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Contracts – Why Bother?

So it’s not worth the paper it’s written on…right?  Wrong!  I have to thank one of my clients, Babs Hobbs Digital Solutions, for emailing me this salutary tale which she found on the Internet: “What I learned from being dragged through the UK court system” – http://www.sellyourservice.co.uk/2015/01/learned-dragged-uk-court-system/.

To summarise here are some of the lessons learned:

  1. Make sure you have a paper trail.  This means entering into and looking after any signed contracts and taking a note of phone conversations and meetings and when/where they took place.  If you have a client file then that’s the ideal place to keep a note of these things.  These will become essential in the event that you get into a dispute with a client.

2. Pay for someone to check over a contract.  There are lots of template contracts on the Internet in the same way that I can also find the blueprints to build a 4 bedroom house.  However, I’m not going to build a house without using a professional so why would I do the same with a legal agreement?

3.Have the best insurance you can afford.  This can be particularly important if you are providing professional services where bad advice could lead to a claim or there is an element of risk involved in the work you do which could injure or cause the death of another person.  It’s also worth reviewing any exclusion or limit of liability clauses in your contract (or insert them).  You should note that in the UK it will never be possible in a contract to exclude your liability for death or personal injury caused by your negligence.  As such insurance is essential.

4.Get written permission for any portfolio work and links on your website. This will not be applicable to all businesses but if you mention work you’ve done for a previous client then make sure you get their permission to mention their name in your testimonials.

5.Trust your gut, don’t work with difficult people.   If the person you’re working with is abrasive, rude and is prone to little white lies (your client, not your lawyer that is!) then there’s a decent chance if you fall out that they will get a whole lot worse.

6.Don’t respond to anything immediately.  This is a really tricky one for all of us when a dispute arises!  When you see the red mist and want to tell the other person exactly what you think about them, then calm down, sleep on it and take advice (from your solicitor and colleagues) and respond in a factual and measured manner.  Often threatening letters from the other side are just bluster which needs a cool response in order to protect your position.

7.UK Court is nothing like TV.  I soon realised this on becoming a lawyer myself!  My 10 year old Toyota Starlet didn’t quite match my expectations that I’d be driving a brand new Porsche 911 to my workplace or that lawyers’ offices were all like Ally McBeal.  In addition, raising or defending court actions is time-consuming, stressful, expensive and divisive; it should be a very last resort only once you have exhausted every other avenue.

My advice would be to treat a commercial contract like insurance.  In the vast majority of cases the business relationship with clients will proceed without any big issues and the contract will just gather dust in your filing cabinet.  However, if things go wrong then you’re going to need that contract in order to determine what was actually agreed, who’s responsible for what and to resolve the dispute as quickly and cheaply as possible.  The cost of putting a contract in place is usually pretty insignificant compared with the cost of raising or defending a court action.  However, a poorly drafted contract can be just as bad as not having any contract so it is recommended that legal advice is sought for any commercial arrangements you are entering into.

If you would like any advice on drafting or reviewing commercial contracts then please contact Angus McGuire or Alan Stalker on 01383 721621.

Babs Hobbs Digital Solutions specialises in creating websites and social media strategy for SMEs at competitive rates.  Further information can be obtained at http://babshobbs.com.

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