiary (such as a spouse) or has beneficiaries who are sharing the estate by percentage. A bequest Will is similar to the simple Will except that it also allows for specific bequests (gifts) to certain individuals (friends or family members) or entities (such as charities). The pourover Will can be a combination of a simple and bequest Will, and it additionally has language that allows for a certain part of an estate to be given to (poured over into) a Trust (usually a Living Trust). The Will I sell has optional language in it for all of the above types of Wills.
Q. I am starting a business with my best friend. I feel awkward about having a contract with him. Should I just trust him to do the right thing?
A. I would want a contract even more if my partnership was with a friend. A written contract ensures that you both agree to the same things, and it can be referred to and amended with time, whenever necessary. It isn't about not trusting each other, it's about preserving your friendship as you build a strong business partnership.